Investors Clamor for Student Housing
Student housing has a unique ability to outperform other property types in a down market, a compelling feature given where we are in the cycle.
AMES, IA—Arrimus Capital Advisors, an affiliate of Newport Beach, CA-based Arrimus Capital, sold out its first Delaware Statutory Trust offering after raising $44 million for ACA Stadium View Student Housing DST.
The ACA Stadium View Student Housing DST offering, designed for 1031 exchange buyers, is comprised of Stadium View, a class A, 197-unit student housing property adjacent to Iowa State University in Ames, IA. Arrimus Capital purchased the 518-bed luxury property in December 2017. Stadium View is 99% occupied and more than 80% pre-leased for the 2018-2019 academic year.
Investors have begun taking closer looks at student housing like this, partly because after such a long economic expansion, many feel they need portfolios with less risk. And large, public universities such as ISU, show every sign of expanding even if a downturn appears.
“Student housing has a unique ability to outperform other property types in a down market, which is a compelling feature given where we are in the cycle,” says Chris Lee, a partner with Arrimus Capital. “Its recession resistance stems from the stable demand of the captive renter base associated with anchor universities. Student housing also benefits from short-term leases that allow for increases to keep pace with inflation similar to conventional multifamily properties.
From 2004 to 2014, developers constructed no new student housing in Ames. But ever since, the university town has seen a host of new communities geared toward the rapidly expanding student population.
ISU, with an enrollment of more than 36,600 students, is the largest public, four-year university in IA and has experienced 40% enrollment growth over the past 10 years. According to AXIOMetrics University Report, an industry market research firm, projects enrollment will grow by more than 3,350 students by fall 2021.
“The fundamentals for student housing investment, including the growth rates of the student demographic around the country, remain attractive,” Lee adds. “Solid fundamentals combined with proven performance of the asset class have led to an infusion of institutional and international capital in the last few years, driving record transaction volume. We expect more institutional capital to enter the space to help expand and diversify their multifamily portfolios, which will help increase long-term valuations.”
Stadium View is located at 1206 S. Fourth St. near Jack Trice Stadium, home of the Iowa State Cyclones Big12 football team. The property offers 197 units with a mix of two, three or four bedrooms.
Recently voted the #1 student housing property by ISU students, it features five four-story buildings with each unit offering a private bathroom for each bedroom and a full kitchen. Tenants also have access to numerous amenities including a fitness center, clubhouse, study lounge and fire pit.