Candlebrook Enters Student Housing, Buys 5 Assets for $230M with Lubert-Adler

Candlebrook has launched a subsidiary to manage its new student housing platform and teamed with Lubert-Adler Partners to purchase five properties for $230 million to begin the enterprise.
The James, Richmond, Va.

The James, Richmond, Va.

Candlebrook, a New York-based multi-family owner and operator, has launched a subsidiary to manage its new student housing platform and teamed with Lubert-Adler Partners to purchase five properties for $230 million to begin the enterprise.

The properties in the Midwest and Southeast were acquired from Trinitas Ventures, an Indiana-based student housing company that owns and manages more than 6,300 student housing beds. A Trinitas spokesperson told Bloomberg that the closely held company determined it was time to sell some properties and expected to use the proceeds for future student-housing development projects.

Candlebrook’s new subsidiary, Letter 9, will manage the properties, comprised of more than 3,400 beds, located near five major universities. They are: The Dillon, with 635 beds, serving the University of Indiana in Bloomington, Ind.; The Tyler, with 675 beds, serving Indiana University-Purdue University Indiana in Indianapolis; The Blake, with 736 beds, serving Kennesaw State University in Kennesaw, Ga.; The Wyatt, with 699 beds, serving the University of Kentucky in Lexington, Ky.; and The James, with 690 beds, serving Virginia Commonwealth University in Richmond, Va.

The properties all feature amenities including fitness centers, pools, hot tubs, game rooms, basketball and volleyball courts and clubhouses.

“Over the past several years, Candlebrook has established a strong track-record of delivering high-quality housing options in the Northeast and Mid-Atlantic suburban areas, and we are excited to expand our operating model to the explosive student housing market in the South and Midwest,” Neil Rubler, president of Candlebrook, said in a release. “With the launch of Letter 9, Candlebrook is entering an important new phase that will give us the ability to grow our portfolio, expand our geographical reach, and deliver exceptional housing and management services to new demographics and communities across the country.”

Candlebrook has tapped managing director John DeRiggio to run Letter 9. DeRiggio was a former executive vice president at GMH Capital Partners and also served as president & CIO of the student housing division for the publicly traded GMH Communities Trust. He oversaw the acquisition, financing and operations of more than 60,000 student housing beds.

Rhonda Smith will be joining Letter 9 as senior vice president and director of operations. She had the same title at College Park Communities, where she oversaw the operation of properties housing more than 56,000 students at 54 major university markets.

“By leveraging Candlebrook’s significant experience in property management and the Letter 9 team’s deep experience in this unique market, we are well positioned to become a leading player in the student housing industry,” DeRiggi said in the release.

Many investors are entering the student housing space as college enrollment in the United States continues to grow. At least 60,000 beds are expected to be delivered during the 2014-2015 school year, according to the CBRE Capital Markets Multi-Housing 2014 Annual Market Report. The report estimates that about 78 percent of undergraduate students at large universities are seeking off-campus housing every school year.

Lubert-Adler, a Philadelphia-based real estate investment firm, has previously worked with Candlebrook. Earlier in the year, the companies acquired an apartment complex in King of Prussia, Pa., for $70 million and are spending $50 million to renovate and reposition it as high-end housing for young professionals and families.