Lauderhill Partners Acquires United Campus Housing Management

In its first acquisition since entering the hot student housing market, Campus Evolution Villages, a subsidiary of Lauderhill Partners, has acquired properties with a total of 1,762 beds from Gulfstream Capital Partners.

 By Gail Kalinoski, Contributing Editor

In its first acquisition since entering the hot student housing market, Campus Evolution Villages L.L.C., a subsidiary of Lauderhill Partners L.L.C., has acquired properties with a total of 1,762 beds for $46.5 million from Gulfstream Capital Partners.

Known as the Campus Core portfolio, the properties are: a 120-unit, 360-bed community in Warrensburg, Mo., that serves students of the adjacent University of Central Missouri; a 120-unit, 432-bed community that serves students from Louisiana Tech University and Grambling State University in Ruston, La.; a 156-unit, 480-bed community that serves students of the University of South Carolina Upstate in Spartanburg, S.C.; and a 140-unit, 490-bed community serving students at Murray State University in Murray, Ky. Each of the assets has been branded as a Campus Evolution Villages property.

The properties were all built in 2008 and are in walking distance to their campuses. The communities have a combination of two-bedroom, three-bedroom and four-bedroom units with resort-style amenities, including 24-hour computer labs, fitness centers and pools.

“They are in very good condition and do not need any capital improvements,” Andrew Stark, CEO of Campus Evolution Villages, told Commercial Property Executive.

Stark said the acquisitions were partly funded by a “very significant equity” investment from Barry Reichmann and associates of Reichmann International Development Corp., a Toronto-based real estate holding company with properties in the United States, Canada, Mexico and the United Kingdom. Reichmann has been active for years in the seniors housing market in the U.S. and Canada, but this is the family’s first investment in the student housing market, according to Stark.

Lauderhill Partners is a diversified merchant banking firm headquartered in New York City that was launched in June. Stark and his partner Evan Denner launched the firm with the intention of focusing on the student housing business. Stark said it then formed Campus Evolution L.L.C., the overall student housing company, and Campus Evolution Villages, L.L.C., which owns and manages the student housing assets. The companies are a joint venture between Lauderhill and Waterbridge Capital L.L.C. Stark did not say how much Waterbridge Capital invested in the Campus Evolution companies.

Stark, a principal and executive managing director of Lauderhill Partners serves as CEO of Campus Evolution Villages and COO of Campus Evolution. Denner, a Lauderhill principal, is CEO of Campus Evolution and Chief Investment Officer of Campus Evolution Village. He had been CIO of merchant banking at Cantor Fitzgerald before leaving to form Lauderhill. Stark had served as executive managing director at Cantor Real Estate before he stepped down to launch Lauderhill with Denner.

Lauderhill acquired United Campus Housing Management Group in June and folded it into Campus Evolution Villages. The amount paid to acquire the management company was not disclosed. Mark Harries, who had been CEO of UCHMG, is now chairman of Campus Evolution Villages. By combining the new assets with the properties UCHMG was already running, the new company now manages more than 7,500 beds across the U.S. Harries has a long career in student housing, including co-founding and serving as principal of Asset Campus Housing, and working in top management positions at other well-known student housing firms. Stark met Harries while Harries was at American Campus Communities. That firm became the first in the student housing sector to go public on a U.S. stock exchange.

Denner described the acquisition of UCHMG as a pivotal event for Lauderhill and Campus Evolution.

“Like Mark, Andrew was an early pioneer in the student housing business. Their combined knowledge and insight into the sector is profound,” Denner said.

Stark said the firm is ready to close on another student housing purchase, possibly by the end of this year. He said 2013 will be an active year for Campus Evolution Villages.

“We expect to be in a significant acquisition growth period throughout the year,” Stark said.

He said they were “very selective” in targeting student housing assets for acquisition with the top two criteria being located near growth universities and in markets that “are not heavily supplied with other privatized student housing.”

The sector is growing rapidly. In 2011, there were 97 transactions up from 71 in 2010 and 32 in 2009, according to the Student Housing Research Report for 2011 from the National Student Housing Group at Colliers International. That group, headed by top student housing brokers Dorothy Joffe Jackman and Travis Prince, was formed in January 2012 to focus on the student housing niche and grow Collier’s business in it.

The Capital Markets Multi-Housing 2012 Annual Market by CBRE noted that “national student housing pricing trends have increased 10 percent over 2010 and have surpassed their 2007 peak.” The report also stated there was an increase in REIT buyers and developer sellers in the fourth quarter of 2011.

“This variability in property trades is a good sign of investor confidence in the asset class and a return to a more diverse investor pool,” the CBRE report added.

CBRE predicts private student housing to keep increasing along with the rise in student enrollment. Almost all of the student rental demand is from the so-called Generation Y, those aged 15 to 32 who are making up 25 percent of the current U.S. population. The market is also expected to be strong because universities are finding it harder to fund on-campus housing to meet the demand. Other experts say the tough economy has lead more young people to enroll in college and stay longer because of the soft job market.

Stark said he still thinks there is “significant growth in the sector.”

“There is a true lack of supply for most of the markets in this country,” he said, adding that private companies will take up more of the responsibility for providing the student housing. “The private sector has the ability to move quickly and be able to spend the dollars.”

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