Student Housing Fund to Target $150M in Distressed Assets

While the student housing sector is described by real estate experts as recession resistant, more than a few investors have fallen prey to the ills of the economy and credit market, and that’s where the Place/BV Student Housing Fund L.L.C. has decided to carve out an opportunity.The fund is setting aside approximately $50 million to acquire pre-distressed, distressed and foreclosed student housing properties. With leverage, the fund will have about $150 million to shop the market. Managed by BVP Managers L.LC., a joint venture involving Place Properties L.P. and Blue Vista Capital Management L.L.C., Place/BV’s new investment plan is designed to provide an alternative exit strategy for owners with properties on the brink of foreclosure or suffering other financial troubles. “Place Properties has been in student housing for better than a decade and at a certain point, all of a sudden, institutional investors started watching this market segment and everyone started flocking to it,” Stephen Mitchell, Place Properties vice president of acquisitions, told CPN. “But some paid too much for the properties and some weren’t good operators.” And proper operation is key in the student housing sector, according to many industry experts.. “Student housing is management intensive,” Daniel Hogan, director of research with debt and equity capital provider Red Capital Group, explained to CPN. “You have to know what you’re doing. There is a very narrow lease-up cycle dictated by the school year.” Whether they’re plagued by management problems or lending issues, student housing owners looking to jump ship are now very much on Place/BV’s radar. “There are a few transactions we looked into last year and we are re-approaching those sellers because of worsening conditions with those assets,” Mitchell said. “And we’re consistently hearing from brokers about bank-owned assets that soon will be coming to the market for disposition.” Although Place/BV has decided to allot a certain amount of money for the acquisition of troubled assets, the fund is still making traditional purchases. Just last month, Place/BV announced investments totaling $64 million in two developments serving the University of Arkansas Fayetteville and the University of Nevada at Las Vegas. Headquartered in Atlanta, Place Properties is one of the largest multi-family development and construction concerns in the country. It has developed over $800 million of student housing properties since 1996. Chicago-based Blue Vista Capital is a top national real estate investment management firm with more than $550 million in capital currently under management.