Student Housing Syndication
Creating Value Through Active Operations
A syndication of real estate investors purchased a Class B 174-unit student housing asset in close proximity to a major university in the Southwest. The property was scheduled to complete a $2.4M, 15-month renovation with delivery of units in June, 2020. Renovation delays, uncertainty of in-class instruction at the university and other complications due to the Covid-19 pandemic significantly impacted the property’s lease-up plan. Expected occupancy for August, 2020 was 92% though the management team was only able to achieve 32% occupancy in time for the academic year start.
Solution
Indigo performed an extensive evaluation of the management team and determined that a change would be beneficial. We worked with the client to establish criteria for candidates and vetted new management companies by conducting secret shops, completing interviews, and leveling bids. The teams were ultimately transitioned through a deliberate process that minimized further disruption to the property’s stability and reputation.
Indigo deployed a proactive lease-up strategy that balanced occupancy and rents to maximize financial performance. A marketing and social media plan was developed that included targeted advertising, updates to property website and social media platforms, plus any necessary reputation management. The existing staffing model was reviewed with a focus on critical lease-up goals, resident satisfaction, and service. Indigo’s experience in providing customized and accurate monthly accounting reports, reforecasts and annual budgets provided owners with reliable financial packages. Within two months of the management team transition, the property occupancy had risen to 79%, and income began trending in the right direction at 22% over the current year budget projections.
By 2nd quarter of 2021, the property had stabilized leading to several unsolicited offers from buyers. Indigo participated in the sale of the asset which occurred later that year at returns that far exceeded investor expectations. The new ownership group retained Indigo to provide on-going asset management given its proven track record with the property.
“I had to tell you how appreciative I am to have Indigo on the case with the property. It may have been my best night of sleep in months. I realize that there's a lot of work ahead, but I finally have confidence that we've got a top-notch driver at the wheel.”
David G., General Partner