Project name
The Edge San Marcos (FULLY FUNDED)
Location
San Marcos, Texas, USA
Initiator
REALIANCE USA B.V.
Local partner
Campus Realty Advisors (CRA)
Category
Existing real estate student housing | 173 units, 553 student beds
Expected investment term
Four years
Exit strategy
Sale to an investor
Total investment
US$ 36.450.000
Bank loan
US$ 23.692.500
Equity Project LP
US$ 12.757.500
Equity in REALIANCE entities
US$ 9.075.000
Structure
Participation directly or possibly through a separate LLC in different REALIANCE Capital LP’s
Projected gross return
60.8 % % over 4 years
Projected gross return
15.2% per annum (ROI)
Unique selling points
The investment in The Edge San Marcos offers relations the opportunity to invest together with experienced local partners in a value-add proposition in existing US purpose-built student housing. With the last two projects with the same partners (The Gates at Valdosta and The Beacon) an annual gross return of 29% has been realized. The student housing portfolio performs operationally well and valuations are relatively strong.
An investment in student housing is less cyclical because this category is less dependent of economic developments. A low TV/LTC and a relatively low acquisition price in combination with conservative assumptions mitigate risk. Besides that, REALIANCE investors through different entities have a majority share in the project entity and hold the largest ownership share in the real estate.
Both CRA and T2 Investments participate in the project entity for a total share of 30% of the equity. The remainder is exclusively offered to REALIANCE-participants.
Concrete unique selling point for this investment proposition are:
- Texas State University educates an increasing amount of students (+5% last year) and has planned substantial investments (US$ 500 mio.) for further growth as well as to increase the universities education level.
- The complex is less than 1 mile from the university campus and has a bus stop in front of the clubhouse where the Bobcat Shuttle of the university stops every 15 minutes.
- The complex has different room types from 1-bed/1-bath to 4-bed/4-baths, but also the more popular and affordable type 4-beds/2-baths. Only one other project (sister project of REALIANCE The Junction) offers this as well. • The occupancy rate at 94% is relatively high. As of November last year, the pre-lease for next school year (starting in September 2025) is already 26%.
- There is a shortage in student housing of over 10.000 beds in the market.
- Due to an attractive acquisition price – because of an unfavorable finance situation at the seller due to a maturing loan – it is still possible to offer relatively affordable rents, even after the substantial renovation.
- The lender of sister project The Junction (Byline Bank) has provided a term sheet in which the conditions are the same as the assumptions in the model.
For more information you can reach REALIANCE at +31 (0) 20 21 03 180 or invest@realiance.nl.
