Project name
The Beacon (FULLY FUNDED)
Location at the Marietta Campus of KSU
The Beacon, Atlanta, Georgia, USA
Initiator
REALIANCE USA B.V.
Local partner
Category
Student housing – development of 455 student rooms in 157 apartments
Expected investment term
3.5 to 5.5 years
Exit strategy
Sale to an end investor
Total investment
US$ 37,371,429
Bank loan
US$ 24,291,429
Equity Freys Gin Road Housing Owner LP (Project LP)
Owner LP (Project LP): US$ 13,080,000
– The Beacon Capital LP US$ 9,000,000
– T2 Investments US$ 2,772,000
– Campus Realty Advisors US$ 1,308,000
Equity The Beacon Capital LP (Capital LP): US$9,150,000
– Participation in Freys Gin Housing Owner LP US$ 9,000,000
– Costs Capital LP US$ 150,000
Structure
Participation directly or through a separate LLC (for Ltd’s) in the Beacon Capital LP
Participation
From US$ 125,000 excl. 3% emission costs (total of 366 participants of US$ 25,000)
Forecast gross total return (before tax)
84.5% over 4.5 year
Projected gross return (ROI)
18.8% per year
Expected distribution (from Q4 2022)
On average 10.5% per year
Unique selling points
Kennesaw State University (KSU) in Kennesaw and Marietta (Northwest Atlanta) is a tier-2 university (ranked in the top 6% in the US) with 41,181 students. This makes it the second university in Georgia. In the Netherlands, the UvA in Amsterdam is the largest university in the Netherlands with 34,000 students. In recent years, KSU has grown 23.8% compared to 33,252 students in 2015. The designated growth location is the Marietta Campus, which has grown from 8,841 to 13,529 students (+ 53%) in the same period.
The development of 157 apartments with 455 student rooms with state-of-the-art amenities are within walking distance of the Marietta Campus as well as the necessary retail.
The complex has a mix of 1-, 2-, 3- and 4- bedroom apartments with spacious individual rooms and an attractive parking ratio of 1 car per bedroom.
The projected rent level of The Beacon is at the current level of purpose-built student complexes in Kennesaw and is lower than the lower quality housing on-campus. Partly based on the good experiences (realized IRR of 36% per year) of the nearby Campus Edge complex, as well as the limited availability of adequate student housing, the projected rent for The Beacon is realistic.
The area surrounding the university campus is almost fully developed and there are hardly any plots available for future development. These high barriers to enter prevent possible future oversupply.
The cap-rate based on the stabilized rent (3 years after completion) amounts to 7.6%, which reuslts in a good cash-on-cash return and an attractive sales profit (expected cap rate at sale is 6%).
In August and September 2020, the rezoning was implemented and the “site plan” was approved. A GMAX-contract and loan will also be available when the equity is funded. The full building permit will probably also be available at that time.
CRA and its managers have extensive experience in developing, acquiring and managing student housing and participate in the project partnership for US $1,308,000 (10%). REALIANCE is participating in the Capital LP for US$ 100,000 to US$ 200,000.
Investing in student housing is less sensitive to economic fluctuations, for example with the corona crisis. Usually during a recession, a study is chosen as an alternative, which maintains the demand for student housing during this period. In addition, it is expected that all universities will again provide full physical education (‘in-person classes’) from September this year because of the vaccination program.
For more information you can reach REALIANCE at +31 (0) 20 21 03 180 or invest@realiance.nl
