ISLA VISTA, CA-JP Morgan Alternative Fund and Education Realty Trust have closed on a joint venture $42.5-million purchase of the 100-unit, 437-bed Fontainebleu student housing complex, according to Transwestern Multi Housing Capital Advisors. The property, at 6525 El Colegio Rd., was sold by the Hammitt Family Trust.

According to Herb Chase and Curtis Palmer, managing directors of Transwestern MHCA who represented both the seller and the buyer, the Morgan-Education Realty joint venture plans to invest in a substantial renovation to upgrade and reposition the student housing complex. The complex includes two swimming pools, two clubhouse and social rooms, two game rooms and other amenities.

Chase says that the Fontainebleu represents "a true value-add" play for a variety of reasons, among them the expected growth at the University of California Santa Barbara. The current UCSB enrollment of 21,016 students is expected to increase to 23,000 students by 2015.

The university provides only 6,198 university-owned beds, and approximately 14,800 UCSB students need to find housing near the campus. These circumstances, along with the lack of land for development and the difficulty of obtaining entitlements, produce "an exceptionally tight market" in light of the barriers to entry in Santa Barbara, Chase adds.

The Fontainebleu was built in two phases during 1963 and 1967. It includes a main building comprising a three-story garden-style apartment building with 52 units and 257 beds, and an annex building that includes a two-story garden-style apartment building, located a few blocks away, with 48 units and 180 beds.

The two buildings provide tenants with 214 parking spaces of which 40 are subterranean parking. A 1.38-acre parking lot adjacent to Fontainebleu's main building provides "a potential development opportunity," Chase says.