SAN ANGELO, TX-A private equity firm in New York City beat out nine bids to win ownership rights to the 120-unit Angelo Place, a student housing complex that serves Angelo State University. The five-year-old property was a distressed asset sold by the bank that had lent the developer funds in 2007 to build the property.

Chris Epp of Apartment Realty Advisors' National Student Housing team kept mum on the seller of the asset at 1426 Western Court, as well as the buyer. Tom Green County's tax appraisal website lists Special Services Asset Management Co., c/o Bank of America in Elmhurst, IL as the servicer, while indicating BVP San Angelo Place LP as the developer. BVP is shorthand for Place Properties LP and Blue Vista Capital Management LLC, which co-invested in a fund that built the class B student housing property in 2006.

All was not positive with the property, however. "This was an REO deal, with the previous owner having a greater amount of money in the property than what it ended up being worth," noted Epp, who collaborated with ARA Student Housing team colleagues Chris Bancroft and Meredith Wolff along with ARA Texas Secondary Markets broker Kelly Witherspoon to represent the seller. "It was a vestige of the good old days; it was built in 2007, when money was easy to come by and cheap."

There is, however, nothing cheap about Angelo Place. "It's a well-located asset and a nice one. It was probably introduced to the market a little too soon," Epp tells GlobeSt.com. As the developer couldn't repay the non-recourse loan, it was foreclosed upon by Bank of America.

The happy ending to this story is that the property attracted a great deal of attention during its five-week marketing period – the buyer put hard money down, which ultimately made the decision easier. "It's been a long time since we've seen guys being willing to put hard money down," Epp observes. "The buyer was willing to wave contingencies and put earnest money at risk." Furthermore, Epp noted, the buyer was able to close sooner than the original sales date; another point in its favor.

Epp notes that he isn't surprised at the interest in the property – or the fact that the earnest money was flowing. "This is a good prism in which to look at the distressed student housing market," he explains. "There isn't a whole lot out there. Such deals come along maybe once every four or five years, based on the real estate cycle. When such product does come along, buyers get aggressive." Adding to the appeal of this particular property is that Angelo State is part of the Texas Tech University system – a system that's experiencing its share of student population growth.  As such, Epp believes that the student enrollment growth at the university should bode well for Angelo Place, which is currently 90% leased. "As the larger institutions are at capacity, these secondary schools are becoming popular; more students are attending them," Epp says.

Another interesting factor about his particular transaction is that this wasn't a Fannie Mae or Freddie Mac-funded buy, but the buyer had some pretty good debt options available. "The lending community came to the table on this one," Epp comments. "There's definitely a window here in which you're seeing some conduits are winning in markets that Freddie and Fannie won't be contenders in."