JV Spending $130M on Michigan Student Housing

EAST LANSING, MI-A joint venture is wrapping up the purchase of five off-campus student housing apartments near Michigan State University in East Lansing and Central Michigan University in Mount Pleasant. The Pierce Co., based in San Diego, and the Fidelity Real Estate Group, a division of Fidelity Investments, bought the 3,516-unit properties for $130 million.

Included in the sale are four properties in East Lansing: the Village at Chandler Crossings II, the Club at Chandler Crossings and the Landings at Chandler Crossings, as well as closing expected on Chandler Crossings I in March. "The Village is owned in two phases," says Fred Pierce, chief executive officer of the self-named company. "The Phase I is pending our assumption of an existing conduit loan."

Also, the company bought the Village at Bluegrass in Mount Pleasant, 228 apartments with two-, three- and four-bedroom units. The Chandler properties consists of 852, fully furnished one-, two-, three- and four-bedroom units. Pierce's firm had entered into a memorandum of understanding with the City of East Lansing in August to become the master developer of East Village, a 35-acre, $500-million, mixed-use project that will have shops, restaurants, a hotel conference center, office space and new housing.

Pierce says the recent purchase is part of a $500-million national student housing acquisition program that the company will implement in the next three years, mostly properties in the Midwest and Texas. "We believe that the Midwest's university markets have solid fundamentals, but yet are not on the radar screen the way the growth markets are. Also, these are the trophy properties in these markets. Even if the local economy isn't doing well, these university markets are stable, and the properties are top-of-the-line," he says.

He says there's a growing national interest by investors into student housing. "There's a greater amount of institutional capital and investors than there are student housing operating companies so there's a real opportunity to outperform multifamily," Pierce says.