Scion Buys Two Student Properties for $23M

"Between University of Illinois and the local community college, there's probably 60,000 students, so it's a big school and there's plenty of demand," Robert D. Bronstein, president of Scion, tells GlobeSt.com. "In terms of long-term stability, University of Illinois obviously has the prestige of being the flagship school in our state, but we never came across the right property until now. It's distressed, so it was really attractive pricing, and we're not afraid of occupancy challenges."

Scion completed the deal with assumed debt financing and $5 million in private equity from principals and investors. The company purchased the communities, located a mile north of University of Illinois' campus, from a court-appointed receiver. Bronstein says historically, the properties, formerly known as Campus Connection and Lincoln View, have had an occupancy rate above 90%, but in the past year that dropped to about 50%.

"The market there is a little bit over-built so now it's absorbing," he says. "Also, the former owner recognized they were going to lose the property to the lender and didn't try as hard. The properties have deferred maintenance and need a refreshing."

The communities offer amenities including in-unit laundry, athletic courts, full workout facilities and a 14,000 square-foot clubhouse containing a junior-Olympic size indoor swimming pool. Scion intends to complete needed maintenance and put new finishes on the properties, as well as get ahead by a couple of years on capital replacements, including furniture and mechanical components, and rebrand the communities with new signage, Bronstein says. Scion will maintain the previous owner's rental rates, starting at $400 a person, or $1,600 for a four-bedroom, four-bath unit. "They'll be getting more value for the price," Bronstein says.