Vintage Student Housing Still a Big Hit

LOS ANGELES—A joint venture between Stuho and Cambridge Capital Advisors has purchased a six-property student-housing portfolio adjacent to USC for $39.1 million from an unnamed seller. The property is on the north side of campus and has 103 units, a total of 324 beds, with 100% occupancy. Although the properties were built between 1920s and 1980s, the portfolio received substantial interest from private investors, despite the ongoing class-A development in the area.   

“There has been a considerable amount of new construction at USC, mostly along the Figueroa corridor,” Ronald Harris, EVP of investments at Institutional Property Advisors, tells GlobeSt.com. “This product, which ranged in age from the 1920s to the 1980s, is extremely well located. It is literally adjacent to campus in an A-plus location. The rents are also a little lower because it is older product, and as a result, they lease up quickly and stay full.” Harris represented the buyer and the seller in the transaction along with his IPA colleagues, director Paul Darrow and associate director Michael DiSimone.

The seller was disposing of the asset to take advantage of the peak market conditions. Harris and his team widely marketed the property and received double-digit competitive offers from all private investors. There was no institutional interest in the deal. “There were a number of buyers extremely competitive on price. The buyers who purchased the property had an excellent reputation,” says Harris. “They own and manage several dozen buildings on or near campus, and that was very influential in the seller's decision to pick them.” The buyers will make an additional capital investment to renovate the property.

Among the new class-A construction in the area is the USC Village, which some believe will be a catalyst for the market. However, the development wasn't important to the interested buyers in this transaction, according to Harris and DiSimone. “On a personal level, I do think that it will be a catalyst for the area. It is going to revitalize that part of campus, and for the well-located properties on the north side of campus, it will bring a little bit of closure to the university area, so I do think it will be a catalyst for the area,” DiSimone tells GlobeSt.com. “I can tell you that there is a range of opinions as to the ultimate impact that it will have on other apartment buildings. There is some concern with class-A property as to how much competition it will have.”