INVESTMENT SALES those floodgates with off-market opportuni-ties and quietly marketed offerings. “There seem to be more pocket listings as sellers try to gauge the market value for their properties without broadly marketing them,” says Rogers. “This seems to have decreased, though, as students have moved in and given the industry more clarity.” “Many sellers that would have broadly marketed an asset for a 2020 sale are still ac-SEAN LYONS tively trying to thread the needle and sell in Partner, an off-market fashion,” says Stewart Hayes, Triad Real Estate director at JLL Capital Markets. “If a deal is Partners not reached, we anticipate these will be likely candidates to hit the broader market in 2021 when we have more collections data for the 2020-2021 academic year and there is more clarity in the debt capital markets.” Much of what has transacted in the second and third quarters was done off-market. Since the student housing investment sales commu-nity is fairly small, most brokers know the criteria of buyers, which buyers are looking, and which ones are likely to be able to close a deal. “We are working on a number of off-market deals at the moment and have closed a handful of them during the pandemic,” says Lyons. “Owners have been telling us, ‘if you can get to this number, we would consider a sale.’ We do our analysis and if we believe we can get close, we reach out to the most logical buyer for the deal profile and see if they are interested. We are finding the deal has to have a fairly specific profile right now in order for these groups to warrant a closer look.” Way off-market, many owners report that discussions are often held between two owners. “There is a deep pipeline of potential acquisitions now, whether through direct discussions or being marketed by investment sales teams,” says William Talbot, chief investment officer and executive vice president of American Campus Communities. What’s Transacting? While getting a seller to list may be one holdup in the market, the other has been buyers’ ability to close. Many domestic private equity funds tightened their purse strings this spring and summer, waiting for fall to determine what they would do. The government-sponsored entities (GSEs), Fannie Mae and Freddie Mac, also seemingly held off on further lending in the space pending the outcome this fall. Since that picture is in the process of clearing, many debt sources have started to whet their appetite for new acquisitions, and deals have started to move to market, say investment sales professionals. At the same time, buyers have narrowed their focus, with the pandemic giving them fur-ther insight into what would make a good investment. Many investors are reporting that assets with a very strong potential to transact will be the first to hit the market this fall. That potential includes properties at both ends of the spec-trum to attract core and value-add buyers. “Investor demand remains high, albeit their criteria has tightened,” says Katz. “Distance to campus and quality of the university have become even more important than in the past. Assets pedestrian to Division I schools con-tinue to generate the most interest.” “What is coming to market in the fourth quarter includes a mixture of assets with oc-cupancies below 90 percent as well as stabi-FRED PIERCE lized assets at 95 percent-plus occupied,” says President and CEO, Pierce. “There are also Tier 1 assets as well as Pierce Education Tier 2 and 3 properties. In terms of the depth Properties of interest, there seems to be a flight to quality, 46 September/October 2020 StudentHousingBusiness.com NEW LISTING Capstone Real Estate Investments Portfolio • 11 Pedestrian Properties • Uniquely Differentiated With An Average of 1.5 Beds Per Unit • 2,600 Units / 4,000 Beds •Average Less Than a Quarter-mile to Campus For more information on this listing, contact TSB Realty today info@tsbrealty.com | 610.905.1647 | tsbrealty.com
Student Housing Business September/October 2020: Page 46
