COMPANY PROFILE In August 2020, Dan Dooley joined the com-pany from Heitman to focus on new invest-ments. With his institutional background, Dooley is charged with heading Coastal Ridge’s acquisi-tions platform. “We look at properties with the same disci-plined mindset larger institutions do,” he says. “Our advantage is that we are able to lean on our deep operational experience to react quickly and decisively. ” With regard to acquisitions, Coastal Ridge has kept its options open. While cap rates have tightened on conventional multifamily, they have stayed similar to pre-COVID levels on student housing assets. “We keep a close eye on both markets to find opportunities,” says Dooley. “We are hopeful that 2021 will provide more opportunities to acquire than the past year.” While the company has been an active acquirer since 2013, 2020 was an anomaly for Coastal Ridge; it was the first year the company did not acquire a student housing property since its foun-dation. The company did, however, acquire $370 million worth of conventional multifamily prop-erties in 2020 and is putting student acquisitions back in the rotation early in 2021 — Coastal Ridge already has one student asset under contract. Coastal Ridge’s portfolio performed well throughout 2020. The company collected nearly 99 percent of rents for the year. Its pre-leasing for fall 2020, and so far for fall 2021, is on par with previous years. Its occupancy rates have also been stable. “From a fundamental perspective, our port-folio performed,” says Patrick McBride, Coastal Ridge’s managing partner and one of three co-founders. “I think it was a case study for why student housing deserves a place in a well-diver-sified real estate portfolio.” Coastal Ridge’s same-store pre-leasing is ahead by 1 percent as of March 2021 from March 2020. The company’s properties have averaged 93 per-cent occupancy over the past year. Located across the street from the Notre Dame campus in South Bend, Indiana, Overlook at Notre Dame was built with grad students and faculty in mind, featuring studios as well as a mix of one-and two-bedroom units. “Heading into the home stretch of the leasing season with these strong fundamentals, we’re very optimistic about fall 2021,” says Texler. Coastal Ridge has expended a lot of effort in the past year to build its third-party management platform. As a firm that has traditionally focused on the value-add space, the company works with individual and institutional owners who have assets similar to those it has turned around in the past. Coastal Ridge has also focused its third-party management efforts on assets that are op-erationally challenged. The company is currently managing a total of 17,000 beds — approximately 4,000 of which are third-party managed. It ex-pects to add to its third-party management port-folio in the near future, as it is in negotiations with several owners, according to Texler. “From day one, we have been a student hous-ing investor who has been focused on building value within our assets,” says Texler. “In a sense, that is all that we know. Whether it is a third-party management assignment or a new joint venture partnership, we manage the property precisely the same way. Our focus is on investment-centric value creation: value for owners and investors as well as the residents and communities.” The company continues to add value to its portfolio even after initial acquisition, through accretive operational and management changes. Texler estimates that about 15 percent of the com-pany’s portfolio was at one time under significant renovation. That’s in addition to the day-to-day repairs, maintenance and planned replacements that occur to keep all properties in top condition. Coastal Ridge looks at upgrades on an ongoing basis each year so that its properties are competi-tive in the marketplace. “We want to understand what residents truly value before we renovate,” says Texler. “We have found that to be different market-by-market. In a number of instances, our value-add adjustments that we used to make have evolved over time with shifting resident desires.” While Coastal Ridge would like to acquire more value-add prop-erties, that sub-sector of student housing has been extremely com-petitive over the past few years, especially in the types of top uni-PATRICK MCBRIDE Managing Partner, versity markets where Coastal Ridge Coastal Ridge prefers to acquire. “Value-add opportu-nities have been very thin the past 24 months,” says Dooley. “We would love to have more ex-posure to this strategy, but we have to be diligent in our underwriting and there hasn’t been much that has made sense from a risk-adjusted return basis.” To fuel its growth, Coastal Ridge continues to look for strong employees inside the industry and outside. “Our chief requirement is that they be willing to hustle,” says Texler. “You have to have very intelligent people with an exceptional work ethic; the field requires a high level of aptitude in each market.” The company’s goal for 2021? Acquire $1 bil-lion in new conventional multifamily and student housing assets and further build its third-party management portfolio. And Coastal Ridge is well on its way as of March with over $300 million of that target acquisition volume already identified. “We are looking to acquire a handful of proper-ties across the risk spectrum,” says Texler. “We will be opportunistic in trying to identify the right assets with the right reward potential.” SHB March/April 2021 47 Arlington Cottages and Townhomes near the LSU campus in Baton Rouge is 95 percent pre-leased for fall 2021. StudentHousingBusiness.com
Student Housing Business March/April 2021: Page 47
