Stadium View Student Housing DST
Arrimus Capital Advisors
Arrimus Capital Advisors has released their first DST. This investment is a Student Housing apartment complex located in Ames, Iowa. The property is intended for students at Iowa State University as an off-campus housing option. The property consists of 197 units and has a total of 518 beds. The property was built in 2016.
- Year 1 Cash Flow 6.13%
- Initial Occupancy 89.60%
- Est. Time Horizon None
- Yr 1. Cap Rate to Investors 5.36%
- Investor Purchase Price $44,010,000
- Total Offering Size $18,790,000
The loan totals $25,220,000 and is from Walker & Dunlop LLC. The loan has a 10 year term and interest only payments for the entire term. The loan is under the Fannie Mae DUE program and is non-recourse to the investors. The interest rate is fixed at 3.95%.
- Yr. 1 DSCR 2.31
- Loan-to-Value 57.31%
- Hold Period DSCR 2.81
Enrollment at Iowa State University was an all time high in Fall of 2016. It was the second highest ever in Fall 2017 which was 1% below the Fall 2016 mark.
The Debt Service Coverage Rate is projected to average 2.8x during the investment hold period. This allows Arrimus to pay a higher cash flow.
Arrimus is planning on increasing their Operating Expenses at a higher percentage than their Effective Gross Rent. This is considered conservative underwriting.
The location of the student housing facility allows for excellent access to campus. As an off-campus option, the proximity (0.5 Miles) to the center of campus and athletic facilities allows for convenience for students living at the facility.
The rents at this property are above average market rents in the 3 and 4 bedroom units. However, as the newest property in the market and having a very favorable location, higher rents can be expected.
The Cap Rate at the property is low (5.36%).
Due to the loan being interest only, the property must be sold for a price higher than original purchase in order to return original capital back to investors.
Top line rent growth assumptions are slightly aggressive, however as stated before the sponsor is projecting Operating Expenses to increase at a higher rate.
Enrollment in 2017 was less than 2016, however at only 1% below 2016, it still represents a large enrollment and the second largest in ISU history.
About Arrimus Capital Advisors
According to the sponsor's website: "ARRIMUS CAPITAL is a Southern California based real estate private equity firm. We pursue value-add and opportunistic investments in the western US and Texas. Our platform targets multifamily, mixed-use, business and healthcare properties to acquire, reposition and develop. Our uniquely experienced management team has broad investment expertise, deep industry relationships to source compelling opportunities, and a proven history of delivering above market risk-adjusted returns for our investors, partners and clients."