Nelson Brothers Element is an investment into a Class A/B student housing facility that has a total of 288 units and 792 beds. The property was built in 2003/2004 and renovated in 2016. The property is marketed to students attending Sacramento State University which is located in Sacramento, California.
- Year 1 Cash Flow 6.00%
- Initial Occupancy 99.20%
- Est. Time Horizon None
- Yr 1. Cap Rate to Investors 5.32%
- Investor Purchase Price $91,497,679
- Total Offering Size $37,997,679
The loan is for a total of $53,225,000 and is from CapitalOne Multifamily Finance, LLC under the Fannie Mae DUS program. The term is for a total of 10 years with the first 6 years being interest only. When amortization begins it is on a 30 year schedule. The interest rate is fixed at 4.18%.
- Yr. 1 DSCR 2.1
- Loan-to-Value 58.47%
- Hold Period DSCR 1.87
The population in the area is growing and the population numbers in the area are strong.
The sponsor acquisition fee is near $2 Million.
Rent growth is projected by the appraiser to be 3% which is less than the sponsors projection of 2.25%.
There is undeveloped land nearby the property that can be made into a competing property.
The students at Cal State Sacramento are generally commuters and therefore the need for student housing is limited as most students choose to live at home or within the region.
The cap rate to investors is low (sub-4%).
About Nelson Brothers
According to the sponsor's website: "Since its inception in 2007, Nelson Brothers has acquired and managed over $240 million in assets through the acquisition of 19 student housing properties and 3 assisted living properties across 9 states. Nelson Brothers focuses on targeted growth opportunities and value-added investments for its clients through capital improvements, cost efficiency, and revenue maximization. Its entities include Nelson Brothers Professional Real Estate LLC, and Nelson Brothers Property Management Inc."