NB Stadium View
Nelson Brothers
Investment Highlights
Overview
Nelson Brothers Stadium View is an investment into a Class A student housing apartment complex in Bozeman, Montana. The property is marketed to students at Montana State University. The property consists of a total of 499 beds across 139 units. The property was built in 2015.
- Year 1 Cash Flow 7.00%
- Initial Occupancy 99.40%
- Est. Time Horizon None
- Yr 1. Cap Rate to Investors 5.96%
- Investor Purchase Price $47,742,335
- Total Offering Size $19,623,335
Loan Information
The total loan is $28,145,000 and is from Fannie Mae. The term is for a total of 10 years with the first 3 years being interest only. When amortization begins it will be based on a 30 year schedule. The interest rate is fixed at a rate of 3.88%.
- Yr. 1 DSCR 2.59
- Loan-to-Value 58.90%
- Hold Period DSCR 2.09
Key Benefits
The university has created a focused effort on increasing enrollment at the university. They have increased enrollment over 16% since 2010.
As of 2013 the university enrollment had surpassed the projections for 2014 enrollment and this trend is projected to continue.
The on campus housing options allow for only 3,532 students to reside on campus. This represents a total of 22.5% of their current enrollment. Due to the low number of students that can live on campus, there is an opportunity for off-campus housing to capitalize.
The property was built in 2015 and is new construction. This decreases the likelihood for capital expenditures to be required at the property.
Key Risks
The sponsor is using aggressive occupancy assumptions. Their ProForma states they will be 100% occupied during the hold term.
The rent growth is assumed to be 3% each year of the hold term which is aggressive for the local area.
The local area is not infill and there is ample land that may be developed into competing properties.
There is a newly built student housing facility that is planned to be open in Fall of 2016.
The population in the area is boosted by the student population. In the 5-mile radius of the subject, students account for 31% of the total occupancy in the area.
The sponsor and appraiser have different projections as far as year 1 NOI. The difference is 14.52% and this can be attributed to the sponsor projecting Operating Expenses to be 26% less than what the appraiser is projecting.
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."