Arrimus Capital Acquires IA Luxury Student Housing

By Jeffrey Steele

Arrimus Capital has purchased a two-year-old luxury student housing community adjacent to Iowa State University in Ames, Iowa.

Stadium View is a 518-bed property featuring five four-story structures. The community was purchased for an undisclosed price from Ames, Ia.-based Haverkamp Properties, which had unveiled Phase I of the property in 2016 and Phase II last year.

With the purchase, Arrimus Capital has acquired four student housing properties in 12 months, growing its student housing portfolio’s value to approximately $204 million. 

Operational efficiencies

“The seller specializes in high-quality multifamily development in the area and doesn’t have extensive experience in student housing property management, leaving an opportunity to improve upon some operational efficiencies unique to student housing without expending significant capital,” Ryan Gahagan, Arrimus Capital partner, told MHN.

Arrimus calculates a 6.13 percent return on equity in year one, increasing to 7.99 percent by year 10.

Located at 1206 South Fourth St., the Class A property is near Jack Trice Stadium, home to the Big 12’s Iowa State Cyclones football team. Ninety-nine percent leased, the property features 197 units spread across one to four-bedroom floor plans. 

The property includes one-to-one bathroom-to-bedroom parity, full kitchens with granite countertops, furnished living rooms, in-unit washer-dryers and free high-speed Internet and cable service. Residents can also partake of myriad amenities, among them a fitness center, clubhouse, study lounge and fire pit. Stadium View provides easy access to the ISU campus and classrooms, as well as Hilton Coliseum, where the Cyclone men’s and women’s basketball teams play home games. Also, nearby are prominent shops and stores.

Robust enrollment growth

With its 36,000-student enrollment, Iowa State University is the largest university in the Hawkeye State. The institution has benefited from 40 percent enrollment growth during the past decade.

Industry market research firm AXIOMetrics’ University Report indicates market dynamics in Ames are robust. That finding is based on both a constrained supply of new housing and a projected enrollment growth of nearly 3,500 students by fall 2021.

“Stadium View meets our criteria as a well-located, institutional-quality student housing property adjacent to a major university with at least 20,000 students,” said Chris Lee, a partner with Arrimus Capital. “The property’s top-end amenities are designed to meet the needs of today’s college students, making this property highly desirable. The close proximity to campus combined with Iowa State’s sustained enrollment growth and projected future growth make Stadium View an outstanding addition to our portfolio.” 

Acquiring the property presented no downsides, Gahagan reported. “We had vetted numerous deals over the past few months searching for a core-plus deal that worked out of the gates, but still had a value-add component, as Stadium View does,” he said.

“There were three or four big players in the space competing alongside us in the best and final round of the bidding. We spoke with the sellers and conveyed our operational plans and projections for the property as well as our intention of a long-term hold. Our offer had a significant non-refundable deposit day one, which indicated our resoluteness to get the deal done at the terms agreed upon and effectively won us the deal.”