Campus Advantage Sells 42North at University of South Florida
Since acquiring the 420-bed community 36 months ago, the company has pursued a value-add investment strategy that has grown grew NOI by nearly 36 percent.
Campus Advantage has closed on the sale of a 420-bed student housing property, 42North, in Tampa, Fla. The community serves the needs of students at the University of South Florida.
Campus Advantage acquired the property three years ago, then initiated a value-add investment strategy, injecting capital to remedy deferred maintenance issues. That program, along with Campus Advantage’s operations expertise and an integrated marketing approach provided by partner and industry specialist Catalyst, led to an enhancement of the property’s attractiveness in the market.
Since acquiring 42North 36 months ago, Campus Advantage grew net operating income (NOI) by approximately 35.8 percent, or 5.9 percent annually compounded. This was the second successful property disposition for Campus Advantage in the past month. It follows the sale last month of On50, also located near the University of South Florida.
The two properties were acquired three years ago, along with another in Milwaukee. The two Florida properties were marketed together by Campus Advantage, but ended up being acquired by two different purchasers.
“This property was bought in March 2014, with a short-term business plan to inject capital into an older property to increase its value in the USF market,” Campus Advantage director of acquisitions Josh Greenleaf told MHN. “We spent a fair amount of money improving the IT infrastructure, installed new fiber lines and wireless Internet infrastructure and did a rebuild of the cable infrastructure. We gave the exterior of the building fresh paint, added all new appliances in units and all new bedroom furniture.”
The biggest challenge Campus Advantage faced was timing. Earlier phases of the transaction took place in the fall of 2016, with the first and final round of offers from buyers book-ending the presidential election. “The subsequent upward move in interest rates created uncertainty on the part of buyers, which likely created downward pressure on final pricing,” Greenleaf recalled.
“We thought that this was likely a short-term reaction to the election, so we extended the timing of final offers to let the debt market stabilize and reduce the uncertainty for buyers. It was marketed as a package with the On50 property in the same market; we ultimately split them up to two buyers to maximize pricing. With that uncertainty, people were a little more comfortable with doing one deal rather than both.”
Austin, Texas-based Campus Advantage reported it is recycling investment capital gains to support opportunities in tier one markets.
“Because of our consistency in maintaining and operating each of our properties to the highest standard, we are able to create an environment that our residents love, resulting in maximum occupancy, rental rate growth and returning resident ratios,” Campus Advantage President & CEO Mike Peter said.
“Clients know that when you partner with us, you’ll get a great return on investment, and we look forward to continuing to provide our proven, value-add expertise to the benefit of future clients and partners.”