Collegiate Management Launches Property Recovery Division as Student Housing Sector Faces Increasing Woes Due to Downturn
- Mar 25, 2009
By Anuradha Kher, Online News EditorIrving, Texas–To tackle bankruptcy, foreclosures and other issues the student housing sector is facing as a fallout of the recession, Collegiate Management Group LLC has formed Collegiate Management Group Property Recovery Division, designed to provide owners of struggling student housing properties with turnaround management services. The division will provide operational and market consulting, property management, repositioning and re-branding, and due diligence.“We will continue to see troubled student housing assets in the future,” Christina Aclin director of business development at Collegiate Management Group, tells MHN. “Student housing has been in its own bubble for a while now, but we are starting to see problems. We want to help properties before they are faced with bankruptcy and foreclosures.”The problem, according to Aclin is that a lot of markets are saturated with student housing. In addition, an increasing number of builders from the industrial, office and multifamily space, are coming into the student housing sector as they look for better areas to invest in. “This sector is going to see over growth in the coming years,” Cole Heard, senior vice president/division director of management at Collegiate Management Group, tells MHN.Many owners and banks have been approaching Collegiate Management Group in recent months looking for ways to turn around troubled assets by increasing collections, attracting new residents, and increasing or maintaining rental rates and revenue. But these are not new problems. “Many properties were struggling before the economic downturn; however, the situation is now dire. We believe many of the properties have lost sight of basic operational functions. As a result, delinquency rates are up and residents are no longer connected to the community,” says Heard. They are also not going to disappear once the economy turns around, she adds“I don’t know if we will ever see times like we did 18 months prior to the downturn. Those price points are no longer acceptable,” explains Heard. “In fact, many of these properties are in distress because clients can’t afford the price point anymore.” Collegiate Management Group, which plans to help such properties become leaner and adapt to the shift in client’s needs, has turned around two properties so far in 2009. The properties were struggling with high delinquencies and low pre-lease occupancies. Collegiate Management Group decreased bad debt at one property from 24 percent of revenue per month to less than .05 percent in sixty days. At the other property, Collegiate implemented a renewal and marketing program, an open communication with the university and effective residential programming. The struggling property was 42 percent occupied when Collegiate took over and in two months, Collegiate pre-leased the property to 82 percent for the Fall 2009 semester. The group is also offering receivership services, capital expenditure and facility planning, staff training and the “Fresh Living” residence life program.