Interview with Chance Partners’ Judd Bobilin

Judd Bobilin explains the strategy behind Chance Partners' infill student housing.

Judd Bobilin started Chance Partners in 2009 to focus on the development of in-town, walkable student housing communities throughout the Southeast. Headquartered in Atlanta, Chance Partners, LLC has grown into a fully integrated real estate firm that also specializes in multifamily, retail and storage. Chance Partners provides its student residents with boutique touches that are designed to instill brand loyalty during the college residence experience and beyond. Today, the developer has a growing portfolio that includes multiple apartment communities at Florida State University (FSU) in Tallahassee’s Southgate District.

This off-campus housing offers FSU students with spacious living rooms, bedrooms with private baths, huge walk-out balconies and rooftop terraces. But the walkable locations are the number-one amenity. Bobilin, president of Chance Partners, talks to MHN about how Chance Partners conducts market research, the financing landscape and more.

MHN: What are you working on right now?

Bobilin: In April, we announced the start of construction on more than 100 beds at Florida State University through the development of two new communities—Paces and Vue—and a second phase of the successful Avenues community. Located less than two blocks from the FSU campus in Tallahassee’s burgeoning Southgate District, the communities will build off the success of our award-winning Avenues I and Elements communities, which were fully leased prior to the completion of construction in fall 2010 and are already 100 percent pre-leased for fall 2011.

Based on our success with Avenues I and Elements and the continued enrollment growth of Florida State University, we believe that offering high-quality, walkable housing communities will continue to remain in high demand for the foreseeable future.

MHN: When we first met a few years ago you were developing condos.

Bobilin: Yes, I was the chief development officer at Novare, and we developed over 6,500 residential units mostly in the Southeast and over as far as Austin. We also had 250,000 sq. ft. of retail, so we have some great understanding of residential infill and also infill retail. As the market starts to come up with more financing options, we would be interested in developing market-rate apartments, but we have zero interest in doing any garden apartments that are [more than] one or two miles away either from campus or the city center.

MHN: How did you come up with the name Chance Partners for your new company?

Bobilin: I get that question a lot. It’s certainly a conversation piece, and it requires a two-fold answer. Chance [can be defined as] a statistical concept based upon probabilities and expectations. We try to base all of our decisions upon statistical studies, and we also look at the probabilities and expectations of each project. We like high-probability opportunities that have reasonable or fair expectations—so the probabilities are there. But the concept of chance is also based upon serendipity, and that is something I firmly believe in—serendipitous interactions.

MHN: Tell us about how you apply statistics to your student housing market research.

Bobilin: We do significant analysis of enrollment. That’s important, but it’s not the only variable. We also look at the growth of the school and at the finances of the school. We have to dig around a lot on the state Websites to see what’s going on. We look at how many people live off campus or away from the city center. We spend a lot of time trying to really understand those demographics and those enrollment numbers and where people live off campus. There are a lot of other sub-variables such as whether they drive or use shuttle services, and how many parking spaces are available in and around those areas. This helps us make determinations about whether the locations we’re targeting are going to have the demand related to student housing or the infill housing we’re trying to build.

As part of our due diligence process, we study the zoning aspects of what’s going on in that community. We meet with the city officials, and we try to partner with those communities. We may have different ideas on how we go about things, but at the end of the day if we’re going to be understood in that community and be socially responsible, we’ve got to understand where that community is going.

MHN: It sounds like you’re focusing exclusively on student housing now.

Bobilin: I wouldn’t say it’s our exclusive focus. But right now, from a financing perspective, student housing is certainly a viable product. Our leases are guaranteed by the parents. The banks are looking at the guarantee of the parents who are effectively supporting their child or children in school. Banks feel more comfortable financing projects like that.

MHN: In terms of your student housing business, are you merchant builders or building to own and manage?

Bobilin: The fundamental precept of our business plan is that we’re looking for properties that we won’t mind holding for the next 20 years—not that we necessarily will, but I wouldn’t want to base our business plan on a merchant-build concept. I think that’s a somewhat failed model, especially when you take into consideration social responsibility to the community where you’re building. We’re interested in making sure that those communities are becoming alive, which is why we focus on infill.

Location is the single biggest competitive advantage for real estate. Well-located properties generally perform better. Infill has been somewhat of a tough market. Developers are typically looking for larger parcels in the three- to 20-acre range which is tough to find for infill sites where lots may be 5,000 sq. ft. So the garden apartment groups focus on suburban sites because it’s easier. I’d say 80 percent to 90 percent of our business is going to be focused on infill. It’s truly going to be a product that I wouldn’t personally mind holding for the next 20 years.

We’ve been influenced by the idea of “connected capitalism,” a movement created by Neville Isdell, the former chairman and CEO of Coca-Cola. We agree that private enterprise has to build a bridge between social responsibility and making profits for their investors. I think it’s critical for us to find a way to help recreate that community and to be a part of it—not to wall ourselves off from it. And [it’s our responsibility] to create something that is of interest, because people like beautiful things. There are plenty of statistical studies and psychological research as well, underscoring the need for building non-homogenous products that will attempt to blend in as opposed to separating from the community. I think that, in the long run, those projects do so much better for everybody involved, which is, again, why we are not so strictly a merchant builder.

MHN: Is it hard to get the banks on board?

Bobilin: Everyone thought I was crazy going out starting another development business when I left Novare in May of 2009. But I firmly believed there was an opportunity, if it was structured—and located—properly. So, again, it came back to the competitive advantage. The capital markets were very tough then,  and they have loosened up a little, but although they are still tough. I visited with over 57 banks when I first left Novare. I didn’t have a specific project in mind, but I was interested in finding out what they were looking for. And I quickly noticed the small community and regional banks liked student housing. It’s understandable; it’s easy; it’s within 15 to 30 minutes of one of the branch offices. They can touch and feel it, and they’re comfortable with that. So it’s one of the reasons we gravitated toward student housing. I have done business with the big banks—with lots of them—and we would do business with them in the future. But, at present, they’re still picking up the pieces of the financial crisis. The big banks are back in the market now, which is great. But it’s still a challenge. They can more or less pick and choose what deal they want to do with somewhat less competition than before. But, when they see a good deal and a good business plan with a good sponsor, then there is capital there.

MHN: What does Chance have in the pipeline?

Bobilin: We currently have four properties under construction at FSU in Tallahassee, Fla. We’ve got two properties that we’re working on for next year that are in Tuscaloosa for the University of Alabama. We’re also working on some properties for the University of Mississippi, the University of Kentucky in Lexington, and North Carolina State University, in Raleigh. We’re actively looking at sites in Athens, Ga. and downtown Atlanta for the University of Georgia State and Georgia Tech. And we’re also looking at more metropolitan, urban areas including Charlotte, N.C. and Washington, D.C.

MHN: We’ve heard that you favor a new urbanist approach to student housing. Tell us more.

Bobilin: In suburban areas where there is no grid relating to the street, you don’t see a whole lot of people interacting with each other. And that is the sad case of where we’ve gone in America. We’re creating more of an urban atmosphere that is likely to be transformative in students’ lives. When these kids graduate and go to their first jobs, they will probably end up in a garden apartment property that is one to three miles from their offices. So, they are going to commute. Well, after about a year of that, they are going to get tired of it. And, I hope they’ll think, “Gosh, I really wish I lived in a place like I had in college that was close-in and walkable to everything.” Hopefully, as Chance Partners grows, we’ll grow into some of those markets and have an opportunity to extend the product line to them there as well.

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