New Ownership and $2M Upgrade Revitalizes Student Lofts
- Jul 14, 2011
Atlanta–Less than 12 months ago, it was the place to avoid; now it’s all the rage. Westmar Student Lofts in Atlanta was snapped up by Cardinal Group Investments for a pittance in August 2010, when the property was high on vacancies and low on standing, but what a difference a year makes. Cardinal’s employment of a $2 million renovation program combined with management expertise has resulted in an about-face for the 368-unit off-campus student-housing community.
Westmar’s address of 800 W. Marietta St. places it in the midst of a large student population, with Georgia Tech just six blocks away and Georgia State University and Atlanta University Center two miles to the north. The property has access to a substantial tenant base practically right outside its doors. Additionally, as noted in a national report by commercial real estate services firm CB Richard Ellis, “With enrollment growth expected to continue trending upward, reaching 20 million by 2018, demand for living space around universities will continue to grow.”
Cardinal acquired the complex–developed as MetroPointe Lofts for approximately $100 million in 2005–in a partnership with Edgewood Cos. for just over $30 million in cash from a lender that had foreclosed on the property. “It was over-engineered and over-constructed on several different levels, and in 2005, construction prices were at an all-time high, Del de Windt, principal with Cardinal, tells MHN, offering a partial explanation for the bargain-basement price tag on the multifamily asset.
In a 2010 case study report on troubled student housing, Apartment Realty Advisors, the investment advisory brokerage firm that orchestrated Westmar’s disposition on behalf of the lender, described it as having suffered from “operational issues” and “reputation issues,” as well as an occupancy level of 30 percent.
“We were stepping into one of the most distressed properties in Atlanta,” de Windt notes. But Cardinal specializes in valued-added investments, so the company had the experience necessary to facilitate Westmar’s sorely needed renaissance. “We are very strategic with where we spend money on our projects; we have to address each property individually. We recaptured some of the space in the basement and put in a new state-of-the-art gym, and we put in a running track on the top floor of the parking structure. There were 1,600 spaces but only 1,214 beds in the apartment community, so we took that top floor.”
Cardinal went the progressive route when it came to vending options. The company installed a high-tech, 24-hour market that is manned only by security cameras. Students swipe a card to pay for their goodies, from toothpaste and light bulbs to fresh fruit and sandwiches, and the eye in the sky keeps tabs.
Westmar’s clubroom and game room were also upgraded with top-of-the-line extras, and the lobby area got a makeover. “Previously it looked like a prison with glass that looked bulletproof leading all the way back to the security desk,” he recalls. “We removed the glass, we put in chandeliers; we made it a more welcoming area. And we spent a lot of money on the front entrance, where we wrapped concrete pillars in wood to add warmth. Now, it’s like walking into a hip hotel.”
The thick clear glass is gone but the high security isn’t. “It is a very controlled, gated environment and we have a strict check-in requirement. It’s not popular but students need to realize this is not utopia, it’s downtown Atlanta.” The focus on safety is also attractive to parents, and while students may gripe about it, they clearly don’t consider it a deal breaker. Residents have been spreading the word about the new and much-improved Westmar on Twitter and other social networks. “There’s this incredible viral, organic thing that’s been happening,” says de Windt. “We wanted Westmar to have a high-end feel, and as a result we got a lot of traction in the market. We basically changed the whole perception of the property. We went above and beyond, but we felt it was necessary to shake off the reputation of MetroPointe, to rid the property of the negative stigma. It’s a worthwhile story when you understand where it was and where it is now.
Maximum occupancy is where it is now. “We’re going from 30 percent to 100 percent in less than a year; we expect to be 100 percent pre-leased by the end of July. And de Windt believes Westmar’s success can be attributed to more than its impressive amenities and high coolness factor. “Everyone can have a really nice pool and a really nice fitness center, but you have to provide the experienced and personal management that cares.”