Salmanson Capital Acquires Student Housing Portfolio
- Oct 03, 2012
Bethlehem, Pa.—New York City-based real estate firm Salmanson Capital LLC has acquired a portfolio of off-campus student housing adjacent to Bethlehem’s Lehigh University for $15.23 million. A mix of rental buildings and townhouses totaling 50 properties, 108 units and 394 beds comprise the portfolio. All the properties included in the scattered-site portfolio are just blocks from campus.
Acquired by Salmanson from a local owner, the portfolio will be managed by the Salmanson Capital affiliate Campus Hill Management, and the properties will be rebranded as Campus Hill Apartments. This is the first expansion of the Campus Hill brand beyond Syracuse University.
“The portfolio was extremely attractive, due to its location,” David Salmanson, president of Salmanson Capital, tells MHN. “The majority of the townhouses and apartment buildings are adjacent to the campus, in a market with high barriers to entry. We felt there is a great opportunity to renovate the kitchens and bathrooms to give the properties a more modern look, and to provide professional management. By doing so, we feel strongly that the Campus Hill brand will be the leader in off-campus student housing at Lehigh.”
Salmanson Capital plans to undertake a $2 million capital improvement initiative designed to provide full kitchen and bathroom renovations in all units. Kitchen renovations will bring new stainless steel appliances, while renovations of baths will deliver high-end fixtures and finishes. Units will also benefit from upgrades to furniture and technology, and 24-7 professional management will be added.
The changes should result in even greater appeal for student housing properties whose convenient locations already make them highly sought. “We believe the students will see the impact of our acquisition right away,” Salmanson says.
He believes the loan that made the deal possible is a good one, given the company’s significant equity in the deal and the properties tending to be fully occupied over time.
Nonetheless, Salmanson says, it took some time to secure a non-recourse loan for a 50-property scattered-site transaction.
“Many banks loved the deal, but still needed recourse,” he says. “In the end, Ackman Ziff helped arrange a non-recourse 10-year CMBS loan with Citi.”
Salmanson Capital LLC also just completed a $30.75 million refinancing of its Syracuse, N.Y., student-housing portfolio near Syracuse University, originally acquired for $26 million in 2007. The refinancing of the 232-apartment, 614-bed Campus Hill Apartments housing portfolio was made possible by KeyBank’s Rodney Shenman, who helped arrange a 10-year fixed Freddie Mac loan.
The value of this portfolio was enhanced through kitchen and bathroom renovations and technology and management upgrades.
“We are excited about expanding the Campus Hill brand from Syracuse University to Lehigh,” Salmanson concludes.
“We are confident students will find that Campus Hill Apartments offers a coveted, safe and upscale place to live, complete with a management team students and their parents can depend on.”