The Preiss Co. Expands Texas Student Housing Portfolio
The community most recently landed a $63.5 million refi.
The Preiss Co. has purchased The Cottages at Lubbock, an 847-bedroom student housing community serving students at the Texas Tech University in Lubbock, Texas. This marks the company’s first acquisition in Lubbock and the 14th in the state. Newmark arranged a senior acquisition loan to finance the investment. The 70 percent loan-to-cost ratio note includes a 5-year interest-only term and a sub-2 percent all-in rate.
The asset last traded in 2009, when Campus Living Villages acquired it from Capstone Communities, Yardi Matrix data shows. A decade later, the community benefited from a $63.5 million mortgage provided by Massachusetts Mutual Life Insurance Co.
The Preiss Co. plans to renovate the 2008-built property. The multimillion-dollar renovation will commence next year and is estimated to take three years. Upgrades will target the swimming pool, the clubhouse and apartment interiors. Moreover, the property was rebranded as The Collective at Lubbock.
Located at 2001 Ninth St., the community is less than 1 mile from the Texas Tech University campus. The 18.6-acre property offers 241 units across 95 buildings. Floorplans feature a mix of two- to five-bedroom apartments with an average size of 1,593 square feet. In-unit amenities include high-speed internet and washers and dryers. Residents have access to two gyms, a community room, swimming pool, study area and nearly 800 parking spaces. The community is within walking distance from a park and a Walmart Supercenter on Avenue Q.
A resilient university market
The Texas Tech University market has one of the most favorable supply-demand ratios across major universities, with a growing student body and a relatively low construction pipeline—only 290 bedrooms are expected to be delivered in the next five years, according to a Yardi Matrix webinar. The preleasing rate before the 2021 fall semester was also high, standing at 95.5 percent as of August.
In the 2020-2021 academic year, accommodation costs for students in Lubbock averaged $9,956, marking a 14.8 percent increase compared to the previous term, data from the National Council of Education Statistics shows.
Last year’s pandemic-generated insecurities had little effect on the student housing sector in top university markets, which not only fared well but generally seemed to improve performance preleasing-wise. A Tier One university since 2016, Texas Tech remained a safe bet for investors this year.
In September, Ascott Residence Trust, an Asia-Pacific REIT, expanded its U.S. student housing portfolio with the $70 million acquisition of Wildwood Lubbock, a 1,005-bed student community in Lubbock. The community, previously owned by Crow Holdings, was fully leased at the time it changed hands.