While the sellers have placed over $5 million in renovations and have created a premium student housing property, Nelson Brothers understands that many critical value-added opportunities remain. The goal is to leverage the property’s close proximity to campus, the innovative design, high-end amenity set and value pricing to maintain high occupancy and healthy cash flow. From there, Nelson Brothers plans to set aside over $1.64 million in renovation reserves to further enhance the re-branding strategy and complement the property’s appeal and differentiation. Central to this strategy is making further improvements to the amenities, common areas, unit interiors and floor plans in an attempt to optimize The Mark’s market positioning and its appeal as an innovative, modern and luxury student housing destination.
Specifically, Nelson Brothers plans on upgrading the sun deck, the pool area and other common areas that are extremely important to the Tempe market, which in their current position is outdated and inferior to the more competitive offerings. The strategy is to offer a cutting edge, higher end and more appealing lifestyle to today’s more demanding students. Further, Nelson Brothers plans to add accent colors, additional furnishings, washer and dryer sets, and other key modest and inexpensive improvements that help complement the recent work that has been done, to help fill in the gaps in the seller’s strategic design and ultimately finalize the Mark’s transition to an avant-garde property.
Nelson Brothers believes that students will pursue degrees from major universities regardless of the economic climate. The company’s strategy is based upon that belief and contends that well-positioned properties can stay well-occupied and profitable even during an economic downturn. For investors, the target of this strategy is to help provide stable cash flow and diversification to assets that may be less correlated to the economy.
Acquisition and refurbishment loan. Non-recourse. 2 years with 2 one-year extensions. 615 plus libor. Interest only. 1 point origination fee. TIC structure.