Analysis of Investments

Reno Student Housing

Strategic 1031 Properties

Strategic 1031 Reno Student Housing is an investment into a newly constructed student housing apartment complex located in Reno, Nevada. The property is marketed to students at the University of Nevada - Reno. The property has a total of 709 beds and was built in 201

Investment Highlights

  • Yr. 1 Cash-on-Cash 5.19%
  • Initial Occupancy 99.30%
  • Est. Time Horizon 7 years YEARS
  • Current Cash Flow
  • Yr. 1 Cap Rate to Investor 5.11%
  • Investor Purchase Price $77,900,000
  • Total Offering Size $42,900,000

Loan Information

The loan totals $35,000,000 and is from KeyBank National Association. The term is for a total of 7 years with the first 3 years being interest only. When amortization begins it is based on a 30 year schedule. The interest rate is fixed at 3.83%.

  • Yr. 1 DSCR 2.89
  • Loan-to-Offering 44.93%
  • Hold Period DSCR 2.58

Tenant Information & Lease Terms

The property is marketed to students at The University of Nevada Reno. Leases for off-campus student housing is generally on a 12 month schedule, however it is possible that students may sub-lease their units during the summer. 
Leases are signed on an individual basis and not per unit. This is why the cost per bed rather than per unit and square foot are more relevant when analyzing student housing.
Parents are required to sign a guarantee of rent payments on leases for students.

Key Positives

  • A third party company that collects data on student housing properties notes that properties within 1 mile of campus have seen rent growth of 3.1% per year.

  • The same third party company states that University of Nevada is in the top 10 for annual effective rent growth.

  • The property was newly constructed in 2016 and therefore has less likelihood of needing capital expenditures to maintain the property.

  • The property is well located and is within walking distance of campus. As an added bonus there is a shuttle stop outside of the property that takes students to campus.

  • The University of Nevada Reno has been experiencing enrollment growth. This growth is projected to continue in the future.

  • There are no competing student housing complexes currently being developed near the university.

Key Risks to Consider

  • The sponsor has projected rent growth to be 5.54% between year 1 and 2 which is an aggressive assumption. However, the University of Nevada Reno has been ranked as one of the top 10 schools for rent growth.

  • The cap rate to investors is low (5.11%).

Investment Sponsor Information

Strategic 1031 Properties

According to the sponsor's website: "Strategic 1031 Properties, LLC is a Delaware limited liability company that is owned by SmartStop Asset Management, LLC.

SmartStop is a diversified real estate company focused on self storage assets, along with student and senior housing. The company has more than $1.3 billion of real estate assets under management, including 108 self storage facilities located throughout the United States and Toronto, Canada, comprised of approximately 68,000 units and 7.9 million rentable square feet. SmartStop's real estate portfolio also includes three student housing facilities with approximately 1,735 beds and 610,000 square feet of space."