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| Donna Preiss |
RALEIGH, N.C., Jan. 14, 2014 – The Preiss Company, one of
the nation’s largest and fastest growing student housing owners, developers and
managers, announced today that it transacted a record $320 million in student
housing investment in 2013 and a total of $431 million since the fourth quarter
of 2012.
Investment activity by the company and its partners in 2013
included acquiring seven properties in close proximity to four different
campuses, refinancing five existing properties and upgrading six properties.
“Last year was a great year for nimble owners/operators,”
said Donna Preiss, company founder and CEO. “We believe 2014 will be a
transition year for the industry, which creates new opportunities, especially
for entrepreneurial companies.
“We expect to see a change in the mix of participants in the
student housing space in 2014,” she commented.
“Rising interest
rates, which are expected to increase as the year progresses, will put upward
pressure on cap rates, making acquisitions more difficult to pencil out.
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| University of Florida, Gainesville, FL |
“Wall Street also currently is bearish on our industry with
publicly held company stock prices down significantly. These factors will
likely reduce the pool, as well as change the mix, of potential buyers.
“Right now, there is a noticeable amount of high-end
product, both existing and under development, being marketed for sale,” she
said. “Also, there is a sizeable supply
of mid- to lower-price student housing in need of significant renovation dollars.
“ More product on the market, along with higher interest
rates, will put downward pressure on pricing.
With all these changes, finding the right opportunities will be more
challenging and, we believe, more rewarding.
“ At this time, we consider the top acquisition
opportunities in 2014 to be value-add properties that need renovation
investment and strong management and there are a substantial number of
properties that fit those criteria.”
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University of North Carolina Wilmington
Photo by Craig M. Stinson |
Preiss noted that should cap rates tic upward as a result of
the expected rise in interest rates, the development picture will likely
slow. “Like any real estate class, some
markets are overbuilt and some currently active developers/investors will look
at other classes at this phase of the cycle.
“Also the barriers to entry for student housing, even where
land is at a premium, are not always as high as they appear on paper.
" Finding and developing the right site
requires patience, understanding of the market and, of course, location. With so much change occurring, companies
with speed, flexibility and strong operations will be best prepared to
respond.”
“An in-depth understanding of what students and parents view
as important in their leasing decision- making process is the foundation for
optimizing returns,” she said.
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| University of Texas at Austin, TX |
“We conduct a great deal of parent/student research to help
guide our acquisition, development and renovation programs, as well as how we
operate our properties,” she said.
“It’s no surprise
that fast Internet service is number one for students. Other top preferences include a top-notch
pool and pool area, multiple media outlets and places to study, both privately
and with friends. Parking is becoming
more important every year.”
Day-to-day Operations More Critical
Preiss remarked that day-to-day operations will be even more
critical in 2014. “The biggest problems
facing student housing last year were excellence in operations and poorly
maintained properties.
" There is
increasing demand for quality, third-party management. As a result, we have become more aggressive
in seeking third-party management opportunities.”
In 2013, The Preiss Company acquired a total of seven
off-campus properties located near the University of Florida, the University of
North Carolina Wilmington, the University of Texas at Austin and the University
of North Carolina Charlotte.
In
addition, the company is heavily involved in the operations of its first
student housing facility on the West Coast at San Diego State University and through
an affiliate it took over management of a property at Ole Miss at the beginning
of 2014.
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| University of North Carolina at Charlotte, NC |
The company invested
significantly in upgrading its properties near the University of Texas,
University of North Carolina at Charlotte, and the University of Florida.
“We are finalizing plans to renovate our
facility at Clemson University and reviewing all of our other properties to
ensure they meet our students’ expectations and our standards.
"Well-maintained properties help attract
students but strong management keeps them coming back,” she said.
“Last year our portfolio reached 96.7% occupancy for the
2013-2014 term and achieved a 3.4 percent increase in rental rate over the
prior term. Those results played a key
role in adding eight new management contracts in 2013.” Currently, 30% percent of the company’s
portfolio is third-party managed.
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| San Diego State University, San Diego, CA |
Seeks Acquisitions, Development and Management in 2014
“Good investment opportunities will be out there in
2014. In most situations, off-campus
housing is a better value for parents and more desirable to students than
on-campus housing.
"Finding universities
with continued growth or markets where certain niches are under-served is our
focus.
"We will remain aggressive in
seeking new acquisitions, developments and third-party management in 2014. We have a substantial pipeline in all three
areas but have not set a specific target.
" Flexibility and speed are the key factors in 2014. We have access to capital and the bench
strength to expand as much or more as we did in the past year. We would like to in-fill in some of our
existing markets, as well as continue to expand nationally, now that our
operations stretch coast-to-coast. We
are patient investors but can move very rapidly when the right opportunities
arise.
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| Clemson University, Clemson, SC |
"We have a great team in place, a
strong strategic plan and a solid group of investment partners. In a transition year like what we anticipate
in 2014, we intend to be flexible and opportunistic in response to what we see
as a rapidly shifting market.”
For a complete copy of the company’s news release, please
contact:
Patrick Daly
Account Executive
Daly Gray, Inc.
620 Herndon Parkway
Suite 115
Herndon, VA 20170
(703) 435-6293 (office)
Amy Barger, Vice President of Marketing
The Preiss Company
(919) 532-1114
