Atlanta-based Place Properties scored a coup this month, landing a total of $177 million in construction financing for nine development projects set to deliver this year as part of the Place/BV Student Housing Fund, a joint venture between Place and Chicago-based Blue Vista Capital Management. Eight lenders participated in financing for the projects. All of the financing falls within a loan-to-value (LTV) spread between 65 percent and 70 percent, according to Place executive vice president Bob Clark.
“Considering today's economic climate, we are thrilled to have strong relationships with quality financial institutions that support our business plan,” Clark said in a statement announcing the deals. “We believe our access to the capital market community enables us to continue building and buying quality student housing assets around the country."
That doesn’t mean finding the debt was easy. Clark says that Place initiated calls to nearly 350 lenders across the country looking for suitable lending terms and only received about 20 positive responses. “It demonstrates what we all know and read about in the papers every day: There’s just no liquidity in the credit markets,” Clark says. “You’ve got to be A-triple-plus to get a lender to really engage and take a look. Many are just not in the market. They’re not lending; they’re not lending into student housing; they’re not lending into construction.”
The financing will be used to complete development on student housing projects at East Carolina University; the University of Texas at San Antonio;
the University of Arkansas; Old Miss; the University of Texas Arlington; Texas A&M; the University of Nevada Las Vegas; the University of North Carolina, Greensboro; and Indiana Purdue Ft. Wayne. All of the projects are on schedule and on budget to deliver in July 2009 in time for the fall semester. Clark says that lenders are looking even more carefully at deal attributes, including sponsor quality, borrower track record, and confidence in execution. “[Securing the financing] was a daunting task by any stretch,” he says. “I think it is a compliment to our place in the marketplace that we were able to find lenders willing to finance our projects.”
The Place/BV Student Housing Fund is a $280 million fund focused on the acquisition and development of student housing properties across the United States.