Meet Wes Rogers, president and CEO of Landmark Properties, based in Athens, Georgia. In the past year, this leading student housing developer has branched out into the hot single-family build-to-rent (BTR) market as well as conventional multifamily housing. Rogers discusses the latest for Landmark’s student housing portfolio as the 2022-23 school year is about to start as well as what’s in the development pipeline.

MFE: As we head into the 2022-23 school year, what is the outlook for student housing?
Rogers: From an operational standpoint, things have never been better. We are nearly 97% occupied in our nearly 60,000-bed student housing portfolio. We are witnessing record pre-leasing. We are almost 92% pre-leased for the next school year, which is about 11 percentage points ahead of where we were this time last year when we finished really strong. We’re tracking to end up in the high 90s, probably north of 97% based on how well things are going. We’re also looking at record rent growth. As of right now, we have grown our rents 7.2%. And we should end up a little bit higher once the dust settles in the fall. With 7.2% rent growth and record pre-leasing levels, we feel like we have got strong tailwinds to really grow rents the next leasing season as well. We’re hopeful we can push rents even more the next school year. It’s important to note that the supply and demand fundamentals are as compelling as they have ever been.
It’s important to note that the supply and demand fundamentals are as compelling as they have ever been. New supply is down due to COVID. A lot of the midsized and smaller developers had to shelve projects or walk away from them, and at the same time demand at our schools is at record levels. There’s certainly a misconception regarding some of these big-picture headlines about overall college enrollment being down. There are over 7,000 colleges and universities in America, but we at Landmark are only targeting about 200 schools. Enrollment at the universities in which we operate has grown nearly 5% since the beginning of COVID. Really, the enrollment level issues are being felt at the community college level and smaller private schools that aren’t offering value propositions.
MFE: What’s new for Landmark Properties?
Rogers: The past year has been really exciting. We have grown the portfolio to nearly $10 billion of assets under management. The vast majority of that is student housing, but we also have some multifamily and build-to-rent assets in our total asset pool. Last year was very exciting; we did nearly $2 billion of recaps, taking out our shorter-term equity partners with long-term capital. Given where we sit today, the timing of that was great. With many of the recaps, interest rates were much lower, and many of those deals traded well into the 3s, which sub-4 cap rates is something that we had never really seen before.
We started our first single-family BTR and conventional apartment deals in the last year, and we came out of the ground with more construction than ever. We currently have about $3.2 billion of construction in the ground and another $2.8 billion of construction slated to start this year.
We also closed our first value-add vehicle of $500 million in equity. Historically, we had gone deal by deal for value-add acquisitions, but now we have a $500 million equity commitment that was announced with our sovereign wealth fund partner Abu Dhabi Investment Authority, and we are well into the deployment of those funds.
MFE: Are there any other key moves you have made over the past year?
Rogers: The macro issue we’re having is really trying to manage the growth in what is the tightest labor market we’ve ever seen while maintaining our company culture. We have been very successful in the student housing space, and that’s because of our people. Trying to grow while maintaining that consistent high-level employee has been challenging.
MFE: Why was it important for Landmark to expand outside of student housing?
Rogers: For the past six or seven years, we have been evaluating several different strategies where we could leverage our core competencies and really have a competitive advantage. We kicked a lot of ideas around before COVID. We evaluated international student housing, co-living, senior housing, single-family BTR, as well as conventional multifamily. The fundamentals for single-family BTR accelerated during COVID as more and more people desired that space, and more people wanted to move to the suburbs out of the urban core to have more breathing room.
We feel like a lot of the big-picture trends that we liked for single-family BTR were really accelerated during COVID. We have spent the last two years building up a team, refining our strategy, and raising capital. Right now we have $600 million of committed develop-to-core capital for single-family BTR and a big pipeline for that. We closed our first BTR deal a couple of months ago, and we have about four to five deals teed up to start construction this summer. Overall, we expect to start six to eight BTR deals this year with another 30 or so single-family BTR deals in predevelopment. Next year, we hope we can quickly accelerate that and ramp it up.
On the multifamily side, we started our first two deals in the last six months or so, and we have another 10 or 12 deals in predevelopment. We feel like having these two new business lines really diversifies the company overall while allowing us to leverage our strengths in a manner that we believe will allow us to deliver outsized risk-adjusted returns.
MFE: What issues are you most concerned about in the residential space?
Rogers: One is rising rates and what are the implications of that. Today, we haven’t seen any negative impact on pricing. We recapped a bunch of deals, and many of them in the mid- to high-3s. Given where the 10-year Treasury is today, many investors are looking at negative leverage, purchasing assets in the 3s. Even though there is a ton of capital, we do expect pricing to back up just a little bit. We think probably with B and C assets, you might see pricing pull back a little bit more, but, on core assets, we expect pricing to still be impacted but not to the same degree.
Second is construction costs. Starting nearly $3 billion in construction this year, we’re really managing what is a rapidly changing cost environment. We have seen some hope for optimism here in the last month or so. The price of lumber has come down dramatically in May. We are also seeing subcontractors get more realistic on some of their pricing. But with some of your other commodities, you are still having to manage with significant price inflation. Obviously, with the Ukraine crisis going on, we do expect some of those construction materials where their inputs are coming from that part of the world to be negatively impacted. We do expect inflation to moderate, but we absolutely see it continuing to be a challenge the remainder of the year.
Growing rents have really bailed us out, with nearly 7.5% rent growth. Hopefully we can do the same rate or better next year. We’re still able to move forward on all of our planned projects—at least today.
MFE: Favorite amenity trend?
Rogers: For student housing, we’re seeing amenities get more study focused and less leisure focused. Ten years ago, we were building super elaborate pools, and we still do the nice swimming pools. But today it’s larger fitness centers—kids are focused on wellness and exercise—and then an increasing focus on group study space in our amenity areas. Students don’t want to be locked up in their rooms by themselves.
MFE: What’s at the top of your summer bucket list?
Rogers: I’m looking forward to spending the summer in Colorado. I love Georgia, which has been my home for my entire life, but the summers can get hot and humid. And as I get older, I appreciate those cool dry Colorado summers.