Real estate capital raising and syndication

Student and Workforce Housing Investor Mandate: California Family Office

California Workforce & Student Housing Private Investor Mandate Interview

Investors, sponsors and operators who want to understand how a California family office screens student and workforce housing deals.

In their words

What you will hear

A new student housing market needs at least 100 units and 300 beds before Rohan's family office will look at it. The office invests in student and workforce housing from the middle United States to California, where it is based. It starts with schools in large cities that already face supply limits, such as USC in Los Angeles, ASU in Tempe and schools in Las Vegas, Nevada.

Where the group already owns assets near a campus, it will go down to a few million dollars to add pedestrian properties. Rohan also warns about shadow inventory, which means smaller student-focused buildings that appear where land is cheap. For now, the office is mainly looking at workforce housing just outside urban cores, built in the 1980s or later, close to jobs.

On the record

• The family office needs at least 100 units and 300 beds to enter a new university market.
• Purpose-built student assets at most universities run from 300 beds to 1,000 beds, according to Rohan.
• Investors once earned an additional 100 basis points for student housing over multifamily, a premium Rohan says eroded over three or four years.

General education only. Not legal, tax or investment advice.

What stood out

1. Start with the city, then the school. The family office first checks that a school sits in a large city with existing supply constraints. Rohan names USC in Los Angeles, ASU in Tempe and Las Vegas as examples. Those limits add pressure to the student housing around the campus.
2. Minimum size depends on existing presence. A new university needs at least 100 units and 300 beds. Near a school where the office already has a base and management in place, it will go down to a few million dollars. Rohan says this has changed over the last five years.
3. Student housing premium has faded. Rohan says investors used to earn an additional 100 basis points for the heavier operations of student housing compared with multifamily. He says that gap eroded over the last three or four years and left the space challenged. Some early entrants exited or stood pat.
4. Check the school and the asset. Rohan favors universities with large enrollment, some endowment and a stable foundation. He expects some smaller private schools and even some state schools to fold into larger ones. The building itself should be pedestrian to campus and have features that make it stand out.
5. Watch for shadow inventory. Purpose-built student assets usually run 300 to 1,000 beds. Where land is cheap, people build much smaller student-focused product that can erode demand by oversupplying the market. Rohan says to study this during diligence, especially at schools you do not know.

Related questions

• How can I raise capital for land development?To raise capital for land development, I start with the structure.
• What is the difference between a syndication and a real estate fund?A syndication raises money for one specific property or deal.
• How do I raise capital for build-to-rent communities?Start with the exit.

Questions about this video

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