Real estate capital raising and syndication

Student and Workforce Housing Investor Mandate Interview

California Workforce & Student Housing Investor Mandate Interview

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

In their words

What you will hear

Rohan leads a family office based in California that invests in student and workforce housing, from the middle United States out to California. He starts by screening the school and the city. He wants large cities with existing supply constraints, and names USC in Los Angeles and ASU in Tempe as examples. For a new school, the minimum is about 100 units and 300 beds.

On due diligence, Rohan points to large enrollment and some level of endowment. He warns that smaller private schools and some state schools may fold into larger ones. He also describes shadow inventory, where small projects on cheap land erode student demand. Looking ahead, his office is focused on workforce housing just outside urban cores, in 1980 to 1990 vintage or better.

Key facts

• Rohan's family office invests in student and workforce housing from the middle United States to California.
• The stated minimum for a new school is about 100 units and 300 beds.
• Purpose-built student assets at most universities run from 300 beds to a thousand beds.

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

The 5 big lessons

1. Screen the city before the campus. Rohan's office first checks that a school sits in a large city with existing supply constraints. He says those constraints add pressure to student housing around the school.
2. Set a minimum deal size. For a new school, the office looks for at least about 100 units and 300 beds. Where it already owns assets near a campus, it may add smaller pedestrian assets of a few million dollars.
3. Check enrollment and endowment. Rohan says large enrollment and some level of endowment matter. He expects smaller private schools and even some state schools to fold into larger ones, so investors need to be careful.
4. Watch for shadow inventory. Shadow inventory means much smaller student-focused buildings going up where land is cheap. Most universities have purpose-built assets of 300 to 1,000 beds, and the smaller product can erode demand by over-supplying the market.
5. Workforce housing near jobs. The office is now focused on workforce housing just outside urban cores. Rohan expects location and distance to work to matter again, as in 2010 to 2012.

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