Raleigh, N.C. — TPCO transacted $320 million in investment in 2013 and is looking ahead to rise in interest rates and cap rates.
Raleigh, N.C. — The Preiss Company transacted $320 million in student housing investment in 2013, which the firm says was a record-setting year, 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,” says 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. 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. 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.”
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,” she says. “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.”