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Benefits of the College House System
March 15, 2013

Benefits of the College House System

Dozens of schools—including Baylor and Trinity College—have announced a switch to a college house (AKA residential college) system. Considering joining the ranks? You might look to Franklin & Marshall. It implemented the model in '05, delivered a new dorm in 2011, and Dean Kent Trachte is seeing a significant impact.

Franklin and Marshall team
Photo: Nick Gould/Franklin & Marshall College
Dean Trachte (right, with F&M president Daniel Porterfield, Robert Weis, and Patricia Ross Weis at the 2011 dedication for the newly-renovated Weis College House) tells us F&M had three goals: strengthen admissions, extend "the life of the mind" into residential life, and increase faculty/student interactions. A 2003 survey found that F&M applicants rated the school's academics high,but found its residential environment less attractive. Post-conversion, 56% of the incoming Class of 2016 said the college house system played a positive role in their decision to enroll. Dean Trachte says it changed the college culture and distinguished it from other universities.

Franklin and Marshall Brooks College
Photo: Ian Bradshaw;/Franklin & Marshall College
How can you tell when there's a good "life of the mind? (No, surgery isn't required. Sorry, med students.) Students in the college houses form governments, attend classes held in the college houses, and have intellectual discussions in their common areas. And the college's four-year graduation rate has increased 5% to 82% since the system was implemented. Increased student/faculty interaction probably helps; each college house has a faculty leader and an assistant dean who are involved in daily residential life.

Franklin and Marshall students
Photo: Ian Bradshaw/Franklin & Marshall College
Dean Trachte tells us F&M is designing a new strategic plan, and the faculty is considering how to build upon the success. One possible focus: more apartment-style housing in the houses to keep upperclassmen on campus longer.

What's Spurring Record Student Housing Sales?

Chris Bancroft
Student housing sales volume was at a record level last year, with $3.7B in transactions. ARA Student Housing's Chris Bancroft sees no reason that'd slow this year. Two things are benefiting investment sales: Compressed cap rates mean it's a good time to come to market with product, and new investors are entering the sector. He's seen strong activity from high net worth individuals—including two of his recent deals (both new developments that stabilized quickly): Circle West Campus serving the University of Texas Austin and The Domain in Morgantown, W. Va.

National syndicates are making a splash, too. Chris and colleague Chris Epp recently closed two Class-A deals serving Texas A&M (including Enclave at College Station, above) and a garden-style deal in Sacramento to this group. Other new players include international players, private equity, and conventional multifamily investors who are tired of too much competition. Low caps are also fueling development. There were 40 projects delivered last year, and 70 deals are in the pipeline to deliver this year. Those projects have great exits (many new assets will sell quickly) and are easy to finance.

Rising Interest Rates Won't Harm Student Housing

Will Baker
Some people are concerned an increase in interest rates could slow acquisition and development. But Walker & Dunlop SVP of multifamily finance Will Baker—whose team financed $157M in off-campus student housing last year—isn't one of them. (Above, he's supporting Bama against Notre Dame with Capstone Collegiate Communities' Rob Howland and TSB Capital Advisors' Tim Bradley at the BCS National Championship.) He thinks investors like the product type so much that the 10-year treasury could increase 25 to 50 bps without significantly hurting activity. He's been surprised by cap rates these days; at low-6% (and occasionally in the 5% range), they're comparable to core conventional multifamily deals.

Sun Belt
This was taken from a college geography class when we asked them to color in Texas. We kid. It's actually the areas Will intends to watch closely. He thinks development will be particularly hot in Arizona, Texas, and Florida, because enrollment is increasing and they're low-barrier-to-entry areas. He expects we'll see more partnerships like EdR's with the University of Kentucky—in which universities bring in private developers—and he doubts the cottage trend will slow. Lenders, especially Fannie and Freddie, will get cautious about financing deals in markets with lots of new development and will look hard at the borrower. (They particularly want to see management expertise.) On the acquisitions front, he foresees more large portfolio sales and more Class-A developments with no operating history trading hands this year.

We waited up all night to see where the sun went. Then it dawned on us. Email news to Catie Dixon (catie@bisnow.com) or Tonie Auer (tonie@bisnow.com).

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