2016 Will Be PEP's Biggest Acquisition Volume Yet; Could Be Industry High, Too
Pierce Education Properties recently closed on an 888-bed, 288-unit community just southeast of the East Carolina University campus, named The Landing. The purchase was finalized in late February for $42M with debt financing of $21.4M provided by KeyBank Real Estate. The state-of-the-art property features a garden-style gated community with units that come fully furnished in two-, three- and four-bedroom floor plans. The purchase represents the latest in PEP’s strong push into the market and an overall plethora of student housing sales in 2016.
Founder and CEO Fred Pierce (above right with family) told Bisnow back in January he expected this to be PEP’s biggest year yet, and he's proving that very quickly, with $180M closed or pending already in 2016. He expects his company will purchase in excess of $300M in student housing this year, growing his portfolio by 6,000 beds.
In addition to two closed housing acquisitions, PEP has three in escrow for Q2 closing that represent over 2,350 beds for approximately $90M. They're consistent with PEP’s strategy of seeking core and value-add, purpose-built student housing investments at public universities with 15,000 or more students that play Division I football. PEP is specifically targeting individual assets valued between $15M and $65M with 400 to 1,000 beds.
One of the factors spurring PEP’s blistering pace in 2016 is a much larger volume of student housing assets available for sale early in the year than in years past. Generally, the majority of annual sales take place in Q4, 2015's huge transaction volume (over $5B) has overflowed into Q1 2016 with no signs of slowing. Fred expects 2016 to rank as one of the largest years of sales volume in industry history.