Student Housing Lenders A Little More Cautious
GMH Capital Partners president Gary Holloway says student housing deals are slower than in previous quarters and the reasons are complex: Lenders are a little more reluctant to finance because construction loans aren’t very profitable for them, and there is a slew of new regulations that constrain operations. Hear the full story at Bisnow's annual student housing summit on June 14. Meanwhile, we've got a sneak peek.
Ironically, it’s often easier to purchase assets for $100M than $30M to $70M, says Gary (pictured here with the microphone). The market for those midsized deals is heated and lenders assume the guys who want $100M are already well-capitalized.
But it’s not just student housing facing the pinch–high yields have eroded all across multifamily as construction has pulled back slightly. Student housing follows multifamily so it isn’t a huge shock that student housing stakeholders have blinked.
The best value, Gary says, is older or vintage garden-style properties that can be rehabbed. They can be dense without the elaborate engineering and construction costs of a high-rise. Of course, the trick is finding those properties, which isn't easy.
Gary says his company isn’t chasing portfolios right now. GMH Capital Partners likes the baby Ivies (like Johns Hopkins) when they are looking, though.