Collegetown developers see big pay off sale of multiple buildings
ITHACA, NY – It wasn’t quite on the same lucrative downtown scale earlier this year, but it wasn’t far either. Visual Development Group and its owner-partners sold two properties in Collegetown last week for $ 63.25 million.
The properties involved in the sale are a pair of newer buildings in Collegetown Market. 201 College Avenue, also known as “The Lofts at 201 College Ave”, is a 44-unit, 74-room apartment building completed in 2017. “The Lux”, a pair of buildings located at 112-114 Summit Avenue, houses about 60 units. with 207 rooms and was completed in 2018. At the time of the sale, the buildings were 95% occupied.
The sellers were Ithaca-based Visum and a number of unidentified financial partners, at least one of which was a UK real estate private equity firm. Capital from East to West, according to a press release provided by the sellers.
“Ithaca, New York and Cornell University represent one of the most attractive student housing markets in the country from a supply and demand perspective,” said Andrea Cassandro, Managing Partner of East To West Capital. “This characteristic of the market is made possible by the high demand and the barriers to entry that exist for new developments. “
The buyer of these properties is based in Chicago Harrison Street Real Estate Capital, which calls itself “one of the leading investment management companies focused exclusively on alternative real assets”. Through alternative real assets, private equity firm refers to student housing, senior housing, medical offices and storage facilities. The company manages $ 33 billion in assets across several hundred properties and on three continents.
In the press release, Christopher Merrill, Co-Founder, President and CEO of Harrison Street, said: “This is well-managed and highly desirable student accommodation serving one of the nation’s most prestigious universities at Cornell. Ithaca is a growing college town, but access to new developments is scarce. We are delighted to have acquired these assets and to support this exceptional student accommodation designed to facilitate and enhance the university experience for Cornell students. “
The long story short of the press release is that Ithaca’s student real estate market is like the big, pretty apple on top of the tree – very desirable, but with significant barriers to entry. In a sense, Visum, its development team, and financial partners did the hard part, going through the rigorous planning board process and having the buildings constructed on time and within budget. Now that Visum and its partners are ready to part with their Collegetown properties, they have very interested buyers with very deep pockets, in this case Harrison Street.
“With interest rates remaining low and the impacts of COVID better understood, now is the time to sell,” Fox said in the statement. “This asset has worked well since we developed it and is expected to remain one of the main student accommodation in Ithaca.” In fact, the press release twice noted that 201 College and Lux had “outperformed” their business plans and investment targets.
According to the Tompkins County Assessment Department, 201 College Avenue is valued at $ 7 million. The Lux at 112-14 Summit Avenue is valued at $ 20 million. Both properties pay property taxes in full, which, with a sale of this size, are likely to see an upward adjustment in the next property tax reassessment cycle.
Property easement filings with the Tompkins County Clerk suggest Visum is considering retaining ownership of a small, ongoing addition to the Lux Complex, an eight-unit, 16-bedroom building located at 238 Dryden Road. Easements ensure legal access to property even if Harrison Street becomes the owner of adjacent buildings.
Physically speaking, no substantial change is expected in the properties. The Cardinal Group, a national property management company based in Denver, will assume the property management functions of apartment buildings. Their website suggests these will be the first properties in their New York State management portfolio.
J. Ryan Lang, Vice President, and Ben Harkrider, Transaction Manager, Multifamily Capital Markets, Newmark Group, were the exclusive marketing representatives for Visum Development and East To West Capital. Newmark also represented Harrison Street in this off-market transaction (not officially listed for sale or announced).