Saban Real Estate just loaded up its portfolio with 19 student housing projects for $508 million. The deal, which counted Austin-based management company Campus Advantage as a partner, makes Saban one of the country’s largest holders of off-campus student housing, said Saban Managing Director Bowen Hsu.
The Century-City based real estate investor, a subsidiary of billionaire Haim Saban’s Saban Capital Group Inc., also focuses on the self-storage and federal office sectors, aiming to focus on properties that generate strong cash flow over time, even during weak economic cycles.
“We’ve gravitated toward some things that have a better story in down cycles,” Hsu said. “There will always be students.”
Hsu said that Saban targeted high-ranking schools, picking up a portfolio of 12,083 beds at nearly a dozen universities in the South and on the East Coast, including Penn State University, Michigan State University, and Florida State University.
The properties are deemed “purpose-built student housing.” Off-campus, but primarily intended for student use, with leases operating on a school year cycle in 11-month terms. Parents often co-sign with their children, helping to guarantee payments. Saban plans to spend about $30 million on renovations, but installing luxury amenities is not necessarily part of the plan. Part of the strategy is to keep costs low to attract students without deep pockets. The locations farther from campus than typical student housing also bring down the price point.
“Not every student is there without taking out loans and Pell grants and things like that,” Hsu said. “The difference between $1,000 and $400 is a big difference.”
Real estate reporter Daina Beth Solomon can be reached at email@example.com. Follow her on Twitter @dainabethcita for the latest in L.A. real estate news.