Analysis of Investments

Stadium View Student Housing DST

Arrimus Capital Advisors

Arrimus Capital Advisors has released their first DST. This investment is a Student Housing apartment complex located in Ames, Iowa. The property is intended for students at Iowa State University as an off-campus housing option. The property consists of 197 units and has a total of 518 beds. The property was built in 2016.

Investment Highlights

  • Yr. 1 Cash-on-Cash 6.13%
  • Initial Occupancy 90.00%
  • Est. Time Horizon None YEARS
  • Current Cash Flow 5.70%
  • Yr. 1 Cap Rate to Investor 5.36%
  • Investor Purchase Price $44,010,000
  • Total Offering Size $18,790,000

Loan Information

The loan totals $25,220,000 and is from Walker & Dunlop LLC. The loan has a 10 year term and interest only payments for the entire term. The loan is under the Fannie Mae DUE program and is non-recourse to the investors. The interest rate is fixed at 3.95%.

  • Yr. 1 DSCR 2.31
  • Loan-to-Offering 57.31%
  • Hold Period DSCR 2.81

Tenant Information & Lease Terms

Tenants at the property are required to sign a 12 month lease that runs from Fall (generally August 1) until late Summer (generally mid-late July). Each lease is individual and on a per bed basis rather than on a per unit basis. Leases are required to be guaranteed by the students parents.

Key Positives

  • Enrollment at Iowa State University was an all time high in Fall of 2016. It was the second highest ever in Fall 2017 which was 1% below the Fall 2016 mark.

  • The Debt Service Coverage Rate is projected to average 2.8x during the investment hold period. This allows Arrimus to pay a higher cash flow.

  • Arrimus is planning on increasing their Operating Expenses at a higher percentage than their Effective Gross Rent. This is considered conservative underwriting.

  • The location of the student housing facility allows for excellent access to campus. As an off-campus option, the proximity (0.5 Miles) to the center of campus and athletic facilities allows for convenience for students living at the facility.

Key Risks to Consider

  • The rents at this property are above average market rents in the 3 and 4 bedroom units. However, as the newest property in the market and having a very favorable location, higher rents can be expected.

  • The Cap Rate at the property is low (5.36%).

  • Due to the loan being interest only, the property must be sold for a price higher than original purchase in order to return original capital back to investors.

  • Top line rent growth assumptions are slightly aggressive, however as stated before the sponsor is projecting Operating Expenses to increase at a higher rate.

  • Enrollment in 2017 was less than 2016, however at only 1% below 2016, it still represents a large enrollment and the second largest in ISU history.

Investment Sponsor Information

Arrimus Capital Advisors

According to the sponsor's website: "ARRIMUS CAPITAL is a Southern California based real estate private equity firm. We pursue value-add and opportunistic investments in the western US and Texas. Our platform targets multifamily, mixed-use, business and healthcare properties to acquire, reposition and develop. Our uniquely experienced management team has broad investment expertise, deep industry relationships to source compelling opportunities, and a proven history of delivering above market risk-adjusted returns for our investors, partners and clients."

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