Analysis of Investments

CP Cincy

Nelson Brothers

This offering consists of a single 440 unit student housing facility located in Cincinnati, Ohio.  The property is located near the University of Cincinnati.

Investment Highlights

  • Yr. 1 Cash-on-Cash 6.40%
  • Initial Occupancy 99.10%
  • Est. Time Horizon None YEARS
  • Current Cash Flow
  • Yr. 1 Cap Rate to Investor 6.96%
  • Investor Purchase Price $30,417,833
  • Total Offering Size $13,517,833

Loan Information

This offering has a debt term of 10-years with the first 5-years interest only. The interest rate is anticipated to be fixed at 4.25%. The loan is non-recourse to investors.

  • Yr. 1 DSCR 3.13
  • Loan-to-Offering 55.56%
  • Hold Period DSCR 2.12

Tenant Information & Lease Terms

Tenants generally sign a 12-month lease. 

The University of Cincinnati has been growing steadily for the past 5 years. 2017 marked the 5th straight year with record enrollment. Total enrollment in the 2017-2018 school year is 44,783.

Key Positives

  • The property is showing a 16% lower cost per bed than comparable properties. 

  • The University of Cincinnati has seen steady enrollment growth over the past five years. 

  • Year-1 EGR shows 0.17% conservative growth over the trailing-12 amount.  

Key Risks to Consider

  • New development in the area is planned to be completed in 2019.  The new facility will contain 1,029 beds.  This will increase competition and may potentially affect rent growth and occupancy for older facilities. 

  • Upfront reserves and expected ongoing reserves may not be enough to cover expected expenses based on amount given in the property condition report. 

  • Cap rate is being adjusted.  Sponsor has removed Tax/Insurance fees from year-1 operating expenses and placed them into the upfront costs.  By lowering the  operating expenses and increasing net operating income the sponsor has increased their cap rate, however when placed back into operating expenses these fees lower the cap rate to 5.05% instead of 6.61%. 

  • According to the pro forma the property is expected to have cash flow shortfalls in years 4-8.  Master tenant income is sufficient to cover this, however should the property miss projected rent revenue the investment may struggle to pay stated distributions in these years.  

Investment Sponsor Information

Nelson Brothers

According to the sponsor's website: "Since its inception in 2007, Nelson Brothers has acquired and managed over $240 million in assets through the acquisition of 19 student housing properties and 3 assisted living properties across 9 states. Nelson Brothers focuses on targeted growth opportunities and value-added investments for its clients through capital improvements, cost efficiency, and revenue maximization. Its entities include Nelson Brothers Professional Real Estate LLC, and Nelson Brothers Property Management Inc."

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