Landmark student high-rise changes ownership days after opening
The 14-story, 606-bed student high-rise on South University Avenue in Ann Arbor has a new owner after a deal that closed within days of the building opening its doors.
The 606-bed Landmark student high-rise sold recently to a Texas-based development and property management company.
Melanie Maxwell | AnnArbor.com
Landmark is part of a wave of high-end student developments opening near the University of Michigan campus. Several similar projects opened this fall, with more in the city’s pipeline.
It’s unclear the purchase price of the Landmark property, specifically, and a representative with American Campus Communities could not immediately be reached for comment.
As part of the 15-property acquisition, American Campus Communities plans to invest $13.7 million to make improvements across the portfolio, helping to “drive future rental rate and revenue growth,” according to a release.
“We are very pleased to be adding 15 properties to the ACC portfolio that meet our investment criteria of differentiated communities close to campus in submarkets with barriers to entry,” said American Campus Communities CEO Bill Bayless, in a release.
The publicly traded company — which is one of the largest developers and managers of student housing in the U.S. — owns 152 student housing properties containing approximately 99,500 beds. Its average occupancy across its portfolios is 92.5 percent.
The company owns Willowtree Apartments & Towers off Plymouth Road, about 1/2 mile west of Huron Parkway. The company listed the complex for sale in 2010 to test the Ann Arbor market, but it was never sold.
William Talbot, executive vice president of investments for American Campus Communities, told AnnArbor.com in 2010 that the company sells 5 to 10 properties a year to generate capital and build value for shareholders. Ann Arbor, he said, is a “very desirable place for people to invest.”
The company also owns Peninsular Place in Ypsilanti.
Campus Acquisitions is in the process of transitioning Landmark’s ownership to American Campus Communities, said JJ Smith, Campus Acquisitions’ executive vice president of development and construction, via email.
“Their property management staff has assumed all responsibilities of the building,” he said.
Smith told AnnArbor.com in August that of Landmark’s 606 beds, 605 were leased.
Rents at Landmark range from $975 to $1,745 per bed, meaning the project could generate $10 million in rent each year for its owner. How the sale could affect the building and its rental rates remains to be seen.
American Campus Communities stock [NYSE: ACC] was selling for $43.73 per share on Monday, with a market cap of $4.02 billion. It has 2,387 full-time employees and reported second quarter revenue of $107 million.
Lizzy Alfs is a business reporter for AnnArbor.com. Reach her at 734-623-2584 or email her at lizzyalfs@annarbor.com. Follow her on Twitter at http://twitter.com/lizzyalfs.
Comments
15crown00
Tue, Oct 2, 2012 : 4:23 p.m.
smells like something is fishy
My2bits
Tue, Oct 2, 2012 : 12:29 p.m.
For better or worse, this is capitalism at work. The market will tell us all when it is over-saturated, which will happen. Some companies will make money; others will lose money. Portfolio managers will make decisions about "investing in attractive markets" or "balancing their portfolio's risk": some will build, some will buy and some will sell. Ann Arbor has changed and outside money is here to stay. We can't change that. What can we do? Let's use their property tax dollars wisely and shop in locally owned stores, and keep alive as much as we can Ann Arbor's local character.
G. Orwell
Tue, Oct 2, 2012 : 2:40 a.m.
With so many high rises, the city's tax base must be growing. The city is good at raising taxes. How about committing a big sin and cutting taxes for once. Less taxes give residents relief from rising costs and some may spend the money downtown. Helping businesses. In turn, businesses pay more sales tax. Win-win for everyone. Less taxes, more money in everyone's pockets. A city council member propsing this is sure to get re-elected.
G. Orwell
Tue, Oct 2, 2012 : 2:45 p.m.
@greener Definitely property taxes. @kathryn You are right that sales taxes goes to the state. However, as businesses do better downtown, they will grow and hire more people. More buildings will go up or renovated and grow the tax base even more. Finally, if the state does well financially, Ann Arbor will benefit from it. We will get more money from the state to improve our infrastructure and more. Win-win for everyone.
Tom Whitaker
Tue, Oct 2, 2012 : 1:47 p.m.
Hard to cut taxes when our local governments keep giving away our money to developers and crony economic development rackets like SPARK and the Aerotropolis....or spend it on expensive public art.
greener_tea
Tue, Oct 2, 2012 : 12:25 p.m.
you mean property taxes, right G.? That WOULD be well received.
kathryn
Tue, Oct 2, 2012 : 11:09 a.m.
Sales taxes don't go to the city to pay for police, streets, or parks.
jpud
Tue, Oct 2, 2012 : 12:34 a.m.
Barriers to entry include approval for building and financing. With every building that goes up, the N + 1 building gets harder to approve as financing becomes more risky and city hall gets more repurcussions for tearing down the historic German immigrant settlers'houses to replace them with bourgeois student housing. The supply of students who will pay $1,600 per month is finite, although UM can shift the students who enroll to a more affluent profile, something they publicly reject while tacitly approving the development of financially segregated housing.
CincoDeMayo
Tue, Oct 2, 2012 : 3:25 p.m.
I definitely agree with your assessment of economically segregated student housing increasing and being tacitly approved by the UofM. Sad. As if the the economically disadvantaged students don't already feel the differences on a daily basis, now in case they can manage to forget, there are actual brick and mortar walls up to remind them.....so keep recruiting those lower income students to supply the diversity, but don't let them forget who they really are......
Tom Whitaker
Tue, Oct 2, 2012 : 1:52 p.m.
Two things the University could do to improve the affordability of housing for staff and students. 1. Stop over-enrollment of the undergraduate student body and roll the population back a few thousand. 2. Stop tearing down housing for parking lots, parking structures, and building expansions. If the UM wanted to get even more proactive and act sustainably, they would use some the Pfizer property to build quality housing for staff--perhaps a land-lease to a private developer. Other universities have done this with great success. This would be a far better use of public resources than building parking structures and county-wide transportation systems just to get people to work.
jpud
Tue, Oct 2, 2012 : 2:44 a.m.
By Tacitly, it means the University approves of the projects being carried on without words or speech, the University's approval is implied. There are no disclosed further active plans to expand the number of on campus housing units. Indeed, the actions of the housing office are just the opposite, they closed Baits I and displaced more students on the private sector. In short, the University is giving the green light to the private sector to create economically segregated housing. All the University needs to do is say, "We are a public institution; we loathe the economically segregated housing which is being built around our campus. We plan to maintain a diverse and egalitarian living environment for all students regardless of financial means, and toward that end we will build more on campus housing so students of diverse backgrounds can live together and learn from each other." If the prosepect of stable to increasing demand is taken away, so will the financing be taken away for these bourgeois apartments.
two canoes
Tue, Oct 2, 2012 : 1:54 a.m.
The university doesn't approve units like this, Ann Arbor planning commission does.
Veracity
Tue, Oct 2, 2012 : 12:32 a.m.
Addendum: This change of ownership could bode well for Landmark and for Ann Arbor. Apparently, American Campus Communities is much larger than Landmark's present owner, Campus Acquisitions. Also American Campus Communities has deep financial pockets and can afford necessary investments in Landmark when needed. It is also an experienced manager of student resident facilities. Landmark should have better prospects for success with its new owners.
Veracity
Tue, Oct 2, 2012 : 12:22 a.m.
Interesting. American Campus Communities may be accepting the risk of Landmark's failure to lease enough units to be profitable in order to get more desirable properties that are already profitable. Because of depreciation tax benefits that accompanies investing in residential rental properties I would expect apartment buildings to change ownership on average every five years. On exchange of ownership the advantage of depreciation starts over again. Depreciation contributes to generating profits in a big way. Landmark will be starting its first course of depreciation.
Chris
Tue, Oct 2, 2012 : 4:03 p.m.
How is 605 beds out of 606, as of August, considered a failure?
Richard Carter
Tue, Oct 2, 2012 : 1:11 p.m.
Wonder if two companies could collude to re-flip properties back and forth... trade two buildings every five years.
say it plain
Tue, Oct 2, 2012 : 12:01 a.m.
It's all good right build-build-build folks?! So long as they pay taxes, who cares? Who cares that our town has become in many ways merely a receptacle for this game played by the big RE Corps who are betting big on student housing, like they'd bet big on retirement communities before that?! Bubbly RE can't hurt the towns that contain the developments, can it?! Can it?!
Craig Lounsbury
Tue, Oct 2, 2012 : 1:34 p.m.
yes not me not me no no
MRunner73
Mon, Oct 1, 2012 : 10:05 p.m.
Think about all the other ownership flips (changes) forthcoming with the high rise develpments upcoming. This does not pass the smell test.
Basic Bob
Tue, Oct 2, 2012 : 1:22 a.m.
Some companies specialize in development, others in operations. The risks and management styles are different.
javajolt1
Mon, Oct 1, 2012 : 9:40 p.m.
Sold by an Illinois-based conglomerate to a Texas-based conglomerate....... Yawn!
Billy Bob Schwartz
Mon, Oct 1, 2012 : 9:36 p.m.
Another step in the great divide the population by money transition. Do these places have doormen? Good grief.
cinnabar7071
Tue, Oct 2, 2012 : 12:46 a.m.
Bob stop complaining and get in the game, only $43.73 per share. No guts, no glory. Again its $43.73 per share, don't need $627 million to get in this game, the divide you speak of is because you don't take the risk.
a2xarob
Mon, Oct 1, 2012 : 8:23 p.m.
"differentiated communities close to campus in submarkets with barriers to entry" Can someone explain how this high rise is "differentiated" and what the "barriers to entry" are besides the cost? And is this supposed to be a good thing, that cost is a barrier to entry?
Veracity
Tue, Oct 2, 2012 : 12:13 a.m.
Are you both aware of the number of student residence high rises that have been built near campus the last few years and the likelihood that several more will receive approval soon. Now tell me again about "barriers." The DDA and apparently City Council drool at the mere thought of more massive construction projects as if "saturation" was not in the dictionary and that "quaint character" was never part of a description of Ann Arbor.
Adam Schubatis
Mon, Oct 1, 2012 : 11:45 p.m.
Well said Epengar. The properties are in a variety of communities, so they are differentiated insofar as if one community suffers a downturn the other properties will not be affected. The barriers to entry don't refer to barriers to living in the building, but barriers to new building opening up and competing with Landmark. This is likely referring to the trouble developers have had pulling permits to build a competing highrise on the parcel to the east of Landmark. ACC is happy to invest in a property that will not face a lot of competition.
Epengar
Mon, Oct 1, 2012 : 9:51 p.m.
I think you misunderstood. That statement is referring to 15 properties in different cities. I read it as "these buildings are the sort of thing we're looking for as an investment because they are in community with a distinct identity, or at least a recognized name, they are close to their respective campuses, and there aren't a lot of chances for other buildings to be build that would serve the same group of potential tenants."
GoNavy
Mon, Oct 1, 2012 : 8:07 p.m.
On the next episode of "Flip this development," Ann Arbor's Zaragon Place 2.
say it plain
Mon, Oct 1, 2012 : 11:58 p.m.
Lol. This is the new business model for student housing I guess. How wonderful for our city that so much of the 'new downtown' housing will be played like this, as pawns in big portfolios. They all look the same too, so, Ann Arbor can look forward to being this keeper of generic student towers because this is what makes bucks for the players...
MRunner73
Mon, Oct 1, 2012 : 10:06 p.m.
That, and many more.