Boone, NC, US, Americas

Boone Student Living

Portfolio description

Jones Lang LaSalle Americas, Inc. (“JLL”) is pleased to present the Boone Student Living Portfolio (the “Portfolio” or “Properties”), consisting of four properties with a total of 145

units / 408 beds. Located in Boone, North Carolina, the Portfolio serves the student body of Appalachian State University (the “University” or “App State”). The Properties are fully preleased for the 2024-2025 Academic Year (“AY”) and were 95% preleased by January 2024 while achieving nearly 10% rent growth.

The Portfolio has reached 100% occupancy every year since inception without a complex marketing campaign. More specifically, the Portfolio has never utilized a model unit or had professional photos completed. There are numerous value-add opportunities for a new owner. There is proven demand for renovated units as a competitive property was recently upgraded and is now achieving ~$200/bed premiums. Furthermore, there’s a mark-to-market opportunity in both the Portfolio’s rental rates and parking charge, which are both 25-45% discounts to competitive properties. In total, these opportunities would unlock more than $1 million of additional revenue per year.

App State set numerous enrollment records for the 2023-2024 Academic Year. Total enrollment grew 4% to an all-time high 21,253 students, undergraduate enrollment grew 5% to a record 19,405 students, and the University received a record 24,001 applications, representing an 8% increase over the prior year.

The enrollment records and empty development pipeline have created a 100% occupied and 95% preleased student housing market as of April 2024. Boone is a hidden gem for operators, and this investment opportunity will enable a new owner to capitalize on the market’s strong fundamentals with value-add upside potential.

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Attributes

Number of units

145 units

Boone Student Living (4 Properties)

Media

Investment Highlights

Proven Value-Add Upside

The Portfolio presents numerous value-add opportunities for a new owner. First, new ownership can unlock $1,000,000+ additional revenue per year by emulating the value-add business plan at The Village of Meadowview. Despite the older vintage and farther distance from campus, this property is achieving ~$200 monthly premiums per bed following renovations. Second, new ownership can increase the parking charge, which would add ~$100,000 per year in additional parking income while still remaining a discount to competitors. Finally, various amenities can be improved, such as the clubhouse at Highland Crossing, the outdoor space at Greenway Cove, or the private storage facility at Highland Crossing, to boost rent growth across all beds within the Portfolio.

New Records In Fall 2023

App State welcomed 21,253 Mountaineers for Fall 2023, setting a new record in total enrollment. This year, the University also set new records with the largest freshmen enrollment, the most applications received, and the largest undergraduate enrollment in the institution’s 124-year history. Undergraduate enrollment has grown for 13 consecutive years, and total enrollment has grown in 11 out of the last 13 years. The Men’s Basketball team also celebrated its most successful year in history, clinching the regular-season conference championship with the team’s highest winning percentage.

Strong Student Housing Fundamentals

Enrollment has grown by 3,415 students over the last ten years, while only five projects have supplied just 1,720 beds in that time. The supply & demand imbalance in Boone has led to a tight student housing market that’s 100% occupied for the 23-24 AY and 95% preleased for the 24-25 AY as of April 2024, which is 20% higher than the national preleasing average. Furthermore, the Boone Student Living Portfolio leads the market as it was 95% preleased by January and achieved nearly 10% rent growth.

Empty Development Pipeline

Despite enrollment reaching a record 21,253 students in Fall 2023 and record applications for eight consecutive years, there are currently no off-campus student housing projects in the development pipeline. The topography of the region creates natural barriers to entry like limited buildable parcels and higher development costs due to the need of retaining walls. If a new owner chooses to execute a value-add business plan, the rent premiums will be uncapped and insulated with no new supply to compete with.

University Growth Outlook

Not only did Fall 2023 enrollment reach a record high in Boone, App State also opened a new campus in Hickory, NC, and Dr. Troy Johnson was named the Vice Chancellor of Enrollment Management. Dr. Johnson has an extensive track record in the higher education industry and has been outspoken on building upon App State’s retention, success, and overall enrollment. To support these goals, App State has committed nearly $600 million to campus improvement projects over the next five years. Notable projects include the $270 million Innovation District, $80 million new STEM building, and $100 million for App State Athletics.

Record Endowment Value and Funding

App State’s capital plan in Boone and the new Hickory campus will be partially funded by the University’s endowment, which reached a record value in 2023. In just five years, the endowment fund doubled in value from $89 million in 2018 to $180 million in 2023. App State celebrated its best fundraising year in more than a decade with $31 million in cash gifts – the largest cash fundraising year in history – in 2022. Additionally, the athletics program’s “All for App” initiative has raised more than $50 million of its $100 million goal in just two years.