Kayne Anderson, Capstone form JV for student housing

According to an announcement from the private equity real estate arm of Los Angeles-based Kayne Anderson Capital Advisors, the properties will be near the University of New Hampshire in Durham, Texas A&M University in College Station and Kennesaw State University in Kennesaw, Georgia. 

Al Rabil

Al Rabil, president and chief executive of Kayne Anderson Real Estate Advisors, told PERE that this partnership came about after roughly three years of discussions between the two firms. “Capstone's a big well-known player in the student housing market,” he said. “An opportunity presented itself, so we went for it.”

Although the firms would not disclose specifics on the cost of the projects or the percentages provided by each firm, Rabil said the firms are “building at a plus or minus 9.5 percent return on cost”. Kayne Anderson would put up the majority of the equity, and Capstone would serve as the developer.

The properties near the University of New Hampshire and Texas A&M are cottage-styled buildings, while the property at Kennesaw is a more traditional off-campus apartment building. “The Cottages of Durham” are expected to be completed by the fall 2012 academic year and will have 141 units with 619 beds. The Texas property, “The Cottages at College Station,” will be a 369-unit, 1,352-bed development built in two phases. The first phase will deliver 829 beds prior to the fall 2012 academic year, while the second phase of 523 beds will be completed by the fall 2013 academic year. Kennesaw State University's “The Lofts of Kennesaw” is set for delivery in time for the fall 2012 academic year and will provide 217 units and 803 beds.

The three properties are the first of what is intended to be a series of joint ventures between Kayne Anderson and Capstone. In fact, the two firms are about to close another deal on a 683-bed property near Michigan State University in September.

“Although this isn't a formal joint venture – we're not formally committed to Capstone, and Capstone isn't formally committed to us – there's a tremendous amount of mutual trust and respect from both companies, which I anticipate will result in future deals together,” said Rabil.

Kayne Anderson now has a portfolio of 28 student housing properties totaling 13,451 beds, two multifamily properties totaling 571 units and 11 operating self-storage properties totaling 7,121 units.