“There’s a demand for this asset class that’s just not being fulfilled” | CAPRE’s Mountain West Student Housing Forum Preview with Fountain Residential Partners’ Brent Little
DENVER, CO — Brent Little, Partner at Fountain Residential, has been instrumental in the development and construction of well over $2 billion of multifamily rental and condominium properties, as well as office, retail, and commercial properties, in a career spanning over 20 years. He has led various divisions of JPI Luxury and JPI Student Living Development and Construction, as well as with other major developers such as Echelon Residential, The Related Group of Florida, Trammel Crow Residential, and First Worthing. Before co-founding Fountain Residential Partners, Brent served as Executive Vice President and National Development Partner at Place Properties where he opened the Dallas office and was responsible for over $900M of the company’s development activities across the country over a four year period. Brent will be a featured speaker at CAPRE’s Mountain West Student Housing Forum on August 8.
Little: I started off in conventional multi-family back in the 80s. Since 2001, I’ve worked exclusively in the student and collegiate housing markets. We started Fountain Residential Partners nine years ago. We’re a very small shop, and we use third parties for property management, construction management, etc. We do 2-3 deals a year. At other places, we would do as many as 13 projects in a year, but now we say that we work in a margin shop rather than a volume shop.
CAPRE: What markets have you been active in recently?
Little: We look at lots of deals and choose the best 2 or 3 in different collegiate markets. Our last few transactions were in Chico, California for California State University, Arlington, Texas for the University of Texas at Arlington, and Sunderland, MA to serve the University of Massachusetts Amherst. You couldn’t get more disparate locations, but those were the best locations we found for us and our investors.
CAPRE: We’re looking forward to seeing you in Colorado. What are your thoughts on that market?
Little: We worked on conventional deals there back in the 90s and 2000s, but as of late, we haven’t been able to find land opportunities or development opportunities, that really interest us. What we’re finding in Colorado is that you have all of the costs of California, but you don’t have the California rents. So there are issues with returns and in finding available land.
CAPRE: What are the top attributes you look for to ink a deal?
Little: We’re very picky about our sites. We’re not just looking for walk-to-campus locations but fall-out-of-bed to campus locations. The majority of our sites have been right across the street. When we have found some sites in Colorado, we just couldn’t make the numbers pencil. We’ve done more deals in California than we have in Colorado as a result of that. But we also look for high barriers to entry and high growth potential for students.
CAPRE: Tell us more about those two line items – barriers to entry and growth. What markets check those boxes?
Little: We’re working on deal in Charlotte for the University of North Carolina, and that market has high barriers to entry. It’s a school of 30,000 students, but there’s only been about 5 transactions since 2014. So that’s not a lot of production for a school of that size. A school of 30,000 students would probably have between 10 and 15 projects serving that marketplace. So we look for markets like this, that aren’t overbuilt, where there’s still demand. The university there is growing as well – the total net growth of the UNC system for the last 5 years has been at UNC Charlotte. And the product here on the ground is full. It’s getting good rents and increasing annually over 3%.
CAPRE: Let’s talk about your projects that have gone to market recently. How are they performing?
Little: Our assets have been doing very, very well for last few years. On a national basis, student housing is 95% occupied. Our deal at Chico is over 94% pre-leased for the fall. We’ve still got another month and a half to go, so we anticipate we’ll be at 100% in that asset. In the asset we’re preleasing and is under construction in Arlington, we’re approaching 88% pre-leased, and leasing at about 2-3% per weak. We anticipate we’ll be above 95% in that asset as well.
In our property for UMass Amherst, there are only 351 beds. UMass Amherst is the largest public university in all of New England, so our capture ratio will be low. But there have only been 600 beds delivered in that market in the last 10 years…so again, that’s why we went there.
CAPRE: What kind of units do you offer?
Little: We have broadened our offerings on student-oriented development. We used to build, and most people still do build, a majority of 4-bedroom apartments. We’ve broadened that to what we call micro-units, or studios and efficiencies. Those are very popular. We also built 2, 3, 4, and 5 bedrooms where it’s allowed. We find that the broader the offering we have, the better our capture ratio that we have in many markets, than some of our markets that have 80-90% 4 bedrooms. You do market research and you hear people say that they were waiting to fill up their last units at the last minute, but their 1 and 2 bedrooms filled up right away. So why don’t you build more of those?
CAPRE: What are you looking forward to about CAPRE’s upcoming Colorado Student Housing Forum?
Little: The last one of these I went to was up in Toronto. I hadn’t been to Toronto for 10-15 years and it was good to get to that marketplace and see how things are doing. That’s really what I’m looking forward to about the Colorado event as well. I haven’t spent quality time up in Colorado recently, so I look forward to seeing how they’re doing and seeking opportunities for development in those Colorado markets.
CAPRE: Last question. What’s the bottom line in the student housing market?
Little: Well, for student housing in general, we’re down a third from our peak about five years ago. We used to be delivering 60k-65k beds per year and now we’re down to 40k-45k beds per year. The market has contracted. At the same time, the asset class has become more of an institutional class. So there’s more money than deals, and that’s keeping us busy. There’s a demand for this asset class that’s just not being fulfilled. People are still struggling to find those good sites and bring them to market, as it’s become harder to find entitlements and do construction over the last few years.
CAPRE: Got it. Thanks for your time, Brent. We’ll see you in Colorado!
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