South Dakota Student Housing Net Lease
Number of Beds: Approximately 265
Current NOI: +/-$1,140,000
Selling NOI: $1,260,000, Seller will guarantee a sale based on a cap rate and expects the lease to renew at this rate (net).
Final sale price to be predicated on selling cap rate.
NOI to be reconciled between both parties.
Selling Cap: 6.00%, $21M, conditioned upon lease renewal at $1.26M.
The owner is "firm" at $21M.
Lease Guarantor: A subsidiary of the State of South Dakota.
Tenant S&P Investment-Grade Credit Rating: Aa3
Construction: EIFS Clad units (low mtce) and no structural beams throughout, meaning buildings could be re-purposed as classroom buildings / laboratories / etc, at any point in the next 50+ years.
Year Built - Two high-rise buildings built in 2012 and 2013.
Location: These student housing units are the closest units to the University Campus, located in the heart of the Campus Master Plan.
The University: A small, very successful and well-known university with strong, targeted academic excellence.
Lease Term: 5 Years Remaining, negotiable. The tenant would like a 30-year lease! Adjacent, similar property, is held by a REIT on a 30-year lease. The tenant is on master lease and subleases the units to students. The tenant also subleases to a Einstein Bagels which has $550K of build out in the ground floor of one of the building.
Lease Type: NN - LL responsible for roof and structure.
Reason For Sale: Owner/Developer has 1,000 acres under control within City limits and has numerous projects in the pipeline and is looking to raise capital for new projects.
There is an attractive and assumable $12.5M in debt with an interest rate in the mid 3's
The loan will reset but in no circumstance can it be greater than 5% per the loan covenants.
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