The Preiss Company Moves to Fourth Largest, Privately Owned Student Housing Owner Operator
Wednesday March 05, 2014
RALEIGH, N.C.--(BUSINESS WIRE)--The Preiss Company, one of the nation’s largest and fastest growing student housing owners, developers and managers, announced today that it has been ranked by an independent industry source as the nation’s fourth largest, privately held student housing owner operator in 2013, up from its eighth place ranking in 2011. “Over the past two years, we have grown from the eighth to fourth largest, non-public student housing company and still see substantial room for additional growth,” said Donna Preiss, company founder and CEO. “We and our partners have invested $431 million in the past 18 months. Last year, the company acquired seven properties, refinanced five existing properties, upgraded six and participated in two developments. We continue to have an aggressive appetite for growth and are working to meet or exceed our record 2013 growth.”
“We are bullish on 2014 because we expect it to be a transition year for the industry with the mix of student housing owners changing due to a variety of reasons, the expected increases in interest rates and a substantial number of properties coming to market that require renovation investment capital and strong management, as well as a noticeable number of either newly developed properties or ones that are well along in the process,” she said. “We are looking coast to coast with an emphasis on the southern half of the U.S., especially in markets where we have experience and can achieve economies of scale.”
“Based on our momentum coming into this year, we are optimistic that we will meet or exceed last year’s volume of transactions,” Preiss noted. “We reviewed more than 60 properties/portfolios last year and currently have some 10 potential investments in our active pipeline. While we don’t expect to close every transaction we consider, we are confident about making significant acquisitions in 2014 due to the number of available opportunities and our access to capital. We are flexible and quick to make a decision but prudent in our decision-making. If market conditions change, positively or negatively, we will respond accordingly.”
“We are seeing a number of properties both from brokers and off-market. Currently, we are focusing most on properties where we can add value through strategic investment upgrades and bring state-of-the-art management. Pricing generally is realistic and fair to both the buyer and seller. Flexibility and creativity is what gets deals done in today’s market. We are targeting to close several transactions by mid-year, based on the state of our current pipeline and assuming due diligence goes as expected.”
Development is expected to play a role in the company’s growth in 2014 after a relative quiet 2013, in which the company participated in the development of two properties. Preiss acted as a consultant and now operates the 36-bed, 2604 Hillsborough Street complex at North Carolina State and the owned and operated, 709-bed, 111 South complex at Georgia Southern University. The company currently has a $125 million, new-build pipeline with one project under construction in Raleigh, N.C., and is evaluating five others in diverse geographic locations. “There are opportunities both on campus and proximate to schools that are appealing,” she said. “Location, existing product in the target markets and demand are key factors.”
Maintaining Quality Product
In 2013, the company budgeted approximately $9 million in capital upgrades over six projects and plans to have that work completed this summer. Preiss currently is reviewing its portfolio to determine value-added upgrades.
Third Party Management Outlook
“Student housing is a unique real estate type, compared to other multi-housing segments,” Preiss said. “As a result, it is one of the least understood and most poorly managed. Student housing has a significantly different leasing cycle and tenant base with a diverse set of demands and expectations. We see this area as ripe for growth, given the relatively small number of quality operators who really understand the business,” she said. “Ironically, we are more selective in taking on a new, third-party assignment than an acquisition. Without owner investment and support, it is too difficult to generate the high returns we seek for our owners.”
Commenting on the outlook Preiss noted, “We are very upbeat about 2014 for our company. All aspects of the industry offer growth opportunities and our plan is to be entrepreneurial and opportunistic in our approach, while remaining prudent in our investment decisions.”
About The Preiss Company
Celebrating its 27th year, Raleigh-based, The Preiss Company specializes in the development, acquisition and management of off-campus student housing. The company currently is the nation’s fourth largest privately held owner operator of private student housing. The company’s portfolio currently comprises approximately 16,000 beds located in ten states and thirteen markets. For more information, visit www.tpco.com.