Evolution Solution
Campus Evolution Villages is off to a quick start in student housing with an experienced executive team.
Campus Evolution Villages Morgantown, formerly known as The District Morgantown, is the company’s largest acquisition to date, at 924 beds. The property serves students at West Virginia University.Officially launched at the end of 2012, Campus Evolution Villages is off to a quick start in the student housing sector. At the time the company announced its formation it had already purchased a portfolio of four student housing properties from Gulfstream Capital Partners for $46.5 million.
These purpose-built student housing properties, all completed in 2008, are located in Warrensburg, Mo., Ruston, La., Spartanburg, S.C., and Murray, Ky. In late December, the company acquired a fifth property, a 924-bed property called The District, serving students at West Virginia University in Morgantown.
While the Campus Evolution name may be new to the industry, the names behind it are not. Andrew Stark, who was involved in the early launch of American Campus Communities, serves as CEO of Campus Evolution Villages. Evan Denner, a former Wall Street executive, serves as chief investment officer. Mark Harries, who Stark worked with at ACC, and who is former CEO of United Campus Housing Management Group, is the chairman of the new company.
Denner and Stark are also founders of Lauderhill Partners, a private merchant banking investmentEvan Denner, CIO, Campus Evolution firm, founded Campus Evolution Villages in June 2012. They spent most of 2012 forging relationships with multiple investors, including one with Toronto-based Reichmann International Development Corp., a large real estate investor. The company also acquired Harries’ former company, United Campus Housing Management Group (UCH), to give it a foothold in managing student housing. That acquisition immediately brought about 5,900 beds to Campus Evolution’s management portfolio.
“Our mission is to focus as much on the student as we do on the physical asset,” says Stark. “We need to deliver an experience that is different. This is not just student life or residence life, it is creating relationships that last for a longer period of time. We have to build something that is honest and trustworthy so that students want to do more with us — not just see us as a place where they put their heads at night. We want to go beyond that and support them in their lives and futures.”
“Campus Evolution Villages’ vast experience and niche focus across the real estate industry gives us a unique perspective on the particular needs and challenges of managing student housing. We know that our constituents are not only the individual student, but also his or her parents, the university, the local community and our partners” Stark adds.
Andrew Stark, CEO, Campus EvolutionOn the asset side, Campus Evolution Villages is ramping up its management plan. The company manages its own assets with a very hands-on approach; it wants to create that direct relationship with students and build a strong brand awareness.
“We are closer with our residents day-to-day by managing our own properties,” says Stark.
As Campus Evolution Villages differentiates its management platform by adding new characteristics and best practices, it is working with property owners to implement new amenities and offerings.
“We are expanding upon the philosophy that the UCH team had with management,” says Stark. “We are providing the capital and resources to fill out the philosophy, which is enhancing the college experience through a better place to live.”
Campus Evolution plans to spend 2013 acquiring additional assets to its portfolio. The company has found all of its properties thus far off-market, or silently marketed through brokers. The existing management footprint of the company enables Campus Evolution to acquire and operate properties in all areas of the country. Campus Evolution is also now willing to co-invest with some owners on properties. Stark says the company sees great opportunities in markets that have 10,000 to 15,000 students.
“We are looking at university markets where there is an opportunity to be a leader in the student housing market,” says Stark. “We don’t want to be one of 30 student housing owners in the market.”
As it acquires, Campus Evolution is being careful not to differentiate its owned properties from its managed properties.
“We give the same hands-on approach to our third-party managed assets as we do to our own properties,” says Stark. “We’re about customer satisfaction; it doesn’t matter who the owner is.”
Already, Campus Evolution is making capital improvements to some of the properties it has recently acquired. At Campus Evolution Villages Morgantown (formerly known as The District), the company is investing several million dollars to renovate each of the apartments with new laminate wood flooring, solid surface countertops, lighting and appliances as well as the clubhouse and added amenities. At the other properties, it is performing some renovations and upgrades.
Campus Evolution is seeking out assets that are both stabilized and value-add in nature and currently is in the process of acquiring an additional five properties with approximately 2,000 beds. The company is more concerned with making a difference in the market.
“We will acquire properties that need added value on the property side and on the managementCampus Evolution Villages owns and operates the 360-bed Campus Evolution Villages Warrensburg near the University of Central Missouri. side,” says Stark. “Sometimes each needs to be improved, thus creating a true value-add opportunity. We are currently in discussions on a transaction that has been managed by a multifamily operator that has experienced a series of unfortunate events. That affects how they are running their properties. Those scenarios are a great opportunity for us.”
In addition to acquiring single properties, Campus Evolution expects to become a player in industry consolidation. As of this writing, the company was attempting to acquire two student housing companies.
“In addition to having a full pipeline of assets, we are also interested in acquiring the assets, portfolios and operations of other companies,” says Denner. “This is a privately held sector that is ripe for some level of continued consolidation. We see ourselves as a major consolidator of companies and assets in the near future.”
Campus Evolution believes that there is an evolution needed in operations and management. With a fresh set of eyes as well as years of experience, the company wants to create a different model. It is doing that by driving efficiency, as well as focusing on parent, resident and student satisfaction.
“We love the student housing asset class because we get to work with the future leaders of tomorrow,” says Denner. “We like working with students and those who like working with the dynamic student population that we have. Five years from now, we want to show that we’re leaders in this industry in terms of numbers of properties and beds, as well as sophisticated thought leaders on the operations side. We’re looking to take a fresh approach to a sector that’s ready for change.”
.
— Randall Shearin