Lexington, Ky. — The apartments were built in 1996. A $3.5 million improvement campaign will upgrade furnishings, appliances, fixtures.
The Courtyards will be rebranded and undergo improvements, but the new owners say rents will be lower than recently developed housing in the market.Lexington, Ky. — VerTex Student Housing Partners, a joint venture of Vermilion Development and Dallas-based TEXLA Housing Partners, has acquired a 182-unit, 676-bed student housing development near the University of Kentucky from McKinney Properties. The acquisition marks the first transaction in a partnership with Chicago-based Harrison Street Real Estate Capital.
“As this acquisition indicates, our partnership with VerTex allows us to focus on an additional aspect of the student housing space, which is repositioning underperforming properties,” says Brian Thompson, senior vice president of Harrison Street Real Estate Capital.
The acquisition expands VerTex’s student housing portfolio, which also includes University Trails, an asset at the University of Mississippi. Both the buyer and the seller were represented by Dorothy Jackman and Travis Prince of Colliers International Student Housing Group.
“We are very pleased to continue the growth of our student housing portfolio. It complements and expands upon our focus on university-related real estate development,” said Dave Cocagne, President, and CEO of Vermilion Development. “We have a seasoned operating partner in TEXLA Housing Partners that brings years of experience to student housing development, management, and repositioning.”
Vermilion was founded in 1992 and has partnered with cities, universities and healthcare institutions on a variety of development projects, totaling 750,000 square feet.
The acquisition in Lexington has a total cost of $19.3 million and will be financed by a $16.9 million loan assumption with Bank of America. Harrison Street invested the majority of the equity, with investors affiliated with Vermilion Development and TEXLA Housing Partners providing the balance. VerTex Student Housing Management will act as property manager of the asset.
Known locally as The Courtyards, the 676-bed student apartment community was originally constructed in 1996. It consists of eight three-story residential buildings and a one-story clubhouse and leasing office. In addition to re-branding the property, the partnership will invest roughly $3.5 million in capital improvements.
“We feel this is an excellent opportunity to reposition a well-located, purpose-built asset in a Tier 1 market,” says Roger Phillips, President, and CEO of TEXLA Housing Partners. “Although the capital improvements will include new furniture, appliances, and fixtures along with flat-panel TVs, we will still maintain an affordable pricing structure relative to new construction.”