Serving the needs of single soldiers, whether on- base or off, has on the surface many similarities to student by the bed housing. The need is driven by a large institution, the investment in housing facilities is not core to the institution’s mission, and demand is relatively stable providing a very “defensive” asset class. Important nuances that create differentiation here are which bases to select among the BRAC survivors, which branch of service (which drives land cost and depth of market), which type of base (training units vs. war fighters), unit mix (fewer 3 and 4 bedroom units), effective lease terms (4-12 months depending on the base’s function), and unit pricing (triangulating between housing allowance, extended stay hotel rates and unfurnished apartment rents). In addition to ground up development, conversion of BTU to a portion BTB can have significant positive incremental returns while mitigating investment risk.
Our work in this segment identified competitively benchmarked pricing by # of bedrooms and lease matching to major training classes as the critical drivers of enhancing profitability of an existing portfolio. This had a direct impact on future development and acquisition strategy. Results were improved operating results of existing assets and growth opportunities in acquisitions/developments to grow the platform.