Wenner flipping the format on student housing

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Investor Don Wenner is set to turn dorms into
apartments as the nation’s colleges continue to battle falling enrollment
compounded by the coronavirus.

Wenner’s DLP Real Estate Capital has picked up
a 184-unit, 552-bed student housing community adjacent to Kutztown University
in Kutztown, PA, for $21.1 million.

The investment firm, whose northern US
headquarters are in Bethlehem, PA, acquired The Edge at Kutztown located at 2200
Lifestyle Lane in Berks County. They will rename the property DLP Kutztown and
offer it as affordable housing to both students and families living in Kutztown
and the Greater Lehigh Valley area.

The property was previously owned by Toll
Bros. co-founder Bruce E. Toll’s BET Investments, which paid $30 million for it
in 2011 when Kutztown had an all-time high enrollment of 10,707 students. Toll
lost the property to foreclosure last year when Kutztown’s enrollment dropped
to 7,892 as COVID shut down campuses across the US.

It’s not an issue confined to one school. According
to the National Student Clearinghouse Research Center, undergraduate enrollment
this spring is in its steepest decline so far since the pandemic began. A falloff
in the number of births during the last recession is expected to drive numbers
down further beginning in the mid-2020s.

Wenner, founder and CEO of DLP Real Estate Capital,  said it makes sense to broaden the tenant base at The Edge beyond students.

DON WENNER

 “By
transforming the community to a mix of both student and multifamily units, more
hardworking individuals and families will be able to live here at a more
affordable price,” he said. “The acquisition of DLP Kutztown adds to our
growing portfolio and confirms our belief in the Greater Lehigh Valley where I
was born and raised.”

Lou Davis, managing director of investments, added,
“DLP Kutztown is a great example of how DLP is making an impact for our
residents and investors alike. Our team remains bullish on the Greater Lehigh
Valley area and we are committed to adding value in Kutztown through our
regional expertise.”

DLP
Kutztown features 184 apartments across 21 buildings situated on a 23-acre
campus. Apartments feature a full appliance package, white cabinetry, vinyl
tile flooring, Formica countertops, stacked in-unit washer and dryer and
original bathrooms. Community features include a clubhouse, patio with grilling
area, package receiving area, pool table, bike racks and vending machines.

A team from JLL Capital Markets that included Fran Coyne, Tom Hall, Mark Thomson and Carl Fiebig helped broker the sale.

“We
have seen tremendous interest in our REO and NPL sales on behalf of servicers
and lenders,” said Hall. “Given the competitive unit finishes and amenity
package, an investor can reposition the asset and begin renting as market rate
to further increase rental income upon acquisition.”

Wenner is not the first investor to flip the format on student housing. As far back as 2016, Pebb Capital began acquiring student housing, including Yeshiva University’s Alabama property in New York’s East Village. After paying $58 million for the building and transforming the dated dorms into furnished apartments, the company and its JV partners sold it last year for $104 million as a mixed-use property housing a mix of graduate students and young professionals.

The 115-unit Alabama pre-war building in Greenwich Village.

Pebb Capital and TriArch also built Monarch Heights for Columbia University students but switched to a mixed-use format once the pandemic hit.

One of the fastest-growing companies in the US, DLP now has over $1 billion in assets under management, including more than 10,000 apartments and homes located primarily throughout the south and northeast, as well as a portfolio of more than 500 real estate loans, originated to active real estate investors.

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