Replies to post #88177 on JP 3E Holdings Inc (JPTE)

[I ll be back]

As a rule, student housing has a lower cap (higher valuation) since investors love the low vacancy rates they tend to support.

So, there's frequent turnover as students come and go meaning gaps in rent, rehab costs etc correct?

Bottom line, you can show a 100% occupancy on the balance sheet, the lender, appraiser are going to still place it at 5% as a rule of thumb, which will impact the appraised value and the debt coverage ratio (DCR) against what the financing will support when the loan comes due.

If this project was finished in 2019, it likely had a 10-year term loan. Anyone following the issue that banks are facing right now knows the commercial lending market is in trouble. Just look at the number of auctions taking place on projects that can't get financing. There is a strong chance that this project only has 3 to 4-years left on the loan. If it was a roll-over under the construction, it's likely much shorter.

Given this was an "LLC membership" deal, the loan on this was not refinanced under the recent deal.

How far is this project from the nearest college?

[I ll be back]

Commercial vs residential mix.

How might such a residential mix affect valuation?

It depends on what the mix is. Given you have a restaurant below and given the quality of the construction, (lack of) can have an impact on the turnover.

Banks will only allow anywhere from 10% to 20% of the net rentable area.