Real Deals: Kane turns to familiar partner for student housing financing
12/05/2013 9:59 AM
12/05/2013 10:00 AM
Kane Realty has found a familiar partner to help finance its first foray into student housing.
Federal Capital Partners is providing $10 million in financing for the Stanhope Center project on Hillsborough Street near N.C. State University. It’s the third project on which FCP and Kane have partnered in Raleigh.
Construction of the Stanhope Center is expected to begin in the first quarter of next year. The $70 million project, which will provide housing to 800 students and include about 30,000 square feet of retail, is scheduled to open in time for the 2015-16 school year.
Location earns A-plus
This is FCP’s first student-housing deal, although the Chevy Chase, Md.-based firm has several more in the pipeline, said E.J. Corwin, a senior vice president.
“I think our general thesis for investing in student housing is to pick the best sites very proximate to campus,” Corwin said. “Those tend to do very well just purely because students can walk out their front door across the street and be on the main quad.”
Kane Realty, the developer behind North Hills, liked the project for similar reasons.
“We’ve looked at it from a bunch of different angles and feel very confident,” CEO John Kane said. “N.C. State’s not building any more housing over there for students, so the need is really having to be filled by private development. And obviously this location is pretty sterling; it’s an A-plus location.”
Private developers across the country have been rushing to build new amenity-laden housing for college students. The Stanhope Center will be next to Valentine Commons, a 10-story, 928-bedroom complex at Hillsborough and Dixie Trail that opened in the summer of 2012.
A family connection
Kane said his firm got involved in the Stanhope Center after developer Val Valentine, who had assembled the land, approached him about shepherding the project through construction. Kane Realty plans to have Asset Campus Housing manage the property after it opens.
“We feel comfortable executing on this; we feel very good about that,” Kane said. “But we don’t feel comfortable managing it, because it’s just a different animal.”
Kane’s relationship with FCP is more than just business. His son, Bryan Kane, is FCP’s vice president of acquisitions.
FCP is providing some financing for two other Kane Realty apartment projects. FCP provided a $5.15 million mezzanine loan for Midtown Green, a 214-unit apartment project that is under construction at North Hills. Kane and FCP are also partners in the Allister North Hills Apartments, a $53 million joint venture that is being built just south of North Hills in the Ramblewood residential community.
FCP has also become a major player in Durham, where it owns the West Village development and is building a 156-unit apartment complex. Earlier this year, FCP acquired the Erwin Square Plaza office tower for $37.5 million.
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