Celebrating Innovation in Tech at AppFolio’s 5th Annual Customer Conference

What do you get when over 800 property managers join us for three days of industry leading insight, networking, and hands-on product support?

Our favorite time of year, of course!

Last week, the 5th Annual Customer Conference welcomed customers and market leaders from all over the country to The Fess Parker DoubleTree Resort here in sunny Santa Barbara for high-energy learning, networking, and fun.

AppFolio CEO Jason Randall kicked off the festivities before welcoming David Rose, award-winning entrepreneur, MIT Lab Instructor, and author of Enchanted Objects, to clue us into the exciting and not-so-distant future of smart homes and the innovative products making their way into them. As a leading voice on the Internet of Things – the idea that everyday, household items can be upgraded into “enchanted objects,” like Nest Learning Thermostats and Keyless Smart Locks – Rose showed off the exciting possibilities of creative connectivity that can be a reality in your home and properties.

David Rosecc 2017 audience

“Everyday objects — watches, refrigerators and thermostats to name a few — are becoming increasingly connected to each other and to us. The promise of “the Internet of things” is that we will be more efficient, healthier and ultimately happier.” David Rose, Enchanted Objects

In addition to three unique tracks with educational sessions, collaborative workshops, and the always crowd-favorite Genius Bar, the conferenced featured a “Home Smart Home” exhibit, a display of the latest innovations the tech world has to offer that property managers should know about. While smart technology has already begun changing the way we view household items and living spaces, popular voice-activated services – like the Amazon Alexa – have ushered in new possibilities for renters. For example, our VP of Product Management Nat Kunes demonstrated how renters could use Alexa to pay rent or submit maintenance requests to their property managers simply with a voice command.

Home smart home exhibit

During the conference we announced the upcoming launch of two new offerings for AppFolio Property Manager customers. The offerings include AppFolio Renters Insurance, a new Value+ Service, and same day ACH, an enhancement to our existing Electronic Payments Value+ Platform.

Genius bar

Here at AppFolio, we love to meet our customers face-to-face. We’re passionate about getting feedback, answering questions, and collecting ideas for improvement so we can help our customers work smarter (not harder!) and continue building a better future together with AppFolio. Not to mention, it’s a ton of fun!

Check out all the action and relive the fun at #iheartappfolio on Instagram and Twitter, or flip through the Facebook Photo Album (tag your friends and colleagues!).

cc 2017 party


6 Steps to Greater Freedom

To-Do lists are so popular they need no introduction. You’re surrounded by them: at the grocery store, around the house, even in outer space!

It’s easy to see why these agendas are so popular. You list the items that need to get done on a piece of paper or a device, preferably in the order of most to least important, and then cross them off as you go, giving you a sense of real accomplishment.

It’s a simple, elegant, powerful solution as to how to organize your days. But there’s a catch.

Are you a high achiever looking for a next level productivity solution? Find relief from endless distractions and overwhelming to-do’s with Free to Focus™, my total productivity system designed especially for leaders and professionals. You can reclaim work-life balance — and up to 20 hours of your week! But public enrollment is only open until Friday, September 29, at 11:59 p.m. Pacific… so check out the Free to Focus™ course before it’s gone!

When To-Dos To-Don’t

Often, To-Do lists give you more items than you can reasonably—or even unreasonably—get done. What then? Enter the Not-to-Do List.

I came up with this idea several years ago and keep coming back to it. Happily, several people have joined the not-to-do bandwagon.

The idea is to list all of the activities you are intentionally going to stop doing for the sake of greater productivity.

And here’s why that’s important: As you succeed at work, you attract more and more assignments. It’s like you become a task magnet.

“Give it to Lori,” colleagues will say. “She’ll do a great job!”

But people are a finite resource. You only have so much energy and so much time, no matter how good you are.

When You Really Need a Not-to-Do List

The only way for a super-productive person to continue to grow professionally without going crazy is to periodically decide what you are not going to do.

This is particularly important when you have just been promoted to a new job. That’s when you really face the pressure to perform, and it’s the most difficult to say no. But you must say no if you are going to say yes to the things that really count—both in your job and in your life.

Keep in mind that the great risk for most people in new jobs is that you will continue to do your old job.

“Now why would people do that?” you ask. “That’s crazy!”

Probably because it is familiar. And your supervisor never said you had to stopdoing it. Being aware of this dynamic is half the battle.

How Do I Create a Not-to-Do List?

The other half of the battle is to sit down and physically create your Not-to-Do List. Here are the steps I suggest to make that a concrete reality.

  1. Find a quiet place where you can think.
  2. Look at your previous month’s calendar activities. Write down anything you’re not sure really fits your current job description.
  3. Look at your upcoming appointments for the next month. Write down things that are questionable in terms of your current job description.
  4. Go through your to-do list(s) and do the same thing. Write down the questionable activities, given your new role.
  5. You should now have a list of Not-to-Do candidates.
  6. Now go through the list and put an asterisk beside each item that is significant enough that you want to add it to your official Not-to-Do List and shove it off your plate.

What Next?

Once you get your list done, share it with your colleagues and your assistant, if you have one. They can help you screen out tasks that no longer belong on your To-Do list so you can focus on the things that are most important to the organization.

It’s especially important to discuss your Not-to-Do List with your boss. You’ll need her buy-in so she doesn’t keep assigning you work that you have mutually agreed is no longer what you ought to be doing.

My Old Not-to-Do List

Just to give you some idea of what to include, here is the Not-to-Do list I wrote back when I became CEO of Thomas Nelson Publishers. It prepared me well for that job and for later success as founder of Michael Hyatt & Company.

Not To-Do List
  1. Review book proposals or manuscripts for possible publication.
  2. Write deal memos.
  3. Negotiate contracts with agents or authors.
  4. Meet prospective new authors unless they have significant brand potential.
  5. Attend publishing meetings unless the topic is vision or strategy.
  6. Write marketing plans.
  7. Travel by car to other cities unless they are less than one hour a way.
  8. Check my own voice mail.
  9. Read unfiltered e-mail.
  10. Answer my own phone.
  11. Respond to (or feel the need to respond to) unsolicited sales pitches or proposals of any kind.
  12. Attend process review meetings unless there’s a compelling reason for me to be there.
  13. Attend trade shows for more than two days.
  14. Serve as a director on more than two outside boards.

Strike a Balance

You don’t have to be grappling with a new role to find the Not-to-Do List extremely helpful. If you want balance in your life, you want a Not-to-Do list.

Remember, the To-Do list tendency is to grow and grow. If you don’t periodically take a machete to it, your To-Do list will eventually crowd out everything. So get yourself a Not-to-Do list and swing away.

Here’s how to keep up with Nest’s growing smart home

Trying to make sense of Nest’s new product announcements? Start here.

What was once a limited lineup of six standalone products is now a fairly comprehensive home security and safety suite. This all happened really fast by Nest standards. It took the smart-home manufacturer roughly six years to churn out its first six products; everything else was announced (or redebuted, in the case of the Nest Yale Lock) at a single press event.

Now Playing: Nest Hello doorbell camera can recognize your face

Suddenly, Nest isn’t only offering a potential solution for your janky, old thermostat. Now it’s a whole Google-backed home security and automation system. Here’s everything you need to know to make sense of the new Nest smart home.

The new Nest

Here’s a brief overview of each new device:

Nest Cam IQ Outdoor – Cost, $349. Available for preorder now, shipping in November.

Like the Nest Cam IQ Indoor, the IQ Outdoor has a 4K image sensor, 1080p HD live streaming, a motion sensor, two-way audio, free Person Alerts and optional Familiar Face Alerts with a Nest Aware cloud subscription.

Nest Hello – Cost, TBD. Available in early 2018.

The Hello is Nest’s first video doorbell. Complete with HD live streaming, motion detection, free Person Alerts and optional Familiar Face Alerts, Nest’s inaugural buzzer has a lot of the same smarts as its IQ product line.

Nest Secure – Cost, $499. Available for preorder now, shipping in November.

Nest’s Secure alarm system is another new venture for the smart-home brand. Rather than sticking to standalone products, they’re now offering this bundled security kit. Secure includes a Guard hub (with 85-decibel siren), two Detect door/window sensors and two Tags for quickly arming and disarming the Guard hub.

Nest Yale Lock – Cost, TBD. Available in early 2018.

We first wrote about the Nest Yale Lock in 2015, when it was called the Yale Linus Lock. Nest hasn’t had much to say about the Linus in recent years, except that it was still in development. Now, it seems, Nest is *nearly* ready to bring this device to market in partnership with lock maker Yale.

The old Nest

Before the Nest Cam IQ Outdoor, Secure and Hello products were announced, Nest had a small, six-device roster:

While you always had the option of buying multiple Nest thermostats, security cameras and smoke detectors to suit the size of your home, various heating and cooling zones and more, there was no central hub to manage everything.

Instead, the app served as the main point of entry where you’d configure your Nest devices and make any necessary adjustments to settings. The app isn’t going anywhere, but the Secure system gives Nest a hardware hub. That doesn’t mean you have to buy it, though.

What size Nest suits you best?

As always, you can buy any of Nest’s standalone products and manage them via Nest’s web and mobile apps. That means one thermostat, one lock, one doorbell — whatever product you need for your home. But, if you’re in the market for a more complete security system, Nest can now handle that too.

In a word, Nest has made everything scalable, so you can pick and choose exactly what you want and ignore the rest. Here are your main options as I see it:

Standalone devices: Snag a single product for a single use case in your home. That’s anything from the $99 Nest Protect on up to the $349 Nest Cam IQ Outdoor (shipping in November). Configure it in the Nest app, and happily forget about the rest of Nest’s product lineup.

Entry-level security system: We’re reserving final judgments until we actually get to test Nest Secure, but, Nest’s new $499 alarm system might be right for you if you want a basic DIY home security system. Arm and disarm the siren-equipped hub based on your home and away schedule — and use the Detect open/close sensors and the Tag arm/disarm sensors for additional monitoring. Sign up for Nest’s optional professional monitoring service through Moni if you want someone else keeping an eye on your home as well.

Security and standalone devices: Here’s where you get to experience most (or all) of the Nest lineup — a Nest Secure system, coupled with other Nest accessories. Have your Nest cams record video footage to complement your Nest Secure system. Let your Nest Hello doorbell communicate with your Nest Yale Lock to control the door. Pricing will vary based on the specific product combination you choose, but it would start around $600 for a $499 Nest Secure system and a $99 Nest Protect smoke detector.

Note: You can also add additional Detect open/close sensors ($59) and Tag arm/disarm sensors ($25) to your Secure system as needed. Get more Nest product pricing info here.

Megan Wollerton 

@meganwollertonHere’s what 85 decibels sounds like.

The bigger question

While Nest is doing interesting things with home security (particularly by sticking facial recognition tech in outdoor cameras and doorbells), I’m not yet convinced Nest Secure adds much to what’s already out there. DIY systems like AbodeScoutand Simplisafe have been around for awhile and offer a lot of the same features as Nest’s Secure (and, in some cases, for less money). Again, we’ll have to test out all of Nest’s Secure to be sure, but $499 sure seems like a lot to spend on a hub and handful of sensors.

Homeowners Association Safety Tips for Winter Roads and Trips

by HOA Manager –

cars on snowy winter roadDo you live in a homeowners association where snowy weather leads to snow plowing your private roads during the winter months? Preparedness is paramount when it comes to being on the road. With an increased risk of potential driving hazards like sleet, snow, strong winds and frigid temperatures, it’s a good idea to think about ways to ensure you’ll travel safely.

Consider the following tips when preparing for your winter road trip:

  • Invest in an emergency kit for your vehicle. Available at most major retailers, these kits are relatively inexpensive and contain items like flares, booster cables, flashlights, ponchos and first aid supplies for minor injuries.
  • Develop a contingency plan. Create a strategy for dealing with a flat tire, vehicle accident, dead battery or other potential travel delays. Keep a hard-copy list of people or businesses to contact for help should you need it.
  • Stay in touch. Check in with a designated contact during your journey with updates on your location, delays encountered or unexpected situations that require longer travel time. When driving, remember always to pull off the road before using your cell phone.
  • Check the local weather report before heading out. Winter weather can be tricky and forecasts aren’t always accurate. You can double check your destination’s weather history on a variety of websites to determine typical conditions to expect in that area during your travels.
  • Store warm clothes and blankets in your vehicle. Be prepared to stay warm if you’re stuck for extended periods by keeping a blanket or two in your car. Also, pack a small travel case with snow boots, socks, gloves, a scarf, hat and heavy sweater in case you need to leave your vehicle.
  • Review your travel route without GPS. Read through detailed driving directions, including alternate routes, so you know your options. Also consider keeping a map handy in case your navigation system is compromised during your trip.

If you’re going to be away for extended periods of time, it’s also important to have trusted neighborsyou can count on in your homeowners association to keep an eye on your home while you’re gone. To learn what they should look for read this blog.



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Legislature passes housing package before close of 2017 session

The California Legislature has passed a package of CAA-endorsed and sponsored bills intended to help solve the state’s housing crisis.

Gov. Jerry Brown will have until Oct. 15 to sign or veto the bills.

The legislative package seeks to remove regulatory hurdles to residential development — a key to fixing the state’s jobs-to-housing imbalance.

The package also seeks ongoing funding sources for affordable housing programs, including a bond measure and fee on certain real estate transactions.

“Today we took a step toward addressing a housing crisis that has been plaguing California for years,” Assembly Speaker Anthony Rendon, D-Lakewood, said Thursday, as reported in this San Jose Mercury News story.  “The package of bills we approved today addresses funding, project streamlining, stricter enforcement, and real accountability – all the affordable housing elements necessary to help more Californians pay the rent or buy a house.”

Bills that increase California’s housing supply can help ease rental prices and quell calls for onerous policies such as rent control.

Brief summaries of key housing bills approved by the Legislature:

SB 35 by Sen. Scott Wiener, D-San Francisco, would create a streamlined approval process for housing in cities that have failed to meet their housing goals. Streamlined projects would be approved “by right,” meaning they would move forward without a drawn-out review process.

SB 2 by Sen. Toni Atkins, D-San Diego, would establish a permanent funding source for affordable housing through a fee of $75 to $225 on recorded documents. The bill, however, exempts  residential real-estate sales. The fees would likely generate between $229 million and $258 million annually.

SB 3 by Sen. Jim Beall, D-San Jose, would place a $4 billion statewide affordable housing bond before voters in the November 2018 election.

SB 540 by Richard Roth, D-Riverside, would streamline the approval process to spur housing construction by having cities identify where housing needs to be built and adopting specific, up-front plans and conducting all necessary environmental reviews and public engagement.

AB 678 by Assemblyman Raul Bocanegra, sponsored by CAA, and a companion bill SB 167 by Sen. Nancy Skinner, D-Berkeley, would financially penalize local governments that deny housing permits in violation of state law.

AB 352 by Assemblyman Miguel Santiago, D-Los Angeles, is a CAA sponsored bill to boost construction of micro apartments. It would help prevent local governments from establishing roadblocks to “efficiency dwelling units,” which usually measure 220 square feet or less. This bill won final approval in the Legislature earlier this month and now awaits the governor’s signature.


There Will Be More Retail Stores Opening Than Closing In 2017

You read the headline right, there are more retail stores opening this year than there are stores closing. You may say, but when I walk down almost any shopping street, I see so many vacancies where there were previously tenants, so… how can there be more openings than closings?

new report out by IHL Group answers the question. The kind of store that’s opening now is different.  If you look at the chart below, you’ll see that the most significant closings are due primarily to the Radio Shack bankruptcy and the closure of a lot of fashion stores. The fashion-related vacancies you’re seeing are dominating the list of store closures. You could blame technology for that, but that wouldn’t be entirely fair. It’s more fair to say that technology accelerated the decline of retailers who have not been in touch with what their consumers wanted as much as their competitors. Technology helps consumers see more of what’s available and that makes the comparison between brands so much more stark and apparent.

Major Store Closings in 2017

What’s Opening Now

Here’s a chart listing the retailers that are opening more stores than any other.

Major Store Openings

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One of the things you’ll see on the chart above is that the list of stores opening this year is dominated by discount and convenience stores. (You might not recognize some of the names. Couche-Tard is the corporate owner of Circle K stores, and Aldi and Lidl are large European grocery chains that are expanding in the US.)

The data highlight changing lifestyles and tastes. Fashion is less important in physical retail stores. It’s being shopped for more and more online and it’s becoming less of a focus for younger consumers who are more willing to spend money on experiences than on fashion products.

What’s the net difference in stores in total? The chart below tells the story (they are calling mass merchants what I call discounters like Dollar General and Dollar Tree). The discounters and convenience store openings are opening in a big way and the fashion retailers are closing almost as fast.

Net Store Openings

The reason why you see so many vacancies even though more stores are opening than closing is that the footprint and locations of the stores being closed aren’t suitable for the stores being opened. The old stores’ formats can’t be transformed and their locations don’t work for the new stores that are opening. Hence, more vacancies for you to see on major shopping streets. (Here’s an article I previously wrote about what will happen to the retail spaces that are vacant now.)


Of all the experiences that consumers are starting to prefer over purchases of things, food is always at the top of list. It’s one of the few things that applies to everyone so the market for restaurants is enormous. Ergo, any look at retail locations opening and closing should also be looking at what restaurant doors are opening and closing too. Here are the restaurant brands with the most store openings:

Largest number of restaurant openings

These are the restaurant brands that are having the most store closings:

Largest number of restaurant closings

At first glance, it’s hard to see trends in these store opening and closing numbers. For example, why is Starbucks closing stores and Dunkin Donuts is opening? Why is Pizza Hut closing stores and Noble Romans (also pizza) opening more stores than anyone else?

I had a conversation with my trend-seeing friend Irma Zandl about it. Zandl says “Dunkin Donuts, which is rebranding to just ‘Dunkin,’ has impressed me since Nigel Travis got on board as CEO in 2009. He really gets consumers. Their impending rebrand that drops the ‘Donuts’ name, suggests they realize how trendy donuts have become and they don’t want to be caught up in the donut backlash.” About Starbucks, Zandl says they are “at a tipping point. There are so many other, better, coffee places…hundreds of local places…” She adds, “as an aside, most of the people who still go to Starbucks are very corporate and Howard Schultz’s tirades against corporate America don’t help Starbucks’ cause.”

The big driver of these numbers according to Zandl is convenience. Noble Romans, the pizza brand opening more stores than any other restaurant business, is “all about expanding licensing and franchising into grocery and convenience stores… it’s all about the food and convenience these days, not so much groceries of cigarettes and definitely not the gas.”

Greg Buzek, President of IHL Group that wrote the report, says there are a few reasons for what looks like a disparity in the trends that the numbers reflect:

Those explanations are good and there’s more.  Burger King and McDonald’s are convenient, low-cost options whose store count is declining. That’s telling us that consumers want low price and convenience but they also want newness, they’re tired of many long-established brands. In addition, casual restaurant concepts are challenged by newer brands and fresher environments that give consumers the feeling they’re new and the next big thing. Hence the decline in store numbers for Applebee’sRuby TuesdayLone Star Steakhouseand others.

The Takeaway

Consumers haven’t gone into hiding and they’re not spending less. They’re spending more and there are more new stores — but tastes have changed. One of the most important things about these changes is that they are happening faster than ever before. There’s lots of reasons for that and plenty to debate about it but there’s no way to avoid the constant adaptation that’s now required.  Organizations now need to be able to process new ideas at a rate that’s faster and more efficient than ever before. If you’re a legacy retailer of any kind, it’s hard to change quickly enough and that creates an opening for more nimble competitors. It’s not enough just to have something new, it has to keep evolving. That’s a challenge both for younger companies as well as the established players and it will be for the foreseeable future.

Preventing Cyber Attacks, Part 2: How The Board Can Protect HOA Data

Cyber security is not something that your homeowners association (HOA) can afford to take lightly. A constant flood of cyber attacks hits businesses, governments and individuals every day, and many of them have affected Californians.

In May 2017, one such attack shut down the largest terminal in the Port of Los Angeles. In 2016, ransomware prevented a number of California hospitals from accessing important information, with hackers demanding money to unlock the data. Hackers also disrupted the San Francisco Muni system that same year. And according to cyber security experts, the severity of these attacks is only going to get worse.

To tackle the growing problem of cyber crime, the California Cybersecurity Task Force was created as a statewide partnership in 2013. A few years later, the California Cybersecurity Integration Center was created to improve coordination of information and help reduce the number and severity of incidents. In addition, representatives from all levels of California government attend the Cybersecurity Symposium each year to share their concerns and get the latest information.

Clearly, the state of California takes cyber security very seriously – and so should your HOA’s board of directors. Keeping sensitive information safe is part of your fiduciary duty to the homeowners in your community. But how does a board made up of volunteers address this issue?

In the first article in our two-part series on cyber security, we discussed how homeowners could do their part to prevent cyber attacks. In part two, we examine the steps that your board of directors can take to protect HOA information.

The Increase of Rental Property in Community Associations (HOAs) – The Subscription Economy

Subscription Economy Driving Increased Rental Property in Community Associations and HOAs

The increase of rental property throughout community associations and HOA’s is on the rise, there’s no doubt. And just because you’re a “tenant”, doesn’t necessarily mean you don’t care.

When is the last time you bought a DVD? How about the last time you bought a CD? The preference of buying and selling goods and services on a subscription model, rather than a one-time purchase, is becoming mainstream and probably sits somewhere between the early and late majority on the adoption curve – I’d argue it’s still early.


What is the Subscription Economy?

Subscription models have been around for a really long time. The surge of the subscription model is trending and becoming preference for many – both business and consumer. Think trade unions, magazines, Blockbuster, and contracted services as early adopters. Today we have Netflix, Amazon, and even Walmart pursuing the subscription business model. What’s so great about a subscription model anyways? You could argue it’s two fold:

  • It’s better for the business
    • Steady cash flow
    • Increased focus on long-term value
    • Predictable revenue
    • Reduced cost in customer acquisition
    • and much more…
  • It’s better for the customer
    • Flexibility
    • Better support and service
    • Easier to budget
    • Less upfront commitment

Although I don’t believe the subscription economy is the only contributing factor to the increase of rental properties throughout Community Associations and HOA’s, it may play a large part in why we might be seeing an increase in tenants, especially as the newest generations begin living on their own and others realize they don’t want the long-term commitment anymore.

The American Dream

In the United States, The American Dream is/was built on a foundation of owning your own home – it made sense when the world was less accessible globally, real estate was cheap, and careers were spent at a single place of employment. In my opinion, that’s no longer good supporting evidence. I have friends, under 30, that have had 2-3 professional careers already. Real estate is a 30 year “investment” and I can be anywhere in the world in less than 24 hours.

Times have changed and I believe purchasing and or owning a home is becoming a downward trend. It’s not even a generational thing, it’s a cultural shift. People are realizing that owning a home doesn’t really pan out to be a good investment if you want to be agile, work for multiple companies, and enjoy the freedom of less commitment. Granted, if you plan on staying put and you buy at the right time, it’s a great investment. The argument can go both ways, dependent on your future plans and commitment level.

What actually drives the increase in rental property throughout the community association? I’d be interested in hearing other’s thoughts on this topic.

Some other factors I believe contribute to the increase in rental property within HOA’s and Community Associations:

  • Access and speed to information
  • Real estate downturn during youth (2008 R.E. crisis)
  • Increased speed/pace of life
  • Career duration and frequency
  • Institutional investors purchasing within common interest developments

The student housing sector is hotter than ever—here’s what you should know

The number of people enrolled in higher-education programs—20.5 million at the start of the current school year—explains much about investor interest in the student housing niche. Find out who’s buying and who’s lending now.

Of all the statistics tied to education, one number does much to explain why lenders and investors look favorably on communities geared to college students: 20.5 million. That’s how many people attended institutions of higher learning last fall. What’s more, enrollment will continue to rise well into the next decade, according to the National Center for Education Statistics.

“What really attracts (investors) to our biz is the stability of cash flows,” said EdR Chairman & CEO Randy Churchey during a panel discussion at the 2016 NMHC Student Housing Conference and Exposition last fall. “When you remind investors that when the economy goes into a recession, enrollments go up—a light goes on in their heads.”

Financing remains in high demand on multiple fronts, driven in large measure by record deal volume. Transaction levels hit a new high for the sixth consecutive year in 2016: $9.8 billion, more than double the previous year’s total and three times 2014’s volume, CBRE’s National Student Housing Group reports. Even taking into consideration $3.3 billion worth of large-scale portfolio acquisitions, 2016 sales outpaced 2015 by 16 percent.

Topping the list of student housing lenders last year were the government-sponsored enterprises, which completed $4.2 billion in student housing loan purchases between them. That breaks down to $2.6 billion for Fannie Mae and $1.6 billion for Freddie Mac, all of it for acquisition or refinancing, and represents a 27 percent year-over-year increase.

The GSEs’ vehicles for the sector are their DUS Student Housing Loan Programs, which offer permanent fixed-rate and floating-rate products starting at $3 million, typically for five- to 15-year balloon terms, or 20 to 30 years’ full amortization. Maximum loan-to-value is 75 percent of the asset’s appraised value.

Life companies were also an important source of capital for student housing deals in 2016, including some for construction, though they tend to prefer Class A assets in major markets. Also, many life loans are at lower loan-to-values, usually 65 percent or less. Trailing behind were CMBS and commercial banks.


As student housing matures as an asset category, sophisticated players are pursuing larger transactions that require intricate capital stacks. “When I started out, smaller investors were the only ones interested in student housing,” said Brendan Coleman, a managing director for Walker & Dunlop. “That’s changed. Institutional investors are now very interested in the property type, and they’re more sophisticated borrowers, so the deals tend to be a lot more complex.”

A case in point is the financing for two student housing portfolios acquired by Scion Student Communities LLC, a joint venture of The Scion Group LLC, the Chicago-based owner-operator; GIC, which manages foreign investments for the government of Singapore; and the Canada Pension Plan Investment Board. Both portfolios were financed through Fannie Mae facilities arranged by Coleman and Will Baker, a Walker & Dunlop colleague.

For the first acquisition, which involved six student housing assets, Walker & Dunlop drew on the expansion and borrow-up features of an existing Fannie Mae credit facility to achieve $233 million in proceeds. A second Fannie Mae facility of $416 million was structured for the acquisition of 11 assets. That facility offers fixed- and floating-rate components with varying maturities. Many of the properties qualified for the GSE’s Green Certification Program, which discounts interest rates for properties that have been certified sustainable by a recognized organization.

The lion’s share of student housing acquisition deals tend to require somewhat less complex structures. In February, for example, HFF secured $45.4 million in financing for St. Croix, a 540-unit apartment community near the University of South Florida’s main campus in Tampa. HFF’s client, The RADCO Cos., obtained a seven-year, floating-rate loan through Freddie Mac’s Green Advantage Program.


Refinancing is another source of considerable demand in the student housing subsector, and those deals often require a touch of creativity. Such was the case when Capstone Capital negotiated a loan for The Boundary at West End in Greenville, N.C., which provides 550 beds for East Carolina University students. The sponsor, Taft Family Offices, sought at least $40 million in order to take out $34.4 million worth of existing debt plus its development equity.

To fulfill that wish list, Capstone Capital negotiated 14 waivers to standard Fannie Mae underwriting. The upshot: a $42 million loan with 10 years of fixed-rate financing at 4.21 percent, including two years of interest-only, followed by a 30-year amortization. Taft Family Offices took $7.4 million in proceeds to fund two new developments.

Development financing, too, is in demand, as attested by the 15,400 units that the National Center for Education Statistics estimates were in the pipeline at the end of 2016. Creative structures are emerging to meet these needs. Blinn College, a 134-year-old county institution in eastern Texas, is relying on a public-private partnership to expand housing at its flagship campus in Brenham. Servitas LLC is developing the 465-bed facility, which will meet the growing needs of a resident population that already numbers more than 1,300, the most of any community college in Texas.

At the heart of the plan is a partnership with National Campus and Community Development Corp., an Austin-based nonprofit that specializes in structuring public-private ventures. A nonprofit entity, National Campus and Community Development (NCCD)-Blinn College Properties LLC, would recieve a loan from the U.S. Department of Agriculture. The college would then lease the facility from the nonprofit for 40 years. When NCCD-Blinn College Properties repays the loan, ownership of the facility would revert to the college.

One hitch is that USDA financing is on hold, which has pushed back completion a year to fall 2018. To move the project forward, Blinn’s trustees authorized $2 million in interim financing, which will be repaid from the proceeds of the USDA loan, or if necessary, from the proceeds of bonds issued by the nonprofit New Hope Cultural Education Facilities Finance Corp. If the plan does pan out, it could serve as a model for cash-strapped schools with a need for housing.


Source: multihousingnews.com