Strategies for leasing or selling College residences

[Nathan Gesner]

If there's a better place for this, please let me know.

I was speaking with a local two-year college. They have a housing area that's losing money. They can't afford to renovate units so they sit empty. Occupancy level is 35% - 65% and probably averages below 50% for the year.

They received the land for $1 from the state. The income is spent on maintenance, utilities, etc., so they technically haven't lost any money but losses seem inevitable. More importantly, the administrative staff has to spend a lot of time and energy managing the property and they're not very good at it and don't want to deal with it.

I offered a couple options. The law doesn't allow the college to open the property to the public but they may be able to lease it to my company with a Master lease and then I could open it to the public with priority going to college students and faculty at discounted rates. The other option is to subdivide the property and sell it off in small chunks over a period of years. It's a mixture of single-family, duplexes, townhomes, fourplexes, one "barracks-style" building, and a couple nice business buildings that would make great office space.

Has anyone ran into anything like this? Are there some options we haven't considered? They're researching with attorneys right now to see what is feasible and then would have to open it for bids. I'm trying to prepare with options so I'm ahead of the curve if this opportunity presents itself.