Investors interested in the Kingston, Ont. student housing market had a chance to bid on the Cornerstone Suites residence until this week.
“The original owner and developer had assembled a bunch of properties just outside of the student ghetto of Queen’s University with the intention of building student residences, which is ultimately what was built,” said Earl Kufner, the JLL Multifamily Investment broker representing the property along with Michael Betsalel.
“They made it all the way through the rezoning of the property and got part of the way through construction and then started defaulting on their loans. KingSett Capital, the mortgage holder, ended up stepping in and finishing the project.
“This went from multiple houses to a 100-bed, 28-suite, student-focused residence. It was substantially completed early this year and had first full occupancy as of May 1. Right now it’s being managed by Varsity Properties. Varsity is a fairly well-established student residence operator in the Kingston market.”
KSV Kofman Inc. is the insolvency trustee firm selling the 0.61-acre, fully leased townhome property at 637-655 Johnston St., where leases run until April 2018.
“It’s mostly private capital looking at this,” Betsalel told RENX.
What Cornerstone Suites offers
“It’s brand new. There’s strong demand for rental-quality housing in Kingston. They’re furnished apartments. They’re full. Tenants pay for the majority of utilities so there’s very little expense exposure. It’s well-constructed.”
Cornerstone Suites offers four suite sizes: four-bedroom, two-bathroom; three-bedroom, one-bathroom; two-bedroom, one-bathroom; and one-bedroom, one-bathroom. Most of the units have four bedrooms and two bathrooms.
They feature in-suite washer and dryer, an open concept living room and kitchen area, high-efficiency furnace and air conditioner, a shared courtyard and underground parking. Varsity provides bi-weekly housekeeping service, snow removal and a 24/7 maintenance and repair team on call.
“This is not an amenity-rich building,” said Kufner. “There have been some recent sales, including one in Kingston and a couple in Waterloo, that were 400- or 500-bed complexes that have media rooms, gyms and a lot of the things that you would expect to see in more of a traditional student residence or a very nice condo.”
Cornerstone Suites is a 12-minute walk to Queen’s, the downtown core, grocery stores and restaurants.
“The monthly differential between a pretty downcast building in the student ghetto of Queen’s and something like this is about $150 per month roughly,” said Kufner.
“To change from a dated building that may be a little dirty and run-down, but may be a little bit better located, for $150 a month to get your child a more bright, modern and clean environment to learn in is a pretty easy argument.”
Student housing is improving
The overall quality of student housing has improved over the past decade, along with its ownership and management, according to Betsalel.
“It’s becoming more consolidated. You’re getting more professional management. You’re getting institutions now that are looking at acquiring student housing.”