ITHACA, N.Y.—It wasn’t quite on the same lucrative scale of City Centre earlier this year, but it wasn’t far off either. Visum Development Group and its owner-partners sold two properties in Collegetown last week for an eye-watering $63.25 million.

The properties involved in the sale are a pair of newer buildings in the Collegetown market. 201 College Avenue, also called “The Lofts at 201 College Ave,” is a 44-unit, 74-bedroom apartment building completed in 2017. “The Lux,” a pair of buildings at 112-114 Summit Avenue, hosts about 60 units with 207 bedrooms, and was completed in 2018. At the time of sale, the buildings were at 95 percent occupancy.

The sellers were Ithaca-based Visum and a number of unidentified equity partners, at least one of which was UK real estate private equity firm East To West Capital, per a press release provided by the sellers.

201 College Avenue. Image provided.

“Ithaca, New York and Cornell University represent one of the most attractive student housing markets in the country from a supply and demand perspective,” said Andrea Cassandro, the Managing Partner for East To West Capital. “This market characteristic is made possible by the great demand and the barriers to entry that exist for new development.”

The buyer for these properties is Chicago-based Harrison Street Real Estate Capital, which calls itself “one of the leading investment management firms exclusively focused on alternative real assets.” By alternative real assets, the private equity firm refers to student housing, senior housing, medical office space and storage facilities. The firm has $33 billion in assets under their management across several hundred properties and three continents.

In the press release, Christopher Merrill, Harrison Street’s Co-Founder, Chairman and Chief Executive Officer, stated “(t)hese are well managed, highly desirable student accommodations serving one of the nation’s most prestigious universities in Cornell. Ithaca is a phenomenal, growing college town but access to new developments is scarce. We are pleased to have acquired these assets and support these exceptional student accommodations designed to facilitate and enhance the university experience for Cornell students.”

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The long story short of the press release is that Ithaca’s student real estate market is like the big, pretty apple at the top of the tree—very desirable, but with significant access barriers. In a sense, Visum, its development team and funding partners did the hard part, by going through the stringent planning board process and getting the buildings built within time and budget constraints. Now that the owners are willing to part with their Collegetown properties, they have very interested buyers with very deep pockets, in this case Harrison Street.

“With interest rates remaining low and the impacts of COVID more fully understood, now was an appropriate time to sell,” stated Fox in the release. “This asset has performed well since we developed it and should remain one of the premier student housing properties in Ithaca.” In fact, the release noted twice that both 201 College and the Lux “overperformed” their business plans and investment goals.

According to the Tompkins County Department of Assessment, 201 College Avenue is valued at $7 million. The Lux at 112-14 Summit Avenue is valued at $20 million. Both properties pay full property taxes, which with a sale of this size are likely to see an upward adjustment during the next property tax reassessment cycle.

Property easement filings with the Tompkins County Clerk suggest that Visum will continue with development of a small addition underway for the Lux complex, an eight-unit, 16-bedroom building at 238 Dryden Road. The easements ensure legal access to the property even as Harrison Street takes ownership of the adjacent buildings.

Physically speaking, no substantial changes are planned to the properties. The Cardinal Group, a national property management firm based out of Denver, will assume property management duties for the apartment buildings. Their website suggests this will be the first properties in their management portfolio from New York State.

J. Ryan Lang, Vice Chairman, and Ben Harkrider, Transaction Manager, of the Multifamily Capital Markets division of Newmark Group, were the exclusive marketing representatives for Visum Development and East To West Capital. Newmark also represented Harrison Street in this off-market (not formally listed for sale or advertised) transaction.

Clarification: Visum CEO Todd Fox states Visum developed and managed the properties but that it had no ownership stake in the buildings at the time of sale.

Brian Crandall

Brian Crandall reports on housing and development for the Ithaca Voice. He can be reached at bcrandall@ithacavoice.com.