The proposal of graduate student housing complex Ponderosa Village was pulled from the Nevada System of Higher Board of Regents meeting agenda after the owners decided to pull the property off the market a week prior to the Thursday, Nov. 29 meeting.
After opening in 2014, Ponderosa Village has been owned by a private company, but as of Friday, Aug. 31, the University of Nevada, Reno, received notice the property is on the market due to an agreement made with Balfour Beatty public limited company in 2013.
After the complex went onto the market, the university had the opportunity to purchase Ponderosa Village — a graduate student, faculty and professional staff housing apartment complex — located on the northeast corner of campus. The university was planning to purchase Ponderosa Village for $23.8 million if the Nevada System of Higher Education Board of Regents Board of Regents approved the purchase during their public meeting.
Ponderosa Village houses approximately 230 graduate students each year and is owned by Balfour Beatty PLC.
Due to an agreement made with Balfour Beatty back in March 2013, the moment Balfour Beatty chose to sell the property, the university would have the opportunity to make the first offer of purchase.
“As a result of this Sale of Interest Notice, the Landlord has sixty (60) days from receipt of this letter to provide Tenant with notice of its acceptance, rejection or counteroffer to acquire the Offered Interest based on the Valuation Range,” Balfour Beatty wrote to the NSHE Board of Regents on Aug. 31. “Any efforts the University can make to respond sooner than the sixty day deadline would be appreciated as we believe this will enable the process to be run as expeditiously as possible and will ensure that we are able to fully engage with highly qualified buyers.”
According to the NSHE Briefing Papers from the NSHE Board of Regents Nov. 29-30 meeting, Balfour Beatty had provided notice to sell and is expected to make a decision no later than Monday, Dec. 31. However, since Balfour Beatty decided not to sell, they will be able to keep it due to leasing rights, according to university Director of Real Estate Troy Miller.
“It was pulled from the agenda as the Ponderosa Village Owner decided to retain the property,” Miller said. “Nothing is to change at this time, all to stay the same as it is today.”
The briefing further showed an appraisal from Johnson Perkins Griffin Real Estate Appraisal and Consultants that Ponderosa Village is worth $24 million although university officials told the Board of Regents they would be pay no more than $23.8 million. The appraisal was based off location, occupancy rates and maintenance.
If the university was to purchase Ponderosa at their proposed price, there would be a 6 percent return on investment based of the 2018-2019 actual rent and expected maintenance expenses. The return on investment was expected to be $1.428 million yearly.
Since 2014, occupancy rates have not dropped below 95 percent and NSHE was expected to use the financial principal “certificates of participation” to finance the purchase over the span of 30 years. According to Municipal Securities Rulemaking Board, certificates of participation is a type of financing where an investor purchases a share of the lease revenues.
Andrew Mendez can be reached at email@example.com or on Twitter @NevadaSagebrush.