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Frat House in Condominium Ownership

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George Hatch

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This is a new one for me. A local university is building a student housing project just off campus. "Fraternity Row" consists of a 66-unit apartment, surrounded by 8 chapter houses, and also features a secured subterranean parking garage, elevators and the whole bit. They did it on a condo map, so there are 9 units (the apartment building is No. 9). Ownership of one of the chapter houses also includes the right to refer a limited number qualified students to the adjacent apartment building in the project, although this doesn't appear to have any contributory value as such. The apartment building is supposed to be reserved for occupancy by fraternity members only, although there is a provision for accepting non-fratrats if the demand is insufficient.

I am doing the largest unit, and they have a short term interim lease to a different fraternity. Of course, the lease rate only reflects the residential portion of the frat house; it doesn't include the contributory value of the meeting rooms on the ground floor. Incomewise, it won't make any sense, seeing as how I have a GIM of 18+.

This is a unique setup in my county and I hadn't heard of it anywhere else. Because of the condo docs, the CCRs and the other legal restrictions, the unit can only be used as a frat house or sorority house. Demand in this limited market segment isn't an issue because there are other frats that haven't been included so far.

I reckon my only comps are the other chapter houses in the project, a couple of which have already closed escrow. Value isn't my problem, but having some outside data is. Any other ideas out there?

George Hatch
 

Lee in L.A.

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:lol: Better you than me. :lol:

Maybe look at other Universities and see if any others have a similar arrangement? Guess you shouldn't hold your breath on that idea. :D
 

Eminent Domain

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Mr. Hatch,

I don't know if I can help but maybe I can give you a lead or two which may. I am House Corporation Prez of my undergrad Sig Chapter and the local university has instituted a similar plan for my alma mater. This is in the very early planning stages. It is essentially a greek village with town house or row type structures (2 I believe with three different designs for each chapter to pick from) with a third structure which is a dormitory type building to house overflow greeks and as in your situation GDI's should the demand fall short from the fraternities. The buildings are situated in a triangular manner so as to have a semi-private court yard in the middle.

The model our school used was from Southeastern Louisiana University. Unless the papers were totally fictitious "The Village" is located at 1500 N. General Pershing Extension, Hammond, LA and The Terms of Participation were to be signed by Bradley S. O'Hara which at the time was Interim Vice-President for Student Affairs at SELU.

The interesting thing about the one at my school (WCU) is the fact that it is on university property but is being privately developed. This gets real complicated at this point but a 501c3 corp is formed who leases the site from the university, who then contracts with a private developer to design and build improvements. The corp through a conduit agency issues tax exempt revenue bonds to finance the project and debt is secured by project revenues alone. At this point the improvements are leased back to the university who then manages, operates, and maintains the project. From the fraternity standpoint there is no more hassle with rent because since the university manages it if the rent is not paid you can't get grades or graduate.

If it would be helpful I could get the contact person from my university for you. There have been several other of these projects which probably an SELU or WCU contact could refer you to.

Just let me know.

Bryan
 

Eminent Domain

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By the Way......

I seem to remember that there is a private company out there somewhere which specializes in this type of development. I think WCU had already been in contact with these people and had preliminary data from them.

Bryan
 

George Hatch

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Thanks, Bryan. I'll try and follow up on this.

George Hatch
 
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