Eastman Companies, a New Jersey-based real estate developer, has secured a $16 million loan to acquire a 437-unit student housing property near Coastal Carolina University and convert it into a 149-unit multifamily property. Eastman Residential, the multifamily arm of Eastman Companies, will lead the redevelopment.
The property is not attached to or affiliated with Coastal Carolina University, according to Coastal Carolina University director of communication Jerry Rashid.
The loan was originated by Knighthead Funding, an affiliate of New York-based investment management firm Knighthead Capital Management. Knighthead Funding Vice President Brian Sullivan led the origination of the loan.
“Our capital will help the sponsor’s vision for this property to become reality, which will help meet the growing demand for quality multifamily properties in the market,” Sullivan said in a statement.
Zach Schofel, a principal at Eastman Residential, told Commercial Observer that his firm acquired the property with more than 50 percent of the tenancy being non-student renters. He said the property had operated as off-campus, non-student housing that targeted students.
Eastman Residential plans to convert the normal-sized apartments units, which were marketed to students, into 144 three-bedroom apartments and five studio units that will fall in line with market rents in similar metropolitan areas.
“This is our fourth student housing conversion that we’ve been part of,” Schofeld told CO. “We identify distressed and underutilized multifamily communities that are in strong conventional markets with top-rated school districts and diverse, robust employment drivers.”
Eastman will implement a light interior renovation program (granite countertops, modern paint schemes, luxury vinyl wood flooring, a modernized lighting package, and new cabinets with stainless steel hardware), along with an amenity refresh which will bring the units in line with market rents as a cost alternative to new construction product, according to Schofel.
The property sits at 110 Chanticleer Village Drive, next to the Myrtle Beach National Golf Club in the affluent neighborhood of Carolina Forest. The area has been boosted in recent years by an influx of new graduates, young professionals and families who have been drawn to Myrtle Beach’s shoreline, golf courses and restaurants. The city features numerous tourist attractions such as the Myrtle Beach Skywheel, Hollywood Wax Museum, Myrtle Beach State Park, and the Broadway at the Beach shopping mall.
The attraction of Myrtle Beach has been apparent for some time. The United States Census reported in 2021 that Myrtle Beach was the second-fastest-growing metropolitan area in the entire U.S. between 2010 and 2018, where it experienced 27.7 percent growth in population.
The growing population has been a boon for the local rental market. Average occupancy for market apartments in Myrtle Beach in first quarter 2023 was 94.6 percent, according to a recent analysis by data firm Axiometrics.
Founded in 1954 as a public university, the nearby Coastal Carolina University boasts 514 faculty members and just over 10,000 students. The university most recently reported a $44.6 million endowment.
Schofel reiterated that Coastal Carolina University was not part of the deal and that the school did not lose any student housing units.
“There’s no contract with Coastal Carolina [University],” he said. “It was operating as an off-campus student housing property for Coastal Carolina University, targeting students from the university.”
This article has been updated to reflect Coastal Carolina University’s comments that no student housing will be lost by the university.
Brian Pascus can be reached at email@example.com