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Portfolio Royal Properties' student housing portfolio has consistently produced steadily increasing rental revenue over time. During the past 10 years, the company has been able to achieve these results by increasing rents annually at existing properties while developing new student housing with 400 to 500 new bedrooms each year. Royal Properties' entire portfolio has maintained over 98% occupancy since the company began developing apartments in 1984. The company has experienced rental revenue increases from $10,700,000 in 1994 to more than $26,100,000 (projected) for the school year beginning in August of 2004. Royal Properties has experienced rapid growth in both the revenues and number of units without a significant increase in its expense ratios. The company has been able to keep its total expenses (as a percent of the total revenues) to approximately 37%, while increasing the number of rental bedrooms between 1994 and 2005 from 716 to 5,729 (projected). Housing Summary
Company Summary Property Management: Royal Properties has been a consistently strong manager of portfolio assets. Due to the unique nature of student housing, Royal Properties has developed management policies and techniques that have allowed the company to provide students with a high level of value while maintaining high occupancy and above average market rents. Royal Properties typically enters into 11-month, 3-week leases with twelve equal monthly payments. This strategy minimizes the company’s vacancy exposure. It also allows Royal Properties to efficiently complete preventive maintenance on units while they are vacant for one week a year. It is unusual for Royal Properties to deviate from this leasing strategy, and, as a result, the company’s portfolio maintains very high occupancy rates and does not experience seasonality. In order to maintain its track record of minimal bad debt, Royal Properties’ standard lease requires a binding guaranty agreement. As a result, the company has experienced average bad debts of less than 1.0% over the past seven years. Development: Royal Properties has developed a total of 2,202 units, or 7,025 bedrooms of off-campus student housing properties, since 1984. The company has strong capabilities in all aspects of development, including site selection, obtaining zoning approvals, design management, construction management, leasing and other related services. Royal Properties’ development pipeline currently consists of two projects in which the company has selected the site and controls the development land. Royal Properties also has multiple other projects under consideration for which site selection has not yet been completed. Occupancy Summary
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