| 4A - Occupancy < 80% U/W Occupancy. The loan is secured by a 2 phase student housing property in Valdosta, GA. Phase I has a total of 204 units or 596 beds built in 2005; Phase II has a total of 72 units or 264 beds built in 2006. The property serves as student housing for Valdosta State University. The property was inspected on 07/17/09; rated in Good condition. The Q1-2009 NCF DSCR is 1.10 with a combined occ of 74.77%; YE 2008 NCF DSCR was 1.10 with a combined occupancy of 73%. The decline in occupancy is a result of increased vacancies at Phase II. Per Borrower, the decline in occupancy at Phase II is due to reduced demand and management\''s aggressive rental rates compared to the market. For Fall 2008, the property''s rates were $515 2/2, $489 3/3, $475 4/4. In 2006 and 2007 current residents were able to renew and keep their current rates, which was not offered in 2008. Current asking rates are as follows: $520 per bed for the 2 bed/2 bath, $469 per bed for the 3 bed/3 bath, and $449 per bed for the 4 bed/4 bath. Rental concessions are currently not offered. The property is advertised in Valdosta Student newspaper, Apartment Finder, Valdosta Apartment Guide, roomster.com, college rentals.com, hotpads.com, at Georgia Military College and Valdosta Technical College as well as local restaurants and pubs. As of April 2009, Phase I is 81.88% occupied and phase II is 59.10% occupied. Combined, the property is 74.88% occupied. Borrower further noted that traffic has increased during the first four months of 2009. The majority of the increase can be attributed to a sustained marketing campaign which has included direct mail programs to local and permanent student addresses and regular on-campus marketing. Additionally, the property is seeing improved demand for summer/immediate occupancy. Bank of America will continue to monitor the loan.
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