“We were in a bit of a pioneering situation,” said Jim Smith, managing principal at Kensington Realty Advisors.

 Kensington - a Chicago-based investment company with about $1 billion under management  - bought the rights to the plan from initial developer Bill Conlin of Ann Arbor. Conlin was working with Melrose StudentSuites on what that team called “North Quad by Melrose.”

 When Kensington took over the development, it purchased the 5.4-acre property for $1.8 million in August 2005 and renamed it The Courtyards.

 “What excited us about the site to start with was that with a five-acre site surrounded by University of Michigan property … we thought it was an ideal spot for student housing,” Smith said.

 And in 2005, no other large-scale projects had been proposed for that type of housing, Smith added.

 Since then, Zaragon Place and 411 Lofts opened near Central Campus, and U-M’s North Quad mixed-use dormitory is under construction on State Street. The locations, Lee and Smith said, mean those properties aren’t in direct competition with The Courtyards.

 The development is the first in Ann Arbor for Kensington, with targets the central U.S. for investments and has other properties in suburban Detroit; the company has been involved with student housing in both Kalamazoo and Grand Rapids.

 Kensington pulled in partners on The Courtyards, including student housing company Allen & O’Hara Education Services Inc., the property management subsidiary of Education Realty Trust Inc.

 “We didn’t just take this and move it forward from where it was,” said Jim Lee, senior principal at Kensington. “We came in and redesigned the interiors. We did extensive studies on what we thought the students would want, and we wanted a much more efficient layout.”

 The result, Lee said, is “not a party building.”

 The property has 896 individually leased bedrooms - each with its own bathroom - in the 358,000-square-foot facility comprising three buildings: two of 117,000 square feet and one of 124,000 square feet, plus underground parking. The units range from one to four bedrooms and onsite amenities - like tanning - are in the larger building.

 Kensington wouldn’t disclose exact occupancy rates, but said the one-bedroom units are the most popular.

Construction costs were “north of $35 million,” Smith said, and the city now estimates the market value at about $47 million, according to assessment data.

 The financial crisis didn’t threaten to derail the project, Smith said. The company’s capital comes from large institutional investors, and the large upfront equity commitment kept it moving, as did the “relatively modest construction loan,” he said.

 One change was to open the buildings in three phases, he said, instead of putting all of the apartments on the market in fall 2008.

 “In hindsight, since this was a new design and product, and new to the market, it was good that we just delivered 1/3 of it a year ago instead of the entire project,” Smith said.

 The economy has pressured all real estate sectors, but Smith said student properties are relatively more stable.

 Still, construction and land costs remain high in Ann Arbor, meaning few projects of The Courtyards’ scale are likely to follow it into the market now that it - and the three successive projects near campus - are either open or close to it.

 “You might see a smattering of smaller deals,” Lee said, nothing that the barrier to entry in this market - including the entitlement process - remains high even outside the credit crisis.