The Rise of Student Housing REITs in Real Estate

Student housing REITs have experienced significant growth in recent years, driven by increasing demand for purpose-built student accommodation. This trend is expected to continue, with the global student housing market projected to reach $84 billion by 2025.

The rise of student housing REITs can be attributed to the growing need for high-quality, affordable housing for students. Many students now prioritize living in purpose-built student accommodation, which offers a safer, more convenient, and more social living experience.

In the US, the student housing REIT sector has seen significant investment, with companies like American Campus Communities and Education Realty Trust (EdR) leading the way. These companies have successfully capitalized on the demand for student housing, with EdR's stock price increasing by over 20% in the past year.

The growth of student housing REITs is also driven by the increasing complexity of student housing financing, which has made it more difficult for individual developers to enter the market. As a result, institutional investors are turning to REITs as a way to access this growing market.

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Student housing REITs are a type of investment that allows individuals to invest in a diversified portfolio of student housing properties.

These properties are typically located near colleges and universities, where demand for housing is high and consistent.

Student housing REITs can provide a steady stream of income through rental payments from students.

They often have a long-term lease agreement, which can provide stability and predictability for investors.

Investors can also benefit from the potential for long-term appreciation in property value.

Student housing REITs can be a way to invest in a growing market, with the number of students attending college increasing over time.

This growth in demand can lead to higher rental rates and property values.

By investing in a student housing REIT, individuals can gain exposure to this growing market without directly managing properties.

Student housing REITs often have a professional management team that handles property maintenance, leasing, and other day-to-day tasks.

This can be a significant advantage for investors who don't have the time or expertise to manage properties themselves.

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Investing in student housing REITs can be a smart move, especially considering their historically high dividend income and long-term capital appreciation.

Student housing REITs have delivered competitive total returns over the years, thanks to their stable income streams and potential for long-term growth.

Their low correlation with other assets makes them an excellent portfolio diversifier, helping to reduce overall portfolio risk and increase returns.

These characteristics, combined with the growing demand for student housing, make student housing REITs an attractive option for investors.

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Student housing REITs have been dominating the market through growth and acquisition. Three public REITs, with a total market capitalization of $6.4 billion, focus on student housing.

These REITs represent just 1.0% of the overall REIT industry, indicating a highly specialized and fragmented market. This fragmentation provides room for growth through acquisitions.

Campus Crest Communities (CCG) recently made a significant move by announcing an acquisition of a 48% stake in Copper Beech Townhome Communities, with an option to acquire the remainder of the company over several years.

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Education Realty Trust (EDR) is repositioning its portfolio through acquisition, development, and sales activity, owning and managing 34 communities with more than 25,400 beds and providing management services for an additional 10,000 beds.

American Campus Communities (ACC) is the largest student housing REIT, adding 51 properties with more than 30,000 beds totalling $2.2 billion in 2012, and its acquisitions included a 19-property portfolio containing 11,683 beds and 366 beds under development at an existing property.

The supply of student housing is increasing, but this risk is highly location specific, with conditions varying widely by campus. Projects closer to campus bear less risk.

The sector's positive influences compensate for the negative implications, with healthy dividend yields and a solid outlook for long term demand attracting investors. While supply is high, the risks are limited and location specific.

Student Housing REITs offer customized solutions and seamless service with their established resources and proven expertise. This approach is structured with careful evaluation and equity partners, providing actionable insights backed by powerful data.

Berkadia's investment advisors provide expert advisory for the purchase and sale of student housing assets. Their industry-leading insights and tools result in better investment outcomes.

Student Housing REITs can benefit from best-in-class financing partners and unparalleled access to capital.

The student housing market is showing no signs of slowing down, with preleasing rates remaining stronger than pre-pandemic levels. This is a great sign for investors in student housing REITs.

Properties located within a short distance from campus, specifically 0.5 to 1.5 miles, are experiencing the highest rent growth and preleasing rates. This proximity to campus is a key factor in determining the success of student housing investments.

The Midwest is maintaining a consistent preleasing rate from 2023, making it a stable region for investment. The Southeast, on the other hand, is exhibiting the strongest preleasing activity and the highest rent increases.

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The current preleasing trend is favoring apartments with smart home features, with 75% of renters looking for this amenity. This is a significant shift from previous years, where only 30% of renters considered smart home features a must-have.

According to the latest market data, the average rent for a 1-bedroom apartment in the city is $1,800, up 10% from last year. This increase is largely driven by the high demand for housing.

Renters are also looking for apartments with in-unit laundry, with 60% of renters considering this a top priority. This is likely due to the convenience and cost savings of having laundry facilities right in their own unit.

The most in-demand neighborhoods for renters are those with good public transportation options, with 80% of renters prioritizing this amenity. This is likely due to the desire for a convenient and sustainable lifestyle.

The preleasing period for new developments is typically 6-12 months, with some buildings reaching 90% preleased before opening. This highlights the importance of getting into the market early to secure a unit.

The preleasing report is in, and it's looking strong. Preleasing has slowed only slightly from last year's pace, remaining stronger than pre-pandemic rates.

Properties located within 0.5 to 1.5 miles from campus are experiencing the highest rent growth and preleasing rates, making them a prime investment opportunity.

The Midwest is maintaining the most consistent preleasing rate from 2023, while the Southeast is exhibiting the strongest preleasing activity and the highest rent increases.