If they can handle all-night parties and college-aged tenants, student housing landlords are making a killing in the current market.
One reason? While college enrollment is booming, demand for housing hasn’t kept pace. And student housing provides solid returns in good times and bad, since people tend to go back to school when the economy falters, Bloomberg reported.
As a result, shares of Memphis-based landlord Education Realty Trust are up 54 percent since last year, while American Campus Communities’ stock is up 44 percent. That compares to a 12 percent increase among other apartment landlords.
“In an environment of striking political and economic uncertainty, public investors are ascribing value to [the] certainty of cash flows in student housing,” analyst Ryan Burke of Green Street Advisors said. Student housing, however, performs well in good times and bad.
There’s also far more demand for student housing than existing dorms. There were 17.7 million students enrolled in college in 2012, up from 12 million in 1990. But the number of dorm-living students only increased by 600,000 over that 12-year period.
As a result, developers have rushed to meet the demands of roughly 85 percent of college students who don’t live in dorms. Earlier this year, private equity firm Harrison Street Real Estate Capital took Campus Crest Communities, a publicly traded landlord, private in a $1.9 billion deal. [Bloomberg] — E.B. Solomont