School’s out for summer. But will student housing rebound in the fall?

Covid-19 could also upend one of real estate’s most stable investment sectors, as an increasing number of colleges shifting to online classes

American Campus Communities CEO Bill Bayless
American Campus Communities CEO Bill Bayless

The shift among some colleges to online classes has been met with skepticism in academia but it could also spell trouble for student housing investors.

Housing geared to students has historically been considered a safe investment, but the uncertainty around the coming school year has some questioning that thinking, according to the Wall Street Journal.

Overall, pre-leasing rates for student housing properties in April was relatively unchanged from a year ago, at around 65 percent, according to the report. But some landlords have fared worse than others.

Student Housing Solutions, a company with properties near three Florida campuses — including Florida State University — said it has leased about 60 percent of its units compared to 75 percent this time last year.

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The 23-campus California State University system and Eastern Washington University are among the larger institutions to move primarily to online courses for the fall, which will cut into occupancy levels at surrounding apartment properties. Harvard Medical School is putting together some courses for students as well.

Investor anxiety could be contributing to dips in share prices for major student housing investors. American Campus Communities, which owns or manages more than 200 properties nationwide, has watched its share price drop 20 percent since March 13, even as CEO Bill Bayless says leasing hasn’t slowed much compared to last year.

Coronavirus or not, cracks were beginning to show in the student housing investment sector before the pandemic hit — about 3.9 percent of student housing-backed CMBS debt was delinquent at the end of November 2019. [WSJ]Dennis Lynch