Student Housing REITs: Spoiled By The Millennials



  • The millennial generation - the largest cohort in American history - supported the maturity of the student housing industry over the last decade into a mainstream institutional-grade real estate sector.
  • At 23 years old, the youngest of the millennials are now out of college and entering the workforce and beginning to come full-steam in the undersupplied housing markets.
  • For the student housing sector, growth has been harder to come by over the last half-decade. Enrollment growth, even at the highest-quality institutions, has been flat-to-down since 2012.
  • Meanwhile, supply growth continues to be a headwind for the sector as capital remains plentiful. Off-campus units are also highly exposed to changes in university housing policies.
  • Despite these headwinds, student housing REITs are perhaps the most “recession-resistant” REIT sector. Concerns regarding rising tuition costs are overstated by the widening gap between “sticker prices” and net costs.
  • This idea was discussed in more depth with members of my private investing community, iREIT on Alpha. Get started today »

REIT Rankings: Student Housing

In our REIT Rankings series, we introduce and update readers each of the residential and commercial real estate sectors. We focus on sector-level fundamentals, analyzing supply and demand conditions and macroeconomic factors driving underlying performance. We update these reports quarterly with a breakdown and analysis of the most recent earnings results.

student housing REITs

Student Housing Sector Overview

Within the Hoya Capital Student Housing Index, we track the lone student housing REIT, American Campus Communities (ACC) which accounts for $6.4 billion in market value. Once viewed as a riskier asset class than traditional apartment REITs, the sector has matured over the last decade, no doubt helped by the robust demand for student housing associated with the enormous millennial generation. American Campus owns roughly 110,000 student housing beds of the more than 5 million purpose-built student housing beds across the country. ACC's portfolio is primarily on-campus or near the campuses of major 4-year public universities. Small-cap REIT Preferred Apartment (APTS) also owns a portfolio of roughly 6,000 beds.

student housing REITs

Down to just one major player after the acquisition of EDR by Greystar in 2018 and the Harrison Street acquisition of Campus Crest Communities in 2015, the student housing sector comprises 1% of the broad-based REIT ETFs (VNQ and IYR). A microcosm of the trends seen across the REIT sector over the last four years, the student housing REIT sector has been gobbled up by the private markets, but we see a potential reversal of that trend given the REIT Rejuvenation this year which has restored the critical NAV premium for most REIT sectors, a critical prerequisite for accretive acquisition-fueled external growth. Student housing REITs have historically been one of the most countercyclical real estate sectors as student enrollment trends are typically inversely correlated with job growth.

student housing

Purpose-built student housing facilities are

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The views and opinions in all published commentary are as of the date of publication and are subject to change without notice. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Any market data quoted represents past performance, which is no guarantee of future results. There is no guarantee that any historical trend illustrated herein will be repeated in the future, and there is no way to predict precisely when such a trend will begin. There is no guarantee that any outlook made in this commentary will be realized.

Readers should understand that investing involves risk and loss of principal is possible. Investments in real estate companies and/or housing industry companies involve unique risks, as do investments in ETFs. The information presented does not reflect the performance of any fund or other account managed or serviced by Hoya Capital. An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes.

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