DALLAS-In the student housing sector, 2012 was highlighted by some rather impressive portfolio transfers between major players. One example was American Campus Communities' buy of Campus Communities and Kayne Anderson's portfolios. That feat hasn't been repeated just yet in 2013, but it doesn't mean it's going to happen.
Still, experts tell GlobeSt.com that everyone is keeping an eye on fluctuating interest rates, as much as anything. "We're keeping an eye on those, to see how those will impact yield and cash flow to investors," says Dorothy Jackman, managing director with Colliers International's National Student Housing Group. Adds CBRE National Student Housing Group associate director Jaclyn Fitts: "One of the things we don't know is what changes in those rates will do in our industry, or how it will impact pricing overall."
There are a few things, however, that these experts do know. For example, there is a large development pipeline in place for the 2013-2014 school year. "Some markets will experience overbuilding because of those large pipelines," Fitts says. Furthermore, because of that new development, the larger pipeline has meant longer delays when it comes to longer leasing cycles. Fitts says the majority of quality product out there is stabilized. However, "it's a lot later than usual, due to that new development," she comments.
Second, enrollment at most universities continue strong, which means student housing will continue to grow. And, despite uncertainty regarding interest rates, Jackman and Fitts agree that properties will continue changing hands. "By and large, we're anticipating there will be at least as many trades this year as there have been in the past," Jackman observes. Some of them will be brokered, whereas others will be principal-to-principal."
Furthermore, Jackman goes on to say that some of the product is under contract even as it's being developed and leased. "In the old days, you had to wait for a year of stabilized income to get a loan on a building," she says. "These days, if we like it and want to own it, all you have to do is build it and fill it, and we'll take it off your hands as soon as it's occupied."
Fitts agrees, adding that coming debt maturities will also drive more sales through the remainder of 2013. "Student housing came into favor during the 2006-2008 time period," she says. "A lot of deals will be coming to maturity soon on the loan side, and some of those owners will look to sell those deals."
Will the remainder of 2013 see the massive sales that marked 2012? Jackman says yes, though many of the larger deals could be privately and directly marketed between the major players.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
