Category Archives: Student Housing

Student Housing: A solid investment

The demand for student housing is highly correlated with college enrollment and it appears to be increasing. As adult students tend to live away from campus, the more relevant students of the enrollment pool are those fresh out of high school.campus crest 02

While a sizable portion of the increase is part-time students who are less likely to utilize student housing, the full-time student enrollment is growing as well.

Additionally, an increasing number of students are taking more than four years to graduate and more are enrolling in post-baccalareate programs. While university funded student housing is typically focused at freshman and sophomores, the private student housing REITs can provide housing for upperclassmen.

While a sizable portion of the increase is part-time students who are less likely to utilize student housing, the full-time student enrollment is growing as well.

Additionally, an increasing number of students are taking more than four years to graduate and more are enrolling in post-baccalareate programs. While university funded student housing is typically focused at freshman and sophomores, the private student housing REITs can provide housing for upperclassmen.

Between more students enrolling each year and each student staying at college longer on average, the overall demand for student housing is set to increase steadily through 2021.

The supply side of the equation also looks favorable as a material amount of publicly funded student housing is becoming too old or obsolete. Many states have tightened their budgets and there is simply not enough funding to keep up with the demand for student housing. This is where the REITs come in.

The student housing industry is rather promising with multiple trends working in its favor and the market agrees with me as the sector trades at a substantial premium. While the sector gets a valuation of 16X forward FFO,

Campus Crest, led by CEO Ted Rollins, trades at a projected 2014 FFO multiple under 12. It is cheaper than the average REIT despite participating in a promising sector to which most investors assign a premium.

Campus Crest (CCG) is a student housing REIT with multiple catalysts that should create substantial outperformance:  strong industry fundamentals; deep value compared to its peers; thriving operations; unique development capabilities provide superior growth; healthy balance sheet with ample liquidity; and bigger tax advantaged dividend.

Together these catalysts provide outsized reward relative to the risk. Campus Crest’s expected return to investors is approximately 40% greater than the peer average.

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Campus Crest’s approach to student housing

Campus Crest is structured on a vertically integrated platform that includes development, construction, real estate management, and asset management. This operating platform allows us to control asset quality, reduce cost, increase delivery speed, improve operating efficiency, and ultimately, drive value for stakeholders.

“Our approach to student housing looks like none other,” said Ted Rollins, chief executive officer of Campus Crest Communities.  ted rollins build

Vertical integration has made it possible for us to implement prototype construction, where repetition of product has resulted in smarter construction, consistent operational practices, and a hospitality brand model across the portfolio.

“Our construction strategy includes repetition and refinement of prototype, a captive general contractor and construction manager, and captive wholesale supply that results in a 15-20% cost savings, giving Campus Crest a strong market advantage,” said Rollins.

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