AUSTIN, TEXAS — American Campus Communities' Bill Bayless and EdR's Randy Churchey, CEOs of the two largest companies in the student housing sphere, weighed in Wednesday on emerging industry trends during the fourth annual InterFace Student Housing Conference in Austin that has attracted more than 700 attendees.
The two publicly traded REITs have been growing by leaps and bounds, but most public attention has been on EdR, which secured an agreement with the University of Kentucky (UK) to develop and manage all of the university's on-campus housing. It is the first such deal to be struck where a large, land-grant public university chose to outsource its entire stock of on-campus housing.
The 50-year ground lease was signed in February, and ground has been broken for a brand-new, 600-bed honors college. Eventually, EdR will add 3,000 beds to the campus and drive the on-campus bed total to 9,000. This agreement has the industry wondering what this deal could mean going forward.
Moderator Dorothy Jackman, managing director of the National Student Housing Group for Colliers International, asked the CEOs if more colleges like UK will soon make similar deals. “Those types of major initiatives take longer to transact,” Bayless told the attendees gathered Wednesday at the Hyatt Regency Austin. “There are several hundred public-private partnerships with several universities that are happening incrementally right now, and that's how we want to see it happen.”
Churchey disagreed, however. “What happened at UK [the aging stock of dorms, shrinking state appropriations, and growing enrollment leading the university to privatize] is happening at other universities. And we are even seeing the same strains at private universities. Bookstores and food services have all gone this route. I'm hoping to say it's a fact that housing will soon follow.”
On overbuilding, Bayless said student housing companies are performing due diligence more thoroughly to avoid some of the mistakes made in 2005 and 2006, such as building too far from campus. Smarter, more responsible development has led to additional capital entering the sector, a positive sign, emphasized Churchey.
But in a later session, “Up Close with Fannie Mae and Freddie Mac,” Richard Martinez, the managing regional director for multifamily in Freddie Mac's Southeast Regional Production & Sales Group, said that without an experienced student housing partner, investors are less likely to secure loans and enter the sphere.
The conventional wisdom is that student housing has proven to be recession-resilient during a strapped economy compared to other real estate sectors. Now industry leaders are steering collegiate housing into a new era of sophistication.
The emergence of cottage developments versus garden-style apartments, an increase and diversification of institutional investment and a strong eye toward sustainable development with more mixed-use elements reflect the evolution of the industry.
In addition, owners and managers of student housing are developing closer ties with university officials as the number of public-private partnerships increases.
The fourth annual InterFace Student Housing Conference in Austin features approximately 40 exhibitors.
The InterFace Student Housing Conference hosted by France Media has attracted developers, operators, managers, architects, brokers, lenders and others. Panel topics range from management challenges and leasing to investment trends to turning around distressed assets. Attendees arrived April 3 for a golf outing and welcome reception in an exhibit hall featuring approximately 40 vendors that serve student housing properties.
The conference, which also recognizes outstanding achievement through the Innovator Awards, concludes today.
— Lynn Peisner