Student Housing Finance Transactions Continue Through Pandemic
Despite the ongoing struggles faced by the student housing sector, lenders are still active, according to a recent survey by Student Housing Business.
The coronavirus pandemic has had a major impact on all aspects of on- and off-campus student housing. In an attempt to better assess that impact and the sector’s outlook for the future, Student Housing Business, sister publication of REBusinessOnline, conducted a survey of industry professionals over the course of several weeks in May.
The survey was segmented by industry function for specific elements of the business, allowing SHB to better understand the pandemic’s distinct influence on each segment of the industry.
Of the survey’s 569 respondents, 19 defined their company’s role in the industry as that of a lender, debt capital source, mortgage banker or broker. In this segment of the industry, 15 percent of companies laid off or furloughed employees at the corporate level and 8 percent instituted pay cuts.
When asked whether their companies are still financing, lending or facilitating any investment and development transactions, 77 percent indicated yes.
Forty-six percent of respondents noted that they are currently most inclined to lend on investment deals with 38 percent noting they are equally interested in both development and investment transactions.
No respondents indicated that their activity and lending levels were normal for the month of April, with 46 percent of respondents reporting that their activity was down by 50 percent. Sixty-nine percent of those polled expect to see a surge in deals financed or for sale following the pandemic, but over half of respondents believe it will take more than four months for deal flow and velocity to fully snap back.
The verdict is mixed on what impact Federal Reserve monetary policy and lower interest rates will have on the lending and investment environment. Fifty-four percent of respondents believe it will be very helpful and 46 percent predict it will not have much of an impact.