TSB Capital Advisors: Student Housing Finance Versus Conventional Multifamily Finance
Student housing lending faces a number of uncertainties as 2021 begins: agency policies affecting available sources of lending, the availability of distressed properties, special considerations for Tier 2 and 3 schools and the difficulties of obtaining construction and permanent financing under certain circumstances.
Timothy S. Bradley, founder of TSB Capital Advisors and a principal of TSB Realty, explains his outlook on 2021 for the student housing industry, including some of the intricacies in student housing finance versus conventional multifamily. While the two classes did not face vastly different outcomes before COVID, “Post-COVID is a completely different story. There is a significant delta when you are looking at permanent financing for student housing right now versus conventional. The agencies [have enacted] COVID reserves that have been instituted in new loan originations — and most new loan originations are for acquisitions versus refinancing right now. We are starting to see them reduce the reserves, but they were doing it for both multifamily and student.”
Bradley explains, “However the interest rates that, over the past three to four months, you could get for conventional housing versus student ranged anywhere from 50 to 75 basis points better for conventional. This allows the conventional market cap rates to keep compressing when you have debt that’s in the 2 to 2.5 percent range.”
to learn all about the student housing sector in 2021: financing options, GSEs’ appetites for this class, the role of P3s, borrower expectations and much more.
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