Student Housing Investment Remains Uncertain, S&P Says

Some pension funds and other institutions have taken big positions in the segment.


Even with the fall semester roughly two months away for most colleges and universities, many students still have little certainty whether they’re returning to campus or whether they should just stay put. 

Neither do investors of student housing. For the moment, it seems the short answer is that little has changed. Pre-leasing data shows a slight decline, just 0.7 percentage point for schools that were planning for in-person instruction from the same period last year, according to a June report from American Campus Communities, which is one of the largest owners of student housing properties in the United States.

But there are plenty of challenges ahead. Many are waiting to see what lawmakers and university presidents will decide.

Student housing is considered a relatively niche commercial real estate investment. But institutional investors have made significant investments in the past. In 2018, the Canada Pension Plan Investment Board (CPPIB), Singapore sovereign wealth fund GIC, and property management firm Scion Group made a $1.1 billion acquisition of 24 US student housing properties. The portfolio had a mix of Class-A properties in mostly tier-1 university markets. 

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Depending on the speed of recovery, student housing properties for larger, affluent public or private universities will continue to perform well, according to a report from S&P Global Ratings. Large endowments or government funding will help them weather headwinds.

Not so for housing properties at smaller colleges, which will suffer given that they’re already seeing falling enrollment. 

“The COVID-19 pandemic will likely exacerbate these trends, which will in turn affect student housing properties that primarily cater to these colleges,” S&P Global Ratings analysts wrote.

In the short term, the analysts write, a possible spike in coronavirus cases could weigh on the performance of student housing properties. But in the long run, how online learning will shape higher education could forever change the landscape. 

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CIO Launches Webinar Series

Monthly virtual panels and active discussions on highly discussed topics to start July 23.


The world is virtual right now, and vetting managers and ideas can be challenging. CIO is launching a series of online panels with your fellow allocators to discuss some of the most pressing topics of the day. CIOs will be able to meet online, raise questions, and add to the discussion.

We’ll be launching our first panel, “Passive Investing Leveraging ESG Integration and ESG Benchmarks,” at 2 p.m. on July 23. It will feature Chris Ailman, CIO of the California State Teachers’ Retirement System (CalSTRS) and Hernando Cortina, head of index strategy at ISS ESG in a dynamic discussion moderated by CIO’s managing editor, Christine Giordano.

On Aug. 13, we’ll discuss commercial real estate with Ash Williams, CIO of the Florida State Board of Administration and Jonathan Grabel, CIO for the Los Angeles County Employees Retirement Association (LACERA), in an active panel moderated by CIO’s market’s editor, Larry Light.

Other topics to be covered include: Climate Risk and Financial Performance (Sept. 10); Rebalancing and De-risking During a Pandemic and Election Year (Oct. 28); Alts (Nov. 11); and Debriefing 2020: Portfolio Tools and Tactics for the Years Ahead (Dec. 2).

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Registration and upcoming webinar information is here. Register early to save your seat.

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