Jackman Group Limited

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Student Housing Business recently posted an article based on Real Capital Analytics data describing the activity in 2009 for Student Housing Investment transaction velocity. http://www.studenthousingbusiness.com/industry-voices/715-a-recap-of-the-quiet-2009-student-housing-investment-market.html Credit markets froze following the financial crisis that hit in September 2008, and the commercial real estate sector has been among the hardest hit; not a single property type has been able to avoid the downturn in investment activity. Student housing, an increasingly popular niche for investors, is no exception. Sales volume of properties to trade for $5 million plus in student housing properties hit bottom, with only 20 properties trading hands year to date for a total of $313 million. That marks a stunning 87% fall from 2008 totals, and it is also the lowest volume for the niche since RCA began tracking student housing in 2004. From 2005 to 2008, annual student housing volume ranged between $2 billion to $2.5 billion, and typically represented 2 percent to 3 percent of all apartment properties traded. Despite the decline in volume this year, student housing sales this year have stayed true to this pattern, accounting for 2.8 percent of all apartment activity.However, cap rates for this niche have risen markedly higher than those for apartments as a whole. Student cap rates are up 140 bps, almost three times the 50 basis-point gain for apartment properties on average. Even so, pricing has held up more for this niche than for the broader apartment sector, with only a 3 percent drop on price per unit compared to a 13 percent per-unit slump for all other apartments. One indicator of the slow market: to date this year, no student housing asset has traded for $50 million or more; the highest price paid so far this year was the nearly $46 million sale of the Cottages of Lubbock, a 241-unit asset in Lubbock, Texas. The property was acquired by Campus Living Villages, an investor group based in Sydney, Australia, from Capstone Capital Corp. The thin sales volume cut across the entire country; no region had sales above $100 million, although the Southwest came close and had the most activity five transactions totaling $99 million. Not a single student housing property has traded in the Northeast so far in 2009. Typically, the public REITs have led investment in this niche, but these companies have stayed out of the market, making no acquisitions to date this year. Private investors accounted for 62 percent of acquisitions. All but two deals involved just a single property. Only Westar Associates and Kayne Anderson Real Estate Partners were the exceptions, each acquiring two assets.

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