Student Housing Moves to the Mainstream
Considering the overall economy is still shaky, the capital markets are funding a lot of student housing deals these days at quite aggressive rates and terms.
With continued enrollment gains nationwide generally boosting rents and operating incomes at student housing properties, the capital markets are bullish on the sector.
“It’s never been easier to secure debt for student housing properties — and equity as well,” says veteran developer Donna Preiss at Raleigh, N.C.-based Preiss Co.
The most aggressive lenders might quote a rate as low as 4.5% to 4.75% for a seven-year mortgage secured by a solid asset. A rate in the low-5s is more likely with a 10-year transaction, Powell says.
Meyer expects that additional equity investors will migrate to student housing as the first wave of post-recession projects goes into operation — and gives a clearer indication of likely stabilized cash flows.