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Looking to diversify that portfolio? Consider the growth of student housing



The student housing market has been booming in the U.S., with what we believe to be a continued positive outlook. One of the reasons for the influx of capital into the market is that investors are seeking portfolio diversification, and therefore investing in niche commercial real estate sectors.

According to the latest PREA Investor Intentions Survey, 14 percent of institutional investors say they’re focusing on student housing. The obvious reason for choosing student housing as an investment is that it can provide the opportunity for strong risk-adjusted returns. But it also offers diversification in an investment portfolio. Here’s why student housing may be attractive to investors looking to diversify:

Student housing has historically been resistant to recessions

Student housing has historically been less tied to the ebb and flow of the economy than other sectors of the real estate market. When a recession hits or the economy worsens, the demand for student housing his historically increased while other sectors, including retail, office and industrial, declined. That’s because more people enrolled in colleges and universities when a recession happened. So with an increasing number of investors worrying about a coming recession, diversifying an investment portfolio with student housing may make sense.

It’s attracting diverse investors

Over the last several years, student housing has been increasingly on the radar of international investors interested in portfolio sales, providing for a steady and increasing capital flow into the sector. These investors include sovereign wealth funds like GIC and ADIA, private equity firms, foreign pension funds as well as foreign investors such as Safanad, Allianz and Investcorp. Like domestic investors, they’re attracted by diversification, valuation and the historical risk vs. return. Many of these investors also are familiar with student housing in the U.S. because they attended a university in the country or have children who were educated here.

We believe student housing has a strong outlook

Even in the strong economy of the last 10 years, enrollment at universities in the U.S. has steadily increased in recent years. Between now and 2027, the National Center for Education Statistics expects college enrollment to increase from 19.9 million to 20.5 million.

So with the growing number of students, we would anticipate an increased demand for housing. However, the supply of new student housing is declining, which increases the value. The rising capital flow into the niche sector also suggests a strong forecast for the foreseeable future.

Even in a vibrant economy, smart investors look to diversify in sectors that have the potential to yield returns in the long term. With its perceived outlook, the diversity of investors and historically recession-resistant characteristics, student housing may be a logical choice for a diversified portfolio.

Offering Disclosure:
The contents of this communication: (i) do not constitute an offer of securities or a solicitation of an offer to buy securities, (ii) offers can be made only by the confidential Private Placement Memorandum (the “PPM”) which is available upon request, (iii) do not and cannot replace the PPM and is qualified in its entirety by the PPM, and (iv) may not be relied upon in making an investment decision related to any investment offering by an issuer, or any affiliate, or partner thereof (“Issuer”). All potential investors must read the PPM and no person may invest without acknowledging receipt and complete review of the PPM. With respect to any “targeted” goals and performance levels outlined herein, these do not constitute a promise of performance, nor is there any assurance that the investment objectives of any program will be attained. All investments carry the risk of loss of some or all of the principal invested. These “targeted” factors are based upon reasonable assumptions more fully outlined in the Offering Documents/ PPM for the respective offering. Consult the PPM for investment conditions, risk factors, minimum requirements, fees and expenses and other pertinent information with respect to any investment. These investment opportunities have not been registered under the Securities Act of 1933 and are being offered pursuant to an exemption therefrom and from applicable state securities laws. All offerings are intended only for accredited investors unless otherwise specified. Past performance are no guarantee of future results. All information is subject to change. You should always consult a tax professional prior to investing. Investment offerings and investment decisions may only be made on the basis of a confidential private placement memorandum issued by Issuer, or one of its partner/issuers. Issuer does not warrant the accuracy or completeness of the information contained herein. Thank you for your cooperation.

Securities offered through Wealthforge, LLC Member: FINRA/SIPC. Only available in states whereWealthforge, LLC is registered. Wealthforge is not affiliated with any other entities identified in this communication.

Real Estate Risk Disclosure:
  • There is no guarantee that any strategy will be successful or achieve investment objectives including, among other things, profits, distributions, tax benefits, exit strategy, etc.;
  • Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments;
  • Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities;
  • Potential for foreclosure – All financed real estate investments have potential for foreclosure;
  • Illiquidity – These assets are commonly offered through private placement offerings and are illiquid securities. Private Placements are Speculative.
  • There is no secondary market for these investments;
  • Private placements carry a high degree of risk
  • Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions;
  • Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits;
  • Stated tax benefits – Any stated tax benefits are not guaranteed and are subject to changes in the tax code. Speak to your tax professional prior to investing.

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