Huntington Beach, Calif. — As the industry rounds the bend into the fourth quarter, more than 500 student housing industry executives gathered for the NMHC Student Housing Conference last week in Huntington Beach, California. The conference had more than a dozen sessions covering the industry from new capital to research to development and construction.
The conference kicked off, Wednesday, October 3 with several members-only sessions. The opening general session, “Executive Insights” focused on the state of the industry with executives from four leading owners, managers and investment sales firms: Randy Churchey, former CEO of EdR and now with Greystar; Peter Katz, executive managing director of IPA; Bob Clark, CEO of Peak Campus; Bill Bayless, CEO of American Campus Communities; Wes Rogers, CEO of Landmark Properties; and Brian Dinerstein, President of The Dinerstein Companies. Doug Bibby, president of NMHC, moderated the session, which discussed the current climate of the industry.
The first question was the one on the mind of many in the room — “Why did EdR sell to Greystar?” — was poised to Randy Churchey, the former CEO of EdR, now with Greystar. Churchey stated that the sale was primarily driven by the fact that the value of EdR’s assets did not connect to its share price, a thought held by a number of REITs across many real estate sectors presently. The sale was, he said, “a good outcome for shareholders,” who received a premium of the company’s share price at closing. Other panelists commented that EdR’s sale to Greystar also brought another big name to the industry — Blackstone — since that company will be a partner with Greystar in some of the assets.
The opening general session also addressed supply-and-demand in the industry, with Rogers adding that rising construction costs are pressing the price point so that most student housing properties are built with the upper end of pricing in mind. He also noted that many suppliers are raising prices, forcing developers to do more value engineering in pre-construction phases to save development costs. Dinerstein agreed, adding that the company is taking more control of its vendors and consultants rather than allowing them to directly approve costs. Clark and Bayless agreed that there was little that they saw in terms of supply/demand issues that gave them cause for concern, despite a few markets like College Station [Texas] and Columbia [Missouri] showing poor occupancy. The panel also tackled the difficult issue of labor in off-campus student housing, stating that it is challenge to find and retain skilled labor. “One of the big risks is people,” said Clark. “There is not enough talent and we must invest in our employees’ careers.” Toward the end of the session, all were asked about their leasing results for fall 2018. After ACC reported its results (the company’s same store portfolio was 97 percent leased), others joked that since there was now only one public company in the industry their results were better, before giving more accurate approximate answers. All were in the mid-90s percentage-wise, their principals reported.
Thursday morning kicked off with a panel on new equity in the industry, featuring executives from CPPIB (Canadian Public Pension Investment Board); Goldman Sachs, Blackstone and ARA Newmark, moderated by Avi Lewittes, chief investment officer of The Scion Group. All discussed their entries into student housing and future plans to invest in the sector. Interestingly enough, all reported that they had no allocations set for the sector, but preferred to be more opportunistic with their different funds.
As the day continued, sessions covered the industry’s economic outlook, data, investing in student housing assets, construction and IT. The conference concluded on Friday, October 5, with sessions on town and gown relationships, managing risk and exclusive NMHC research covering the cost of housing options for students.