This week, Berkadia Student Housing will be on-site at the Interface Student Housing conference in Austin. It’ll be the first time in a while that the team has gathered broadly with owners, investors, developers and lenders in the industry to talk about what’s ahead for student housing.
Pandemic restrictions created some uncertainty in the market but, like it did during the Great Financial Crisis, student housing has once again demonstrated its resilience. So far in 2021, Berkadia Student Housing has closed more than $300 million in investment sales transactions across 5,500 beds. Headed into the second half of the year, the outlook is bright. Ahead of Interface, we caught up with the team to talk investor outlooks, the lender landscape and, of course, Texas barbeque.
Interface comes at a good time—halfway into the year, and firmly on our way out of the pandemic, we have better sense of where things stand in terms of activity and performance. With that in mind, what about 2021 has surprised you so far?
It has been a positive surprise to see how quickly the country seems to be going back towards a normal way of life since the CDC lifted the majority of COVID restrictions. For student housing, we have seen an overall trend of stronger lease-ups for AY21/22 when comparing to AY20/21, which of course gives us confidence.
Certainly sales activity has picked up significantly since this time last year. Across the board, appetite for multifamily is nearly insatiable and student housing has benefited from that as well. We’re excited to see new investors enter the market, and as a result, new lenders enter the space as well, mainly in the form of portfolio lenders, such as regional banks and life insurance companies. We love to see this diversity—more lenders mean more options we can bring to our borrowers to meet their goals.
Sounds like you’re feeling really confident at this point in the year. What do you see on the horizon for your industry for the remainder of 2021?
Lending sources took a step back on student during the onset of COVID. Fortunately, after the start of the 20/21 school year, it was clear which properties were doing well and lenders were quick to identify which student deals they wanted to chase. We did see a flight to Power 5 but have also been able to fill gaps on the Tier 2 schools. We expect that lenders will continue to loosen up on student housing and we hope to see leverage climb back to pre-COVID levels.
Other than debating the best barbeque in Austin, what will the hot topics of conversation be at Interface? What are you most excited to talk about?
Power 5 schools remain of great interest to investors—across the student housing market, these schools showed the most resilience in terms of enrollment, lease up, etc.—so we expect clients and colleagues to be eager to hear what opportunities there are in these markets. It tracks with what we’re seeing on the lending side, where the best terms we’ve seen are generally coming from lenders seeking Power 5 schools.
On the financing side, we’re excited to talk with lenders and understand how they’re approaching a possible return to pre-COVID underwriting standards, which would drive more leverage into transactions