Unlocking Alternatives: Investing Beyond the Major CRE Asset Type

STUDENT HOUSING: INVESTMENT PERFORMANCE

Pricing and Volume Trends

• As with many other asset types, 2022 was a banner year for student housing as the sector experienced several major portfolio and M&A transactions that pushed transaction volumes to record highs. Among those transactions was the $12.1B purchase of American College Communities’ 166-property portfolio by Blackstone, as well as other large purchases by Harrison Street, Morgan Stanley and Brookfield. • Volumes have tapered linearly since Q3 2023, as debt availability becomes more constrained. Average pricing has slid slightly, as the composition of deals shifts toward distressed sales. • Cap rates had been steadily compressing through the end of 2021, but have slowly expanded since then. The student housing yield spread has noticeably compressed. After reaching 480 basis points (bps) at the beginning of 2020, the spread has reduced to 50 bps as of Q3 2023.

$10B $15B $20B $25B $30B

$100K $150K $200K $250K $300K

$B $5B

$K $50K

Unit Pricing ($)

Transaction Volume ($)

Transaction Volume (LHS)

Price per Unit (RHS)

Cap Rates and Spreads

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00%

600

500

400

300

200

Cap Rate

bps spread

100

0

DIVE DEEPER: • 2023 UK Student Housing Report

Yield Spread (RHS)

Cap Rate (LHS)

Top Quartile Cap Rate (LHS)

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Source: MSCI/Real Capital Analytics, Cushman & Wakefield Research