Wall Street poured billions into campus housing — thinking it was an easy win. With colleges sitting empty, here are the bets that could get hit the hardest.

Student housing owned by Blue Vista near the University of Chicago

Investors have poured billions into student housing, and now the sector’s undergoing its first real test.
Student housing providers’ performance will largely come down to whether they’re focused near small or for-profit schools that could collapse, or near state schools and top-tier universities that will continue to see strong enrollment.
The sector’s short-term outlook is bumpy, but analysts and executives said they’re still optimistic about the medium and long term.
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Avi Lewittes knows the pain college students – and their parents – feel as laptops on kitchen counters replace lecture halls.

“As a parent of college students who are attending college from their childhood bedrooms, online learning is clearly not a compelling value proposition,” said Lewittes, the father of three young adults.

And as chief investment officer of Scion Group, one of the country’s biggest student-housing providers, Lewittes has been evaluating the impact of sudden school closures and uncertainty about fall reopening not just on his kids, but across his company’s 28-state portfolio of housing for nearly 60,000 students.

Chicago-based Scion and its peers have poured billions of dollars into student housing in recent years from public-markets investors and private groups like pension systems and sovereign wealth funds. Investors have sought out the sector in part because when the economy goes south, enrollment typically shoots up, making student housing a better bet in a down market than other real-estate options like retail. The bigger student-housing companies often partner with well-known universities, helping to guarantee income.

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Now, after the coronavirus pandemic emptied college classrooms, the sector is facing its biggest challenge yet. While early predictions from five executives and analysts are rosy, the 2020 outlook hinges on an open question: Can students safely return to campus in the fall, and, in case of a second wave of the coronavirus, stay there? One Yale student told Business Insider earlier this month that all of her close friends are weighing taking the fall semester or the full year off.

So far, pre-leasing numbers look better than expected, but the demand dynamic is complicated.

Some international students, who can often afford nicer housing, may not return for the fall – but US students can’t do their study abroad programs, so they’ll need housing.

Facing a more difficult financial situation, some parents may not want to pay up for buildings filled with amenities, from hair salons to SoulCycle, while others may want …read more

Source:: Business Insider

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