The demand for student housing is highly correlated with college enrollment and it appears to be increasing. As adult students tend to live away from campus, the more relevant students of the enrollment pool are those fresh out of high school.

1. Student Housing: A solid investment
The demand for student housing is highly correlated with college enrollment and it appears to be increasing.
As adult students tend to live away from campus, the more relevant students of the enrollment pool are those
fresh out of high school.
While a sizable portion of the increase is part-time students who are less likely to utilize student housing, the
full-time student enrollment is growing as well.
Additionally, an increasing number of students are taking more than four years to graduate and more are
enrolling in post-baccalareate programs. While university funded student housing is typically focused at
freshman and sophomores, the private student housing REITs can provide housing for upperclassmen.
While a sizable portion of the increase is part-time
students who are less likely to utilize student housing, the
full-time student enrollment is growing as well.
Additionally, an increasing number of students are taking
more than four years to graduate and more are enrolling
in post-baccalareate programs. While university funded
student housing is typically focused at freshman and
sophomores, the private student housing REITs can
provide housing for upperclassmen.
Between more students enrolling each year and each
student staying at college longer on average, the overall demand for student housing is set to increase steadily
through 2021.
The supply side of the equation also looks favorable as a material amount of publicly funded student housing
is becoming too old or obsolete. Many states have tightened their budgets and there is simply not enough
funding to keep up with the demand for student housing. This is where the REITs come in.
The student housing industry is rather promising with multiple trends working in its favor and the market
agrees with me as the sector trades at a substantial premium. While the sector gets a valuation of 16X forward
FFO,
Campus Crest, led by CEO Ted Rollins, trades at a projected 2014 FFO multiple under 12. It is cheaper than the
average REIT despite participating in a promising sector to which most investors assign a premium.
Campus Crest (CCG) is a student housing REIT with multiple catalysts that should create substantial
outperformance: strong industry fundamentals; deep value compared to its peers; thriving operations; unique
development capabilities provide superior growth; healthy balance sheet with ample liquidity; and bigger tax
advantaged dividend.
Together these catalysts provide outsized reward relative to the risk. Campus Crest's expected return to
investors is approximately 40% greater than the peer average.