Investor Interest: Alternative Real Estate

"…the cap rates on the best multifamily, office and retail buildings have fallen so low lately that it has become difficult to achieve decent yields." That's according to Elaine Misonzhnik, Demographic Trends Drive Investor Interest in Alternative Real Estate Assets | Student Housing content from National Real Estate Investor.Demographic Trends Drive Investor Interest in Alternative Real Estate Assets | Student Housing content from National Real Estate Investor

Medical office, seniors housing, and student housing are seen as alternatives to the more traditional categories. Does student housing seem the larger gamble due to the student-loan problem but more so, the advent of online courses such that more students will opt to live at home with parents longer during the slow recovery?

Does the following sound like enough to convince you that student housing is a solid bet?

“There are a lot of things about this particular sub-sector of multifamily” that are attractive, says Ted W. Rollins, CEO of REIT Campus Crest Communities Inc. In February, Campus Crest began a staged acquisition of its competitor Copper Beech Townhome Communities LLC, paying $230 million in cash and taking on a $31.8 million loan in exchange for a 48 percent interest in 35 student housing properties. “It’s recession resistant and it’s a very stable asset class that grows consistently. Even through 2008 and 2009, these assets continued to perform well. And it’s a growing industry—the percentage of students graduating from college is increasing, the average stay at college is increasing and there is a consistent increase in foreign enrollment.”

Currently, "public REITs are dominating these sectors (medical office, seniors housing, and student housing)," says David Gilbert, chief investment officer, Clarion Partners.

What do you think of those "alternative" assets?


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