Surprising Investment Choice for the Coronavirus Pandemic: Student Housing

San Diego, California, Oct. 05, 2020 (GLOBE NEWSWIRE) — Since his first acquisition in 2007, Frederick W. Pierce, IV President and CEO of Pierce Education Properties, has amassed a long list of accomplishments in the private student housing industry, including hitting a portfolio surpassing $1 billion in cumulative acquisitions on October 1, 2020.  

But the one that really counts now is his advice to investors: student housing is a recession resilient investment. 

It may seem counter intuitive. Colleges and universities across the United States find themselves on the front lines of the coronavirus pandemic, making decisions for fall 2020 and into 2021 on whether students should return to campus for their education.

Pierce is unapologetically bullish on privately developed student housing as a strong investment today, and for years to come despite some uncertainty about on campus learning for the remainder of 2020. 

“You could have said, wow, all universities pivoting to 100% on-line courses could be the most challenging environment that you could imagine,” says Pierce. “But student housing has come through smelling like a rose. The percentage of (student housing) residents paying their rent in our portfolio has been between 96 and 97 percent in April, May, June and July during the pandemic. It underscores that our leases are backed by parental guarantees. Parents stood behind their students, stood behind their lease obligations, and supported their children’s lease obligations. It’s an important demonstration of resiliency.”

Higher education on campus more attractive in recessionary times 

“What happens in a recession?” asks Pierce. “What are the options for the spring graduating class from America’s universities this fall? Most are not going to get a job, unfortunately.  So many graduates are going to go back to school. They’ll go to graduate school, and they’ll further their education.” 

“Many workers have been laid off and realize they need to retool themselves. They need to go back to school so that they’re better prepared in the next up cycle to retrain for a different industry or to be better educated and more qualified for promotion. So, in down cycles, universities do better,” said Pierce. 

The data backs Pierce up. In April, 61 percent of residents in Pierce Education Properties owned student housing – a total of 18,000 beds at 24 properties – remained at campus. In May, nine percent returned to campus yielding 70 percent of students living at campus. And, despite that fact, 96% to 97% paid their rent.

Looking into fall 2020, a survey of more than 1,000 universities conducted by the Chronicle of Higher Education, a leading higher education periodical, found just eight percent of universities plan to provide only online instruction in the fall.  

“I don’t know if that sounds surprising to others. It’s not surprising to me. Higher education is about much more than what you learn in the classroom,” said Pierce. “Students want to be taught in the classroom. They want the whole college experience. They don’t just want to be an online student.” 

Online learning not a long-term factor 

“The future of higher education is not online learning. Online learning will be a component of higher education. What it will do is augment and supplement the access to higher education to those that aren’t the traditional residential student graduating high school and going onto college,” observed Pierce. 

“Online learning is not a disruptor to the student housing industry. Student housing is a recession resistant asset class and most institutional investors should seriously consider having a portion of their asset allocation dedicated into this specialty sector.”

Pierce says students and their families now have a renewed appreciation for the college experience. “Let’s face it, college age kids, they like their independence, they like their lifestyle. It’s not preferable for them to live at home. Frankly, it’s not preferable for the parents either.”

ABOUT PIERCE EDUCATION PROPERTIES  

Founded in 1995, Pierce Education Properties (PEP) took its platform national in 2006. More than a decade later, we’ve grown into one of the nation’s top 15 buyers and owners of student housing, and we’ve since acquired more than $1 billion of purpose-built student housing.