Trepp Back to School Special: A Student Housing Loans Cheat Sheet

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Trepp has published its Back to School Special: A Student Housing Loans Cheat Sheet examining the student housing market.

"The student housing market has been a fast-growing asset class in recent years. Many CMBS loans backed by student housing properties were built only shortly before being securitized."

Trepp, LLC, a leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, has released its Back to School Special: A Student Housing Loans Cheat Sheet. To read more and see a full list of student loans behind CMBX deals, click here: https://info.trepp.com/trepptalk/back-to-school-student-housing-loans-cheat-sheet.

In the post-financial crisis era, the student housing sector served as one of the major areas of growth for CMBS lenders.

With the GSEs taking the lion’s share of traditional multifamily finance since 2008, CMBS lenders have been forced to move into sub-segments of the apartment space, with the student housing market being one of them. (While GSEs also lend on student housing loans, private-label lenders have been able to capture market share more so than in the traditional multifamily sector.)

“The student housing market has been a fast-growing asset class in recent years,” said Trepp Senior Managing Director, Manus Clancy. “Many CMBS loans backed by student housing properties were built only shortly before being securitized. The absence of significant operating history has allowed the CMBS market to capture additional share when other lenders were skittish.”

Unfortunately, the CMBS market has seen several recent vintage student housing loans turn delinquent or get moved to special servicing.

Generally speaking, the student housing market is relatively barbelled in terms of inventory quality. One end consists of older, lower-end developments with more dated amenity offerings. Since “low end” housing construction is constrained and most campuses have a steady supply of frugal students as well as money-conscious parents, this part of the market usually soldiers on. On the other end, there is a constant new supply of amenity-rich multifamily units coming onboard – which has triggered – as we like to say - the “student housing amenity race.”

The housing options that find it hardest to compete are those complexes that were amenity-rich 10 years ago and remain pricey, but now seem dated. As a result, these landlords have trouble maintaining current occupancy levels while commanding premium prices, especially since they cater to a very specialized audience and are heavily impacted by new competition.

For additional details, such as charts displaying multifamily CMBS allocation by subtype, student housing CMBS in special servicing, a complete list of student housing loans in CMBX and more click here: https://info.trepp.com/trepptalk/back-to-school-student-housing-loans-cheat-sheet. For daily CMBS and CRE commentary, follow @TreppWire on Twitter.

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Manus Clancy
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