Student housing poised for further growth; Kushner scraps Veris deal talks

S&P Global Market Intelligence offers our top picks of real estate news stories published throughout the week.

Transaction volume in the U.S. student housing sector grew 64% to a record $18.9 billion from the previous all-time high of $11.5 billion in 2021, according to JLL Capital Markets research.

The sector is gaining interest from international investors that have grown their holding to 20% market share from 2017 to 2021, or equivalent to $10 billion of investments. In comparison, cross-border capital only held 6.7% of market share from 2012 to 2016, the analysis showed.

Buyers from the Middle East, Singapore and Latin America are becoming active investors in the space.

Both domestic and foreign investors target student housing properties because they consider the assets recession proof, as leases have parental guarantees and enrollment has historically increased during economic recessions, JLL said.

The sector is expected to retain momentum and see yet another strong performance in 2023, according to Yardi Matrix's National Student Housing Report, which includes over 2,000 universities and colleges nationwide.

Roughly 48% of beds at Yardi 200 universities, which are investment grade universities across all major collegiate conferences, were already leased for the fall 2023 school year as of December 2022, and rent growth was strong at 4.7% yearly. Supply, on the other hand, is being impacted by rising interest rates. This has caused contraction in the development pipeline, which includes planned, prospective and under-construction properties.

CHART OF THE WEEK: Average short interest in US REITs up in December 2022

⮞ The average short interest in U.S. equity real estate investment trusts was up 16 basis points in December 2022 to 3.2% of shares outstanding, according to S&P Global Market Intelligence data.

⮞ The advertising REIT group recorded the most gain in average short interest during the month, led by Outfront Media Inc.

⮞ Overall, healthcare-focused Medical Properties Trust Inc. saw the highest increase in short interest by December-end.

M&A

* Kushner Cos. LLC abandoned talks for a potential deal with Veris Residential Inc. The multifamily REIT said its board is looking at launching a strategic review process in due course.

* Sortis Holdings Inc. agreed to buy hotel chain operator Ace Group International LLC for $85 million in cash, Dow Jones Newswires reported. Ace operates 11 hotels in Los Angeles, New York and New Orleans as well as Kyoto, Japan.

Funding

* TF Cornerstone Inc. secured $725 million in construction loans from Wells Fargo and PNC Bank for its apartment complex development in New York City, The Real Deal reported. The project will span 811 units across a 25-story tower and a 38-story building connected by a six-story podium, and 575 units across a 33-story building above a six-floor podium.

* Alidade Capital LLC raised $250.6 million at the close of Alidade Capital Fund V LP fund. The firm's fifth value-add real estate fund will invest in properties in select secondary geographic markets with tenants in the life sciences, engineering, robotics, software and other related industries.

Property transactions

* A joint venture among Metrovest Equities Inc., BLDG Management Co. Inc. and BB Hotels seeks to sell a luxury resort in Paradise Valley, Ariz., for a potential price of over $220 million, Green Street reported. The Sanctuary Camelback Mountain resort comprises 110 rooms and eight villas.

REIT Replay: Hotel, office REITs post biggest stock gains in week ended Jan. 13