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Shares in Landlords Continue to Rise

Posted by Richard Ward in

Image courtesy of Flickr, Creative Commons

Shares in companies renting campus apartments to U.S students are thriving, with shares in Education Realty Trust, up 54% in the past 12 months. American Campus Communities has also posted positive gains, reporting a 44% rise in its stock.

By comparison the Bloomberg index of North American apartment landlords is up 12% over the same time period.

The rise in student accommodation providers has been attributed to the boom in student enrolment over the past 10 years, whilst at the same time investment into new on-campus accommodations hasn't kept up with demand.

Shares of such companies have also done well as investors look to use the stock to hedge themselves against the possibility of a U.S recession. Traditionally purpose build student accommodation has performed well in both good and bad times, whilst certainty of cash flows is also seen as a benefit to investors.

Figures provided by the U.S Department of Housing and Urban Development, show that 17.7m students were enrolled in post-secondary, degree-granting institutions in 2012. This represents approximately a 48% increase since 1990. Over the same period the number of students living in on-campus student accommodation has increased by just over 600,000.

In a time of low interest rates, collecting rent has looked like a way to achieve decent returns. In particular even during a recession college enrolment has increased, meaning landlords can somewhat protect themselves from a downturn.