Student Housing Business

JUL-AUG 2018

Student Housing Business is the voice of the student housing industry.

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Page 102 of 104

WHAT'S ON MY MIND July/August 2018 102 E Every time I hear or read about some sig- nificant event within the student housing seg- ment I ask myself if it is good for the broader sector. Admittedly, part of this is based in fear because student housing is the only thing I've ever done in my career. However, part of it comes from a good, less selfish place. A place that wants to see the sector continue to grow and flourish and provide opportunities to people in the way it has provided to me. So when rumors of Greystar's $4.6 billion buy- out of Education Realty Trust (EdR) became a reality I started to really think about what it meant to the sector — what would be the potential impact? I started thinking over my nearly 20 years of experience in this segment and, other than ACC going public in 2004 and Harrison Street's entrance into the space in 2007, I cannot think of a more significant event. It's still unclear as to exactly what is going to happen to EdR and the employees, but let's be honest with ourselves, Greystar and their capital partner(s) will be running the show. My initial gut reaction was 'how can los- ing a great company, one with high-quality and high-performing assets all under superb leadership be a good thing for the space?' That in and of itself just didn't make sense to me. EdR and its predecessor company, Allen & O'Hara, are one of two or three groups who can be credited with inventing purpose-built privatized student housing. Tom Trubiana and Olan Brevard are legends in this sector. If it weren't for these guys I'd probably still be caddying at the golf course my lovely parents belong to in suburban Philadelphia. EdR is highly respected on Wall Street, highly regarded by colleges and universities, and maybe most importantly, as evidenced by its portfolio occupancy, trusted and regarded by the parents and kids who live in its 79 com- munities. EdR didn't develop that kind of reputation overnight — it was earned through honesty, trust, doing the right thing and being good stewards of the space over the last 54 years. Aside from the emotional element, there's a less subjective and more plausible concern which involves a public company going pri- vate — which I view as a negative. The one overarching criticism of student housing is that it's too small. Keep in mind, two student housing REITs — GMH and Campus Crest — have already been lost, which certainly hasn't help add credibility to the space. Two REITs and $7 billion to $10 billion in annual investment volume are small potatoes when compared to the traditional real estate sectors. In 2017, transaction volume in the conven- tional multifamily sector topped $140 billion. My point is that we need to grow, not con- tract. We need more good public companies, not fewer. In order to grow the segment, we need to spread information and educate people. Public companies spread information much better than private companies. That's a fact. They are required to release data regu- larly, are highly transparent and most impor- tantly, are trusted. ACC, to its credit, has become an expert in this area. With the con- tinual improvement of Axiometrics' data and the different reports released by the various brokerage shops, student housing has made great strides in the area of data dissemination over the past several years. I strongly view this particular aspect as a significant and real step back for the sector. As I ruminated, thinking through all of the potential advantages ACC will now have as the only public company, I found myself Googling Greystar. Admittedly, I always thought of the company as a big conventional multifamily player (it is the largest operator of apartments in the U.S.) and I never really considered it a player within the context of the student housing segment. I knew Greystar had a sizeable student management platform in the U.S. However, I'd never run into it or against it in the domestic student transaction world — until now. As I read through its website as well as a hand- ful of miscella- neous web-based articles, I learned that Greystar is the third largest owner of student hous- ing in the United Kingdom and has the largest student management platform in Spain. Through its investment management business, it man- ages over $13 billion in equity across mul- tiple investment vehicles. Led by Bob Faith, Greystar is young, bright, creative, able to raise/manage institutional capital and clearly is very aggressive — all of which is exactly what this space needs. The optimist in me hopes that Greystar injects new energy and life into the space. Perhaps it will bring some new ideas and maybe some borrowed ones picked up along the way from its time in the conventional world. I do not see Greystar being content with just gobbling up EdR — at least that's not what its track record would suggest. After the dust has settled and the celebratory cham- pagne hangover wears off, I hope Greystar truly understands the shoes it needs to fill and how important a role it now has as one of the leaders in a sector that is still in its infancy. Good luck, Greystar, and thank you EdR. Brian Thompson, executive vice president, investments, CA Ventures Good for Shareholders, But Good for the Space? Thoughts on the largest merger the student housing industry has seen in years. By Brian Thompson BRIAN THOMPSON Executive Vice President, Investments CA Ventures

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