Student Housing Business

MAY-JUN 2018

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

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May/June 2018 StudentHousingBusiness.com 76 INTERFACE CONFERENCE sations that we've had over the last decade, we're finally realiz- ing everything that we had hoped would occur in the industry," continued Bill Bayless, CEO of American Campus Communities. "When you see the cap rate com- pressions taking place, and the global equity that is flowing into the sector, it is all based on the risk-adjusted return that we, and so many of the sector's companies, have put forth over that decade." "When you see the stability of cash flows that this industry offers, coupled with what is still a supply- and-demand imbalance in favor of more supply needed, it is a rare opportunity in real estate," said Bayless. Wes Rogers, president and CEO of Landmark Properties, points to stability and continued demand as drivers for investment in stu- dent housing properties. "Investors that we talk to are attracted to the space because of the stability of cash flows over a long period of time," said Rogers. "They're also attracted to the supply and demand fundamentals. Forty-five thousand beds being delivered nationally is less than the enrollment growth at the top 180 universities. Big picture, supply and demand is still in great shape, which is not necessarily the case in the multifamily sector." Randy Churchey, CEO and chairman of the board for EdR, pointed to the wealth of informa- tion available today as a catalyst for the continuing increase of insti- tutional investment in the sector. "You have two public companies that publish information all of the time, and stock analysts following those companies," said Churchey. "Axiometrics has data out about how well the industry has per- formed, as well. That wealth of data available for institutional investors to look at and analyze has helped a great deal — and the data is large- ly positive for investments in our sector." The next topic of discussion was tax reform, and its impact on com- mercial real estate as a whole, and more specifically the student hous- ing sector. "At first, we were very nervous about the new tax reform legislation, as it increased the hold period for carried interest from one year to three years," said Rogers of Landmark. "We employ a lot of car- ried interest, and have been able to successfully convert the vast major- ity of our income to long-term capi- tal gains over the years, so we were very concerned with that increase in time and what it was going to do to the tax rate that we paid." "Fortunately, we've been largely able to structure around it," contin- ued Rogers. "On the net, it's proba- bly going to be good for us because of the lower ordinary income rates that result, despite having the same long-term capital gains." Peter Stelian, CEO and founder of Blue Vista Capital Management, disagreed. "I think the capital gains issue is going to be a huge issue," he countered. "I don't think that the Treasury department has fully sort- ed out the issue, nor has the devel- opment industry fully absorbed the issue. In particular in student hous- ing, as opposed to traditional mul- tifamily, it puts a lot more risk on a developer." Katz pivoted the conversation to the large portfolio institutional acquisitions in 2017 by Mapletree Investments, American Campus PLATINUM SPONSORS: The InterFace Student Housing Exhibit Hall featured more than 60 vendors and service providers to the industry and was the scene of two lively cocktail receptions in addition to other networking and dealmaking during the event. MEDIA & PROMOTIONAL SPONSORS:

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