Tough month for education REITs
19 September 2014 London
Image: Shutterstock
US education exposed REITs have underperformed the rest of the REIT market over the last four weeks, according to research from Markit.
All three US listed student housing REITs have seen their shares retreat in the last month, while their short interest has increased by 41 percent year to date.
Over the last four weeks, shares in this small corner of the REIT universe have fallen by 5.4 percent on average.
The surge in shorting activity was led by Educational Reality Trust, which saw the proportion of its shares out on loan jump six-fold at the end of July to 6 percent.
The company has seen its shares hold up relatively well in the recent selloff, but has shown signs of buckling in recent weeks after its shares fell by 5 percent in the last week.
Leading the price decline has been Campus Crest Communities, which has fallen by just under 9 percent to the lowest level since its 2010 initial public offering.
The company, which operates over 43,000 beds in 80 campuses nationwide, recently announced that it was scaling back its purchase of competitor Copper Beach after failing to agree merger terms.
Shares in American Campus Communities, the largest of the three firms, have also fallen by a greater proportion than the rest of the universe with a 5.5 percent decline.
The quest for yield in these low rate times has forced investors to turn to increasingly exotic corners of the financial world such as these relatively high yielding student housing REITs where companies build and then lease multi-family units to students.
With the total US student population increasing by nearly a third in the decade to 2012, universities have increasingly turned to these firms to help house their growing attendees.
Markit’s Simon Colvin commented: “All has not been smooth sailing for these companies as recent speculation of an impending rate rise has seen all major US listed student housing REITs fall by a greater proportion than the rest of the REIT universe in the last month.”
All three US listed student housing REITs have seen their shares retreat in the last month, while their short interest has increased by 41 percent year to date.
Over the last four weeks, shares in this small corner of the REIT universe have fallen by 5.4 percent on average.
The surge in shorting activity was led by Educational Reality Trust, which saw the proportion of its shares out on loan jump six-fold at the end of July to 6 percent.
The company has seen its shares hold up relatively well in the recent selloff, but has shown signs of buckling in recent weeks after its shares fell by 5 percent in the last week.
Leading the price decline has been Campus Crest Communities, which has fallen by just under 9 percent to the lowest level since its 2010 initial public offering.
The company, which operates over 43,000 beds in 80 campuses nationwide, recently announced that it was scaling back its purchase of competitor Copper Beach after failing to agree merger terms.
Shares in American Campus Communities, the largest of the three firms, have also fallen by a greater proportion than the rest of the universe with a 5.5 percent decline.
The quest for yield in these low rate times has forced investors to turn to increasingly exotic corners of the financial world such as these relatively high yielding student housing REITs where companies build and then lease multi-family units to students.
With the total US student population increasing by nearly a third in the decade to 2012, universities have increasingly turned to these firms to help house their growing attendees.
Markit’s Simon Colvin commented: “All has not been smooth sailing for these companies as recent speculation of an impending rate rise has seen all major US listed student housing REITs fall by a greater proportion than the rest of the REIT universe in the last month.”
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