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Top Student Housing REITs Experienced Slower Than Usual Leasing

Two of the nation’s largest student housing REITs have reported slower leasing activity this fall.

Top Student Housing REITs Experienced Slower Than Usual Leasing

Education Realty reported 95.2% occupancy, which is a 1.2% drop from the year prior, while American Campus Communities Inc. reported 96.6% occupancy, a decline of 0.6% from the same period in 2016, CoStar reports.

Despite the decline in leasing activity, EdR did manage to achieve its targeted 3% growth rate. Rental rates grew by 3% in 2016, which resulted in a 1.8% revenue increase during the leasing period.

ACC attributed the slowdown to a drop in occupancy within three schools in its 60 markets — Texas Tech, the University of Illinois and Rochester Institute of Technology. Excluding these three universities, ACC experienced 98% occupancy in its portfolio, which is a slight increase over last year's 97.5% occupancy. The REIT also recently announced a $590.6M acquisition of seven student-housing properties from affiliates of Core Spaces and DRW Real Estate Investments.

While this year did bring lower-than-expected demand, the sector is largely regarded as a secure bet because it is able to withstand economic volatility during downturns. Supply and demand and student enrollment growth is expected to remain consistent next year and is anticipated to grow 14% to 23 million by 2024.