Student Housing Expert Frederick W. Pierce IV, President and CEO of Pierce Education Properties L.P., Clarifies Common Misconceptions about Housing Industry

SAN DIEGO–(BUSINESS WIRE)–Thousands of students are heading back to their universities. Most of
them are living on or near their place of learning. If you’re
considering an investment in this space, you probably have
pre-conceptions and questions regarding the sector, in general, and
certain property operating characteristics. Frederick W. Pierce,
President and CEO of Pierce Education Properties (PEP), www.pierceeducationproperties.com,
has answers about four common “misconceptions regarding Student Housing”.

Today, PEP owns and operates approximately 12,500 beds of student
apartments at 20 universities across the nation including the likes of
University of Florida, Florida State, University of Georgia, Georgia
Tech, University of South Carolina, West Virginia University, The Ohio
State University, Purdue University, Iowa State University and many
others. PEP buys at public universities with 15,000+ students that play
Division 1 (FBS) Football. PEP’s equity capital comes from institutional
investors such as pension funds and insurance companies.

  1. Question: It has been reported there is a growing national “student
    debt” burden.
    Does or won’t this inhibit students’ capacity to
    pay rent for Class A student apartments?

    Answer: Not
    true for students at traditional non-profit universities. Amongst
    those students, ½ graduate with no student loan debt, while the other
    half average approximately $25K in student debt upon graduation.
    Conversely,
    it is at America’s private, for-profit universities where students are
    amassing large student loan balances. Also, domestic students who
    pursue Graduate degrees often accumulate large debt balances, which
    does make those students more rent sensitive.

  2. Question: Don’t students trash the properties? Doesn’t that
    drive up repair and maintenance costs and negatively impact NOI?

    Answer:
    Generally, not true. It is standard amongst student housing operators
    to conduct in-depth quarterly unit inspections, which timely reveal
    any such damage.
    Any such damage discovered is immediately
    charged back to the resident and the industry has two very effective
    means of collecting those bills:
    we can contact their parents
    and/or turn off their internet.
    You see, in student housing
    there are parental lease guarantees and cable and internet is
    universally bulk contracted by the landlord.
    There is also
    significant word-of-mouth communication in student housing – word gets
    around fast that the landlord doesn’t tolerate property damage.
    As
    a result, at PEP property damage is kept in check and our bad debt
    expense averages only 0.5% of revenues.

  3. Question: Aren’t leases written for the academic year producing
    high vacancy in the summer when students return home?

    Answer:
    Not true. On-campus dorms write academic year leases, while off-campus
    apartments typically require 12-month leases.
    It’s true that
    most freshmen reside in university dorms and return home that first
    summer.
    However, after that freshman summer, most students
    prefer to stay at their community near school during the summer since
    they have new-found freedom for the first time and most all stay at
    school taking a summer course, working part-time or just enjoying the
    summer since their rent is paid and they have many more amenities and
    independence than they would have living back at home!
    They
    also have a new set of friends who also prefer to summer at college.

  4. Question: On-line learning is proliferating. Doesn’t this
    trend put traditional university enrollments at risk now and into the
    future?
    Won’t that negatively impact demand for student housing?

    Answer:
    Not true at major universities.
    A significant part of a college
    education is what goes on outside the classroom.
    While it is
    likely that traditional students do and will continue to take some of
    their courses on-line, they do so while living at college.
    What
    on-line education is doing is providing access to higher education to
    those who are not traditional students: lifelong learners, place-bound
    students, and foreign students without the resources to study abroad.

    As such, distance learning is actually expanding the reach and
    enrollments at major universities, with no negative implications for
    the core residential student base.

For further information on Pierce Education Properties, please visit the
company website at www.PierceEducationProperties.com.

Contacts

Berkman Strategic Communications
Jack M. Berkman
619-246-3404
jack@berkmanpr.com
or
Schloss
Communications
Rick Schloss
619-308-4387
rickschlosspr@aol.com