Covid-19 Impacts on Centaline US Student Housing

2020-03-26

The two student housing apartments owned and managed by Centaline US Student Fund are located in San Antonio, Texas and Athens, Georgia, where the outbreak of COVID-19 is relatively contained. The local governments have already carried out policies to restrict social interactions and strengthen public hygiene.

Two universities (UTSA and UGA) are situated in the suburbs that are away from densely populated area. Both of them have suspended face-to-face teaching and switched to online learning, which make the virus spread more controllable.

Current Leasing

• No suspected or confirmed case.
• Most of the residents choose to stay in our premises.
• Some choose to move out or stay home but they have to pay rent according to contract requirement.
• No breach of contract has been recorded due to the outbreak.
• According to our survey, residents appreciate our high standard of sanitation and disinfection and consider safer to stay than move out.

Pre-leasing

• Our target tenants are locals so the retreat of international students has limited impact on preleasing.
• FaceTime virtual tours and full-scale online application have been arranged for AY20-21 preleasing.
• As for March, Eclipse on Broad has reached 93.8% pre-lease rate with around 6.5% rent growth. The Estates at San Antonio also leads the market with 63.2% pre-lease rate and 1.7% rent growth.

The Future

• Student Housing outperformed other assets in the last financial crisis. Its strong resilience to recession and stable performance helps us to fight the epidemic impacts on economy.
• The US Senate has approved a $2 trillion stimulus package to provide a jolt to an economy reeling from the coronavirus pandemic, including direct payment to citizens and deferment of federal student loans. This would help students to pass this difficult time.
• Reduction of interest rate can further strengthen our cash flow.
• Student population will not drop drastically because of the epidemic, which keeps the demand for student housing and occupancy rate in good shape.

Updates on Coronavirus Protocols

2020-03-25

The novel coronavirus (COVID-19) spreads across the globe and rapidly affects communities across the USA. During this threat, the comfort and safety of all our student housing residents and staff remain our No. 1 priority. We have been taking several actions to ensure the safety and security of their students, employees, and residents.

Including:

1. Update Information
   • Delegated website set up to provide the most updated information on COVID-19.
   • Residents will also receive all updates via emails and messaging.
2. Online Services
   • Management and services are provided mainly by virtual interactions including messaging, email and phone calls.
   • Online rent payment is encouraged by waiving credit card fee
   • On-site office performs only emergency work orders.
3. Communities Open for Residents
   • Our properties are opened for residents ONLY
   • No visitor is allowed to reduce social interaction.
4. Sanitation and Disinfection
   • More frequent cleaning and sanitation of the property
   • Temporary closure of clubhouse, gym and common areas
5. New arrangement for Pre-lease
   • Facetime Virtual tour is arranged for potential residents.
   • All pre-lease procedures are done online.

Recession Resilience of Student Apartments

2020-03-18

With the coronavirus Covid-19 pandemic wreaking havoc around the world and the global financial markets, circuit breakers have been kicked in a few times and investors continue to panic and suffer losses. Governments are adopting aggressive measures to try to curb the virus spreading and the impact is being felt across the economy. Many economists forecast that it is very likely the global economy will slump. Facing uncertainties much greater than normal, what is a safer bet for investors who are looking for investing opportunities during this pandemic?

During economic recessions, it is a common belief that real estate properties would record lower rents and prices. However, many research have found that the “Recession Resilience” of student apartments is very high. During the 2008 Global financial crisis, the rental return of student apartments were very stable and the asset prices did not fluctuate greatly. After the crisis, it attracted many investments from large insurance companies, sovereign funds, pension funds, and so on.

Why did this happen? Research revealed that during economic downturns, redundant or unemployed workers chose to further their study in order to improve their job prospects. Governments also incentivised students to delay their graduation to reduce unemployment rates. It was therefore logical that the rent of student apartments increased against the market trend with more college students studying and in need of accommodation.

According to Green Street Advisors, the industry leader in REIT research, as long as GDP falls by 1%, the asset value of properties, such as shopping malls, offices and hotels, would fall by 3% -14%, and rents by 0.5 -1.5%. However, the rent of student apartments is contrariant to this trend. In the past 12 years (including the period of 2008 Global financial crisis), the rent of student apartments has been steadily increasing (2-5%).

Therefore, targeting the right sector and through astute selections of projects, it is still possible to find stable investment opportunities in student apartments during crises.

Successful UK Properties Acquisition

Centaline Investment Advisory has successfully represented a client to acquire two properties in Inner London. Both properties are Victorian style constructions in prime neighbourhoods. On behalf of the client, Centaline negotiated with the seller and arranged professional services, such as legal and surveyor services, to conduct legal, financial and structural due diligence. After closing the deals, Centaline helped the client to sign new leases with the tenants and purchase building insurances. In addition, Centaline managed to secure tax exemptions and save more than £1,100,000 stamp duty for the client.

Cenaline Investment Management has been appointed as the asset manager of these two properties and will be responsible for appointing local management company to carry out daily operations, including tenant management, property maintenance and reporting. Furthermore, Cenaline will provide renovation advice to the owner about future upgrades in order to add value to the properties and increase returns.

The housing market of London began to pick up in mid-2019, with rents showing positive growth for 13 consecutive months and an average rent increase of 1.2% in 2019. Knight Frank forecasts that starting from 2020, there will be a growth of the UK residential market at a rate of 1-5% in the next 5 years and the rent growth for the same period is 2%.

(In Chinese Only)

{信報}中原房產基金逾億拓美學生公寓

租金回報6厘 兩項目落實數個在洽

2019-05-22

本港樓價高企，投資回報偏低，近年引發新一波海外置業熱潮，連本地龍頭代理行中原集團也加入進軍海外物業市場行列，在3年前成立中原房地產基金，經過多年研究及評估，近期終落實投資美國學生公寓，斥資約1400萬美元（約1.092億港元）購入喬治亞州鄰近喬治亞大學的一個學生公寓，淨租金回報約6厘。該基金未來暫只 …

（ 節錄 ）

https://www1.hkej.com/dailynews/property/article/2140930/%E4%B8%AD%E5%8E%9F%E6%88%BF%E7%94%A2%E5%9F%BA%E9%87%91%E9%80%BE%E5%84%84%E6%8B%93%E7%BE%8E%E5%AD%B8%E7%94%9F%E5%85%AC%E5%AF%93?

(In Chinese Only)

{經濟日報} 中原私募基金 攻學生公寓市場
宿位不足＋需求殷切 長綫投資佳

2019-05-20

中原集團主席兼總裁施永青透露，集團旗下剛成立了房地產投資基金，在海外尋求穩定回報項目，當中特別看好美國的學生公寓市場，原因在於學生宿舍不足，集團已在當地購入數個項目長綫投資。

（ 節錄 ）

https://paper.hket.com/article/2353586/%E4%B8%AD%E5%8E%9F%E7%A7%81%E5%8B%9F%E5%9F%BA%E9%87%91%20%E6%94%BB%E5%AD%B8%E7%94%9F%E5%85%AC%E5%AF%93%E5%B8%82%E5%A0%B4