Student Housing Owners To CMG: Rescue Me

Christina Aclin, Collegiate Management's director of business development, says the idea to form the new division came about in late 2008, when an owner requested help from the Dallas company for two properties with high delinquencies and low pre-lease occupancies. The success Collegiate Management had with the two properties in raising occupancies and whittling down delinquencies, combined with more requests from other owners, were the impetuous for the division.

"Even while I was writing the press release and we were getting the word out about this division, we were contacted by four other property owners and lenders to begin receivership procedures and property management services," Aclin acknowledges. She adds that the division is being staffed in-house, but as it grows, more hires are likely, especially in the property management area.

Though student housing has long been regarded as recession-proof, Aclin tells GlobeSt.com that owners of these assets are starting to feel the economic pinch. Properties struggling before the recession are especially hard-hit now.

"One of the major aspects tends to be high delinquency rates," she points out. "Students may not be getting the student loans they need, and have to leave school, and their apartments. Some of the universities are also retracting on enrollment because students can't afford to attend. Demand is down in some markets, while delinquencies are higher in others."

The worst-hit properties, she continues, are those serving medium-size schools in secondary and tertiary markets, and private schools. But the major university off-campus housing projects haven't been immune either. Aclin says in the primary markets, the problem has been overbuilding, meaning a glut of beds. And, in many of these markets, the developers, who knew little about student housing and how it operates, failed to form any kind of relationship with the university their projects were supposed to serve.

"A lot of problem properties were one-offs that came online when the recession started, and builders hired a management firm to run it that knew nothing about student housing," Aclin says. "As a result, they couldn't implement any kind of resident life programs or form relationships with the universities. That's so key when it comes to leasing up housing."

But Heard, with her years of experience in student housing management and property turnarounds, is trying to rectify that. "She is able to approach universities in the right manner, and knows how to talk with them," Aclin adds.