When most people think of student housing, images from the movie “Animal House” usually come to mind. It’s a common misperception, and one that continues to influence investment decisions today. The reality of student housing, however, is far removed from wild parties and drunken revelry.

In fact, student housing has evolved into niche sector within the commercial real estate world and now includes three publicly-traded real estate investment trusts (REITs): American Campus Communities Inc. (ACC), Education Realty Trust (EDR) and Campus Crest Communities Inc. (CCG).

In 2004, ACC went public as the nation's first student housing REIT. Today, the sector has a market cap of just over $3.3 billion, representing less than 1% of the REIT industry’s total market cap.

Both institutional and retail investors are attracted to student housing’s strong growth prospects. But, they must do their homework because the three student housing REITs that exist today have vastly different investment stories and strategies.

“I like student housing – it has a lot of growth opportunities ahead of it,” says Alexander Goldfarb, a managing director with Sandler O'Neill + Partners LP. “With that said, it’s important to differentiate between the different companies and stocks. You have to understand the sector, and you also have to understand the stocks.”

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