Canada might soon have its first publicly-traded real estate investment trust specializing in student housing.
Last week a capital pool company called CHC Realty Capital Corp. completed an initial public offering and said it is looking to buy properties that cater to students and reorganize into a real estate investment trust.
The student housing sector, which is much further along in its evolution in the United States than it is in Canada, hasn't attracted investors to the same degree as shopping malls, office buildings or other types of real estate.
Rents on student housing are relatively low, the tenant turnover is relatively high and young people are not known for their ability to look after their living quarters.
But Mark Hansen and Craig Smith, two of the directors behind CHC Realty, think it's a sector ripe with opportunity.
"The marketplace itself is non-existent in Canada, and that's one of the things that attracted us to it," says Mr. Hansen, 42, the chief executive of CHC, who was previously vice-president of operations at Canadian Apartment Properties Real Estate Investment Trust.
He says that university enrolment has been rising for 30 years, parents generally pay their kids' rent, less than 10 per cent of students live on campus nationwide, and there is a lack of modern high-end buildings that cater to the desires of both parents and students.
The opportunity, as he sees it, is for modern student apartment buildings near campuses that include amenities such as weight rooms, tanning beds, movie theatres and easy internet connectivity, as well as parent-friendly touches such as ubiquitous security cameras.
"The parents would say the most important thing is security, the schools would say proximity, to the kids it's connectivity," says Mr. Smith of CHC. His company's vision is to be completely independent from the schools.
"Municipalities are fighting what's become the sprawl of the student ghetto," Mr. Smith adds.
There are private companies in the student housing sector, with the largest in Canada being Campus Living Centres, which is owned by companies controlled by Richard Ivey, Hal Gould and Ray Stanton. South of the border, American Campus Communities, a REIT focused on this area, went public in 2004 and now has a market value of more than $3.4-billion.