Campus Crest Communities
If you went to college, you might have been subjected (as I was) to a highly fragmented off-campus residence market. Times are changing, though, and someone finally got the idea to establish a housing brand that served college communities.
If retirement homes and hotels can have brands, why not student housing?
Campus Crest Communities (CCG) operates 33 student housing properties comprising 6,324 apartment units under its “Grove” brand name. It’s a REIT, so it distributes a minimum of 90% of taxable income as a common dividend of roughly 6%, which may even attract other investors. Campus Crest carries $225 million in debt and services it at a rate of about 5%. The company came into its own in 2012, as it reported solid EBITDA of $16.5 million and a profit after debt service and preferred stock payments, which it just started that year.
Its 8% Preferred Series A shares were issued at $25, and are now trading above par at $26.19. That tells us that investors have a lot of confidence in the company and its ability to make the preferred stock payments. By trading above par, the effective yield is 7.61%.