With the economy still plodding along, enrollment at universities and colleges across the country is continuing its upward trend. According to the National Center for Education Statistics, enrollment in college will continue to increase through 2019. This is being driven by a series of demographic shifts. The echo boomer generation (children of baby boomers born after 1980) are reaching the peak of their college attendance years. Overall, a higher percentage of high school students are graduating and are electing to attend college full time. In addition, the average length of time that young adults spend in college has grown from 4 years to 5.5 years. While some investors have preferred to play this trend with for-profit education stocks like Corinthian Colleges (Nasdaq:COCO), the best way may be in a small but growing segment of the real estate market. (For more check out How To Analyze Real Estate Investment Trusts.)
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No Longer 'Animal House'
For investors, the best way to play this "collegiate renaissance" could be in student housing real estate. Shedding its slum-like pretenses, the sector is benefiting from a unique set of supply and demand factors. According to the Department of Education, more than 3 million high school students are expected to graduate each year until the 2018-19 academic years. This compares with just fewer than 2.5 million in 1993-94. This increase in the number of enrolling students means universities will need to prepare for more students and figure out ways to house them. Space-challenged institutions are already grappling with more students than available dormitory rooms, and large state schools are facing budget caps. Funding simply isn't there to build new housing solutions or dormitories.

A Big Win for the Private Sector
With universities strapped for cash, third-party property owners have been quite successful at providing the necessary supply. Analysts expect the players within the sector to generate double-digit FFO growth until at least 2013.

In addition, student housing real estate operators have been able to charge higher rental rates. Baby-boomer affluence has many parents of today's college students preferring to have them live in the manner they've become accustomed to in their own home. Kitchens, private bedroom and bathrooms, study lounges and even pools are necessities and commonplace at these locations. Analysts expect student housing REITs to grow rents between 2% and 6% this year. (To help you determine if REITs are a good investment in your portfolio, check out How To Assess A Real Estate Investment Trust (REIT).)

Tapping That Tuition Money
Overall, the apartment real estate market and funds like iShares FTSE NAREIT Residential Index (NYSE:REZ) have outperformed the broad real estate sector by more than 9% so far in 2011. With demographics, supply and demand trending in the student housing market's favor, that outperformance should continue. While investors can purchase a broad apartment REIT like Avalonbay Communities (NYSE:AVB) that has operations near college campuses, there are a few pure choices within the sector.

By far the largest in the sector is American Campus Communities (NYSE:ACC) with nearly 137 different student housing properties in its network. The REIT has performed well over the last year and is up around 30% so far in 2011. American Campus offers a strong 3.4% dividend yield and trades for less on a Price-to-FFO metric than some of its peers like Equity Residential (NYSE:EQR). Similarly, slightly smaller player Education Realty Trust (NYSE:EDR) offers investors a strong 3% dividend yield.

For investors looking for more of a growth play, Campus Crest Communities (NYSE:CCG), which issued an IPO at the end of 2010, could be a great bet. The REIT operates 27 different campus communities with seven in construction and more than 25 in the development phase. The firm boasts an average occupancy rate of 88.6% and yields a very juicy 5.45%.

The Bottom Line
With college enrollment continuing to rise and inadequate on-campus student housing affecting a variety of universities, the long-term growth in student housing REITS is assured. For investors, these firms could offer some of the best medium to long-term buys in the real estate sector. The preceding firms, along with traditional apartment owners like Apartment Investment & Management (NYSE:AIV), make interesting plays on that growth. (To learn more about REITs, read The REIT Way.)

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