AUSTIN, TEXAS — American Campus Communities Inc. (NYSE: ACC), an Austin-based owner, manager and developer of student housing communities, will acquire 15 student housing properties with 6,579 beds — including two properties and an additional phase at an existing property currently under development — for $627 million.
ACC, which has substantially completed its due diligence on the student housing portfolio, will acquire the properties from affiliates of Chicago-based Campus Acquisitions LLC.
The acquisition will consist of the assumption of approximately $231.6 million of outstanding mortgage debt, the issuance of between $15 million and $50 million in common limited partnership interest in ACC’s operating partnership and between $345.5 million and $380.4 million in cash, which will be determined by Campus Acquisitions prior to closing.
The properties in the portfolio are located in 11 of ACC’s existing markets, as well as four new markets: Baylor University in Waco, Texas; University of Southern California in Los Angeles; Iowa State University in Ames, Iowa; and Purdue University in West Lafayette, Ind. The 15 properties have a combined average distance to campus of nearly one-quarter mile.
“We are very pleased to be adding 15 properties to the ACC portfolio that meet our investment criteria of differentiated communities close to campus in submarkets with barriers to entry,” says Bill Bayless, CEO of ACC.
“This acquisition should provide us a significant opportunity for meaningful accretion in asset value, operational upside, efficiencies with 11 of the assets located in our existing markets, plus new business prospects with the entry into four new tier-one collegiate markets,” adds Bayless.
ACC is the largest student housing developer, owner and manager in the U.S. The company’s managed portfolio, including its owned and third-party managed properties, totals 152 student housing properties with approximately 99,500 beds.
“We believe the highly fragmented student housing industry is ripe for consolidation and we are well positioned to execute on strategic opportunities,” says Bayless.
The transaction is expected to close in the third quarter. American Campus intends to fund the cash portion of the purchase price with available cash, borrowings under its revolving credit facility, a bridge loan facility and/or the sale of debt or equity securities.
The company is also anticipating investing $13.7 million in capital improvements to the portfolio.
ACC’s stock price closed at $45 per share on Tuesday, up from $36.77 per share this time last year.
— John Nelson