American Campus Communities to Acquire $863M in High-Quality Assets
By Gail Kalinoski, Contributing Editor
American Campus Communities continues to add to its student housing stock around the United States, acquiring 19 properties with 12,049 beds for $862.8 million from affiliates of Kayne Anderson Capital Advisors L.P.
The deal includes 366 beds in a phase under development at an existing property. It calls for ACC to assume approximately $396.2 million of outstanding mortgage debt and pay $466.6 million in cash. The purchase of the existing properties is expected to close during the fourth quarter and the acquisition of the development property should close in the third quarter of 2013. ACC will become the managing and leasing agent for the development property.
“We believe these 19 select assets offer high-quality products and locations in Tier 1 markets,” said Bill Bayless, ACC CEO. “Approximately 75 percent of the select portfolio is an average of 0.3 miles from campus in submarkets with barriers to entry. We are excited about this opportunity to create substantial value by overlaying our operating platform on this portfolio.”
The Austin,Texas-based REIT plans to pay for the acquisitions with available cash, borrowings from its revolving credit facility, a bridge loan facility and/or the sale of debt or equity securities. Shortly after announcing the acquisitions Thursday, ACC also said it was hoping to raise $461.2 million through the sale of 11 million shares of common stock at a price of $43.75 per share. The company also gave the underwriters the option to purchase up to an additional 1.65 million shares. The offering is expected to close Oct. 31. BofA Merrill Lynch, KeyBanc Capital Markets, Deutsche Bank Securities and J.P. Morgan served as joint book-running managers for the offering.
ACC expects to invest $12.3 million in upgrades and capital improvements at the facilities which are located in 13 states – Georgia, Louisiana, Michigan, New York, Texas, Kentucky, Missouri, New Hampshire, North Carolina, California, Florida, Virginia and Ohio. The assets, which have an average age of 3.7 years, currently have occupancy of 92.3 percent, providing ACC upside potential, the company said. It also expects to save money by using its own management team in place of six different third-party managers.
The properties include three serving the University of Missouri and two each for students attending Louisiana State University, University of Kentucky and Virginia Commonwealth University.
This acquisition follows a busy third quarter for ACC in which it completed the purchase of Campus Acquisitions’ 15-asset portfolio for approximately $627 million, including $231.1 million of secured debt. The portfolio has properties in nine states and includes 6,579 beds.
Also in the third quarter, it purchased The Block, a six-community off-campus property with 1,555 beds in Austin, Texas, that serves the University of Texas at Austin’s West Campus, for $165 million.
Through its mezzanine investment program, ACC exercised its option to purchase The Retreat, a 780-bed cottage community that opened in August and serves students at Texas State University in San Marcos, Texas, for $52 million. In another mezzanine investment program transaction, ACC agreed to acquire Townhomes at Newtown Crossing, a 608-bed off-campus development that will serve the University of Kentucky when it opens in August 2013. The REIT paid $38.8 million and also agreed to provide the developer $2 million in mezzanine financing.
ACC also has numerous student housing communities in development. It is the largest developer, owner and manager of student housing communities in the U.S. It is a fully-integrated, self-administered equity REIT. It owns and/or manages 169 properties with about 108,300 beds.