American Campus Closes on Student Housing Portfolio Purchase for $863M
- Dec 04, 2012
By Scott Baltic, Contributing Editor
American Campus Communities Inc., of Austin, Texas, has closed on its $862.8 million purchase of a 19-property, 12,049-bed student housing portfolio from affiliates of Kayne Anderson Capital Advisors, L.P., of Los Angeles and Armonk, N.Y., ACC reported Monday. The sale, originally announced in late October, closed last Friday.
The portfolio, which has an average occupancy of 92.3 percent in the current academic year, comprises properties at Kennesaw State University, Louisiana State University (2), Michigan State University, Rochester Institute of Technology, Texas Tech University, the University of Kentucky (2), the University of Louisville, the University of Missouri (3), the University of New Hampshire, the University of North Carolina at Greensboro, the University of Southern California, the University of South Florida, Virginia Commonwealth University (2) and Wright State University. It also includes 366 beds at an additional phase currently under development at an existing property.
With approximately 90 percent of the beds built within the last four years, the weighted average age of the portfolio is 3.7 years.
The aggregate purchase price includes the assumption of approximately $395.8 million of outstanding mortgage debt, with a weighted average interest rate of 5.28 percent and weighted average term to maturity of 8.3 years. The projected year-one cap rate is 6.0 percent nominal and 5.7 percent economic.
When the sale was first announced in October, American Campus CEO Bill Bayless highlighted the fact that about three-quarters of the properties are an average of 0.3 miles from their respective campuses and in submarkets with barriers to entry.
ACC will manage the properties itself, replacing six different third-party managers, and anticipates synergies based on nine of the new properties being in seven existing ACC markets.
Locke Lord L.L.P. served as legal counsel to American Campus.
The two parties to this deal have been very active in the student housing market, according to a recent report from Real Capital Analytics. The report pegs ACC and Kayne Anderson as the number 1 and number 2 buyers, respectively, of student housing over the past 24 months. In addition, the companies were the number 12 and number 1 sellers, respectively, with the sale of this portfolio apparently being enough to put Kayne Anderson at the top of the seller list.
Overall, according to RCA, student housing transactions in the 12 months ending with the third quarter (including only properties or portfolios of $2.5 million or more) totaled $2.926 billion nationwide. This was a 30 percent increase over the previous 12 months.