uploads///C MAP

American Campus Communities’ Geographically Diverse Portfolio

By

Nov. 26 2015, Updated 8:06 a.m. ET

Geographic coverage

American Campus Communities (ACC) is present in some of the high-growth coastal markets of the country. This includes booming cities and universities where students prefer to study. The geographically diverse portfolio of assets has boded well for the healthy growth of the company.

Article continues below advertisement

Presence in tier 1 markets

Since its public offering in 2004, American Campus Communities’ markets grew from 12 to 72 as of September 2015. During the same period, the number of beds increased from 11,773 to 96,000, primarily in tier 1 markets. ACC’s presence in tier 1 markets provides stability and opportunity for further growth.

ACC’s target market has the following characteristics:

  • flagship institutions with enrollment exceeding 15,000 students
  • addressable market of around 6.3 million students at 280 schools
  • consistent annual enrollment growth of 1–2%
  • limited supply of properties

Top universities

The top five markets of ACC in terms of NOI (net operating income) generation are the following:

  • Arizona State University – 9.1% of total company NOI; 6,865 beds
  • University of Texas at Austin – 7% of total company NOI; 4,611 beds
  • Drexel University at Philadelphia – 4.5% of total company NOI; 2,176 beds
  • Texas A&M University – 4% of total company NOI; 3,116 beds
  • Florida State University – 4% of total company NOI; 3,649 beds

Portfolio diversification

The distribution of properties in the attractive US markets reflects American Campus Communities’ geographic diversification strategy to take advantage of growth in prime regional markets. Other major players in apartment REITs such as Equity Residential (EQR), Essex Property Trust (ESS), and AvalonBay Communities (AVB) follow the same portfolio diversification strategy. The iShares US Real Estate ETF (IYR) invests 0.53% of its portfolio in American Campus Communities.

We’ll take a look at American Campus Communities’ strategy in the next part of this series.

Advertisement

More From Market Realist