Four main business segments
American Campus Communities (ACC) classifies its business segments by its customer base and service provided. The company has the following four main segments:
- wholly-owned properties
- on-campus participating properties
- development services
- property management services
The wholly-owned properties are normally off-campus properties. Such properties are located very close to a campus. Off-campus properties are more appealing to students, as they offer more flexible rules than on-campus housing properties. The support of educational institutions for the properties located near their campuses is crucial to the success of ACC’s off-campus properties.
On-campus participating properties
American Campus Communities has five on-campus properties operated under long-term facility leases with three universities. ACC manages these properties under long-term management agreements. The company receives a management fee as a percentage of gross receipts.
American Campus Communities’ development services consists of development and construction management services provided to third parties. ACC offers short-term consulting assignments as well as complete development and construction projects to third parties. The company’s clients mainly include educational institutions planning to redevelop their on-campus student housing properties.
Property management services
The property management services segment includes third-party management contracts. In these contracts, the company is mainly responsible for all the operational aspects.
Other major apartment REIT players such as Equity Residential (EQR), Essex Property Trust (ESS), and AvalonBay Communities (AVB) mainly focus on resident leases. American Campus Communities makes up 0.53% of the holdings of the iShares US Real Estate ETF (IYR).
In the next part of the series, we’ll take a look at American Campus Communities’ property portfolio.