Acquisitions and development
American Campus Communities believes in generating consistent earnings growth through property development and acquisitions. The company aims to acquire or develop properties in markets that have stable or increasing student populations, huge market potential with high barriers to entry, and proximity to campuses.
Other major apartment REITs such as Equity Residential (EQR), Essex Property Trust (ESS), and AvalonBay Communities (AVB) are also active in property acquisition and development projects. The SPDR Dow Jones Wilshire REIT ETF (RWR) invests 0.76% of its portfolio in American Campus Communities.
American Campus Communities (ACC) has acquired around $5 billion worth of properties since its IPO (initial public offering) in 2004. In 2014, the company acquired one wholly-owned property containing 190 units and 610 beds and another property that was an existing hotel. The company plans to convert it into a 400-bed student housing community.
Since its IPO in 2004, ACC has developed or is currently developing off-campus properties worth $1.1 billion. In addition, the company has incurred $1.4 billion worth of investments in 24 on-campus property developments currently in service or under development.
In August 2014, ACC constructed four on-campus properties and three off-campus properties. These properties comprised 1,354 units and 4,140 beds. In addition, ACC was in the process of constructing four off-campus properties and two on-campus properties.
Capital recycling program
Since 2012, ACC has sold 28 properties with an average age of 15 years. In the process, the company raised $644 million as part of overall capital raising activities. The company redeployed the proceeds to develop a property pipeline worth $1.6 billion, thereby improving the overall portfolio quality and net operating income growth.
ACC intends to acquire additional land parcels close to colleges and universities to ramp up its future revenue streams. The company believes that its established relationships with universities provide it a competitive advantage in acquiring additional student housing properties.
In the next article, we’ll look at American Campus Communities’ occupancy level.