American Campus Communities to Acquire $862.8 Million in High-Quality Student Housing Assets

American Campus Communities to Acquire $862.8 Million in High-Quality Student Housing Assets

AUSTIN, TX -  American Campus Communities, the largest owner, manager and developer of high-quality student housing properties in the U.S., announced that it had substantially completed its due diligence investigation relating to the acquisition of 19 select student housing properties with 12,049 beds, including 366 beds at an additional phase currently under development at an existing property, pursuant to purchase agreements with affiliates of Kayne Anderson Capital Advisors, L.P. for an aggregate of $862.8 million. The acquisition consideration consists of the assumption of approximately $396.2 million of outstanding mortgage debt and $466.6 million in cash. The mortgage debt to be assumed currently has a weighted average interest rate of 5.28 percent per annum and weighted average term to maturity of 8.3 years.

The acquisition of the existing properties is expected to close in the fourth quarter of 2012 and is subject to certain closing conditions, including obtaining various lender consents. The acquisition of the development property, which is expected to close during the third quarter of 2013, is further subject to satisfactory completion of such property. After the acquisition of the existing properties, ACC will be the leasing and management agent for the development property. Completion of the transaction is not subject to financing and does not require approval by ACC stockholders. American Campus intends to fund the purchase price with available cash, borrowings under its revolving credit facility, a bridge loan facility and/or the sale of debt or equity securities.

"We believe these 19 select assets offer high-quality products and locations in Tier 1 markets," said Bill Bayless, ACC CEO. "Furthermore, 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."

These assets provide operational upside with a current occupancy of 92.3 percent for the 2012 – 2013 academic year. The company also expects to bring efficiencies with its proven operating platform that will replace six different third-party managers. With approximately 90 percent of the beds built within the last four years, the weighted average age of the portfolio is 3.7 years. Upon closing of this transaction, ACC believes there will be synergies from nine new properties located in seven existing ACC markets along with the addition of seven new Tier 1 markets. The company anticipates investing $12.3 million in amenity upgrades and capital improvements to drive future rental rate and revenue growth. The projected year-one cap rate is 6.0 percent nominal (inclusive of upfront capital improvements) and 5.7 percent economic (inclusive of the assumed $200 per bed capital reserves, upfront capital improvements, $4.4 million in loan assumption costs, and $4.8 million in transaction expenses).

The select portfolio consists of the following 19 assets:

The Lofts of Kennesaw, 795 beds, Kennesaw State University

Aspen Heights, 308 beds, Louisiana State University

The Cottages of Baton Rouge, 1,290 beds, Louisiana State University

The Lodges of East Lansing, Phases I and II, 1,049 beds, Michigan State University

The Province – Rochester, 816 beds, Rochester Institute of Technology

25Twenty, 562 beds, Texas Tech University

5 Twenty Five Angliana, 320 beds, University of Kentucky

5 Twenty Four Angliana, 740 beds, University of Kentucky

The Province – Louisville, 858 beds, University of Louisville

Grindstone Canyon, 384 beds, University of Missouri

The Cottages of Columbia, 513 beds, University of Missouri

Forest Village/Woodlake, 704 beds, University of Missouri

The Cottages of Durham, 619 beds, University of New Hampshire

The Province – Greensboro, 696 beds, University of North Carolina at Greensboro

West 27th Place, 475 beds, University of Southern California

The Province – Tampa, 947 beds, University of South Florida

The Lofts at Capital Garage, 144 beds, Virginia Commonwealth University

RAMZ Apartments on Broad, 172 beds, Virginia Commonwealth University

The Province – Dayton, 657 beds, Wright State University

American Campus Communities, Inc. is the largest developer, owner and manager of high-quality student housing communities in the United States. The company is a fully integrated, self-managed and self-administered equity real estate investment trust (REIT) with expertise in the design, finance, development, construction management, and operational management of student housing properties.

Source: American Campus Communities / #Student #Housing

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