American Campus Communities (ACC) actually does most of its business off campus. The self-managed real estate investment trust (REIT) owns and operates student housing properties located at or near colleges and universities in more than 25 states. The company leases the ground for on-campus properties from the schools, which in turn receive half of the net cash flow from these properties. ACC also works with schools to develop new properties and renovate existing housing, and provides third-party leasing and management services for other student housing owners. In all, the REIT manages about 170 properties (with some 108,000 beds) at more than 85 schools in the US and Canada.
ACC has expanded its portfolio by both buying existing properties and developing new ones. It regularly buys properties in bulk, adding thousands of beds at a time. In 2012 acquired 15 properties with nearly 6,600 beds in several states for some $627 million. The previous year, the REIT acquired four properties as well as shopping center it plans to redevelop into a mixed-use community. It also completed and opened four new communities.
Thanks to its expanding portfolio, as well as improved occupancy rates and some rent hikes, the company's profits more than doubled to $56.6 million in 2011, while revenues grew 13% to $390.3 million. Although third-party development and management services earnings slipped as the REIT wrapped up projects and exited certain contracts, the wholly-owned property portfolio saw a gain of 22% that year. On-campus participating properties (it operates four with more than 4,500 beds) earnings also grew in 2011, also due to increases in occupancy and rental rates.
Many of ACC's properties feature resort-style amenities, making them more desirable than your typical dorm facility. The company has been successful in establishing strong relationships with school systems, which pays off in earning repeat business as various campuses seek to add new housing options. Among the REIT's most recent developments are new sites in Texas and New Mexico, which opened for business in 2011.
In addition to buying and developing new housing communities, the REIT also sells properties when they are no longer considered core to its long-term investment strategy. – less