Student Housing: ACC Kicks Off $157M in Student Housing Projects

By Jennifer Duell Popovec for GlobeSt

AUSTIN, TX-As part of its aggressive development strategy, American Campus Communities Inc. has begun construction on four owned projects with a combined development cost of $156.6 million.

The projects, which contain 3,249 beds, are located in Arizona, New Mexico and Texas. They are slated for completion and occupancy in fall 2012, according to the student housing REIT.

“Each of the projects is differentiated to create a competitive advantage in their respective market and is located either on or pedestrian to campus in a submarket with barriers to entry,” says ACC CEO Bill Bayless. “We’ve also taken advantage of a favorable construction market that has enabled us to offer students affordable price points that provides us the opportunity for meaningful rental rate growth in future years.”

Paula Poskon, a REIT analyst with R.W. Baird & Co., says she expects student housing REITs to allocate more investment capital to development than acquisitions. “We’ve seen cap rates compress in student housing similar to what we’ve seen in market-rate apartments where core class A properties are competitively bid and cap rates continue to tick down,” she tells GlobeSt.com. “As REITs think about capital allocation, and given where cap rates are, they see a window of opportunity where they can produce better yields with development.”

Two of new development projects are being financed under the company’s American Campus Equity (ACE) program. The REIT is building 1,126 owned beds on the campus of Northern Arizona University in Flagstaff, AZ. The $60.6 million project will consist of two unique and separate developments: a modern residence hall (550 beds) and a student townhome community (576 beds).

The townhome style product introduces a private bedroom/private bathroom apartment design on campus with superior amenities to off-campus competitors. The modern suite style residence hall will feature a community center, which includes a fitness center, theater, social lounge, business center, and a plaza with 4,360 square feet of retail space.

In addition, ACC is pursuing an on-campus project at the University of New Mexico. The 1,027-bed modern residence hall is the first traditional residence hall constructed on-campus in over 45 years. With a price tag of $39.4 million, the project features bathrooms within each unit and offers a level of privacy not available in existing on-campus residence halls. It will consist of four separate buildings each containing laundry and kitchen facilities, as well as study rooms and social lounges. A community center will offer additional amenities such as a business lounge, recreational area and office space.

Two of the four projects are off-campus: U Club on Frey located within walking distance to Kennesaw State University in Georgia and U Club Townhomes on Marion Pugh near Texas A&M University in College Station, TX.

U Club on Frey will contain 456 beds and will consist of a four-bedroom/four-and-half-bathroom, three-story townhome unit constructed on top of a four-bedroom/four-bathroom flat unit. The $22.5 million project is differentiated from any currently available housing options in the market. At the heart of the community will be a 6,500-square-foot community center including a fitness center, game lounge, student lounge, wireless Internet café, patio and resort-style pool.

Similarly, the 640-bed U Club Townhomes on Marion Pugh will feature four-bedroom/four-bathroom, two-story townhome units. Located near ACC’s existing property, Calloway Villas, the $34.1 million project will also offer a 7,560-square-foot community center with the same amenities as U Club on Frey.

[globest.com]

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