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ACC Finds Unique Value in Core Pedestrian Student Housing

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American Campus Communities Inc. recently increased its outlook and noted part of the reason was because they incorporated the recently “completed lease-up, which produced economic rental revenue growth of 2% after taking into account our joint venture share of the Austin portfolio versus the 1.7% headline number.”

Outside of Austin, the company said, it experienced solid growth where its other 66 same-store markets collectively achieved 2.4% revenue growth, in line with the midpoint of its guidance for those markets. “We also provided an update to our current capital recycling plan, which includes the disposition of $250 million of previously acquired assets that we expect to trade in the low 4% cap rate range,” said the firm’s CEO, Bill Bayless, on the Q3 earnings call.

“Cap rates for core pedestrian student housing continues to compress, providing us with the opportunity to generate significant value for our shareholders with reinvestment in our core development program with yields at the 6.25% and above range.”

He notes on the earnings call that as the REIT looks forward to the ’20-’21 lease-up, “we’re excited about the healthy fundamental environment with lighter new supply for the fall of 2020.” Specifically, he explained, the company forecasts “new supply in our markets to decline 20%, to the lowest levels that we’ve seen almost in 10 years. Moreover, less of our NOI is produced in the largest new supply markets.”