American Campus Communities Inc. has completed the previously announced acquisition of Campus Acquisitions’ 15 student housing properties with 6,579 beds for a purchase price of $627.0 million. The acquisition consideration consists of the assumption of approximately $231.1 million of outstanding mortgage debt, the issuance of 325,098 operating partnership units valued at $46.14 per unit, and approximately $380.9 million in cash.
“These assets exemplify our investment criteria of differentiated products in close proximity to campus in submarkets with high barriers to entry,” American Campus CEO Bill Bayless said in a statement. “With the implementation of our operating platform across the portfolio, we should achieve operational efficiencies and upside, synergies within the seven markets where we have existing properties and meaningful accretion in asset value.”
According to Bayless, American Campus believes these assets represent some of the best product in their respective markets with a combined distance to campus of 0.23 miles. Eleven properties are located in seven existing American Campus markets, with the remaining four located in four new tier one markets, including Baylor University, University of Southern California, Iowa State University and Purdue University.
In addition to implementing the company’s proprietary operating platform across the portfolio, the company anticipates investing $13.7 million in capital improvements to drive future rental rate and revenue growth. The projected year-one cap rate is 5.9 percent nominal (inclusive of upfront capital improvements) and 5.6 percent economic (inclusive of the assumed $200 per bed capital reserves, upfront capital improvements, loan assumption costs and transaction expenses).
The 15 communities are: 309 Green, University of Illinois, 416 beds; Lofts54, University of Illinois, 172 beds; Chauncey Square, Purdue University, 386 beds; Vintage West Campus, The University of Texas at Austin, 121 beds; Texan West Campus, The University of Texas at Austin, 190 beds; The Vue, Arizona State University, 468 beds; Union, Baylor University, 120 beds; Icon Plaza, University of Southern California, 253 beds; Landmark, University of Michigan, 606 beds; Campustown Rentals, University of Illinois, 766 beds; Campustown, Iowa State University, 1,206 beds; The Castilian, The University of Texas at Austin, 623 beds; River Mill, University of Georgia, 461 beds; Garnet River Walk, University of South Carolina, 476 beds; Bishops Square, Texas State University, 315 beds.
BofA Merrill Lynch acted as exclusive financial adviser to American Campus. Locke Lord LLP served as legal counsel to the company. UBS Investment Bank acted as financial adviser to Campus Acquisitions.