American Campus Communities, Inc. (NYSE: ACC), the nation’s
largest owner and manager of high-quality student housing
properties in the U.S., today announced that the company has formed
a joint venture for the ownership of its existing eight-property
Arizona State University (ASU) student housing portfolio. Harrison
Street, as part of its social infrastructure platform, acquired a
45 percent interest in the joint venture, with the company owning
the majority 55 percent interest. The transaction is structured
with a two-stage closing. The first stage closed on December 31,
2021 and involved the contribution of three properties to the joint
venture and provided the company with proceeds of $271.7 million.
The second stage is currently expected to close in late 2022 or
early 2023 and will involve the contribution of the remaining five
properties for expected proceeds of $279.6 million, subject to
customary closing conditions, including no material adverse changes
to these properties. The transaction satisfies the company’s
previously communicated capital sourcing transactions of $200-$400
million for calendar year 2022 and provides for additional capital
proceeds moving into 2023.
In connection with the transaction, and in alignment with ACC’s
core value of giving back, the company is contributing $5.0 million
to ASU for scholarships, programs that support student success, and
sustainability.
The 8,187-bed ASU portfolio includes seven on-campus American
Campus Equity (ACETM) developed communities subject to leasehold
interests with ASU and one previously acquired off-campus property
located immediately adjacent to the ASU campus. This transaction
demonstrates that on-campus assets developed via properly
structured public-private partnerships (P3) can be valued on par
with private off campus assets that reflect comparable market and
product attributes. The portfolio exemplifies the highest standards
of the company’s longstanding investment criteria, which focuses on
developing or acquiring differentiated on-campus or pedestrian to
campus communities at Carnegie R1 research institutions and/or
Power-5 athletic conference universities. The communities provide a
broad range of products including first-year residence halls,
honors college housing, Greek housing, and upper division
apartment-style housing – providing affordable housing options for
a diverse audience of ASU students. ASU is both a Carnegie R1
institution and Power 5 conference member, and for each of the last
seven years, has been ranked America’s #1 Most Innovative
University by U.S. News & World Report. In addition, ASU is
located in the heart of the Phoenix MSA, which is attracting
significant global institutional capital.
“We are pleased to have executed this two-stage joint venture,
as the structure fully satisfies the capital needs of our
under-construction developments, while maintaining the opportunity
to achieve our stated goal of providing FFOM per share growth in
the range of 12 - 15 percent in 2022,” said Bill Bayless, American
Campus Communities CEO. “We are also excited to partner with
Harrison Street, a highly respected institutional real estate
investor that has been one of the most active student housing
investors of the last decade with a social infrastructure platform
that is fully aligned with the social and purpose-driven mission
that has always been the foundation of our partnership with ASU and
other university partners. This transaction also demonstrates that
we can diversify market concentration in a manner that preserves
the spirit and mission of our university partnerships, while also
demonstrating to our public shareholders the significant value
inherent in our current and shadow pipelines of potential on-campus
transactions. As the only public company in the student housing
sector, ACC is well positioned to execute on this expansive
opportunity for growth and value creation in the years and decades
to come.”
After conducting a competitive process among institutional
investors, Harrison Street, with its social infrastructure
platform, was a natural partner given the alignment with ACC’s
industry-leading ESG position and the four LEED developed
communities in the JV portfolio. Harrison Street’s social
infrastructure platform, which it has pursued since 2018, enables
the firm to pursue a unique strategy of partnering with
universities, health systems and government users to provide them
with clean energy and sustainable buildings as well as critical
service.
“Our partnership with American Campus, which began in 2006,
pioneered the P3 equity financing model for on-campus student
housing. This has enabled Arizona State University to preserve our
capital for research and academic investments while also providing
affordable, sustainable, best-in-class living learning communities
that reflect the university’s high-quality and innovative nature,”
said Morgan R. Olsen, ASU Executive Vice President, Treasurer and
CFO. “We are also appreciative of ACC’s meaningful gift and
continued support in promoting the success and well-being of our
students.”
Christopher Merrill, Harrison Street’s Co-founder, Chairman and
Chief Executive Officer, stated, “Arizona State University is a
nationally recognized institution, serving nearly 75,000 students
and continues to see consistent enrollment and application growth.
Harrison Street is thrilled to launch our P3 joint venture with
ACC, a world-class student housing owner and developer with
exceptional management practices, to support learning environments
that facilitate students’ academic and social lives, as well as
their overall health and well-being. Harrison Street is committed
to delivering strategic capital and helping to ensure students have
access to top-tier living options where they study, and we look
forward to building on our P3 expertise to continue to offer
exceptional and diverse spaces that attract and retain a broad
range of students.”
Portfolio summary:
- Initial Stage:
- Barrett Honors College – The 1,721-bed residential complex
serves first- and second-year students within the distinguished
Barrett Honors College. The community includes 12 classrooms,
advisement center, administrative offices and a dining facility.
Developed by ACC in 2009, LEED Gold.
- Tooker House – The 1,594-bed residential college designed
specifically for undergraduate students in ASU’s IRA A. Fulton
Schools of Engineering. The community features digital classrooms,
makerspaces with 3D printers, laser cutters and soldering tools for
engineering curriculum. Developed by ACC in 2017, LEED Gold.
- Greek Leadership Village – This 957-bed residential complex
serving the ASU Panhellenic community consists of 27 individual
customized chapter houses for fraternities, sororities and
community groups. Developed by ACC in 2018, LEED Certified.
- Second Stage:
- Vista del Sol (VDS) and Villas at Vista del Sol – Originally
developed for the upper-division student population, the success of
Barrett Honors College led to VDS and Villas’ conversion to house
2,266 upper-division honors students. It features a 12,000 sq. ft.
academic support services center. Developed by ACC in 2008 and
2012.
- 922 Place – Originally acquired by the company as a 468-bed
off-campus apartment community steps from campus, ASU master leases
the community to provide an apartment experience with an array of
amenities for upper-class students. Developed in 2009, acquired by
ACC in 2012.
- Casa de Oro – One of only two residential communities on the
campus of ASU West, the 365-bed Casa de Oro serves first-year
students and is located in the center of campus, adjacent to the
main dining facility and steps from classrooms. Developed by ACC in
2012.
- Manzanita Hall – The iconic first-year student residence hall
was originally developed in 1967 in the center of campus and was
redeveloped by ACC in 2013 to accommodate 816 students within the
College of Liberal Arts and Sciences. LEED Silver.
Non-GAAP Financial Measures
The National Association of Real Estate Investment Trusts
("NAREIT") currently defines Funds from Operations ("FFO") as net
income or loss attributable to common shares computed in accordance
with generally accepted accounting principles ("GAAP"), excluding
gains or losses from depreciable operating property sales,
impairment charges and real estate depreciation and amortization,
and after adjustments for unconsolidated partnerships and joint
ventures. We present FFO because we consider it an important
supplemental measure of our operating performance and believe it is
frequently used by securities analysts, investors and other
interested parties in the evaluation of REITs. We also believe it
is meaningful to present a measure we refer to as FFO-Modified, or
(“FFOM”), which reflects certain adjustments related to the
economic performance of our on-campus participating properties and
excludes other items, as we determine in good faith, that do not
reflect our core operations on a comparative basis. FFO and FFOM
should not be considered as alternatives to net income or loss
computed in accordance with GAAP as an indicator of our financial
performance or to cash flow from operating activities computed in
accordance with GAAP as an indicator of our liquidity, nor are
these measures indicative of funds available to fund our cash
needs, including our ability to pay dividends or make
distributions.
The company defines property net operating income (“NOI”) as
property revenues less direct property operating expenses,
excluding depreciation, but including allocated corporate general
and administrative expenses.
About American Campus Communities
American Campus Communities, Inc. is the largest owner, manager
and developer 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. As of September 30, 2021, American Campus Communities
owned 166 student housing properties containing approximately
111,900 beds. Including its owned and third-party managed
properties, ACC's total managed portfolio consisted of 202
properties with approximately 140,700 beds. Visit
www.americancampus.com.
Forward-Looking Statements
In addition to historical information, this press release
contains forward-looking statements under the applicable federal
securities law. These statements are based on management’s current
expectations and assumptions regarding markets in which American
Campus Communities, Inc. (the “Company”) operates, operational
strategies, anticipated events and trends, the economy, and other
future conditions. Forward-looking statements are not guarantees of
future performance and involve certain risks and uncertainties,
which are difficult to predict. These risks and uncertainties that
could cause actual results to differ materially from those
expressed or implied in the forward looking-statements include
those related to the COVID-19 pandemic, about which there are still
many unknowns, including the duration of the pandemic and the
extent of its impact, and those discussed in our filings with the
Securities and Exchange Commission, including our Annual Report on
Form 10-K for the year ended December 31, 2020 under the heading
“Risk Factors” and under the heading “Business - Forward-looking
Statements” and subsequent annual reports on Form 10-K and
quarterly reports on Form 10-Q. We undertake no obligation to
publicly update any forward-looking statements whether as a result
of new information, future events, or otherwise. The information
contained on our website is not a part of this release.
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Ryan Dennison Investor Relations (512) 732-1000
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