Bigger Role Possible for REITs in Student Housing, CEO Says

William Bayless, president and CEO of American Campus Communities, Inc. (NYSE: ACC), joined REIT.com for a CEO Spotlight video interview during REITWeek 2015: NAREIT’s Investor Forum, held in New York.

American Campus Communities, an owner and developer of student housing properties, has a $1.2 billion development pipeline to be delivered between 2015 and 2017. About 50 percent of that pipeline represents on-campus properties where the company is in a partnership with the university.  The remaining assets are all located within a tenth of a mile of campus, he said.

Bayless observed that the student housing sector overall is seeing a robust level of transactions. In 2014, transactions totaled $3 billion, with REITs accounting for only 8 percent of that amount.

He also pointed out that in the first quarter of 2015, student housing capitalization rates dipped below multifamily rates, underscoring the strength of institutional demand for the assets.

And while American Campus Communities has been a buyer of core assets, for the year to date it has already closed on more than $400 million of dispositions. These funds will be recycled back into the $1.2 billion development pipeline, Bayless said.

Meanwhile, Bayless noted that REITs can play a much larger role in the student housing industry. The company has identified 280 target markets and is currently only in 72 of those, Bayless explained. “The opportunity for growth is significant.”

Bayless also said he expects to see more private student housing owners become aware of the advantages that the public REIT platform offers.