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American Campus' Bayless

'We have seen a tightening of underwriting standards and a sharper focus on credit quality.'

By Erika Morphy | Updated on June 30, 2008

Earlier this month American Campus Communities Inc. closed on the largest acquisition in the student housing space – its $1.4 billion purchase of Newton Square, PA-based GMH Communities Trust’ student housing portfolio. It was a complex cash-and-stock deal involving several separate transactions including the sale of 4.5 million shares of www.globest.com/news/1138_1138/austin/170007-1.html ACC’s common stock. With the portfolio now within ACC’s fold, the company has increased its market capitalization to $2.5 billion from $1.3 billion, moved into 39 new markets and more than doubled the size of its portfolio.It is a huge deal by any measure, says ACC CEO Bill Bayless. That it happened in the student housing space is all the more noteworthy, considering that just a few years ago it was viewed as an obscure niche in the commercial real estate industry. “It wasn’t that long ago when venture capital was the only source of funding. Compare that to what we accomplished in this deal.”

GlobeSt.com: What shifted student housing to mainstream status for lenders and developers?

Bayless: It was our IPO in 2004, which was quickly followed by two others. Wall Street got an introduction to the sector’s business case and began to understand why student housing would be a good mainstream investment. Until then, the sector had been burdened with double digit-weighted cost of capital.

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