AUSTIN, TX-American Campus Communities Inc. has beefed up its development pipeline over the past 12 months and expects to break ground on $255 million worth of new student housing projects in 2011. The student housing REIT made the announcement during its fourth quarter and year-end 2010 earnings call and provided additional details in its supplemental analyst package.
In addition to the newly announced projects, ACC already has four student housing projects totaling $190.4 million under development across the nation. In total, the REIT’s development pipeline totals $337.3 million--a substantial difference from the same period last year when it had no owned properties under development.
The REIT is targeting one-year nominal yields of 7.5% to 7.75% on the projects slated to break ground this year.
“One of the things that we’re most excited about in the current developments underway, and the ones that are upcoming, is we are able to enter those markets based on construction pricing at such an excellent basis that the rental rates that we’re entering these markets in, compared to the existing older product stock in place, really gives us probably the best NOI growth profile on development assets that we have ever had,” says ACC president and CEO Bill Bayless. “Therefore those yields are highly acceptable given the pricing power we believe we have moving forward in the years to come.”
The new developments include five on-campus projects and four off-campus projects. The on-campus developments are part of the American Campus Equity (ACE) program. They include: the 550-bed NAU Suites and 580-bed NAU Townhomes at Northern Arizona University in Flagstaff, AZ, for $61.2 million; 1,000 beds at the University of New Mexico for $36.1 million; and two projects with 760 beds for Arizona State University for $35.7 million.
ACC’s off-campus development pipeline includes: a 490-bed project at the University of Texas at Arlington for $23.7 million; a 450-bed project at Kennesaw State University in Georgia for $21.5 million; a 600-bed project for University of Buffalo in Amherst, NY, for $42.6 million; and a 640-bed project at Texas A&M University for $33.9 million.
All nine projects are scheduled for completion in August 2012, according to the supplemental analyst package. The REIT plans to fund the projects using several different capital sources including cash on the balance sheets, revolving credit lines and construction loans, according to ACC CFO Jonathan Graf.
“We are currently bidding out construction loans for several of the pipeline developments,” Graf said during the company’s earnings conference call. He added that the construction loans could offer a total of $180 million in proceeds.
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