AUSTIN, TX-American Campus Communities Inc. is taking advantage of its access to capital and is now providing mezzanine loans to private developers. The student housing REIT outlined its new strategy during its first quarter 2011 earnings conference call.
During the first quarter, ACC made a $4 million mezzanine loan to a private student housing developer for the acquisition and rehab of a condominium complex near Miami University in Oxford, Ohio.
ACC will earn a 10% interest on the loan, compounded monthly, and upon completion in 2012, the REIT can elect to acquire the asset at a pre-negotiated price or pass on the opportunity and take a return of its capital. Repayment of the mezzanine loan is guaranteed by the developer, according to William Talbot, senior vice president of investments for ACC.
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