AUSTIN-A successful lease-up for the 2012-2013 school year combined with same-store NOI growth had executives at American Campus Communities' Q3 2012 earnings call excited about the numbers. The numbers reported at the Oct. 23 called included a same-store NOI that increased by 4.1% year-over-year, which was the result of a 2.8% revenue increase and an increase in operating expenses of less than 2%.
A highlight of the quarter also revolved around acquisitions. Most notably, ACC acquired a 15-property, 6,579-bed portfolio from Campus Acquisitions for $627 million, a deal that closed in September. Additionally, ACC acquired The Block, which serves the University of Texas-Austin, and The Retreat, which serves Texas State University in San Marcos, TX. On the development end, ACC delievered 6,703 beds to market at a cost of $381 million.
The Campus Acquisitions buy prompted questions from analysts, most notable, about whether private players will continue to sell to the larger companies or would rather go the IPO route. American Campus Communities' CEO William Bayless pointed out that IPOs aren't an option for every single student-housing player in the market. As such, "We think there'll continue to be a vibrant pipeline of both one-off properties, smaller regional portfolios and some of the larger ones like Campus Acquisitions, not to rule out that there couldn't be several companies that do undertake the IPO rounds," he adds.
Furthermore, IPOs aren't for the faint-of-heart. Bayless notes that student housing public companies' successes hinge on a stringent operating platform, something that many of the private players, that are partnered with many management companies, may not be able to achieve. As such, "I think the greatest hindrance in the decision to go public versus private is the lack of capability on the operating platform side in the industry as a whole," Bayless comments. But competition will continue to be a factor when it comes to issues such as price-setting and occupancy, he acknowledges.
Bayless also says that, going forward in 2013, the acquisition environment will be "more favorable than it was in the prior two years" with "a good pipeline of product coming to market."
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