ACC Looks to Build $615M Student Housing Project at Walt Disney World Resort
The transaction would be structured as a 75-year ground lease between ACC and a Walt Disney World Resort subsidiary.
LAKE BUENA VISTA, FL—American Campus Communities, Inc. reports it has signed a non-binding letter of intent to lease land from a subsidiary of Walt Disney World Resort here to develop a $615-million student housing project for the participants of the Disney College Program.
The Austin, TX-based owner and developer of student housing projects, stated that it is negotiating terms of a definitive agreement for the venture. If those talks are successful, American Campus Communities would be the exclusive provider to design and build the new multi-building housing project that would replace existing beds owned or master-leased by the Walt Disney World Resort.
According to a presentation on ACC’s website on the project, if the project moves forward, the community would be built on parcels located within Flamingo Crossings Town Center and would feature dedicated bus transportation to all Walt Disney World parks and resorts. The transaction would be structured as a 75-year ground lease between ACC and a Walt Disney World Resort subsidiary.
The project would be built in multiple phases with construction beginning in November of this year. The first two phases would have a total project cost of $106 million and would be completed in August 2020. The entire project would be finished in May 2023, with project stabilization expected in 2024. Upon completion, ACC is targeting a stabilized yield of 6.8%.
While ACC in its announcement estimated a total project cost of $615.1 million, the firm did not reveal the total bed count for the student housing project.
In its presentation, ACC stated that a 25,000-square-foot Disney Education Center would be located within the community. Community amenities would include two 25,000-square-foot buildings with fitness/wellness centers, four resort-style swimming pools, and indoor and outdoor meeting and event spaces.
ACC stated that there are 70,000 applicants for the various Disney educational programs—the Disney College Program, Disney International Program and the Disney Culinary Program. The programs, which have an acceptance rate of 27%, have approximately 1,600 participating schools.
Unrelated to its Walt Disney World announcement, ACC also reported that it completed the portfolio sale of three unnamed owned assets to an institutional partnership for $245 million. The transaction included the pre-payment of $37 million of secured mortgage debt and represented an average economic cap rate of 4.1%.
The company has also completed the sale of a minority joint venture interest in a portfolio of owned assets to an institutional investor. Additionally, the partnership originated $330 million of secured mortgage debt at a coupon of 4.07% with the full principal balance due at maturity in June 2028.
“We are pleased to have completed these capital recycling activities,” says Bill Bayless, American Campus Communities’ CEO. “We believe the additional dispositions further prove the value and attractiveness of student housing to institutional real estate investors and provide us with the opportunity to recycle capital into higher risk-adjusted return investments.”
He adds the dispositions provide “a clear indication of the private market value for core student housing located within walking distance to tier-1 universities.”
As of March 31, 2018, American Campus Communities owned 171 student housing properties containing approximately 104,800 beds. Including its owned and third-party managed properties, ACC’s total managed portfolio consisted of 206 properties with approximately 134,400 beds.