QUALITY CONTROL
Some of ACC’s strong performance can be attributed to the overall growth the student housing sector is enjoying. The college-age population, those age 18 to 24, now numbers 9.5 million, up 20 percent from a decade ago, according to the National Center for Public Policy & Higher Education.
But ACC’s management team and operational expertise are the foundation for the company’s growth, analysts contend. —ACC is the highest-quality blue-chip operator in the student housing space,—says Craig Leupold, president of Green Street Advisors, a San Francisco-based REIT research firm.—They have put together a strong management team that is young and energetic but also experienced. And they have established an outstanding corporate culture and infrastructure.—
Leupold says that Bayless, along with the rest of his management team, focuses on communication and a team-oriented approach, seeking input and listening to opinions. —They are very open and not afraid to engage in debate,—he explains, adding that ACC solicits thoughts from bankers, shareholders, board members, and clients.
ACC’s team-oriented approach has solved many a crisis for the REIT. In 1999, for example, the company bought two properties at the University of Georgia that were on 365-day leases, which left only two days between the time students moved out and when students moved back in for fall classes.—In order to complete the makeready for the new academic year, nearly all the corporate staff went to Georgia and worked the turn, painting apartments and doing other duties,—Bayless recalls.—Everything was ready at move-in day, due to the employees’ hard work.—
That approach has trickled down to the project level, especially with clients such as the University of California, Irvine. In 2003, the university set a goal to house 50 percent of its students on campus. ACC was ready, working with the university to develop two on-campus student housing projects with a total of 3,000 beds. By 2005, the Vista del Campo and Vista del Campo Norte projects were the single largest public/private partnership in the student housing industry.
—ACC listened to us,—says Richard Orr, director of campus asset management for UCI.—We wanted to go a certain direction with the projects, and during the RFP process, they responded to our criteria better than anyone else. They tried to make it fit for us [and] give us what we wanted.—
The two ACC-developed properties allowed UCI to house 43 percent of its students on campus. To reach the 50 percent mark, however, the school decided in 2007 that it needed to develop a third project. So it went through another RFP process—one that ACC won without any—extra points—for its previous UCI projects.—ACC ended up blowing everyone else out of the water,— Orr says. The new UCI project will consist of 4,000 beds, and Orr says it should break ground this month with delivery in August 2010. The project is designed to achieve LEED Gold certification.
Beyond ACC’s management team, the REIT has some of the best student housing properties in the nation, Leupold adds. —ACC’s portfolio is exceptional,— he says, adding that the properties are close to campus and convenient for students who want to walk or bike to school. —That makes the properties insulated from competition.—
In fact, including the newly acquired GMH properties, 82 percent of ACC’s assets are located within 1 mile of campus. And that factor—distance to campus—is one of the three development criteria ACC relies on when acquiring assets. The other two? Barriers to entry and quality of construction.
Consider University Point at Texas Tech University in Lubbock, Texas. It is located within walking distance of the growing campus and boasts competitive floor plans and amenities. Plus, other developers would have a hard time building similar properties without being forced to lease their properties at a much higher rate.