10-K 1 acc2013123110k.htm 10-K ACC 2013.12.31 10K


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
 
ý Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the fiscal year ended December 31, 2013.   
 
o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the Transition Period From _____________________ to __________________.       
 
Commission file number 001-32265 (American Campus Communities, Inc.)
Commission file number 333-181102-01 (American Campus Communities Operating Partnership, L.P.)
 
AMERICAN CAMPUS COMMUNITIES, INC.
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP, L.P.
(Exact name of registrant as specified in its charter)
 
 Maryland (American Campus Communities, Inc.)
Maryland (American Campus Communities Operating
Partnership, L.P.)
 
 76-0753089 (American Campus Communities, Inc.)
56-2473181 (American Campus Communities Operating
Partnership, L.P.)
 (State or Other Jurisdiction of
Incorporation or Organization)
 
(IRS Employer Identification No.)
 
12700 Hill Country Blvd., Suite T-200
Austin, TX
(Address of Principal Executive Offices)
 
 
78738
(Zip Code)
 
(512) 732-1000
 
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
 
(Title of Each Class)
 
(Name of Each Exchange on Which Registered)
 
 
 
Common Stock, $.01 par value
 
New York Stock Exchange
 
Securities registered pursuant to Section 12(g) of the Act:  None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
American Campus Communities, Inc.                                                 Yes  ý No o
American Campus Communities Operating Partnership, L.P.          Yes  o  No ý
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
American Campus Communities, Inc.                                                 Yes  o  No ý
American Campus Communities Operating Partnership, L.P.          Yes  o  No ý
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
American Campus Communities, Inc.                                                 Yes  ý No o
American Campus Communities Operating Partnership, L.P.          Yes  ý No o




 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
American Campus Communities, Inc.                                                 Yes  ý No o
American Campus Communities Operating Partnership, L.P.          Yes  ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
American Campus Communities, Inc.                                                  o                                                                             
American Campus Communities Operating Partnership, L.P.         o
  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
American Campus Communities, Inc.
Large accelerated filer ý                                                                                        Accelerated filer o 
Non-accelerated filer   o   (Do not check if a smaller reporting company)           Smaller reporting company  o
 
American Campus Communities Operating Partnership, L.P.
Large accelerated filer o                                                                                        Accelerated filer o 
Non-accelerated filer   ý   (Do not check if a smaller reporting company)           Smaller reporting company  o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
American Campus Communities, Inc.                                                 Yes  o  No ý
American Campus Communities Operating Partnership, L.P.          Yes  o  No ý
 
The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant was $3,715,337,507 based on the last sale price of the common equity on June 28, 2013 which is the last business day of the Company’s most recently completed second quarter.
 
There were 104,782,817 shares of the Company’s common stock with a par value of $0.01 per share outstanding as of the close of business on February 19, 2014.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
Part III of this report incorporates information by reference from the definitive Proxy Statement for the 2014 Annual Meeting of Stockholders.




EXPLANATORY NOTE
 
This report combines the annual reports on Form 10-K for the year ended December 31, 2013 of American Campus Communities, Inc. and American Campus Communities Operating Partnership, L.P..  Unless stated otherwise or the context otherwise requires, references to “ACC” mean American Campus Communities, Inc. a Maryland real estate investment trust (“REIT”), and references to “ACCOP” mean American Campus Communities Operating Partnership, L.P., a Maryland limited partnership.  References to the “Company,” “we,” “us” or “our” mean collectively ACC, ACCOP and those entities/subsidiaries owned or controlled by ACC and/or ACCOP.  References to the “Operating Partnership” mean collectively ACCOP and those entities/subsidiaries owned or controlled by ACCOP. The following chart illustrates the Company’s and the Operating Partnership’s corporate structure:
 
 
The general partner of ACCOP is American Campus Communities Holdings, LLC (“ACC Holdings”), an entity that is wholly-owned by ACC. As of December 31, 2013, ACC Holdings held an ownership interest in ACCOP of less than 1%. The limited partners of ACCOP are ACC and other limited partners consisting of current and former members of management and nonaffiliated third parties.  As of December 31, 2013, ACC owned an approximate 98.7% limited partnership interest in ACCOP.  As the sole member of the general partner of ACCOP, ACC has exclusive control of ACCOP’s day-to-day management.  Management operates the Company and the Operating Partnership as one business. The management of ACC consists of the same members as the management of ACCOP. The Company is structured as an umbrella partnership REIT (“UPREIT”) and ACC contributes all net proceeds from its various equity offerings to the Operating Partnership. In return for those contributions, ACC receives a number of units of ACCOP (“OP Units,” see definition below) equal to the number of common shares it has issued in the equity offering. Contributions of properties to the Company can be structured as tax-deferred transactions through the issuance of OP Units in ACCOP.  Based on the terms of ACCOP’s partnership agreement, OP Units can be exchanged for ACC’s common shares on a one-for-one basis. The Company maintains a one-for-one relationship between the OP Units of ACCOP issued to ACC and ACC Holdings and the common shares issued to the public. The Company believes that combining the reports on Form 10-K of the Company and the Operating Partnership into this single report provides the following benefits:
 
enhances investors’ understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

ACC consolidates ACCOP for financial reporting purposes, and ACC essentially has no assets or liabilities other than its investment in ACCOP. Therefore, the assets and liabilities of the Company and the Operating Partnership are the same on their respective financial statements. However, the Company believes it is important to understand the few differences between the Company and the Operating Partnership in the context of how the entities operate as a consolidated company. All of the Company’s property




ownership, development and related business operations are conducted through the Operating Partnership. ACC also issues public equity from time to time and guarantees certain debt of ACCOP. ACC does not have any indebtedness, as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity.  Except for the net proceeds from ACC’s equity offerings, which are contributed to the capital of ACCOP in exchange for OP Units on a one-for-one common share per OP Unit basis, the Operating Partnership generates all remaining capital required by the Company’s business. These sources include, but are not limited to, the Operating Partnership’s working capital, net cash provided by operating activities, borrowings under its credit facilities, and proceeds received from the disposition of certain properties.  Noncontrolling interests, stockholders’ equity, and partners’ capital are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The noncontrolling interests in the Operating Partnership’s financial statements consist of the interests of unaffiliated partners in various consolidated joint ventures. The noncontrolling interests in the Company’s financial statements include the same noncontrolling interests at the Operating Partnership level and OP Unit holders of ACCOP. The differences between stockholders’ equity and partners’ capital result from differences in the type of equity issued at the Company and Operating Partnership levels.
 
To help investors understand the significant differences between the Company and the Operating Partnership, this report provides separate consolidated financial statements for the Company and the Operating Partnership. A single set of consolidated notes to such financial statements is presented that includes separate discussions for the Company and the Operating Partnership when applicable (for example, noncontrolling interests, stockholders’ equity or partners’ capital, earnings per share or unit, etc.).  A combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section is also included that presents discrete information related to each entity, as applicable. This report also includes separate Part II, Item 9A Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of the Company and the Operating Partnership in order to establish that the requisite certifications have been made and that the Company and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.
 
In order to highlight the differences between the Company and the Operating Partnership, the separate sections in this report for the Company and the Operating Partnership specifically refer to the Company and the Operating Partnership. In the sections that combine disclosure of the Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the Company operates its business through the Operating Partnership. The separate discussions of the Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.




FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2013
 
TABLE OF CONTENTS
 
 
 
PAGE NO.
  PART I.    
 
 
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Mine Safety Disclosures
 
 
 
  PART II.    
 
 
Item 5.
Market for Registrant’s Common Equity and Related Stockholder Matters
Item 6.
Selected Financial Data
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results  of Operations
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and  Financial Disclosure
Item 9A.
Controls and Procedures
 
 
 
PART III.
 
 
Item 10.
Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and  Related Stockholder Matters
Item 13.
Certain Relationships, Related Transactions and Director Independence
Item 14.
Principal Accountant Fees and Services
 
 
 
PART IV.
 
 
Item 15.
Exhibits and Financial Statement Schedules
 
 
 
SIGNATURES
 




PART I
 Item 1.  Business
 
Overview
 
American Campus Communities, Inc. (“ACC”) is a real estate investment trust (“REIT”) that commenced operations effective with the completion of an initial public offering (“IPO”) on August 17, 2004. Through ACC’s controlling interest in American Campus Communities Operating Partnership L.P. (“ACCOP”), ACC is one of the largest owners, managers and developers of high quality student housing properties in the United States in terms of beds owned and under management. ACC is a fully integrated, self-managed and self-administered equity REIT with expertise in the acquisition, design, financing, development, construction management, leasing and management of student housing properties. ACC’s common stock is publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “ACC.”
 
The general partner of ACCOP is American Campus Communities Holdings, LLC (“ACC Holdings”), an entity that is wholly-owned by ACC. As of December 31, 2013, ACC Holdings held an ownership interest in ACCOP of less than 1%. The limited partners of ACCOP are ACC and other limited partners consisting of current and former members of management and nonaffiliated third parties.  As of December 31, 2013, ACC owned an approximate 98.7% limited partnership interest in ACCOP.  As the sole member of the general partner of ACCOP, ACC has exclusive control of ACCOP’s day-to-day management.  Management operates ACC and ACCOP as one business.  The management of ACC consists of the same members as the management of ACCOP.  ACC consolidates ACCOP for financial reporting purposes, and ACC does not have significant assets other than its investment in ACCOP.  Therefore, the assets and liabilities of ACC and ACCOP are the same on their respective financial statements. References to the “Company,” “we,” “us” or “our” mean collectively ACC, ACCOP and those entities/subsidiaries owned or controlled by ACC and/or ACCOP.  References to the “Operating Partnership” mean collectively ACCOP and those entities/subsidiaries owned or controlled by ACCOP.
 
As of December 31, 2013, our total owned and third-party managed portfolio included 203 properties with approximately 128,500 beds in approximately 44,000 units.
 
Business Objectives, Investment Strategies, and Operating Segments
 
Business Objectives
 
Our primary business objectives are to create long-term stockholder value by deploying capital to develop, redevelop, acquire and operate student housing communities, and to sell communities when they no longer meet our long-term investment strategy and when market conditions are favorable.  We believe we can achieve these objectives by continuing to implement our investment strategies and successfully manage our operating segments, which are described in more detail below.
 
Investment Strategies
 
We seek to own high quality, well designed and well located student housing properties. We seek to acquire or develop properties in markets that have stable or increasing student populations, are in submarkets with barriers to entry and provide opportunities for economic growth as a result of their product position and/or differentiated design and close proximity to campuses, or through our superior operational capabilities. We believe that our reputation and established relationships with universities give us an advantage in sourcing acquisitions and developments and obtaining municipal approvals and community support for our development projects.
 
Acquisitions:  As discussed in more detail in Note 5 in the accompanying Notes to Consolidated Financial Statements contained in Item 8, in 2013, we acquired 6 off-campus properties and an additional phase at an existing property containing 1,416 units and 3,725 beds for a combined purchase price of approximately $318.8 million.
 
We believe our relationships with university systems and individual educational institutions, our knowledge of the student housing market and our prominence as the first publicly-traded REIT focused exclusively on student housing in the United States will afford us a competitive advantage in acquiring additional student housing properties.

Development:  In August and September 2013, we completed the final stages of construction on four owned off-campus properties and three on-campus American Campus Equity (“ACE®”) properties containing 3,945 beds in 1,081 units.  In addition, as of December 31, 2013, we were in the process of constructing four on-campus ACE properties, three owned off-campus properties and one on-campus participating property. In addition, a third-party developer was in the process of constructing an off-campus property located in Knoxville, Tennessee (University Walk) that we did not own as of December 31, 2013, but are obligated to

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purchase as long as the developer meets certain construction completion deadlines and other closing conditions. These properties are summarized in the table below:
 
 
Project
 
 
 
Project Type
 
 
 
Location
 
 
Primary University
Served
 
 
Units
 
 
Beds
 
Estimated Project Cost
 
Total Costs Incurred as of December 31, 2013
 
Scheduled to Open for Occupancy
The Plaza on University
 
Off-campus
 
Orlando, FL
 
University of Central Florida
 
364

 
1,313

 
$
112,300

 
$
72,168

 
August 2014
Stanworth Commons Phase I
 
ACE
 
Princeton, NJ
 
Princeton University
 
127

 
214

 
35,800

 
18,970

 
July 2014
U Club on Frey Phase II
 
Off-campus
 
Kennesaw, GA
 
Kennesaw State University
 
102

 
408

 
25,300

 
14,322

 
August 2014
U Centre at Northgate
 
ACE
 
College Station, TX
 
Texas A&M University
 
196

 
784

 
37,500

 
14,681

 
August 2014
The Suites Phase II
 
ACE
 
Flagstaff, AZ
 
Northern Arizona University
 
164

 
328

 
19,300

 
3,779

 
August 2014
University Walk (1)
 
Pre-sale
 
Knoxville, TN
 
University of Tennessee
 
177

 
526

 
32,300

 
10,623

 
August 2014
West Virginia University Project (2)
 
On-campus participating
 
Morgantown, WV
 
West Virginia University
 
224

 
567

 
44,200

 
19,792

 
August 2014
SUBTOTAL – 2014 DELIVERIES
 
1,354

 
4,140

 
$
306,700

 
$
154,335

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lancaster Project
 
ACE
 
Philadelphia, PA
 
Drexel University
 
351

 
1,316

 
170,700

 
17,430

 
September 2015
Eugene, OR Development
 
Off-campus
 
Eugene, OR
 
University of Oregon
 
192

 
734

 
64,600

 
10,204

 
September 2015
 SUBTOTAL – 2015 DELIVERIES
 
543

 
2,050

 
$
235,300

 
$
27,634

 
 
 
 
 
 
 
 
 
 
 
 
 
 TOTAL – ALL PROJECTS
 
1,897

 
6,190

 
$
542,000

 
$
181,969

 
 
 
(1) 
We did not own this property as of December 31, 2013 but are obligated to purchase the property as long as the developer meets certain construction completion deadlines and other closing conditions.

(2) 
In July 2013, we entered into long-term ground and facility leases with the University to finance, construct and manage this on-campus participating property. Under the terms of the leases, title to the constructed facility will be held by the University/lessor and the University will receive 50% of defined net cash flows on an annual basis through the term of the leases.

Our experienced development staff intends to continue to identify and acquire land parcels in close proximity to colleges and universities that offer location advantages or that allow for the development of unique products that offer a competitive advantage.  We expect to continue to benefit from opportunities derived from our extensive network with colleges and universities as well as our relationship with certain developers with whom we have previously developed student housing properties.
 
Operating Segments
 
We define business segments by their distinct customer base and service provided.  We have identified four reportable segments: Wholly-Owned Properties, On-Campus Participating Properties, Development Services and Property Management Services.  For a detailed financial analysis of our segments’ results of operations and financial position, please refer to Note 18 in the accompanying Notes to Consolidated Financial Statements contained in Item 8.
 
Property Operations
 
Unique Leasing Characteristics:  Student housing properties are typically leased by the bed on an individual lease liability basis, unlike multifamily housing where leasing is by the unit.  Individual lease liability limits each resident’s liability to his or her own rent without liability for a roommate’s rent.  A parent or guardian is generally required to execute each lease as a guarantor unless the resident provides adequate proof of income or financial aid.  The number of lease contracts that we administer is therefore approximately equivalent to the number of beds occupied and not the number of units.  Unlike traditional multifamily housing, most of our leases for an individual property commence and terminate on the same dates and typically have terms of 9 or 12 months.  (Please refer to the property table contained in Item 2 – Properties for a listing of the typical lease terms at our properties.)  As an example, in the case of our typical 12-month leases, the commencement date coincides with the commencement of the respective university’s Fall academic term and the termination date is the last day of the subsequent summer school session.  As such, we must re-lease each property in its entirety each year.
 
Management Philosophy:  Our management philosophy is based upon meeting the following objectives:

Satisfying the specialized needs of residents by providing the highest levels of customer service;

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Developing and maintaining an academically oriented environment via a premier residence life/student development program;
Maintaining each project’s physical plant in top condition;
Maximizing revenue through the development and implementation of a strategic annual marketing plan and leasing administration program; and
Maximizing cash flow through maximizing revenue coupled with prudent control of expenses.
 
LAMS:  We believe we have developed the industry’s only specialized, fully integrated leasing administration and marketing software program, which we call LAMS. We utilize LAMS to maximize our revenue and improve the efficiency and effectiveness of our marketing and lease administration process. Through LAMS, each of our properties’ ongoing marketing and leasing efforts are supervised at the corporate office on a real time basis. Among other things, LAMS provides:

a fully integrated prospect tracking and follow-up system;
a built-in marketing effectiveness program to measure the success of our marketing efforts on a real time basis;
a real-time monitor of lease closings and leasing terms;
an automated lease generation system;
the generation of future period rent rolls to aid in budgeting and forecasting; and
a customized report writer.
 
Wholly-Owned Properties:  Off-campus properties are generally located in close proximity to the school campus, generally with pedestrian, bicycle, or university shuttle access.  Off-campus housing tends to offer more relaxed rules and regulations than on-campus housing, resulting in off-campus housing being generally more appealing to upper-classmen.  We believe that the support of colleges and universities can be beneficial to the success of our wholly-owned properties.  We actively seek to have these institutions recommend our facilities to their students or to provide us with mailing lists so that we may directly market to students and parents.  In some cases, the institutions actually promote our off-campus facilities in their recruiting and admissions literature.  In cases where the educational institutions do not provide mailing lists or recommendations for off-campus housing, most provide comprehensive lists of suitable properties to their students, and we continually work to ensure that our properties are on these lists in each of the markets that we serve.
 
Off-campus housing is subject to competition for tenants with on-campus housing owned by colleges and universities, and vice versa.  Colleges and universities can generally avoid real estate taxes and borrow funds at lower interest rates than us (and other private sector operators), thereby decreasing their operating costs.  Residence halls owned and operated by the primary colleges and universities in the markets of our off-campus properties may charge lower rental rates, but typically offer fewer amenities than we offer at our properties.  Additionally, most universities are only able to house a small percentage of their overall enrollment, and are therefore highly dependent upon the off-campus market to provide housing for their students.  High-quality, well run off-campus student housing can be a critical component to an institution’s ability to attract and retain students.  Therefore, developing and maintaining good relationships with educational institutions can result in a privately owned off-campus facility becoming, in effect, an extension of the institution’s housing program, with the institution providing highly valued references and recommendations to students and parents.
 
This segment also competes with national and regional owner-operators of off-campus student housing in a number of markets as well as with smaller local owner-operators.  Therefore, the performance of this segment could be affected by the construction of new on-campus or off-campus residences, increases or decreases in the general levels of rents for housing in competing communities, increases or decreases in the number of students enrolled at one or more of the colleges or universities in the market of a property, and other general economic conditions.
 
American Campus Equity (ACE):  Included in our wholly-owned properties segment and branded and marketed to colleges and universities as the ACE program, this transaction structure provides us with what we believe is a lower-risk opportunity compared to other off-campus projects, as our ACE projects will have premier on-campus locations with marketing and operational assistance from the university.  The subject university substantially benefits by increasing its housing capacity with modern, well-amenitized student housing with no or minimal impacts to its own credit ratios, preserving the university’s credit capacity to fund academic and research facilities.
 
On-Campus Participating Properties:  Our On-Campus Participating Properties segment includes four on-campus properties owned by one of our taxable REIT subsidiaries (“TRSs”) that are operated under long-term ground/facility leases with two university systems and one on-campus property owned by ACCOP that is currently under development and scheduled to open for occupancy in August 2014. Under our ground/facility leases, we receive an annual distribution representing 50% of these properties’ net cash flows, as defined in the ground/facility lease agreements.  We also manage these properties under long-term management

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agreements and are paid management fees equal to a percentage of defined gross receipts.  Refer to Note 8 in the accompanying Notes to Consolidated Financial Statements contained in Item 8 herein for a more detailed description of these properties.

Our on-campus participating properties are susceptible to some of the same risks as our wholly-owned properties, including: (i) seasonality in rents; (ii) annual re-leasing that is highly dependent on marketing and university admission policies; and (iii) competition for tenants from other on-campus housing operated by educational institutions or other off-campus properties.
 
Third-Party Services
 
Our third-party services consist of development services and management services and are typically provided to university and college clients.  Many of our third-party management services are provided to clients for whom we also provide development services.  While management evaluates the operational performance of our third-party services based on the distinct segments identified below, at times we also evaluate these segments on a combined basis.
 
Development Services:  Our Development Services segment consists of development and construction management services that we provide through one of our TRSs for third-party owners.  These services range from short-term consulting projects to long-term full-scale development and construction projects.  We typically provide these services to colleges and universities seeking to modernize their on-campus student housing properties.  They look to us to bring our student housing experience and expertise to ensure they develop marketable, functional, and financially sustainable facilities.  Educational institutions usually seek to build housing that will enhance their recruitment and retention of students while facilitating their academic objectives.  Most of these development service contracts are awarded via a competitive request for proposal (“RFP”) process that qualifies developers based on their overall capability to provide specialized student housing design, development, construction management, financial structuring, and property management services.  Our development services typically include pre-development, design and financial structuring services.  Our pre-development services typically include feasibility studies for third-party owners and design services.  Feasibility studies include an initial feasibility analysis, review of conceptual design, and assistance with master planning.  Some of the documents produced in this process include the conceptual design documents, preliminary development and operating budgets, cash flow projections and a preliminary market assessment.  Our design services include coordination with the architect and other members of the design team, review of construction plans and assistance with project due diligence and project budgets.
 
Construction management services typically consist of hiring of project professionals and a general contractor, coordinating and supervising the construction, equipping and furnishing process on behalf of the project owner, including site visits, hiring of a general contractor and project professionals, and full coordination and administration of all activities necessary for project completion in accordance with plans and specifications and with verification of adequate insurance.
 
Our Development Services activities benefit our primary goal of owning and operating student housing properties in a number of ways.  By providing these services to others, we are able to expand and refine our unit plan and community design, the operational efficiency of our material specifications and our ability to determine market acceptance of unit and community amenities.  Our development and construction management personnel enable us to establish relationships with general contractors, architects and project professionals throughout the nation.  Through these services, we gain experience and expertise in residential and commercial construction methodologies under various labor conditions, including right-to-work labor markets, markets subject to prevailing wage requirements and fully unionized environments.  This segment is subject to competition from other specialized student housing development companies as well as from national real estate development companies.
 
Property Management Services:  Our Property Management Services segment, conducted by our TRSs, includes revenues generated from third-party management contracts in which we are typically responsible for all aspects of operations, including marketing, leasing administration, facilities maintenance, business administration, accounts payable, accounts receivable, financial reporting, capital projects, and residence life student development.  We provide these services pursuant to management agreements that have initial terms that range from one to five years.
 
There are several housing options that compete with our third-party managed properties including, but not limited to, multifamily housing, for-rent single family dwellings, other off-campus specialized student housing and the aforementioned on-campus participating properties.
 

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Americans with Disabilities Act and Federal Fair Housing Act
 
Many laws and governmental regulations are applicable to our properties and changes in the laws and regulations, or their interpretation by agencies and the courts, occur frequently.  Our properties must comply with Title III of the Americans with Disabilities Act, or ADA, to the extent that such properties are “public accommodations” as defined by the ADA.  The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable.  We believe that the existing properties are in substantial compliance with the ADA and that we will not be required to make substantial capital expenditures to address the requirements of the ADA.  However, noncompliance with the ADA could result in imposition of fines or an award of damages to private litigants.  The obligation to make readily achievable accommodations is an ongoing one, and we intend to continue to assess our properties and to make alterations as appropriate in this respect.

Under the federal and state fair housing laws, discrimination on the basis of certain protected classes is prohibited.  Violation of these laws can result in significant damage awards to victims.
 
Environmental Matters
 
Under various laws and regulations relating to the protection of the environment, an owner of real estate may be held liable for the costs of removal or remediation of certain hazardous or toxic substances located on or in its property.  These laws often impose liability without regard to whether the owner was responsible for, or even knew of, the presence of such substances.  The presence of such substances may adversely affect the owner’s ability to rent or sell the property or use the property as collateral.  Independent environmental consultants conducted environmental site assessments on all of the wholly-owned properties and on-campus participating properties in our existing portfolio.  We are not aware of any environmental conditions that management believes would have a material adverse effect on the Company.  There is no assurance, however, that environmental site assessments or other investigations would reveal all environmental conditions or that environmental conditions not known to us may exist now or in the future which would result in liability to the Company for remediation or fines, either under existing laws and regulations or future changes to such requirements.
 
From time to time, the United States Environmental Protection Agency, or EPA, designates certain sites affected by hazardous substances as “Superfund” sites pursuant to CERCLA.  Superfund sites can cover large areas, affecting many different parcels of land.  Although CERCLA imposes joint and several liability for contamination on property owners and operators regardless of fault, the EPA may choose to pursue potentially responsible parties (“PRPs”) based on their actual contribution to the contamination.  PRPs are liable for the costs of responding to the hazardous substances.  Each of Villas on Apache (disposed of in April 2011), The Village on University (disposed of in December 2006) and University Village at San Bernardino (disposed of in January 2005) are located within federal Superfund sites.  The EPA designated these areas as Superfund sites because groundwater underneath these areas is contaminated.  We have not been named, and do not expect to be named, as a PRP with respect to these sites.  However, there can be no assurance regarding potential future developments concerning such sites.
 
Insurance
 
We carry liability and property insurance on our properties, which we believe is of the type and amount customarily obtained on real property assets.  We intend to obtain similar coverage for properties we acquire in the future.  However, there are certain types of losses, generally of a catastrophic nature, such as losses from floods or earthquakes, which may be subject to limitations in certain areas.  When not otherwise contractually stipulated, we exercise our judgment in determining amounts, coverage limits, and deductibles, in an effort to maintain appropriate levels of insurance on our investments.  If we suffer a substantial loss, our insurance coverage may not be sufficient due to market conditions at the time or other unforeseen factors.  Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it infeasible to use insurance proceeds to replace a property after it has been damaged or destroyed.
 
Employees
 
As of December 31, 2013, we had approximately 3,059 employees, consisting of:

approximately 1,930 on-site employees in our wholly-owned properties segment, including 802 Resident Assistants;
approximately 110 on-site employees in our on-campus participating properties segment, including 48 Resident Assistants;
approximately 884 employees in our property management services segment, including 751 on-site employees and 133 corporate office employees;
approximately 48 corporate office employees in our development services segment; and
approximately 87 executive, corporate administration and financial personnel.

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Our employees are not currently represented by a labor union.

Offices and Website
 
Our principal executive offices are located at 12700 Hill Country Boulevard, Suite T-200 Austin, TX 78738. Our telephone number at that location is (512) 732-1000.
 
We file our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other reports required by Sections 13(a) and 15(d) of the Securities Exchange Act of 1934.  You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549.  You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.  The address of that site is www.sec.gov.
 
Our website is located at www.americancampus.com. We make available free of charge through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.  Our website also contains copies of our Corporate Governance Guidelines and Code of Business Ethics as well as the charters of our Nominating and Corporate Governance, Audit, and Compensation committees.  The information on our website is not part of this filing.

Forward-looking Statements
 
This report contains forward-looking statements within the meaning of the federal securities laws. We caution investors that any forward-looking statements presented in this report, or which management may make orally or in writing from time to time, are based on management’s beliefs and assumptions made by, and information currently available to, management. When used, the words “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,” “project,” “should,” “will,” “result” and similar expressions, do not relate solely to historical matters and are intended to identify forward-looking statements. Such statements are subject to risks, uncertainties and assumptions and may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We caution you that forward-looking statements are not guarantees of future performance and will be impacted by actual events when they occur after we make such statements. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on results and trends at the time they were made, to anticipate future results or trends.
 
Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following: general risks affecting the real estate industry; risks associated with changes in University admission or housing policies; risks associated with the availability and terms of financing and the use of debt to fund acquisitions and developments; failure to manage effectively our growth and expansion into new markets or to integrate acquisitions successfully; risks and uncertainties affecting property development and construction; risks associated with downturns in the national and local economies, volatility in capital and credit markets, increases in interest rates, and volatility in the securities markets; costs of compliance with the Americans with Disabilities Act and other similar laws; potential liability for uninsured losses and environmental contamination; risks associated with our Company’s potential failure to qualify as a REIT under the Internal Revenue Code of 1986 (the “Code”), as amended, and possible adverse changes in tax and environmental laws; and the other factors discussed in the “Risk Factors” contained in Item 1A of this report.
 
Item 1A.  Risk Factors
 
The following risk factors may contain defined terms that are different from those used in other sections of this report.  Unless otherwise indicated, when used in this section, the terms “we” and “us” refer to American Campus Communities, Inc. and its subsidiaries, including American Campus Communities Operating Partnership LP, our Operating Partnership, and the term “securities” refers to shares of common stock of American Campus Communities, Inc. and units of limited partnership interest in our Operating Partnership.
 
The factors described below represent the Company’s principal risks. Other factors may exist that the Company does not consider being significant based on information that is currently available or that the Company is not currently able to anticipate.


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Risks Related to Our Properties, Our Markets and Our Business
 
Volatility in capital and credit markets, or other unfavorable changes in economic conditions, could adversely impact us.
 
The capital and credit markets experienced volatility and disruption, particularly in the latter half of 2008 through the first quarter of 2010.  This made it more difficult to borrow money.  In the event of renewed market disruption or volatility, we may not be able to obtain new debt financing or refinance our existing debt on favorable terms or at all, which would adversely affect our liquidity, our ability to make distributions to equity holders, acquire and dispose of assets and continue our development pipeline.  Unfavorable changes in economic conditions may have a material adverse impact on our cash flows and operating results.
 
Our results of operations are subject to an annual leasing cycle, short lease-up period, seasonal cash flows, changing university admission and housing policies and other risks inherent in the student housing industry.
 
We generally lease our owned properties under 12-month leases, and in certain cases, under nine-month or shorter-term semester leases.  As a result, we may experience significantly reduced cash flows during the summer months at properties with lease terms shorter than 12 months.  Furthermore, all of our properties must be entirely re-leased each year, exposing us to increased leasing risk.  In addition, we are subject to increased leasing risk on our properties under construction and future acquired properties based on our lack of experience leasing those properties and unfamiliarity with their leasing cycles.  Student housing properties are also typically leased during a limited leasing season that usually begins in January and ends in August of each year.  We are therefore highly dependent on the effectiveness of our marketing and leasing efforts and personnel during this season.
 
Changes in university admission policies could adversely affect us.  For example, if a university reduces the number of student admissions or requires that a certain class of students, such as freshman, live in a university owned facility, the demand for beds at our properties may be reduced and our occupancy rates may decline.  While we may engage in marketing efforts to compensate for such change in admission policy, we may not be able to affect such marketing efforts prior to the commencement of the annual lease-up period or our additional marketing efforts may not be successful.
 
We rely on our relationships with colleges and universities for referrals of prospective student-tenants or for mailing lists of prospective student-tenants and their parents.  Many of these colleges and universities own and operate their own competing on-campus facilities.  Any failure to maintain good relationships with these colleges and universities could therefore have a material adverse effect on us.  If colleges and universities refuse to make their lists of prospective student-tenants and their parents available to us or increase the costs of these lists, there could be a material adverse effect on us.
 
Federal and state laws require colleges to publish and distribute reports of on-campus crime statistics, which may result in negative publicity and media coverage associated with crimes occurring on or in the vicinity of our on-campus properties.  Reports of crime or other negative publicity regarding the safety of the students residing on, or near, our properties may have an adverse effect on both our on-campus and off-campus business.
 
We face significant competition from university-owned on-campus student housing, from other off-campus student housing properties and from traditional multifamily housing located within close proximity to universities.
 
On-campus student housing has certain inherent advantages over off-campus student housing in terms of physical proximity to the university campus and integration of on-campus facilities into the academic community.  Colleges and universities can generally avoid real estate taxes and borrow funds at lower interest rates than us and other private sector operators.  We also compete with national and regional owner-operators of off-campus student housing in a number of markets as well as with smaller local owner-operators.
 
Currently, the industry is fragmented with no participant holding a significant market share.  There are a number of student housing complexes that are located near or in the same general vicinity of many of our owned properties and that compete directly with us.  Such competing student housing complexes may be newer than our properties, located closer to campus, charge less rent, possess more attractive amenities or offer more services or shorter term or more flexible leases.
 
Rental income at a particular property could also be affected by a number of other factors, including the construction of new on-campus and off-campus residences, increases or decreases in the general levels of rents for housing in competing communities, increases or decreases in the number of students enrolled at one or more of the colleges or universities in the market of the property and other general economic conditions.


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We believe that a number of other large national companies with substantial financial and marketing resources may be potential entrants in the student housing business.  The entry of one or more of these companies could increase competition for students and for the acquisition, development and management of other student housing properties.
 
We may be unable to successfully complete and operate our properties or our third-party developed properties.
 
We intend to continue to develop and construct student housing.  These activities may include any of the following risks:

we may be unable to obtain financing on favorable terms or at all;
we may not complete development projects on schedule, within budgeted amounts or in conformity with building plans and specifications;
we may encounter delays or refusals in obtaining all necessary zoning, land use, building, occupancy and other required governmental permits and authorizations;
occupancy and rental rates at newly developed or renovated properties may fluctuate depending on a number of factors, including market and economic conditions, and may reduce or eliminate our return on investment;
we may become liable for injuries and accidents occurring during the construction process and for environmental liabilities, including off-site disposal of construction materials;
we may decide to abandon our development efforts if we determine that continuing the project would not be in our best interests; and
we may encounter strikes, weather, government regulations and other conditions beyond our control.
 
Our newly developed properties will be subject to risks associated with managing new properties, including lease-up and integration risks.  In addition, new development activities, regardless of whether or not they are ultimately successful, typically will require a substantial portion of the time and attention of our development and management personnel.  Newly developed properties may not perform as expected.
 
We anticipate that we will, from time to time, elect not to proceed with ongoing development projects.  If we elect not to proceed with a development project, the development costs associated therewith will ordinarily be charged against income for the then-current period.  Any such charge could have a material adverse effect on our results of operations in the period in which the charge is taken.
 
We may in the future develop properties nationally, internationally or in geographic regions other than those in which we currently operate.  We do not possess the same level of familiarity with development in these new markets, which could adversely affect our ability to develop such properties successfully or at all or to achieve expected performance.  Future development opportunities may not be available to us on terms that meet our investment criteria or we may be unsuccessful in capitalizing on such opportunities.  Our ability to capitalize on such opportunities will be largely dependent upon external sources of capital that may not be available to us on favorable terms or at all.
 
We typically provide guarantees of timely completion of projects that we develop for third parties.  In certain cases, our contingent liability under these guarantees may exceed our development fee from the project.  Although we seek to mitigate this risk by, among other things, obtaining similar guarantees from the project contractor, we could sustain significant losses if development of a project were to be delayed or stopped and we were unable to cover our guarantee exposure with the guarantee received from the project contractor.
 
We may be unable to successfully acquire properties on favorable terms.
 
Our future growth will be in part dependent upon our ability to successfully acquire new properties on favorable terms.  With respect to recently acquired properties, and as we acquire additional properties, we will continue to be subject to risks associated with managing new properties, including lease-up and integration risks.  Newly developed and recently acquired properties may not perform as expected and may have characteristics or deficiencies unknown to us at the time of acquisition.  Future acquisition opportunities may not be available to us on terms that meet our investment criteria or we may be unsuccessful in capitalizing on such opportunities.  Our ability to capitalize on such opportunities will be largely dependent upon external sources of capital that may not be available to us on favorable terms or at all.
 
Our ability to acquire properties on favorable terms and successfully operate them involves the following significant risks:

our potential inability to acquire a desired property may be caused by competition from other real estate investors;
competition from other potential acquirers may significantly increase the purchase price and decrease expected yields;
we may be unable to finance an acquisition on favorable terms or at all;

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we may have to incur significant unexpected capital expenditures to improve or renovate acquired properties;
we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations;
market conditions may result in higher than expected costs and vacancy rates and lower than expected rental rates; and
we may acquire properties subject to liabilities but without any recourse, or with only limited recourse, to the sellers, or with liabilities that are unknown to us, such as liabilities for clean-up of undisclosed environmental contamination, claims by tenants, vendors or other persons dealing with the former owners of our properties and claims for indemnification by members, directors, officers and others indemnified by the former owners of our properties.

Our failure to finance property acquisitions on favorable terms, or operate acquired properties to meet our financial expectations, could adversely affect us.
 
Difficulties of selling real estate could limit our flexibility.
 
We intend to evaluate the potential disposition of assets that may no longer help us meet our objectives.  When we decide to sell an asset, we may encounter difficulty in finding buyers in a timely manner as real estate investments generally cannot be disposed of quickly, especially when market conditions are poor.  This may limit our ability to vary our portfolio promptly in response to changes in economic or other conditions.  In addition, in order to maintain our status as a REIT, the Internal Revenue Code imposes restrictions on our ability to sell properties held fewer than two years, which may cause us to incur losses thereby reducing our cash flows and adversely impacting distributions to equity holders.
 
Our debt level reduces cash available for distribution and could have other important adverse consequences.
 
As of December 31, 2013, our total consolidated indebtedness was approximately $2,671.8 million (excluding unamortized mortgage debt premiums and discounts).  Our debt service obligations expose us to the risk of default and reduce or eliminate cash resources that are available to operate our business or pay distributions that are necessary to maintain our qualification as a REIT.  There is no limit on the amount of indebtedness that we may incur except as provided by the covenants in our corporate-level debt.  We may incur additional indebtedness to fund future property development, acquisitions and other working capital needs, which may include the payment of distributions to our security holders.  The amount available to us and our ability to borrow from time to time under our corporate-level debt is subject to certain conditions and the satisfaction of specified financial and other covenants.  Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following:

We may be unable to borrow additional funds as needed or on favorable terms.
We may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness.
We may be forced to dispose of one or more of our properties, possibly on disadvantageous terms.
We may default on our scheduled principal payments or other obligations as a result of insufficient cash flow or otherwise, and the lenders or mortgagees may foreclose on our properties that secure their loans and receive an assignment of rents and leases.
Foreclosures could create taxable income without accompanying cash proceeds, a circumstance that could hinder our ability to meet the REIT distribution requirements imposed by the Internal Revenue Code.
Compliance with the provisions of our debt agreements, including the financial and other covenants, such as the maintenance of specified financial ratios, could limit our flexibility and a default in these requirements, if uncured, could result in a requirement that we repay indebtedness, which could severely affect our liquidity and increase our financing costs.
 
We may be unable to renew, repay or refinance our outstanding debt.
 
We are subject to the risk that our indebtedness will not be able to be renewed, repaid or refinanced when due or that the terms of any renewal or refinancing will not be as favorable as the existing terms of such indebtedness.  If we were unable to refinance our indebtedness on acceptable terms, or at all, we might be forced to dispose of one or more of our properties on disadvantageous terms, which might result in losses to us.  Such losses could have a material adverse effect on us and our ability to make distributions to our equity holders and pay amounts due on our debt.

Variable rate debt is subject to interest rate risk.
 
We have construction loans with varying interest rates that are dependent upon the market index.  In addition, we have an unsecured revolving credit facility and a secured agency facility, each of which bears interest at a variable rate on all amounts drawn on the

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facility.  In December 2013, we borrowed $250 million under a new unsecured term loan which bears interest at a variable rate and we may incur additional variable rate debt in the future.  Increases in interest rates on variable rate debt would increase our interest expense, unless we make arrangements that hedge the risk of rising interest rates, which would adversely affect net income and cash available for payment of our debt obligations and distributions to equity holders.
 
Failure to maintain our current credit ratings could adversely affect our cost of funds, liquidity and access to capital markets.
 
Moody’s and Standard & Poor’s, the major debt rating agencies, have evaluated our debt and have given us ratings of Baa3 and BBB-, respectively.  These ratings are based on a number of factors, which include their assessment of our financial strength, liquidity, capital structure, asset quality and sustainability of cash flow and earnings.  Due to changes in market conditions, we may not be able to maintain our current credit ratings, which will adversely affect the cost of funds under our credit facilities, and could also adversely affect our liquidity and access to capital markets.
 
We may incur losses on interest rate swap and hedging arrangements.
 
We may periodically enter into agreements to reduce the risks associated with increases in interest rates.  Although these agreements may partially protect against rising interest rates, they also may reduce the benefits to us if interest rates decline.  If an arrangement is not indexed to the same rate as the indebtedness that is hedged, we may be exposed to losses to the extent which the rate governing the indebtedness and the rate governing the hedging arrangement change independently of each other.  Finally, nonperformance by the other party to the arrangement may subject us to increased credit risks.
 
We could be negatively impacted by the elimination of Fannie Mae or Freddie Mac.
 
Fannie Mae and Freddie Mac are a major source of financing for secured residential real estate. We and other residential companies have used Fannie Mae and Freddie Mac to finance growth by purchasing or guaranteeing apartment loans. In June 2013, a bipartisan group of senators proposed an overhaul of the housing finance system that would wind down Fannie Mae and Freddie Mac in five years. In August 2013, President Obama's administration announced his support for this legislation. A final decision by the government to eliminate Fannie Mae or Freddie Mac, or reduce their role in the mortgage market, may adversely affect interest rates, capital availability or the development of student housing properties.

We face risks associated with land holdings.
 
We hold land for future development and may in the future acquire additional land holdings.  The risks inherent in owning or purchasing and developing land increase as demand for student housing, or rental rates, decrease.  As a result, we hold certain land and may in the future acquire additional land in our development pipeline at a cost we may not be able to recover fully or on which we cannot build and develop into a profitable student housing project.  Also, real estate markets are highly uncertain and, as a result, the value of undeveloped land has fluctuated significantly and may continue to fluctuate as a result of changing market conditions.  In addition, carrying costs can be significant and can result in losses or reduced margins in a poorly performing project.  If there are subsequent changes in the fair value of our land holdings that we determine is less than the carrying basis of our land holdings reflected in our financial statements plus estimated costs to sell, we may be required to take future impairment charges, which would reduce our net income.
 
We may not be able to recover pre-development costs for third-party university developments.
 
University systems and educational institutions typically award us development services contracts on the basis of a competitive award process, but such contracts are typically executed following the formal approval of the transaction by the institution’s governing body.  In the intervening period, we may incur significant pre-development and other costs in the expectation that the development services contract will be executed.  If an institution’s governing body does not ultimately approve our selection and the terms of the pending development contract, we may not be able to recoup these costs from the institution and the resulting losses could be material.

Our awarded projects may not be successfully structured or financed and may delay our recognition of revenues.
 
The recognition and timing of revenues from our awarded development services projects will, among other things, be contingent upon successfully structuring and closing project financing as well as the timing of construction.  The development projects that we have been awarded have at times been delayed beyond the originally scheduled construction commencement date.  If such delays were to occur with our current awarded projects, our recognition of expected revenues and receipt of expected fees from these projects would be delayed.
 

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We may encounter delays in completion or experience cost overruns with respect to our properties under construction.
 
As of December 31, 2013, we were in the process of constructing seven wholly-owned properties and one on-campus participating property.  These properties are subject to the various risks relating to properties that are under construction referred to elsewhere in these risk factors, including the risks that we may encounter delays in completion and that any such project may experience cost overruns or may not be completed on time.  Additionally, if we do not complete the construction of properties on schedule, we may be required to provide alternative housing to the students with whom we have signed leases.  We generally do not make any arrangements for such alternative housing for these properties and we would likely incur significant expenses in the event we provide such housing.  If construction is not completed on schedule, students may attempt to break their leases and our occupancy at such properties for that academic year may suffer.
 
Our guarantees could result in liabilities in excess of our development fees.
 
In third-party developments, we typically provide guarantees of the obligations of the developer, including development budgets and timely project completion.  These guarantees include, among other things, the cost of providing alternate housing for students in the event we do not timely complete a development project.  These guarantees typically exclude delays resulting from force majeure and also, in third-party transactions, are typically limited in amount to the amount of our development fees from the project.  In certain cases, however, our contingent liability under these guarantees has exceeded our development fee from the project and we may agree to such arrangements in the future.  Our obligations under alternative housing guarantees typically expire five days after construction is complete.  Project cost guarantees are normally satisfied within one year after completion of the project.
 
Universities have the right to terminate our participating ground leases.
 
The ground leases through which we own our on-campus participating properties provide that the university lessor may purchase our interest in and assume the management of the facility, with the purchase price calculated at the discounted present value of cash flows from our leasehold interest.  The exercise of any such buyout would result in a reduction in our portfolio.
 
Changes in laws could affect our business.
 
We are generally not able to pass through to our residents under existing leases real estate taxes, income taxes or other taxes.  Consequently, any such tax increases may adversely affect our financial condition and limit our ability to satisfy our financial obligations and make distributions to security holders.  Changes that increase our potential liability under environmental laws or our expenditures on environmental compliance could have the same impact.
 
Litigation risks could affect our business.
 
As a publicly traded owner of properties, we have become and in the future may become involved in legal proceedings, including consumer, employment, tort or commercial litigation, that if decided adversely to or settled by us, and not adequately covered by insurance, could result in liability that is material to our financial condition or results of operations.
 
Risks Related to the Real Estate Industry
 
Our performance and value are subject to risks associated with real estate assets and with the real estate industry.
 
Our ability to satisfy our financial obligations and make expected distributions to our security holders depends on our ability to generate cash revenues in excess of expenses and capital expenditure requirements.  Events and conditions generally applicable to owners and operators of real property that are beyond our control may decrease cash available for distribution and the value of our properties.  These events include:

general economic conditions;
rising level of interest rates;
local oversupply, increased competition or reduction in demand for student housing;
inability to collect rent from tenants;
vacancies or our inability to rent units on favorable terms;
inability to finance property development and acquisitions on favorable terms;
increased operating costs, including insurance premiums, utilities, and real estate taxes;
costs of complying with changes in governmental regulations;
the relative illiquidity of real estate investments;

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decreases in student enrollment at particular colleges and universities;
changes in university policies related to admissions and housing; and
changing student demographics.
 
In addition, periods of economic slowdown or recession, rising interest rates or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in rents or an increased incidence of defaults under existing leases, which would adversely affect us.
 
Potential losses may not be covered by insurance.
 
We carry fire, earthquake, terrorism, business interruption, vandalism, malicious mischief, boiler and machinery, commercial general liability and workers’ compensation insurance covering all of the properties in our portfolio under various policies.  We believe the policy specifications and insured limits are appropriate and adequate given the relative risk of loss, the cost of the coverage and industry practice.  There are, however, certain types of losses, such as property damage from generally unsecured losses such as riots, wars, punitive damage awards or acts of God that may be either uninsurable or not economically insurable.  Some of our properties are insured subject to limitations involving large deductibles and policy limits that may not be sufficient to cover losses.  In addition, we may discontinue earthquake, terrorism or other insurance on some or all of our properties in the future if the cost of premiums from any of these policies exceeds, in our judgment, the value of the coverage discounted for the risk of loss.
 
If we experience a loss that is uninsured or that exceeds policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties.  In addition, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these properties were irreparably damaged and require substantial expenditures to rebuild or repair.  In the event of a significant loss at one or more of our properties, the remaining insurance under our policies, if any, could be insufficient to adequately insure our other properties.  In such event, securing additional insurance, if possible, could be significantly more expensive than our current policies.
 
Unionization or work stoppages could have an adverse effect on us.
 
We are at times required to use unionized construction workers or to pay the prevailing wage in a jurisdiction to such workers.  Due to the highly labor intensive and price competitive nature of the construction business, the cost of unionization and/or prevailing wage requirements for new developments could be substantial.  Unionization and prevailing wage requirements could adversely affect a new development’s profitability.  Union activity or a union workforce could increase the risk of a strike, which would adversely affect our ability to meet our construction timetables.
 
We could incur significant costs related to government regulation and private litigation over environmental matters.
 
Under various environmental laws, including the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), a current or previous owner or operator of real property may be liable for contamination resulting from the release or threatened release of hazardous or toxic substances or petroleum at that property, and an entity that arranges for the disposal or treatment of a hazardous or toxic substance or petroleum at another property may be held jointly and severally liable for the cost to investigate and clean up such property or other affected property.  Such parties are known as potentially responsible parties (“PRPs”).  Such environmental laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of the contaminants, and the costs of any required investigation or cleanup of these substances can be substantial.  PRPs are liable to the government as well as to other PRPs who may have claims for contribution.  The liability is generally not limited under such laws and could exceed the property’s value and the aggregate assets of the liable party.  The presence of contamination or the failure to remediate contamination at our properties may expose us to third-party liability for personal injury or property damage, or adversely affect our ability to sell, lease or develop the real property or to borrow using the real property as collateral.

Environmental laws also impose ongoing compliance requirements on owners and operators of real property.  Environmental laws potentially affecting us address a wide variety of matters, including, but not limited to, asbestos-containing building materials (“ACBM”), storage tanks, storm water and wastewater discharges, lead-based paint, wetlands, and hazardous wastes.  Failure to comply with these laws could result in fines and penalties or expose us to third-party liability.  Some of our properties may have conditions that are subject to these requirements and we could be liable for such fines or penalties or liable to third parties.
 




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Existing conditions at some of our properties may expose us to liability related to environmental matters.
 
Some of the properties in our portfolio may contain asbestos-containing building materials, or ACBMs.  Environmental laws require that ACBMs be properly managed and maintained, and may impose fines and penalties on building owners or operators for failure to comply with these requirements.  Also, some of the properties in our portfolio contain, or may have contained, or are adjacent to or near other properties that have contained or currently contain storage tanks for the storage of petroleum products or other hazardous or toxic substances.  These operations create a potential for the release of petroleum products or other hazardous or toxic substances.  Third parties may be permitted by law to seek recovery from owners or operators for personal injury associated with exposure to contaminants, including, but not limited to, petroleum products, hazardous or toxic substances, and asbestos fibers.  Also, some of the properties may contain regulated wetlands that can delay or impede development or require costs to be incurred to mitigate the impact of any disturbance.  Absent appropriate permits, we can be held responsible for restoring wetlands and be required to pay fines and penalties.
 
Insurance carriers have reacted to awards or settlements related to lawsuits against owners and managers of residential properties alleging personal injury and property damage caused by the presence of mold in residential real estate by excluding mold related programs designed to minimize the existence of mold in any of our properties as well as guidelines for promptly addressing and resolving reports of mold to minimize any impact mold might have on residents or the property.
 
Environmental liability at any of our properties, including those related to the existence of mold, may have a material adverse effect on our financial condition, results of operations, cash flow, the trading price of our stock or our ability to satisfy our debt service obligations and pay dividends or distributions to our security holders.
 
We may incur significant costs complying with the Americans with Disabilities Act and similar laws.
 
Under the Americans with Disabilities Act of 1990, or the ADA, all public accommodations must meet federal requirements related to access and use by disabled persons.  Additional federal, state and local laws also may require modifications to our properties, or restrict our ability to renovate our properties.  For example, the Fair Housing Amendments Act of 1988, or FHAA, requires apartment properties first occupied after March 13, 1990 to be accessible to the handicapped.  We have not conducted an audit or investigation of all of our properties to determine our compliance with present requirements.  Noncompliance with the ADA or FHAA could result in the imposition of fines or an award or damages to the government or private litigants and also could result in an order to correct any non-complying feature.  Also, discrimination on the basis of certain protected classes can result in significant awards to victims.  We cannot predict the ultimate amount of the cost of compliance with the ADA, FHAA or other legislation.  If we incur substantial costs to comply with the ADA, FHAA or any other legislation, we could be materially and adversely affected.
 
We may incur significant costs complying with other regulations.
 
The properties in our portfolio are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements.  If we fail to comply with these various requirements, we might incur governmental fines or private damage awards.  Furthermore, existing requirements could change and require us to make significant unanticipated expenditures that would materially and adversely affect us.

Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between our co-venturers and us.
 
We have co-invested, and may continue in the future to co-invest, with third parties through partnerships, joint ventures or other entities, acquiring non-controlling interests in or sharing responsibility for managing the affairs of a property, partnership, joint venture or other entity.  In connection with joint venture investments, we do not have sole decision-making control regarding the property, partnership, joint venture or other entity.  Investments in partnerships, joint ventures or other entities may, under certain circumstances, involve risks not present were a third-party not involved, including the possibility that our partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions.  Our partners or co-venturers also may have economic or other business interests or goals that are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our preferences, policies or objectives.  Such investments also will have the potential risk of impasses on decisions, such as a sale, because neither we nor our partners or co-venturers would have full control over the partnership or joint venture.  Disputes between us and our partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and effort exclusively on our business.  Consequently, actions by or disputes with our partners or co-venturers might result in subjecting properties owned by the partnership, joint venture or other entity to additional risk.  In addition, we may in certain circumstances be liable for the actions of our partners or co-venturers.

13



A cybersecurity incident and other technology disruptions could negatively impact our business and our relationships with residents.
We use computers in substantially all aspects of our business operations. We also use mobile devices, social networking and other online activities to connect with our employees, suppliers and our residents. Such uses give rise to cybersecurity risks, including security breach, espionage, system disruption, theft and inadvertent release of information. Our business involves the storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including residents' and suppliers' personal information, private information about employees, and financial and strategic information about us. Further, as we pursue our strategy to grow through development and acquisitions and to pursue new initiatives to improve our operations, we are also expanding our information technologies, resulting in a larger technological presence and corresponding exposure to cybersecurity risk. If we fail to assess and identify cybersecurity risks associated with our operations, we may become increasingly vulnerable to such risks. Additionally, the measures we have implemented to prevent security breaches and cyber incidents may not be effective. The theft, destruction, loss, misappropriation or release of sensitive and/or confidential information or intellectual property, or interference with our information technology systems or the technology systems of third-parties on which we rely, could result in business disruption, negative publicity, brand damage, violation of privacy laws, loss of residents, potential liability and competitive disadvantage, any of which could result in a material adverse effect on financial condition or results of operations. 
Risks Related to Our Organization and Structure
 
Our stock price will fluctuate.
 
The market price and volume of our common stock will fluctuate due not only to general stock market conditions but also to the risk factors discussed above and below and the following:

operating results that vary from the expectations of securities analysts and investors;
investor interest in our property portfolio;
the reputation and performance of REITs;
the attractiveness of REITs as compared to other investment vehicles;
our financial condition and the results of our operations;
the perception of our growth and earnings potential;
dividend payment rates and the form of the payment;
increases in market rates, which may lead purchasers of our common stock to demand a higher yield; and
changes in financial markets and national economic and general market conditions.
 
To qualify as a REIT, we may be forced to limit the activities of a TRS.
 
To qualify as a REIT, no more than 25% of the value of our total assets may consist of the securities of one or more taxable REIT subsidiaries, or TRSs.  Certain of our activities, such as our third-party development, management and leasing services, must be conducted through a TRS for us to qualify as a REIT.  In addition, certain non-customary services must be provided by a TRS or an independent contractor.  If the revenues from such activities create a risk that the value of our TRS entities, based on revenues or otherwise, approaches the 25% threshold, we will be forced to curtail such activities or take other steps to remain under the 25% threshold.  Since the 25% threshold is based on value, it is possible that the IRS could successfully contend that the value of our TRS entities exceeds the 25% threshold even if the TRS accounts for less than 25% of our consolidated revenues, income or cash flow.  Four of our five on-campus participating properties and our third-party services are held by a TRS.  Consequently, income earned from four of our five on-campus participating properties and our third-party services will be subject to regular federal income taxation and state and local income taxation where applicable, thus reducing the amount of cash available for distribution to our security holders.
 
A TRS is not permitted to directly or indirectly operate or manage a “hotel, motel or other establishment more than one-half of the dwelling units in which are used on a transient basis.”  We believe that our method of operating our TRS entities will not be considered to constitute such an activity.  Future Treasury Regulations or other guidance interpreting the applicable provisions might adopt a different approach, or the IRS might disagree with our conclusion.  In such event we might be forced to change our method of operating our TRS entities, which could adversely affect us, or of one of our TRS entities could fail to qualify as a taxable REIT subsidiary, which would likely cause us to fail to qualify as a REIT.






14



Failure to qualify as a REIT would have significant adverse consequences to us and the value of our securities.
 
We intend to operate in a manner that will allow us to qualify as a REIT for federal income tax purposes under the Internal Revenue Code.  If we lose our REIT status, we will face serious tax consequences that would substantially reduce or eliminate the funds available for investment and for distribution to security holders for each of the years involved, because:

we would not be allowed a deduction for dividends to security holders in computing our taxable income and such amounts would be subject to federal income tax at regular corporate rates;
we also could be subject to the federal alternative minimum tax and possibly increased state and local taxes; and
unless we are entitled to relief under applicable statutory provisions, we could not elect to be taxed as a REIT for four taxable years following the year during which we were disqualified.
 
In addition, if we fail to qualify as a REIT, we will not be required to pay dividends to stockholders, and all dividends to stockholders will be subject to tax as ordinary income to the extent of our current and accumulated earnings and profits.  As a result of all these factors, our failure to qualify as a REIT also could impair our ability to expand our business and raise capital, and would adversely affect the value of our common stock.
 
Qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions for which there are only limited judicial and administrative interpretations.  The complexity of these provisions and of the applicable Treasury Regulations that have been promulgated under the Internal Revenue Code is greater in the case of a REIT that, like us, holds its assets through a partnership or a limited liability company.  The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT.  In order to qualify as a REIT, we must satisfy a number of requirements, including requirements regarding the composition of our assets and two “gross income tests”: (a) at least 75% of our gross income in any year must be derived from qualified sources, such as rents from real property, mortgage interest, dividends from other REITs and gains from sale of such assets, and (b) at least 95% of our gross income must be derived from sources meeting the 75% income test above, and other passive investment sources, such as other interest and dividends and gains from sale of securities.  Also, we must pay dividends to stockholders aggregating annually at least 90% of our REIT taxable income, excluding any net capital gains.  In addition, legislation, new regulations, administrative interpretations or court decisions may adversely affect our investors, our ability to qualify as a REIT for federal income tax purposes or the desirability of an investment in a REIT relative to other investments.
 
Even if we qualify as a REIT for federal income tax purposes, we may be subject to some federal, state and local taxes on our income or property and, in certain cases, a 100% penalty tax, in the event we sell property as a dealer or if a TRS enters into agreements with us or our tenants on a basis that is determined to be other than an arm’s length basis.
 
To qualify as a REIT, we may be forced to borrow funds on a short-term basis during unfavorable market conditions.
 
In order to qualify as a REIT, we are required under the Internal Revenue Code to distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain.  A TRS may, in its discretion, retain any income it generates net of any tax liability it incurs on that income without affecting the 90% distribution requirements to which we are subject as a REIT.  Net income of our TRS entities is included in REIT taxable income and increases the amount required to be distributed, only if such amounts are paid out as a dividend by a TRS.  If a TRS distributes any of its after-tax income to us, that distribution will be included in our REIT taxable income.  In addition, we will be subject to income tax at regular corporate rates to the extent that we distribute less than 100% of our net taxable income, including any net capital gains.  Because of these distribution requirements, we may not be able to fund future capital needs, including any necessary acquisition financing, from operating cash flow.  Consequently, we will be compelled to rely on third-party sources to fund our capital needs.  We may not be able to obtain this financing on favorable terms or at all.  Any additional indebtedness that we incur will increase our leverage.  Our access to third-party sources of capital depends, in part, on:

general market conditions;
our current debt levels and the number of properties subject to encumbrances;
our current performance and the market’s perception of our growth potential;
our cash flow and cash dividends; and
the market price per share of our stock.
 
If we cannot obtain capital from third-party sources, we may not be able to acquire or develop properties when strategic opportunities exist, satisfy our debt service obligations or make cash distributions to our security holders, including those necessary to qualify as a REIT.
 

15



Our charter contains restrictions on the ownership and transfer of our stock.
 
Our charter provides that, subject to certain exceptions, no person or entity may beneficially own, or be deemed to own by virtue of the applicable constructive ownership provisions of the Internal Revenue Code, more than 9.8% (by value or by number of shares, whichever is more restrictive) of the outstanding shares of our common stock or more than 9.8% by value of all our outstanding shares, including both common and preferred stock.  We refer to this restriction as the “ownership limit.”  A person or entity that becomes subject to the ownership limit by virtue of a violative transfer that results in a transfer to a trust is referred to as a “purported beneficial transferee” if, had the violative transfer been effective, the person or entity would have been a record owner and beneficial owner or solely a beneficial owner of our stock, or is referred to as a “purported record transferee” if, had the violative transfer been effective, the person or entity would have been solely a record owner of our stock.
 
The constructive ownership rules under the Internal Revenue Code are complex and may cause stock owned actually or constructively by a group of related individuals and/or entities to be owned constructively by one individual or entity.  As a result, the acquisition of less than 9.8% of our stock (or the acquisition of an interest in an entity that owns, actually or constructively, our stock) by an individual or entity, could, nevertheless cause that individual or entity, or another individual or entity, to own constructively in excess of 9.8% of our outstanding stock and thereby subject the stock to the ownership limit.  Our charter, however, requires exceptions to be made to this limitation if our board of directors determines that such exceptions will not jeopardize our tax status as a REIT.  This ownership limit could delay, defer or prevent a change of control or other transaction that might involve a premium price for our common stock or otherwise be in the best interest of our security holders.
 
Certain tax and anti-takeover provisions of our charter and bylaws may inhibit a change of our control.
 
Certain provisions contained in our charter and bylaws and the Maryland General Corporation Law may discourage a third-party from making a tender offer or acquisition proposal to us.  If this were to happen, it could delay, deter or prevent a change in control or the removal of existing management.  These provisions also may delay or prevent the security holders from receiving a premium for their securities over then-prevailing market prices.  These provisions include:
 
the REIT ownership limit described above;
authorization of the issuance of our preferred shares with powers, preferences or rights to be determined by our board of directors;
the right of our board of directors, without a stockholder vote, to increase our authorized shares and classify or reclassify unissued shares;
advance-notice requirements for stockholder nomination of directors and for other proposals to be presented to stockholder meetings; and
the requirement that a majority vote of the holders of common stock is needed to remove a member of our board of directors for “cause.”
 
The Maryland business statutes also impose potential restrictions on a change of control of our company.
 
Various Maryland laws may have the effect of discouraging offers to acquire us, even if the acquisition would be advantageous to security holders.  Our bylaws exempt us from some of those laws, such as the control share acquisition provisions, but our board of directors can change our bylaws at any time to make these provisions applicable to us.
 
Our rights and the rights of our security holders to take action against our directors and officers are limited.
 
Maryland law provides that a director or officer has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believe to be in our best interests and with the care that an ordinary prudent person in a like position would use under similar circumstances.  In addition, our charter eliminates our directors’ and officers’ liability to us and our stockholders for money damages except for liability resulting from actual receipt of an improper benefit in money, property or services or active and deliberate dishonesty established by a final judgment and which is material to the cause of action.  Our bylaws require us to indemnify directors and officers for liability resulting from actions taken by them in those capacities to the maximum extent permitted by Maryland law.  As a result, we and our security holders may have more limited rights against our directors and officers than might otherwise exist under common law.  In addition, we may be obligated to fund the defense costs incurred by our directors and officers.

Item 1B.  Unresolved Staff Comments
 
There were no unresolved comments from the staff of the SEC at December 31, 2013.
 

16


Item 2.   Properties
 
The following table presents certain summary information about our properties.  Our properties generally are modern facilities, and amenities at most of our properties include a swimming pool, basketball courts and a large community center featuring a fitness center, computer center, study areas, and a recreation room with billiards and other games. Some properties also have a jacuzzi/hot tub, volleyball courts, tennis courts, in-unit washers and dryers, and food service facilities.  Lease terms are generally 12 months at wholly-owned properties and 9 months at our on-campus participating properties.
 
These properties are included in the Wholly-Owned Properties and On-Campus Participating Properties segments discussed in Item 1 and Note 18 in the accompanying Notes to Consolidated Financial Statements contained in Item 8.  We own fee title to all of these properties except for properties subject to ground/facility leases and our on-campus participating properties, as discussed more fully in Note 8 and Note 16 in the accompanying Notes to Consolidated Financial Statements contained in Item 8.  All dollar amounts in this table and others herein, except share and per share amounts, are stated in thousands unless otherwise indicated.

Property
 
Year
Built
 
Date
Acquired/
Developed
 
Primary University Served
 
Typical
Lease
Term
(Mos)
 
 Year Ended December 31, 2013 Revenue
 
 
Average Monthly Revenue/ Bed (1)
 
 
2013 Average Occupancy(2)
 
Occupancy
as of
12/31/13
 
# of
Buildings
 
# of Units
 
# of
Beds
WHOLLY-OWNED PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Callaway House
 
1999
 
Mar-01
 
Texas A&M University
 
9
 
$
8,375

(3) 
 
$
1,336

(3) 
 
103.8
%
 
103.5
%
 
1
 
173
 
538
The Village at Alafaya Club
 
1999
 
Jul-00
 
The University of Central Florida
 
12
 
6,210

 
 
592

 
 
98.8
%
 
97.1
%
 
20
 
228
 
839
The Village at Science Drive
 
2000
 
Nov-01
 
The University of Central Florida
 
12
 
5,523

 
 
613

 
 
98.6
%
 
98.6
%
 
17
 
192
 
732
University Village at Boulder Creek
 
2002
 
Aug-02
 
The University of Colorado at Boulder
 
12
 
3,195

 
 
824

 
 
98.7
%
 
98.7
%
 
4
 
82
 
309
University Village - Fresno
 
2004
 
Aug-04
 
California State University - Fresno
 
12
 
2,700

 
 
516

 
 
94.8
%
 
91.4
%
 
9
 
105
 
406
University Village - Temple
 
2004
 
Aug-04
 
Temple University
 
12
 
6,066

 
 
670

 
 
90.9
%
 
96.5
%
 
3
 
220
 
749
University Village at Sweethome
 
2005
 
Aug-05
 
State University of New York at Buffalo
 
12
 
6,638

 
 
647

 
 
99.4
%
 
99.6
%
 
11
 
269
 
828
University Club Townhomes (4)
 
2000/
2002
 
Feb-05
 
Florida State University
 
12
 
5,022

 
 
488

 
 
96.5
%
 
97.1
%
 
27
 
216
 
736
College Club Townhomes (4)
 
2001
 
Feb-05
 
Florida A&M University
 
12
 
3,114

 
 
396

 
 
91.4
%
 
85.8
%
 
12
 
136
 
544
University Club Apartments
 
1999
 
Feb-05
 
University of Florida
 
12
 
2,209

 
 
479

 
 
98.2
%
 
94.4
%
 
9
 
94
 
376
The Estates
 
2002
 
Mar-05
 
University of Florida
 
12
 
7,053

 
 
550

 
 
98.7
%
 
96.7
%
 
20
 
396
 
1,044
City Parc at Fry Street
 
2004
 
Mar-05
 
University of North Texas
 
12
 
3,108

 
 
603

 
 
98.0
%
 
97.6
%
 
8
 
136
 
418
Entrada Real
 
2000
 
Mar-06
 
University of Arizona
 
12
 
2,359

 
 
556

 
 
86.3
%
 
87.1
%
 
8
 
98
 
363
University Village - Tallahassee (5)
 
1990/91/
92
 
Mar-06
 
Florida State University
 
12
 
4,375

 
 
485

 
 
99.4
%
 
99.4
%
 
12
 
217
 
716
Royal Village - Gainesville
 
1996
 
Mar-06
 
University of Florida
 
12
 
2,861

 
 
517

 
 
98.0
%
 
97.8
%
 
8
 
118
 
448
Royal Lexington
 
1994
 
Mar-06
 
The University of Kentucky
 
12
 
1,800

 
 
525

 
 
98.5
%
 
100.0
%
 
4
 
94
 
364
The Woods at Greenland
 
2001
 
Mar-06
 
Middle Tennessee State University
 
12
 
1,411

 
 
413

 
 
96.5
%
 
97.8
%
 
3
 
78
 
276
Raider’s Crossing
 
2002
 
Mar-06
 
Middle Tennessee State University
 
12
 
1,471

 
 
433

 
 
96.8
%
 
98.6
%
 
4
 
96
 
276
Raiders Pass
 
2002/03
 
Mar-06
 
Texas Tech University
 
12
 
4,359

 
 
457

 
 
89.9
%
 
94.9
%
 
12
 
264
 
828
Aggie Station
 
2003
 
Mar-06
 
Texas A&M University
 
12
 
3,021

 
 
549

 
 
99.9
%
 
99.6
%
 
5
 
156
 
450
The Outpost - San Marcos
 
2003/04
 
Mar-06
 
Texas State University
 
12
 
3,153

 
 
527

 
 
99.2
%
 
99.2
%
 
5
 
162
 
486

17


Property
 
Year
Built
 
Date
Acquired/
Developed
 
Primary University Served
 
Typical
Lease
Term
(Mos)
 
 Year Ended December 31, 2013 Revenue
 
 
Average Monthly Revenue/ Bed (1)
 
 
2013 Average Occupancy(2)
 
Occupancy
as of
12/31/13
 
# of
Buildings
 
# of Units
 
# of
Beds
The Outpost - San Antonio
 
2005
 
Mar-06
 
University of Texas – San Antonio
 
12
 
$
5,133

 
 
$
550

 
 
89.7
%
 
89.9
%
 
10
 
276
 
828
Callaway Villas
 
2006
 
Aug-06
 
Texas A&M University
 
9/12
 
6,262

 
 
757

 
 
91.5
%
 
99.6
%
 
20
 
236
 
704
The Village on Sixth Avenue
 
2000/06
 
Jan-07
 
Marshall University
 
12
 
4,211

 
 
465

 
 
96.0
%
 
95.1
%
 
14
 
248
 
752
Newtown Crossing
 
 2005/07
 
Feb-07
 
University of Kentucky
 
12
 
6,716

 
 
580

 
 
99.2
%
 
99.3
%
 
7
 
356
 
942
Olde Towne University Square
 
2005
 
Feb-07
 
University of  Toledo
 
12
 
4,074

 
 
594

 
 
99.8
%
 
100.0
%
 
4
 
224
 
550
Peninsular Place
 
2005
 
Feb-07
 
Eastern Michigan University
 
12
 
2,930

 
 
477

 
 
98.8
%
 
98.7
%
 
2
 
183
 
478
University Centre
 
2007
 
Aug-07
 
Rutgers University, NJIT
 
9/12
 
7,076

 
 
824

 
 
80.4
%
 
87.9
%
 
2
 
234
 
838
Sunnyside Commons
 
1925/ 2001
 
Feb-08
 
West Virginia University
 
12
 
940

 
 
456

 
 
100.4
%
 
99.4
%
 
9
 
68
 
161
Pirates Place Townhomes
 
1996
 
Feb-08
 
East Carolina University
 
12
 
2,338

 
 
362

 
 
93.0
%
 
93.6
%
 
12
 
144
 
528
The Highlands
 
2004
 
June-08
 
University of Nevada at Reno
 
12
 
4,168

 
 
460

 
 
99.1
%
 
99.9
%
 
17
 
216
 
732
The Summit & Jacob Heights (5)
 
2003- 2006
 
June-08
 
Minnesota State University
 
12
 
5,431

 
 
469

 
 
98.0
%
 
95.1
%
 
34
 
258
 
930
GrandMarc Seven Corners
 
2000
 
June-08
 
University of Minnesota
 
12
 
4,650

 
 
643

 
 
122.5
%
 
120.2
%
 
1
 
186
 
440
University Village – Sacramento
 
1979
 
June-08
 
California State University - Sacramento
 
12
 
2,970

 
 
578

 
 
104.6
%
 
103.6
%
 
41
 
250
 
394
Aztec Corner
 
1995
 
June-08
 
San Diego State University
 
12
 
4,799

 
 
638

 
 
98.2
%
 
98.2
%
 
3
 
180
 
606
University Crossings
 
1926/
2003
 
June-08
 
Drexel University
 
12
 
9,284

 
 
635

 
 
99.4
%
 
99.4
%
 
1
 
260
 
1,016
Campus Corner
 
1997
 
June-08
 
Indiana University
 
12
 
4,813

 
 
487

 
 
97.8
%
 
98.0
%
 
23
 
254
 
796
Tower at Third
 
1973
 
June-08
 
University of Illinois
 
12
 
3,375

 
 
704

 
 
98.7
%
 
98.7
%
 
1
 
188
 
375
University Manor
 
2002
 
June-08
 
East Carolina University
 
12
 
2,904

 
 
392

 
 
97.2
%
 
96.8
%
 
18
 
168
 
600
Lakeside Apartments
 
1991
 
June-08
 
University of Georgia
 
12
 
3,621

 
 
367

 
 
94.4
%
 
92.7
%
 
20
 
244
 
776
The Club
 
1989
 
June-08
 
University of Georgia
 
12
 
2,097

 
 
345

 
 
97.3
%
 
97.7
%
 
17
 
120
 
480
The Edge -Orlando
 
1999
 
June-08
 
The University of Central Florida
 
12
 
6,997

 
 
605

 
 
99.1
%
 
98.1
%
 
21
 
306
 
930
University Place
 
2003
 
June-08
 
University of Virginia
 
12
 
2,436

 
 
395

 
 
92.9
%
 
96.0
%
 
12
 
144
 
528
South View
 
1998
 
June-08
 
James Madison University
 
12
 
5,215

 
 
459

 
 
96.1
%
 
93.9
%
 
21
 
240
 
960
Stone Gate
 
2000
 
June-08
 
James Madison University
 
12
 
3,692

 
 
459

 
 
97.7
%
 
99.0
%
 
15
 
168
 
672
The Commons
 
1991
 
June-08
 
James Madison University
 
12
 
2,127

 
 
361

 
 
88.2
%
 
83.7
%
 
11
 
132
 
528
University Gables
 
2001
 
June-08
 
Middle Tennessee State University
 
12
 
2,982

 
 
372

 
 
97.1
%
 
97.2
%
 
15
 
168
 
648
The Enclave
 
2002
 
June-08
 
Bowling Green State University
 
12
 
1,764

 
 
294

 
 
98.4
%
 
99.2
%
 
11
 
120
 
480
Hawks Landing (6)
 
1994
 
June-08
 
Miami University of Ohio
 
12
 
2,488

 
 
424

 
 
98.7
%
 
98.8
%
 
13
 
122
 
484
Willowtree Apartments and Towers(4)
 
1968/ 1974
 
June-08
 
University of Michigan
 
12
 
5,232

 
 
498

 
 
99.5
%
 
99.5
%
 
16
 
473
 
851
Abbott Place
 
1999
 
June-08
 
Michigan State University
 
12
 
3,813

 
 
474

 
 
98.4
%
 
97.7
%
 
9
 
222
 
654
The Centre
 
2004
 
June-08
 
Western Michigan University
 
12
 
3,502

 
 
402

 
 
98.7
%
 
98.6
%
 
23
 
232
 
700
University Meadows
 
2001
 
June-08
 
Central Michigan University
 
12
 
3,025

 
 
416

 
 
94.4
%
 
97.2
%
 
23
 
184
 
616
Campus Way
 
1993
 
June-08
 
University of Alabama
 
12
 
3,827

 
 
459

 
 
97.1
%
 
94.4
%
 
9
 
194
 
680
University Pointe
 
2004
 
June-08
 
Texas Tech University
 
12
 
4,551

 
 
554

 
 
95.5
%
 
92.2
%
 
11
 
204
 
682
University Trails
 
2003
 
June-08
 
Texas Tech University
 
12
 
4,462

 
 
536

 
 
96.3
%
 
94.6
%
 
20
 
240
 
684
Vista del Sol - ACE
 
2008
 
Aug-08
 
Arizona State University
 
12
 
16,249

 
 
681

 
 
96.4
%
 
94.8
%
 
12
 
613
 
1,866

18


Property
 
Year
Built
 
Date
Acquired/
Developed
 
Primary University Served
 
Typical
Lease
Term
(Mos)
 
 Year Ended December 31, 2013 Revenue
 
 
Average Monthly Revenue/ Bed (1)
 
 
2013 Average Occupancy(2)
 
Occupancy
as of
12/31/13
 
# of
Buildings
 
# of Units
 
# of
Beds
Villas at Chestnut Ridge
 
2008
 
Aug-08
 
State University of New York at Buffalo
 
12
 
$
4,761

 
 
$
704

 
 
98.8
%
 
99.3
%
 
12
 
196
 
552
Barrett Honors College – ACE
 
2009
 
Aug-09
 
Arizona State University
 
9
 
13,184

 
 
832

 
 
96.2
%
 
97.7
%
 
7
 
604
 
1,721
University Heights - Birmingham
 
2001
 
Mar-10
 
University of Alabama at
  Birmingham
 
12
 
2,976

 
 
434

 
 
99.3
%
 
99.2
%
 
8
 
176
 
528
Sanctuary Lofts
 
2008
 
July-10
 
Texas State University
 
12
 
4,066

 
 
641

 
 
98.0
%
 
97.7
%
 
4
 
201
 
487
Lions Crossing
 
1996
 
Sep-10
 
Penn State University
 
12
 
4,976

 
 
525

 
 
99.3
%
 
99.1
%
 
17
 
204
 
696
Nittany Crossing
 
1996/97
 
Sep-10
 
Penn State University
 
12
 
4,681

 
 
524

 
 
99.1
%
 
99.0
%
 
11
 
204
 
684
The View
 
2003
 
Sep-10
 
University of Nebraska
 
12
 
2,706

 
 
359

 
 
99.9
%
 
99.8
%
 
12
 
157
 
590
Chapel Ridge
 
2003
 
Sep-10
 
UNC – Chapel Hill
 
12
 
4,064

 
 
618

 
 
97.8
%
 
97.2
%
 
13
 
180
 
544
Chapel View
 
1986/
2003
 
Sep-10
 
UNC – Chapel Hill
 
12
 
2,870

 
 
655

 
 
98.2
%
 
97.2
%
 
14
 
224
 
358
University Oaks
 
2004
 
Sep-10
 
University of South Carolina
 
12
 
4,323

 
 
516

 
 
99.1
%
 
99.1
%
 
14
 
181
 
662
Blanton Common
 
2005/07
 
Sep-10
 
Valdosta State University
 
12
 
4,189

 
 
409

 
 
89.7
%
 
94.9
%
 
21
 
276
 
860
Burbank Commons
 
1995
 
Sep-10
 
Louisiana State University
 
12
 
2,868

 
 
429

 
 
97.5
%
 
98.7
%
 
7
 
134
 
532
University Crescent
 
1999
 
Sep-10
 
Louisiana State University
 
12
 
4,198

 
 
550

 
 
98.1
%
 
98.7
%
 
15
 
192
 
612
University Greens
 
1999
 
Sep-10
 
University of Oklahoma
 
12
 
2,716

 
 
425

 
 
97.8
%
 
98.6
%
 
13
 
156
 
516
The Edge – Charlotte
 
2000
 
Nov-10
 
University of North Carolina at
  Charlotte
 
12
 
4,331

 
 
476

 
 
99.4
%
 
99.4
%
 
15
 
180
 
720
University Walk
 
2002
 
Nov-10
 
University of North Carolina at
  Charlotte
 
12
 
2,995

 
 
499

 
 
99.0
%
 
99.2
%
 
12
 
120
 
480
Uptown Apartments
 
2004
 
Nov-10
 
University of North Texas
 
12
 
3,874

 
 
596

 
 
97.1
%
 
96.2
%
 
12
 
180
 
528
2nd Ave Centre
 
2008
 
Dec-10
 
University of Florida
 
12
 
5,961

 
 
560

 
 
99.3
%
 
99.5
%
 
7
 
274
 
868
Campus Trails
 
1991
 
June-08
 
Mississippi State University
 
12
 
2,446

 
 
415

 
 
98.4
%
 
98.5
%
 
14
 
156
 
480
Villas at Babcock
 
2011
 
Aug-11
 
University of Texas – San
  Antonio
 
12
 
5,339

 
 
559

 
 
95.3
%
 
92.4
%
 
16
 
204
 
792
Lobo Village - ACE
 
2011
 
Aug-11
 
University of New Mexico
 
12
 
5,466

 
 
517

 
 
95.1
%
 
91.6
%
 
20
 
216
 
864
Villas on Sycamore
 
2011
 
Aug-11
 
Sam Houston State University
 
12
 
4,227

 
 
472

 
 
97.7
%
 
98.7
%
 
88
 
170
 
680
University Village Northwest - ACE
 
2011
 
Aug-11
 
Prairie View A&M University
 
9
 
838

 
 
633

 
 
99.9
%
 
100.0
%
 
2
 
36
 
144
Eagles Trail
 
2007
 
Sep-11
 
Univ. of Southern Mississippi
 
12
 
4,352

 
 
427

 
 
97.9
%
 
99.0
%
 
16
 
216
 
792
26 West
 
2008
 
Dec-11
 
University of Texas - Austin
 
12
 
10,914

 
 
780

 
 
99.5
%
 
99.4
%
 
3
 
367
 
1,026
The Varsity
 
2011
 
Dec-11
 
University of Maryland
 
12
 
12,011

 
 
953

 
 
98.2
%
 
99.3
%
 
1
 
258
 
901
Subtotal - Same Store Wholly Owned Properties (7)
 
 
 
$
369,509

 
 
$
548

 
 
97.0
%
 
97.1
%
 
1,074
 
17,047
 
54,232
2012 Acquisitions and Completed Development Projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
University Heights - Knoxville
 
1999
 
Jan-12
 
University of Tennessee
 
12
 
3,291

 
 
436

 
 
93.2
%
 
98.7
%
 
8
 
204
 
636
Avalon Heights
 
2002
 
May-12
 
University of South Florida in Tampa
 
12
 
4,871

 
 
510

 
 
99.8
%
 
100.0
%
 
4
 
210
 
754
University Commons
 
2003
 
June-12
 
University of Minnesota in Minneapolis
 
12
 
4,294

 
 
612

 
 
112.6
%
 
115.6
%
 
4
 
164
 
480
University Pointe at College Station –  ACE
 
2012
 
Sep-12
 
Portland State University
 
12
 
7,751

 
 
641

 
 
92.4
%
 
98.8
%
 
1
 
282
 
978
Casas del Rio – ACE
 
2012
 
Aug-12
 
University of New Mexico
 
10
 
5,543

 
 
579

 
 
96.7
%
 
94.3
%
 
4
 
283
 
1,028
The Suites – ACE
 
2012
 
Aug-12
 
Northern Arizona University
 
10
 
3,319

 
 
637

 
 
98.9
%
 
99.6
%
 
2
 
275
 
550
Hilltop Townhomes - ACE  
 
2012
 
Aug-12
 
Northern Arizona University
 
12
 
4,414

 
 
601

 
 
99.1
%
 
99.3
%
 
10
 
144
 
576

19


Property
 
Year
Built
 
Date
Acquired/
Developed
 
Primary University Served
 
Typical
Lease
Term
(Mos)
 
 Year Ended December 31, 2013 Revenue
 
 
Average Monthly Revenue/ Bed (1)
 
 
2013 Average Occupancy(2)
 
Occupancy
as of
12/31/13
 
# of
Buildings
 
# of Units
 
# of
Beds
U Club on Frey
 
2012
 
Aug-12
 
Kennesaw State University
 
12
 
$
3,297

 
 
$
585

 
 
98.9
%
 
98.9
%
 
7
 
114
 
456
Campus Edge on UTA Boulevard
 
2012
 
Aug-12
 
University of Texas - Arlington
 
12
 
3,654

 
 
595

 
 
99.7
%
 
99.6
%
 
1
 
128
 
488
U Club Townhomes on Marion Pugh
 
2012
 
Aug-12
 
Texas A&M University
 
12
 
4,626

 
 
585

 
 
99.3
%
 
99.4
%
 
40
 
160
 
640
Villas on Rensch
 
2012
 
Aug-12
 
State University of New York at Buffalo
 
12
 
5,235

 
 
708

 
 
98.8
%
 
98.7
%
 
39
 
153
 
610
The Village at Overton Park  
 
2012
 
Aug-12
 
Texas Tech University
 
12
 
4,609

 
 
615

 
 
96.0
%
 
93.3
%
 
2
 
163
 
612
Casa de Oro - ACE
 
2012
 
Aug-12
 
Arizona State University
 
12
 
1,198

 
 
629

 
 
55.6
%
 
58.9
%
 
1
 
109
 
365
The Villas at Vista del Sol – ACE
 
2012
 
Aug-12
 
Arizona State University
 
12
 
3,571

 
 
690

 
 
99.7
%
 
99.5
%
 
12
 
104
 
400
University Edge
 
2012
 
Dec-12
 
Kent State University
 
12
 
3,972

 
 
559

 
 
93.2
%
 
99.3
%
 
3
 
201
 
608
The Block
 
2007/
2008
 
Aug-12
 
The University of Texas at Austin
 
12
 
17,245

 
 
829

 
 
96.8
%
 
94.7
%
 
8
 
669
 
1,555
309 Green
 
2008
 
Sept-12
 
University of Illinois
 
12
 
3,899

 
 
784

 
 
89.9
%
 
96.2
%
 
1
 
110
 
416
The Retreat
 
2012
 
Sept-12
 
Texas State University
 
12
 
5,455

 
 
572

 
 
95.8
%
 
92.1
%
 
140
 
187
 
780
Lofts 54
 
2008
 
Sept-12
 
University of Illinois
 
12
 
1,369

 
 
641

 
 
90.9
%
 
100.0
%
 
1
 
43
 
172
Campustown Rentals
 
1920-1987
 
Sept-12
 
University of Illinois
 
12
 
4,092

 
 
485

 
 
82.9
%
 
74.5
%
 
22
 
280
 
766
Chauncey Square  
 
2007/
2012
 
Sept-12
 
Purdue University
 
12
 
3,998

 
 
776

 
 
98.3
%
 
99.0
%
 
2
 
158
 
386
Vintage West Campus
 
2009
 
Sept-12
 
The University of Texas at Austin
 
12
 
1,451

 
 
918

 
 
96.3
%
 
98.3
%
 
1
 
62
 
121
Texan West Campus
 
2005
 
Sept-12
 
The University of Texas at Austin
 
12
 
1,895

 
 
724

 
 
99.3
%
 
100.0
%
 
1
 
62
 
190
The Castilian
 
1967
 
Sept-12
 
The University of Texas at Austin
 
9
 
6,263

(3) 
 
1,111

(3) 
 
85.3
%
 
71.9
%
 
1
 
371
 
623
Bishops Square
 
2002
 
Sept-12
 
Texas State University
 
12
 
2,108

 
 
546

 
 
91.0
%
 
97.8
%
 
13
 
134
 
315
Union
 
2007
 
Sept-12
 
Baylor University
 
12
 
826

 
 
561

 
 
97.5
%
 
98.3
%
 
1
 
54
 
120
922 Place
 
2009
 
Sept-12
 
Arizona State University
 
12