Amendment No. 3 to Form S-11

S-11/A 1 ds11a.htm AMENDMENT NO. 3 TO FORM S-11 Amendment No. 3 to Form S-11

As filed with the Securities and Exchange Commission on July 27, 2004

Registration No. 333-114813

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 3

Form S-11

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

American Campus Communities, Inc.

(Exact Name of Registrant as Specified in Its Governing Instruments)

805 Las Cimas Parkway, Suite 400

Austin, TX 78746

(512) 732-1000

(Address, Including Zip Code and Telephone Number, Including Area Code,

of Registrant’s Principal Executive Offices)

William C. Bayless, Jr.

President and Chief Executive Officer

805 Las Cimas Parkway, Suite 400

Austin, TX 78746

(512) 732-1000

(Name, Address, Including Zip Code and Telephone Number, Including Area Code, of Agent for Service)

Copies to:


Yaacov M. Gross		Edward F. Petrosky
Willkie Farr & Gallagher LLP		J. Gerard Cummins
787 Seventh Avenue		Sidley Austin Brown & Wood LLP
New York, NY 10019		787 Seventh Avenue
(212) 728-8000		New York, NY 10019
		(212) 839-5300

Approximate date of commencement of proposed sale to the public:

As soon as practicable after this Registration Statement becomes effective.

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement of the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. ¨

CALCULATION OF REGISTRATION FEE



Title of Securities Being Registered	Proposed Maximum Aggregate Offering Price(1)	Amount of Registration Fee
Common Stock, par value $.01 per share	$292,215,000	$37,024(2)

(1)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) of the Securities Act of 1933, as amended.

(2)

Of this amount $35,046 was previously paid.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. The prospectus is not an offer to sell the securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JULY 27, 2004

PROSPECTUS

LOGO

12,100,000 Shares

American Campus Communities, Inc.

Common Stock

This is the initial public offering, or Offering, of shares of our common stock. Prior to this Offering, there has been no public market for the shares. We currently expect the Offering price of our common stock to be between $19.00 and $21.00 per share. We will receive all of the cash proceeds from the sale of these shares. Our common stock has been approved for listing on the New York Stock Exchange, subject to official notice of issuance, under the symbol “ACC.” We will elect to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes.

See “ Risk Factors” beginning on page 24 for certain risk factors relevant to an investment in our common stock, including, among others:

•

Our estimated initial annual distribution is expected to represent 252% of our estimated cash available for distribution to our common stockholders for the 12-month period ended June 30, 2005. Our ability to fund this distribution will depend, in part, upon the receipt of cash flow from three properties that are currently under construction and are scheduled to open in August 2004 and from development fee income, the timing and amount of which are inherently uncertain. After giving effect to the revenue from leases currently in place at these construction properties, we may have to fund approximately $10.0 million of our estimated initial annual distribution with borrowings under our revolving credit facility. To the extent we use our working capital or borrowings under our revolving credit facility to fund our distributions, our financial condition and our ability to access these funds for other purposes, such as the expansion of our business or future distributions, could be adversely affected. Any such distributions from working capital or borrowings may represent a return of capital for federal income tax purposes. We expect that approximately 72.2% of our estimated initial annual distribution will represent a return of capital for federal income tax purposes.

•

Our results of operations are subject to annual releasing, seasonality and other risks that are unique to the student housing industry.

•

Our existing investors will receive approximately $100.6 million in cash from the net proceeds of this Offering for the redemption of their interests in our Predecessor Entities. This amount will increase or decrease depending upon whether the shares in this Offering are sold above or below $20 per share (the midpoint in the range of the Offering prices referred to above). Our existing investors will receive certain additional distributions from us. Our existing investors played a significant role in structuring our formation, but will not own any continuing interest in us following this Offering.

•

We have been recently organized and have no operating history. Our management has no experience in running a public company or in operating in accordance with the requirements for maintaining its qualification as a REIT.

•

Provisions of our organizational documents limit the ownership of our shares.

•

If we fail to qualify as a REIT for federal income tax purposes, our distributions will not be deductible by us, reducing our cash available for distribution.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.


	Per Share	Total
Public offering price	$	$
Underwriting discount	$	$
Proceeds, before expenses, to us	$	$

To the extent the underwriters sell more than 12,100,000 shares of our common stock, they will have an overallotment option to purchase up to an additional 1,815,000 shares from us at the initial public offering price less the underwriting discount.

The underwriters expect to deliver the shares on or about , 2004.


Citigroup		Deutsche Bank Securities

JPMorgan

UBS Investment Bank

ING Financial Markets

KeyBanc Capital Markets

Wells Fargo Securities, LLC

The date of this prospectus is , 2004

[Inside Front Cover]

[12 pictures of students]

[Company Logo]

The Student Housing Company

www.studenthousing.com

[Picture of The Village at Science Drive]

The Village at Science Drive

Orlando, FL

[Picture of River Walk Townhomes]

River Walk Townhomes, Athens, GA

[Picture of The Village at Alafaya Club]

The Village at Alafaya Club, Orlando, FL

[Picture of River Club Apartments]

River Club Apartments, Athens, GA

[Picture of The Village at Blacksburg]

The Village at Blacksburg, Blacksburg, VA

[Picture of The Village on University]

The Village on University, Tempe, AZ

[Picture of The Callaway House]

The Callaway House, Texas A&M, College Station, TX

[Picture of Cullen Oaks]

Cullen Oaks, Houston, TX

[Picture of University Village at Boulder Creek]

University Village at Boulder Creek, Boulder, CO

[Picture of the location of our student communities

on a map of the United States]

Our Student Communities

Corporate Home Office

Owned by American Campus

Currently Managed by American Campus

TABLE OF CONTENTS


		Page
PROSPECTUS SUMMARY		1
Our Company		1
Our Business		2
Competitive Strengths		2
Summary Risk Factors		3
Business and Growth Strategies		5
Our Properties		7
Third Party Services		9
Indebtedness		12
Structure and Formation		12
Formation Transactions		13
Consequences of this Offering and the Formation Transactions		15
Restrictions on Transfer		17
Restrictions on Ownership of Our Capital Stock		17
Distribution Policy		17
Our Tax Status		18
Summary Selected Financial Data		19
This Offering		23
RISK FACTORS		24
Risks Related to Our Properties and Our Business		24
Risks Related to the Real Estate Industry		28
Risks Related to Our Organization and Structure		32
Risks Related to this Offering		36
FORWARD-LOOKING STATEMENTS		39
USE OF PROCEEDS		40
DISTRIBUTION POLICY		42
CAPITALIZATION		50
DILUTION		51
SELECTED FINANCIAL DATA		53
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		57
Overview		57
Factors Expected to Affect Our Operating Results		59
Critical Accounting Policies		63
Recent Trends and Events		65
Results of Operations		68
Pro Forma Operating Results		76
Cash Flows		78
Liquidity and Capital Resources		80
Off-Balance Sheet Arrangements		85
Funds from Operations		85


		Page
Inflation		87
Quantitative and Qualitative Disclosures About Market Risk		88
New Accounting Standards and Accounting Changes		88
INDUSTRY OUTLOOK		90
THE STUDENT HOUSING BUSINESS		100
BUSINESS AND PROPERTIES		102
Overview		102
Our Business		102
History		104
Our Properties		104
Third Party Services		123
Operations		127
Leasing and Marketing		128
Competition and Competitive Advantages		131
Indebtedness		134
Insurance		135
Regulation		136
Employees		137
Offices		137
Legal Proceedings		138
STRATEGY FOR GROWTH		138
Acquisition and Development		138
Third Party Management and Development Services		138
Proactive Management		139
MANAGEMENT		140
Directors, Executive Officers and Senior Management		140
Board Committees		144
Compensation of Directors		144
Executive Officer Compensation		145
2004 Incentive Award Plan		146
American Campus Partners, LLC		147
Employment Agreements		148
Non-Competition Agreements		150
Indemnification Agreements		150
Compensation Committee Interlocks and Insider Participation		151
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		152
Formation Transactions		152
Description of Contribution Agreement		152
Description of Titan Agreements		154
Description of Employment Agreements		154
Description of Management Agreements		154


		Page
POLICIES WITH RESPECT TO CERTAIN ACTIVITIES		155
Investment Policies		155
Dispositions		156
Financing Policies		156
Conflict of Interest Policies		156
Interested Director and Officer Transactions		157
Business Opportunities		157
Policies with Respect to Other Activities		157
Reporting Policies		158
STRUCTURE AND FORMATION		159
Our Structure		159
The Operating Partnership		159
The Services Company		159
Formation Transactions		159
Consequences of this Offering and the Formation Transactions		162
Benefits to Related Parties		163
Restrictions on Transfer		164
Conflicts of Interest		164
Restrictions on Ownership of Our Capital Stock		164
DESCRIPTION OF THE PARTNERSHIP AGREEMENT OF AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP		165
Management of Our Operating Partnership		165
Transferability of Interests		165
Amendments of the Partnership Agreement		165
Distributions to Unitholders		166
Redemption/ Exchange Rights		166
Issuance of Additional Units, Common Stock or Convertible Securities		167
Tax Matters		167
Allocations of Net Income and Net Losses to Partners		167
Operations		167
Termination Transactions		167
Term		168
Indemnification and Limitation of Liability		168
PRINCIPAL STOCKHOLDERS		169
DESCRIPTION OF SECURITIES		170
General		170
Common Stock		170


		Page
Preferred Stock		171
Restrictions on Transfer		171
Transfer Agent and Registrar		173
CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS		174
Our Board of Directors, Vacancies on Our Board of Directors and Removal of Directors		174
Amendment of Our Charter and Bylaws		174
Transactions Outside the Ordinary Course of Business		174
Dissolution		175
Advance Notice of Director Nominations and New Business		175
Ownership Limit		175
Business Combinations		176
Control Share Acquisitions		176
Anti-Takeover Effect of Certain Provisions of Maryland Law and of Our Charter and Bylaws		177
Board Consideration of Relevant Factors and Constituencies		177
Duties of Our Directors		177
Indemnification and Limitation of Directors’ and Officers’ Liability		177
Indemnification Agreements		178
SHARES ELIGIBLE FOR FUTURE SALE		179
General		179
Rule 144		179
Stock Options and 2004 Incentive Award Plan		179
Lock-up Agreements and Other Contractual Restrictions on Resale		179
FEDERAL INCOME TAX CONSIDERATIONS		181
Taxation of Our Company		181
Requirements for Qualification		183
Organizational Requirements		183
Taxable REIT Subsidiaries		184
Taxation of Taxable U.S. Shareholders		190
Income Taxation of the Partnerships and Their Partners		196
ERISA CONSIDERATIONS		198
General		198
Employee Benefit Plans, Tax-Qualified Retirement Plans and IRAs		198
Our Status Under ERISA		199


		Page
UNDERWRITING		201
LEGAL MATTERS		205
EXPERTS		205
GLOSSARY		206


		Page
WHERE YOU CAN FIND MORE INFORMATION		207
INDEX TO FINANCIAL STATEMENTS		F-1

You should rely only on the information contained in this document. We have not authorized anyone to provide you with any additional or different information. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.

Dealer Prospectus Delivery Requirement

Until , 2004 (25 days after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this Offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

iii

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed information regarding us and our historical and pro forma financial statements appearing elsewhere in this prospectus, including under the caption “Risk Factors.” References in this prospectus to “we,” “our,” “us,” and “our Company” refer to American Campus Communities, Inc., a Maryland corporation, together with our consolidated subsidiaries. These consolidated subsidiaries include American Campus Communities Operating Partnership LP, a Maryland limited partnership of which we are the general partner and which we sometimes refer to in this prospectus as our “Operating Partnership,” and American Campus Communities Services, Inc., a Delaware corporation and wholly owned subsidiary of our Operating Partnership, which we sometimes refer to in this prospectus as our “Services Company.” Our “Predecessor Entities” shall mean one or all, as the context requires, of the limited liability companies, partnerships and joint ventures that owned our properties and provided our third party services prior to the Formation Transactions. “Reckson” shall mean Reckson Associates Realty Corp., a Maryland corporation, “RSVP” shall mean Reckson Strategic Venture Partners, LLC, a Delaware limited liability company, and “RAP” shall mean Reckson Asset Partners, LLC, a Delaware limited liability company owned by Reckson and RSVP. Prior to this initial public offering, which we refer to herein as the “Offering,” RAP and RSVP collectively owned our Predecessor Entities. Unless otherwise indicated, the information contained in this prospectus is as of June 30, 2004 and assumes that the underwriters’ overallotment option has not been exercised, the transactions described under the caption “Structure and Formation” beginning on page 159 have been consummated, the common stock to be sold in this Offering has been sold at $20 per share, which is the midpoint of the range of the Offering prices referred to on the front cover of this prospectus, and the partnership units in our Operating Partnership, or “Units,” to be issued in the Formation Transactions are valued at the same price as our shares of common stock. Certain capitalized terms used herein are defined below with the detailed definitions set forth in the glossary beginning on page 206.

Our Company

We are one of the largest private owners, managers and developers of high quality student housing properties in the United States in terms of beds owned and under management. We are a fully integrated, self-managed and self-administered equity REIT with expertise in the acquisition, design, finance, development, construction management, leasing and management of student housing properties. We own 16 high-quality student housing properties, which include 201 buildings containing approximately 3,900 apartment units and 11,800 beds, including three properties that are scheduled to be completed and opened in August 2004 and are currently in their initial lease-up stages. Our owned portfolio includes primarily off-campus properties that are in close proximity to public universities, contain modern housing units, offer resort-style amenities and are supported by a classic Resident Assistant system and other student-oriented programming.

We believe that significant investment opportunities exist in the private-sector ownership, development, acquisition and management of student housing properties because of a number of factors impacting the student housing market in the United States. According to a report that we have commissioned from Rosen Consulting Group, LLC, a real estate economic consulting firm, these factors include:

•

a surge in college enrollment in the United States, fueling a demand for student housing;

•

budget shortfalls at universities have reduced the availability of capital resources for new student housing;

•

the existing traditional dormitory-style facilities are becoming obsolete and are in need of renovation or replacement;

•

the growing number of partnerships between universities and the private sector developers to provide on- and off-campus student housing; and

•

a highly fragmented ownership of private sector student housing properties.

Our Business

We own and operate 12 off-campus student housing properties within close proximity to nine primary colleges and universities in eight states. Additionally, we participate with two university systems in the ownership of four on-campus properties under long-term participating ground/facility leases; we refer to these properties as our “on-campus participating properties.” We manage all 16 of our owned properties.

We also provide development and construction management services for student housing properties owned by universities, charitable foundations and others. Our clients have included some of the nation’s most prominent systems of higher education, including the State University of New York System, the University of California System, the Texas A&M University System, the Texas State University System, the University of Georgia System, the University of North Carolina System, the Purdue University System and the University of Colorado System. We have developed student housing properties for these clients and often have been retained to manage and lease these properties following their opening. Since 1996, we have developed and secured financing for 23 third party student housing properties. The aggregate development cost of these properties exceeds $525 million.

We also provide third party management and leasing services for 16 student housing properties that represent approximately 10,500 beds in approximately 3,900 units, 13 of which we developed. Our third party management and leasing services are typically provided pursuant to multi-year management contracts that have an initial term that ranges from two to five years. Together with our owned properties discussed above, we currently manage 32 student housing properties, representing approximately 22,300 beds.

We were formed to continue the student housing business of our Predecessor Entities that had been engaged in the student housing business since 1993. From 1993 to 1997, our Predecessor Entities operated primarily as a third party provider of student housing management and development services to private owners and public institutions of higher education. In May 1997, an indirect subsidiary of Reckson acquired a majority interest in certain of our Predecessor Entities, which was subsequently contributed to RSVP. From 1996 through 2002, our Predecessor Entities accumulated 14 properties through acquisitions and development, principally through RAP, an entity jointly owned by Reckson and RSVP. This included the acquisition of nine student housing properties, during the 30-month period from May 1999 to November 2001, eight of which are part of our current portfolio.

In June 1998, Reckson spun off FrontLine Capital Group, RSVP’s indirect parent, to Reckson’s shareholders. Following the spin-off, Reckson became a principal lender to FrontLine, which used this financing, among other things, to fund RSVP’s investment activities. In mid-2001, FrontLine began to experience financial difficulties and subsequently filed for protection under Chapter 11 of the Bankruptcy Code. Since that time, additional capital investments in our Predecessor Entities by RAP and RSVP have been significantly reduced and, as a result, the acquisition program of our Predecessor Entities has been curtailed. Among our goals in this Offering is to reinvigorate our program of growth by accessing new sources of investment capital.

Our principal executive offices are located at 805 Las Cimas Parkway, Suite 400, Austin, Texas 78746. Our telephone number at that location is (512) 732-1000. Our website is located at www.studenthousing.com. The information on our website is not part of this prospectus.

Competitive Strengths

We believe that we have the following competitive advantages:

•

We have expertise in the unique and specialized aspects of the student housing industry and focus on student housing as our core business.

•

We have assembled one of the industry’s most experienced teams of student housing professionals.

•

Our portfolio consists of high quality student housing properties which contain modern unit plans and extensive student oriented amenities.

•

We have a fully integrated organization that is capable of conducting market analysis, administering the entitlement and municipal approval process, coordinating product design, securing financing, administering the development process and providing construction management, leasing and property management services.

•

We have a proven track record as a developer, acquirer, and manager of high quality student housing properties and have an extensive network of relationships with university systems and individual educational institutions, which provides us with acquisition and development opportunities.

•

We are industry innovators having created proprietary lease administration and marketing software for the student housing industry that enables us to quickly respond to market changes.

•

Upon completion of this Offering, we will be the only publicly traded REIT solely focused on student housing in the United States. We believe this will further enhance our reputation and prominence in the student housing industry and will provide us with access to capital markets. It will also enable us to use our shares or Units as currency with which to acquire properties.

Summary Risk Factors

You should carefully consider the following important risks:

•

Our estimated initial annual distribution is expected to represent 252% of our estimated cash available for distribution to our common stockholders for the 12-month period ending June 30, 2005. Our ability to fund this distribution will depend, in part, upon the receipt of cash flow from three properties that are currently under construction and are scheduled to open in August 2004 and from development fee income, the timing and amount of which are inherently uncertain. After giving effect to the revenue from leases currently in place at these construction properties, we may have to fund approximately $10.0 million of our estimated initial annual distribution with borrowings under our revolving credit facility. In the event these properties do not open on schedule, we may incur additional expense in providing alternative housing arrangements to students with signed leases and such students may attempt to terminate their leases. To the extent we use our working capital or borrowings under our revolving credit facility to fund our distributions, our financial condition and our ability to access these funds for other purposes, such as the expansion of our business or future distributions, could be adversely affected. We expect that approximately 72.2% of our estimated initial annual distribution will represent a return of capital for federal income tax purposes.

•

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 ten-month, nine-month or shorter-term semester leases. As a result, we may experience significantly reduced cash flows during the summer months at properties leased under leases having terms shorter than 12 months. Furthermore, all of our properties must be entirely re-leased each year, exposing us to increased leasing risk. Student housing properties are also typically leased during a limited leasing season that typically 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.

•

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.

•

The initial public offering price of our common stock was determined in consultation with the underwriters and does not necessarily bear any relationship to our book value or market value of our assets. As a result, our value represented by the public offering price of our shares may exceed the market value of our assets. You will experience immediate dilution of $8.66 per share immediately after this Offering.

•

Upon completion of this Offering and related transactions, our total consolidated indebtedness will be approximately $199.0 million, which includes the consolidated indebtedness of our on-campus participating properties of approximately $78.2 million, but does not include any indebtedness that we may incur in connection with any future distributions. Our debt service obligations will expose us to the risk of default and reduce (or eliminate) cash resources that are available to operate our business or pay distributions, including those necessary to maintain our REIT qualification. There is no limit on the amount of indebtedness that we may incur except as provided by our revolving credit facility. We expect to incur additional indebtedness through borrowings under a revolving credit facility that will be in place at the closing of this Offering to fund future property acquisitions and for other working capital needs, which may include the payment of distributions to our shareholders. Our ability to borrow from time to time under this facility will be subject to certain conditions and the satisfaction of specified financial covenants. Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences.

•

Our future growth will be dependent upon our ability to successfully develop, acquire and manage new properties. As we develop and acquire additional properties, we will be subject to risks associated with managing new properties, including lease-up and integration risks. Newly developed properties may not perform as expected and newly acquired properties may have characteristics or deficiencies unknown to us at the time of acquisition. There can be no assurance that future acquisition and development opportunities will be available to us on terms that meet our investment criteria or that we will be successful 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.

•

RAP will receive approximately $100.6 million in cash from the net proceeds of this Offering for the redemption of its interests in RAPSH. This amount will increase or decrease depending upon whether the shares in this Offering are sold above or below $20 per share (the midpoint of the range of the Offering prices referred to on the cover page of this prospectus). Our existing investors will receive certain additional distributions from us. RSVP will, through its significant ownership interest in RAP, including interests in RAP received in the Formation Transactions, be entitled to participate in a significant portion of the benefits of this Offering realized by RAP. RAP and RSVP were the principal prior owners of our Predecessor Entities and played a significant role in structuring our formation. In the course of structuring our formation, RAP and RSVP had the ability to influence the type and level of benefits that they and our executive officers would receive from us. They also had the ability to influence the other terms of the Formation Transactions, including, without limitation, the representations and warranties that they made to us in the Formation Transactions and the indemnities that they provided to us for breaches of such representations and warranties. Our existing investors will not own any continuing interest in us following this Offering.

•

referred to on the cover page of this prospectus). Factors considered in determining the Offering price included our Predecessor Entities’ historical operations, management, estimated net income, estimated funds from operations, estimated cash available for distribution, growth prospects, and the current state of the commercial real estate industry and the economy as a whole.

•

We have been recently organized and have no operating history. In addition, all of our properties have been acquired or developed by the Predecessor Entities within the past eight years and have limited operating histories under current management. Our management has no experience in running a public company or in operating in accordance with the requirements for maintaining our qualification as a REIT.

•

Provisions of our Charter limit the ownership of our shares. Our Charter provides that, subject to certain exceptions, no person or entity may beneficially own, or be deemed to own by virtue of certain constructive ownership provisions, 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 our “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 stockholders.

•

In order to maintain our qualification as a REIT, we are required under the Internal Revenue Code of 1986, as amended, or the 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. 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. 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 the cash distributions to our stockholders, including those necessary to maintain our qualification as a REIT.

•

To qualify as a REIT, we will have to comply with highly technical and complex provisions of the Code. Failure to qualify as a REIT would likely subject us to higher tax expenses and reduce or eliminate cash available for distribution to our shareholders.

•

The operations of our on-campus participating properties and our third party services will be conducted through the Services Company, which is our taxable REIT subsidiary. The income from these operations 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 shareholders.

Business and Growth Strategies

Our primary business objectives are to maximize distributable cash flow and enhance the value of our portfolio in order to maximize total returns to our shareholders. We believe we can achieve these objectives by continuing to implement our business strategies described below.

Acquisition and Development

properties that provide an opportunity for substantial economic growth as a result of their quality or proximity to campuses, or through our superior operational capabilities. We believe that our reputation and close relationship with universities give us an advantage in sourcing acquisitions and obtaining municipal approvals and community support for our development projects.

Acquisitions. During the 30 month period from May 1999 to November 2001, we acquired nine properties (eight of which we still own) containing approximately 1,800 units and 6,000 beds. We believe that our relationship with university systems and individual educational institutions, our knowledge of the student housing market and our prominence as the sole publicly-traded REIT focused exclusively on student housing in the United States will afford us a competitive advantage in acquiring additional student housing properties. Concurrently with this Offering, we will enter into a $75 million senior secured revolving credit facility which will be available following this Offering to, among other things, fund future property acquisitions and other working capital needs.

Development. Since 1996, we have developed eight of our owned properties, including three that are scheduled to be completed and open in August 2004. In addition, through a joint venture with a current land owner, we have recently entered into an agreement to purchase a 19.5-acre property in close proximity to the State University of New York at Buffalo that we plan to develop into an owned, off-campus student housing complex consisting of approximately 800 beds. This property is targeted to open in the 2005-2006 academic year.

Our experienced development staff will 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 will also continue to benefit from opportunities derived from our extensive network with colleges and universities, as well as through our American Campus–Titan relationship.

Third Party Development and Management Services

We believe that an opportunity exists for the continued growth of our third party development and management business, particularly for on-campus facilities owned by colleges, universities and charitable foundations. Since 1996, we have developed 23 student housing properties for third parties, including six that are scheduled to be completed and open in August 2004. We believe that there are growing pressures on many colleges and universities to “privatize” their student housing development and management operations. We believe our track record and existing client relationships with some of the nation’s most prominent systems of higher education will enhance our ability to pursue development and management opportunities in the student housing market.

Proactive Management

We will continue to maintain the high quality of our student housing product. We intend to continue to provide a modern, high quality student housing product that offers an active, responsible student lifestyle in an academically oriented community atmosphere. Our on-site management and maintenance staff provides well maintained facilities with comfortable living areas, state-of-the-art technological capabilities and resort style amenities that are designed to maximize a student’s university experience. We also utilize a classic Resident Assistant system that implements an array of educational, recreational and social programs that are designed to promote an atmosphere conducive to community pride, loyalty, scholarship and education.

We aggressively seek to enhance cash flow from our properties. We intend to enhance cash flow by maximizing rental rates and occupancy, expanding the range of our income-generating tenant services, where applicable, and controlling expenses through the implementation of cost control management and systems.

Our Properties

The following table presents certain summary information about our properties. Our properties generally are modern facilities, with 11 of our 16 properties having been built less than six years ago and 14 of our properties having been built less than 10 years ago. Amenities at most of our properties include a swimming pool, basketball courts and a large community center featuring a fitness center, computer center, recreation room with billiards and other games, tanning beds and study areas. Some properties also have a jacuzzi/hot tub, volleyball courts, tennis courts and in-unit washers and dryers. Callaway House also has a food service facility. Three of our off-campus properties are currently under construction and are scheduled to open in August 2004. Lease terms are generally 12 months at our off-campus properties and 9 months at our on-campus properties. In the year ended December 31, 2003, and the six months ended June 30, 2004, our properties represented 84.7% and 83.7%, respectively, of our revenues in these periods.

We own fee title to all of these properties except for:

•

The Callaway House (property #6), in which we own an 80% partnership interest and are entitled to significant preferred distributions;

•

University Village at TU (property #12), which is subject to a 75-year ground lease from Temple University; and

•

four properties (properties #13, 14, 15 and 16) that are on-campus participating properties held under participating ground/facility leases with two university systems.


Name		Year Built	Primary University Served	Twelve Months Ended June 30, 2004 Revenue (in thousands)			Occupancy Rates (1)		Fall 2004 Leases (2)		# of Bldgs	# of Units	# of Beds
*Off-Campus Properties*
1	Commons on Apache	1987	Arizona State University Main Campus	$	1,591		95.9	%(3)	100.0	%(4)	6	111	444
2	The Village at Blacksburg	1990/ 1998	Virginia Polytechnic Institute and State University		3,660		75.7		98.3		26	288	1,056
3	The Village on University	1998	Arizona State University Main Campus		4,074		73.1		86.3		20	288	918
4	River Club Apartments	1996	The University of Georgia– Athens		3,444		97.2		86.8		18	266	794
5	River Walk Townhomes	1998	The University of Georgia– Athens		1,376		95.3		95.6		20	100	340
6	The Callaway House(5)	1999	Texas A&M University		4,541	(6)	73.4	(6)	102.8	(7)	1	173	538
7	The Village at Alafaya Club	1999	The University of Central Florida		5,028		98.5		91.0		20	228	840
8	The Village at Science Drive	2000	The University of Central Florida		4,540		94.3		100.0		17	192	732
9	University Village at Boulder Creek(8)	2002	The University of Colorado at Boulder		2,663		96.1		75.7		4	82	309
10	University Village at Fresno(9)	2004	California State University, Fresno		N/A		N/A		82.0		9	105	406
11	University Village at San Bernardino(9)(10)	2004	California State University, San Bernardino		N/A		N/A		99.4		6	132	480
12	University Village at TU(9)(11)	2004	Temple University		N/A		N/A		100.0	(12)	3	220	749

*Sub Total of Owned Properties:*				$	30,917		87.1	%	93.7	%	150	2,185	7,606

**On-Campus Participating Properties(13)**
13	University Village—PVAMU(14)	1996/ 97/98	Prairie View A&M University	$	7,271		95.6	%(15)	82.7	%	30	612	1,920
14	University Village—TAMIU(14)	1997	Texas A&M International University		1,067		96.0	(15)	71.0		4	84	252
15	University College—PVAMU(14)	2000/ 2003	Prairie View A&M University		5,634		94.9	(15)	87.1		14	756	1,470
16	Cullen Oaks(14)	2001	The University of Houston		3,017		97.9	(15)	95.4		3	231	525

*Sub Total of On-Campus Participating Properties:*				$	16,989		95.7	%	85.1	%	51	1,683	4,167

Totals:				$	47,906	(16)	90.6	%	90.7	%	201	3,868	11,773

(1)

Occupancy Rates are calculated as of June 30, 2004 except where indicated. Occupancy is based on the number of total occupied beds (including beds occupied by staff) divided by total beds.

(2)

Fall 2004 Leases represents the percentage of total beds that are subject to executed leases for the 2004-2005 academic year as of July 25, 2004.

(3)

Occupancy reflected is as of March 31, 2004. Property has a majority of 10-month leases resulting in occupancy as of June 30, 2004 of 29.2%. We believe the occupancy for June 30, 2004 is not representative of 2003-2004 academic year occupancy.

(4)

Commons on Apache is 100% leased for the 2004-2005 academic year by Arizona State University for a minimum rental of approximately $1,660,000.

(5)

Although we hold an 80% interest in the property, because of our preferred distribution rights, we currently receive substantially all of the property's net cash flow.

(6)

As rent at this property includes food services, revenue is not comparable to the other properties in this chart. For a description of asking monthly rent per bed type at the property, see “Business and Properties—Our Properties—The Callaway House, College Station, Texas.” Occupancy reflected is as of March 31, 2004. Property has primarily 9-month leases resulting in occupancy as of June 30, 2004 of 6.2%. We believe the occupancy for June 30, 2004 is not representative of the 2003-2004 academic year occupancy.

(7)

Based on demand, we are adding double occupancy beds in order to increase capacity over the 538 bed count up to a maximum of 566 beds.

(8)

We are developing and will manage a competing 994-bed on-campus residence hall for the University of Colorado that opened 495 beds in the Fall 2003 semester. The second phase of 499 beds is scheduled to open in the Fall 2004 semester.

(9)

These properties are under construction and scheduled to open in August 2004.

(10)

The California State University has an option to purchase this property for $28.3 million, which option expires 150 days after notice of completion of construction has been given to the University. We believe the University will seek approval to exercise this option.

(11)

Subject to a 75-year ground lease from Temple University.

(12)

Of our 749 beds, Temple University has agreed to master lease up to 400 beds that it intends to make available to its students as part of its annual “Housing Lottery.” As of July 25, 2004, we have executed leases for all of the remaining 349 beds for the 2004-2005 academic year.

(13)

Although our on-campus participating properties account for 43.5% of our units, 35.4% of our beds and 28.9% of our revenues for the 12 months ended June 30, 2004, because of the structure of their ownership and financing we have only received approximately $471,000 in distributions of excess cash flow during the 12 months ended June 30, 2004. 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.

(14)

Subject to a participating ground lease with its primary university system.

(15)

Occupancy reflected is as of March 31, 2004. The properties have primarily 9-month leases resulting in occupancy as of June 30, 2004 of 12.7% for University Village—PVAMU, 31.8% for University Village—TAMIU, 0.0% for University College—PVAMU, and 63.4% for Cullen Oaks. We believe the occupancy for June 30, 2004 is not representative of the 2003-2004 academic year occupancy.

(16)

Excludes revenue from Coyote Village, which was transferred to Weatherford College in 2004, and revenue from The Village at Riverside, which following the Formation Transactions will be owned by an entity affiliated with RAP and RSVP. These revenues are included in our historical revenues.

Third Party Services

Development Services

The following table presents certain summary information regarding the development services that we are currently providing for third party owners. Our pre-development services typically include feasibility studies and design services and our development services typically include design oversight, development, construction management and financial structuring services. In the year ended December 31, 2003, and the six months ended June 30, 2004, our fees from development services represented 13.2% and 13.8%, respectively, of our revenues in these periods.


Property		University	Location	Description of Services
Under Construction

1.	IPFW Student Housing	Indiana University–Purdue University, Fort Wayne	Fort Wayne, IN	Design and development services for a 568-bed apartment building community scheduled to open in August 2004.

2.	Cardinal Village (Phase III)	Lamar University	Beaumont, TX	Design, development and construction management services for a 499-bed apartment building community scheduled to open in August 2004.


Property		University	Location	Description of Services

3.	Sam Houston Village	Sam Houston State University	Huntsville, TX	Design, development and construction management services for a 543-bed apartment building community scheduled to open in August 2004.

4.	San Marcos Hall Phase II	Texas State University	San Marcos, TX	Design, development and construction management for a 471-bed residence hall scheduled to open in August 2004.

5.	Vista Del Campo Apartments Phase I	The University of California, Irvine	Irvine, CA	Design, development and construction management services for a 1,488-bed garden apartment community scheduled to open in September 2004.

6.	Bear Creek at Williams Village Phase Ib	The University of Colorado at Boulder	Boulder, CO	Design, development and construction management for a 499-bed mid-rise apartment community scheduled to open in August 2004.

Pre-Development

7.	Fenn Tower	Cleveland State University	Cleveland, OH	Award of design, redevelopment and refurbishment of an existing high rise into 400-bed property.

8.	Purdue University–Calumet	Purdue University–Calumet	Hammond, IN	Feasibility and design oversight services. We also will assume management for this property.

9.	Purdue University	Purdue University	West Lafayette, IN	Feasibility and design oversight services.

10.	Saint Leo University Phase II	Saint Leo University	Tampa, FL	Award of the design, development and construction management services of a 232-bed apartment community scheduled to open in August 2005.

11.	Washington State University	Washington State University	Pullman, WA	Feasibility and design oversight services for future projects, yet undetermined.


Property		University	Location	Description of Services

12.	West Virginia University	West Virginia University	Morgantown, WV	Feasibility and design oversight services for future projects yet undetermined.

13.	Vista Del Campo Apartments Phase II	The University of California, Irvine	Irvine, CA	Award of the design, development and construction management services of a 1,500-bed garden apartment community scheduled to open in Fall of 2006.

Management Services

The following table presents certain summary information regarding the third party properties for which we currently provide management services. These services typically include full responsibility 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 multi-year management agreements (generally ranging between two to five years). All of these properties are on-campus properties except for Campus Estates, Dobie Center, The Village at Riverside and University Village at Sheppard Pratt. In the year ended December 31, 2003, and the six months ended June 30, 2004, our fees from management services represented 2.0% and 2.5%, respectively, of our revenues in these periods.


Property		University	# of Units	# of Beds
1.	Texan Hall(1)	Angelo State University	262	512
2.	IPFW Student Housing(2)	Indiana University–Purdue University, Fort Wayne	220	568
3.	Cardinal Village (Phase I)	Lamar University	261	521
4.	Cardinal Village (Phase II)	Lamar University	261	521
5.	Cardinal Village (Phase III)(2)	Lamar University	251	499
6.	University Village—Savannah State	Savannah State University	192	660
7.	Vista Del Campo Apartments Phase I(2)	The University of California, Irvine	488	1,488
8.	Bear Creek at Williams Village Phase Ia(1)	The University of Colorado at Boulder	170	495
9.	Bear Creek at Williams Village Phase Ib(2)	The University of Colorado at Boulder	172	499
10.	Bayou Oaks Greek Housing(1)	The University of Houston	176	471
11.	Campus Estates(3)	The University of Texas–Austin	498	1,548
12.	Dobie Center(4)	The University of Texas–Austin	383	975
13.	The Village at Riverside(5)	The University of Texas–Austin	156	408
14.	University Village at Sheppard Pratt	Towson University	187	615
15.	Coyote Village(1)(6)	Weatherford College	76	280
16.	RAMS Commons	Winston Salem State University	150	448

Totals:			3,903	10,508

(1)

Property began operation in August 2003.

(2)

Property was under construction as of June 30, 2004, and is scheduled to open in Fall 2004.

(3)

Property management was awarded to us by the foreclosing lender in November 2003.

(4)

An indirect subsidiary of RSVP owns a 23% interest in this property. RSVP has granted us a four-year option to acquire this interest.

(5)

After the Formation Transactions, an affiliate of RAP and RSVP will own this property. It has granted us a four-year option to acquire the property.

(6)

Property was transferred to Weatherford College in April 2004.

Indebtedness

As of June 30, 2004, seven of our off-campus properties had approximately $112.6 million of fixed rate mortgage indebtedness outstanding, bearing interest at an annual weighted average rate of approximately 7.4%. None of such indebtedness matures prior to June 2009.

In addition, three of our on-campus participating properties are encumbered by approximately $61.0 million of fixed rate, taxable, insured bond financed indebtedness, bearing interest at an annual weighted average rate of approximately 7.5% and self-amortizing over the loan term. Our fourth on-campus participating property is encumbered by approximately $17.2 million as of June 30, 2004 of floating rate construction financing that matures in November 2008. We have purchased an interest rate swap that effectively fixes the interest rate of this construction financing at 5.5% through its maturity.

Concurrently with this Offering, we expect to enter into a $75 million senior secured revolving credit facility with affiliates of Citigroup Global Markets Inc. and Deutsche Bank Securities Inc., two of our underwriters, as joint lead arrangers, which facility is expected to be available to, among other things, fund future property acquisitions and other working capital needs. The Company may increase the size of the revolving credit facility by up to an additional $25 million. Our ability to borrow from time to time under this facility is expected to be subject to certain conditions and the satisfaction of specified financial covenants. Our revolving credit facility is also expected to contain covenants that restrict our ability to pay dividends or other amounts to our stockholders unless certain tests are satisfied. The facility will initially be secured by, among other things, mortgages on four of our off-campus properties. Concurrently with this Offering, we will use approximately $5.7 million of this facility to acquire substantially all of Titan’s interests in the American Campus–Titan Properties, approximately $1.7 million to retire our outstanding borrowings under our existing line of credit and approximately $0.8 million for the payment of the revolving credit facility loan origination costs.

Structure and Formation

Our Structure

The Operating Partnership

Following the consummation of this Offering and the Formation Transactions, substantially all of our assets will be held by, and our operations conducted through, our Operating Partnership. We will own 98.7% of the Units in our Operating Partnership. Certain of our officers will own Profit Interest Units (PIUs) in the Operating Partnership representing approximately a 1.3% limited partnership interest. We will be the sole general partner of our Operating Partnership; accordingly, our board of directors will effectively direct all of our Operating Partnership’s affairs.

The Services Company

third parties as well as our income from certain services afforded student-tenants in our owned properties. In order to avoid realizing such income in a manner that would adversely affect our ability to qualify as a REIT, we will provide certain services through our Services Company, which will elect, together with us, to be treated as our “taxable REIT subsidiary” or “TRS.” Our Services Company will be wholly-owned and controlled by our Operating Partnership. Our on-campus participating properties will be owned by our Services Company. The income earned by our Services Company (including income from our on-campus participating properties) will be subject to regular federal income tax and state and local income tax where applicable and will therefore be subject to an additional level of tax as compared to the income earned from our properties.

Formation Transactions

Prior to or simultaneously with the completion of this Offering, we will engage in the Formation Transactions described below. These are designed to:

•

consolidate the ownership of our properties and the business of our Predecessor Entities into our Operating Partnership and Services Company;

•

facilitate this Offering;

•

enable us to raise necessary capital to redeem the interests of RAP and RSVP in our Predecessor Entities and to acquire Titan’s 5% interest in the American Campus–Titan Properties;

•

repay certain existing property indebtedness; and

•

enable us to qualify as a REIT for federal income tax purposes commencing with the taxable year ending December 31, 2004.

Prior to the Formation Transactions, most of the interests in our off-campus properties were owned by RAP Student Housing Properties, LLC, which we refer to as “RAPSH,” which was wholly-owned by RAP. Our on-campus participating properties were owned by American Campus Communities, LLC, which we refer to as “ACCL.” Most of our third party development, management and leasing services were also provided through ACCL. Substantially all of the interests in ACCL, and an interest in a number of our off-campus properties, were owned by RSVP. Four of our off-campus properties, three of which are currently under construction, were owned by our American Campus–Titan joint venture with Titan Investments, an unaffiliated developer; we refer to our joint venture partner as “Titan” and to these properties as the “American Campus–Titan Properties.” Our executive officers, certain of our senior officers and certain of our former employees are the sole members of American Campus Partners, LLC, or “ACP,” a limited liability company that owns a 28% promoted interest in our Predecessor Entities.

Following are the principal steps in the Formation Transactions:

•

We will issue 12,100,000 shares of our common stock in this Offering (or 13,915,000 shares if the underwriters exercise their overallotment option in full). We will contribute the net proceeds of this Offering to our Operating Partnership. ACCL will elect to become a corporation, will be renamed and will serve as our Services Company.

•

RSVP, which owns a 67% interest in RAP, and, prior to this Offering, was our sole stockholder, will contribute to RAP its interests in ACCL, its interest in University Village at TU and its minority interests in our off-campus properties. RAP will then contribute these interests to RAPSH. Consequently, RAPSH will hold all of the interests in ACCL.

•

be acquired by an affiliate of RAP and RSVP and contributed to RAPSH. As a result, American Campus–Titan Properties will be wholly-owned by our Operating Partnership. Certain of the terms of our business relationship with Titan with regard to future property developments will also be restructured.

•

RAPSH and an affiliate of RSVP will distribute their interests in the entities owning The Village at Riverside to an affiliate of RAP and RSVP. We will continue to manage this property for so long as RAPSH’s guarantee with respect to this property remains in effect and this property remains under the control of RAP and RSVP. We will also be granted a four-year option from RAP and RSVP to acquire the property for a cash price equal to its most recent net operating income (before debt service) over the preceding four calendar quarters divided by an 8% “cap” rate, but in no case less than $12 million during the option’s first 24 months and $13 million during the option’s final 24 months. RAPSH will also distribute certain non-core assets (consisting of a single condominium unit and an undeveloped parcel of land) to entities affiliated with RAP, RSVP and Titan.

•

Our Operating Partnership will contribute approximately $100.6 million of the net Offering proceeds to RAPSH in exchange for interests in RAPSH. RAPSH will use these proceeds to redeem the interests owned by RAP in RAPSH. This amount will increase or decrease depending upon whether the shares in this Offering are sold above or below $20 per share (the midpoint in the range of the Offering prices referred to on the cover page of this prospectus). As a result, our Operating Partnership will own all of the membership interests in RAPSH.

•

We will be granted a four-year option from RSVP to acquire its 23% non-controlling interest in Dobie Center. The option price will be based on a $52.0 million valuation of the property less the then outstanding debt, which on June 30, 2004 was approximately $42.8 million, resulting in a $2.1 million option price for RSVP’s 23% interest at that time. We currently manage this property.

•

We will issue to certain of our senior officers PIUs in our Operating Partnership representing approximately a 1.3% limited partnership interest in our Operating Partnership.

•

We will use up to $11.5 million of the proceeds of this Offering to complete the construction of our three properties (University Village at TU, University Village at Fresno and University Village at San Bernardino) scheduled to be completed and opened in August 2004, with any remaining proceeds after such completion (currently estimated to be approximately $1.2 million) to be distributed to entities affiliated with RAP and RSVP. Additionally, any insurance proceeds that we receive after the date of this Offering with respect to our claims related to the Fresno State fire will, unless used by us to fund unanticipated cost overruns at University Village at TU, be distributed to entities affiliated with RAP and RSVP. A portion of these proceeds, if any, will be paid by affiliates of RAP and RSVP to affiliates of Titan.

•

Our executive officers and certain of our senior officers will receive on account of their beneficial interest in ACP approximately $2.3 million (based upon the midpoint of the range of the Offering prices referred to on the cover page of this prospectus) from the cash redemption amount to be paid to RAP. These officers have advised the underwriters of their intention to use their distribution from ACP, net of applicable taxes, to purchase common stock in this Offering.

Consequences of this Offering and the Formation Transactions

The following diagram depicts our ownership structure and the ownership structure of our Operating Partnership and Services Company upon completion of this Offering and the Formation Transactions:

LOGO

(1)

Represents PIUs in the Operating Partnership.

Benefits to Related Parties

Upon completion of this Offering or in connection with the Formation Transactions, the former owners of our properties will receive material benefits, including:

•

RAP will receive a cash payment of approximately $100.6 million (45.3% of the net proceeds of this Offering) for the redemption of its interests in RAPSH. This amount will increase or decrease depending upon whether the shares in this Offering are sold above or below $20 per share (the midpoint of the range of the Offering prices referred to on the cover page of this prospectus). Additionally, RAP will receive a final working capital distribution from cash on hand of $1.5 million and $170,000 in budgeted development fees relating to the construction properties to be paid from the remaining construction budget.

•

RAPSH and an affiliate of RSVP will distribute their interests in the entities owning The Village at Riverside to an affiliate of RAP and RSVP (subject to a four-year purchase option that they have granted to us), and RAPSH will maintain its guaranty of certain contingent obligations of RAP and RSVP under the non-recourse indebtedness encumbering this property.

•

RAPSH will distribute to entities affiliated with RAP, RSVP and Titan certain assets that we consider to be unrelated to our core business, including:

•

fee title to an undeveloped parcel of commercially-zoned land that is adjacent to the University Village at San Bernardino; and

•

interests in entities that previously developed a residential condominium project adjacent to University Village at Boulder Creek and that currently own one remaining condominium unit in that project.

•

RAP and RSVP will be entitled to any savings in the budgeted completion cost of our three off-campus construction properties, including any insurance proceeds that we receive with respect to the fire at University Village at Fresno that are not applied to the construction costs of University Village at TU. Additionally, upon completion of the construction at University Village at TU, RAP will be entitled to receive $450,000 relating to the completion and construction guarantee fee with regard to the property, which amount will be paid from the remaining construction budget.

•

Reckson and RSVP will, through their respective ownership interests in RAP, be entitled to participate in the benefits realized by RAP that are described above.

•

Titan will sell its interest in the American Campus–Titan Properties to our Operating Partnership and will receive approximately $5.7 million in cash. Titan will also receive from RAP and RSVP on account of such interests a share of any construction cost savings received by RAP and RSVP with respect to our three off-campus construction properties and the Fresno fire insurance proceeds.

•

Our executive officers and certain members of senior management have or will receive material benefits, including:

•

the issuance of PIUs in our Operating Partnership representing approximately a 1.3% limited partnership interest in the Operating Partnership;

•

approximately $2.3 million (based upon the midpoint of the range of the Offering prices referred to on the cover page of this prospectus) from the cash redemption amount to be paid to RAP, on account of their beneficial interests in ACP. These officers have advised the underwriters of their intention to use these proceeds, net of applicable taxes, to purchase common stock in this Offering;

•

participation in our program of outperformance awards under our 2004 Incentive Award Plan with respect to the value of 3% of our outstanding stock and Units;

•

employment agreements providing for salary, bonus and other benefits, including severance upon a termination of employment under certain circumstances, as described under “Management—Employment Agreements”; and

•

indemnification by us for certain liabilities and expenses incurred as a result of actions brought, or threatened to be brought, against them as officers or directors.

•

Each of our non-employee directors will receive material benefits, including:

•

a grant of $25,000 of restricted stock units with respect to our common stock pursuant to our 2004 Incentive Award Plan;

•

annual and per-meeting fees described under “Management—Compensation of Directors”; and

•

indemnification by us for certain liabilities and expenses incurred as a result of actions brought, or threatened to be brought, against him or her as a director.

•

In addition to the underwriting discounts and financial advisory fees to be received by Deutsche Bank Securities Inc., its affiliate, BT Holdings (NY), Inc., is a creditor of, and holds a security interest in certain assets of, RSVP’s parent company, FrontLine Capital Group. FrontLine filed for protection from creditors pursuant to Chapter 11 of the Bankruptcy Code in June 2001. BT Holdings (NY), Inc. would therefore potentially receive benefits from this Offering to the extent FrontLine received and paid to its unsecured creditors any portion of the net proceeds of this Offering or otherwise used such proceeds to repay any of its senior or secured indebtedness. To the extent proceeds are used to repay senior or secured indebtedness, proceeds from future asset sales by FrontLine may be available for distribution to BT Holdings (NY), Inc. and other unsecured creditors. Deutsche Bank Securities Inc. may therefore have an interest in the successful completion of this Offering beyond the underwriting discounts and financial advisory fees that it will receive. In addition, concurrently with the closing of the Offering, we will repay all outstanding amounts under our existing line of credit provided by affiliates of Citigroup Global Markets Inc. and Deutsche Bank Securities Inc., as joint lead arrangers, and then retire such line of credit.

Restrictions on Transfer

William C. Bayless, Jr., our President, Chief Executive Officer and a director, Brian B. Nickel, our Executive Vice President, Chief Investment Officer, Secretary and a director, Mark J. Hager, our Executive Vice President, Chief Financial and Accounting Officer and Treasurer, and other members of senior management have agreed not to sell or otherwise transfer or encumber any shares of our common stock or securities convertible or exchangeable into our common stock owned by them at the completion of this Offering (including, without limitation, their PIUs) or thereafter acquired by them for a period of 14 months after the completion of this Offering.

Restrictions on Ownership of Our Capital Stock

Our Charter generally prohibits any person or entity from actually or constructively owning more than 9.8% of the outstanding shares of our stock. 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.

Distribution Policy

of $20 per share, which is the midpoint of the range of the Offering prices referred to on the cover page of this prospectus. This estimated initial annual distribution is expected to significantly exceed our per-share estimated cash available for distribution to our common stockholders for the 12-month period ending June 30, 2005. Our ability to fund this distribution will depend, in part, upon the receipt of cash flow from three properties that are currently under construction and are scheduled to open in August 2004 and from fee income from third party services, primarily from development services, the timing and amount of which are inherently uncertain. After giving effect to the revenue from leases currently in place at these construction properties, we may have to fund approximately $10.0 million of our estimated initial annual distribution with borrowings under our revolving credit facility. To the extent we use our working capital or borrowings under our new revolving credit facility to fund these distributions, our financial condition and our ability to access these funds for other purposes, such as the expansion of our business or future distributions, could be adversely affected.

Our Tax Status

We will elect to be taxed as a REIT under Sections 856 through 860 of the Code, commencing with our taxable year ending December 31, 2004. We believe that our organization and proposed method of operation will enable us to meet the requirements for qualification and taxation as a REIT for federal income tax purposes. To maintain REIT status, we must meet a number of organizational and operational requirements, including a requirement that we annually distribute at least 90% of our REIT taxable income to our stockholders. As a REIT, we generally will not be subject to federal income tax on REIT taxable income we currently distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax at regular corporate rates. Even if we qualify for taxation as a REIT, we may be subject to some federal, state and local taxes on our income or property and the income of our Services Company will be subject to taxation at normal corporate rates and state and local income tax where applicable. Further, unlike dividends received from a corporation that is not a REIT, our distributions to individual shareholders generally will not be eligible for the new lower tax rate on dividends except in limited situations.

Summary Selected Financial Data

The following table sets forth our summary selected financial and operating data on an unaudited pro forma basis and on a historical basis for the Predecessor Entities. We have not presented historical information for American Campus Communities, Inc. because we have not had any corporate activity since our formation and because we believe that a discussion of the results of American Campus Communities, Inc. would not be meaningful. The Predecessor Entities combined historical financial information includes:

•

the development and management service operations and real estate operations of American Campus Communities, L.L.C.;

•

the real estate operations of RAPSH and its subsidiaries (including The Village at Riverside, which we will not own after the Formation Transactions and completion of this Offering, and Coyote Village, which was transferred to Weatherford College in April 2004); and

•

the joint venture properties and operations of American Campus–Titan, LLC and American Campus–Titan II, LLC.

You should read the following summary selected financial data in conjunction with the Predecessor Entities’ combined historical financial statements and our pro forma consolidated financial statements and the related notes and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are included elsewhere in this prospectus.

The Predecessor Entities’ historical combined balance sheet information as of December 31, 2003 and 2002, and combined statements of operations information for the years ended December 31, 2003, 2002 and 2001, have been derived from the historical combined financial statements audited by Ernst & Young LLP, independent auditors, whose report with respect thereto is included elsewhere in this prospectus.

The Predecessor Entities’ unaudited historical combined balance sheet information as of June 30, 2004 and combined statement of operations for the six months ended June 30, 2004 and 2003 are derived from our unaudited historical combined financial statements, which we believe include all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information set forth therein. Our results of operations for the interim period ended June 30, 2004 are not necessarily indicative of the results to be obtained for the full fiscal year.

Our unaudited summary selected pro forma consolidated statements of operations, for the six months ended June 30, 2004 and for the year ended December 31, 2003, assumes the completion of this Offering, the Formation Transactions, the repayment of certain indebtedness and the incurrence of certain other indebtedness as contemplated under “Use of Proceeds” had occurred as of the beginning of the period indicated, and the summary selected pro forma consolidated balance sheet is presented as if this Offering, the Formation Transactions, the repayment of certain indebtedness and the incurrence of certain other indebtedness had been consummated on the last day of the period indicated, and therefore reflects certain assumptions that are described in Notes to Pro Forma Condensed Consolidated Financial Statements beginning on page F-6. The pro forma information does not purport to represent what our financial condition or results of operations actually would have been had this Offering, the Formation Transactions, the repayment of certain indebtedness and the incurrence of certain other indebtedness, in fact, occurred on such date or at the beginning of the period indicated, or to project our financial condition or results of operations at any future date or for any future period.

Statement of Operations Data:

(in thousands, except for share and per share data)


	Six Months Ended June 30,									Year Ended December 31,
	Pro Forma Company 2004			Historical						Pro Forma Company 2003			Historical–Predecessor Entities
	Pro Forma Company 2004			2004			2003			Pro Forma Company 2003			2003			2002			2001			2000			1999
				(Unaudited)						(Unaudited)
Revenues:
Rental revenue	$	24,529		$	25,529		$	25,490		$	48,563		$	50,765		$	48,984		$	39,907		$	22,587		$	9,527
Third party services		4,998			4,974			4,212			9,181			9,128			6,019			3,910			2,558			1,560
Other income (expense)		(8	)		—			28			(35	)		28			355			88			—			2

Total revenues		29,519			30,503			29,730			57,709			59,921			55,358			43,905			25,145			11,089
Operating expenses:
Facility operating expenses		11,164			11,753			11,438			23,250			24,503			24,220			18,727			9,712			4,319
Third party development and management services		2,791			2,791			2,540			5,389			5,389			4,441			3,373			1,955			1,593
General and administrative		1,795			1,045			840			4,278			2,778			2,001			1,659			1,492			675
Depreciation		4,627			4,706			4,591			9,058			9,214			8,412			6,951			4,300			2,318
Ground lease expense		396			396			259			584			584			664			631			11			50

Total operating expenses		20,773			20,691			19,668			42,559			42,468			39,738			31,341			17,470			8,955

Operating income		8,746			9,812			10,062			15,150			17,453			15,620			12,564			7,675			2,134
Nonoperating expenses:
Interest income		25			25			48			71			85			167			350			304			12
Interest expense		(7,299	)		(9,070	)		(8,833	)		(14,362	)		(17,911	)		(17,392	)		(15,557	)		(9,404	)		(4,153	)
Amortization–deferred finance costs		(224	)		(340	)		(279	)		(353	)		(587	)		(564	)		(406	)		(467	)		(50	)
Other nonoperating income		58			58			—			—			—			—			—			—			—

Total nonoperating expenses, net		(7,440	)		(9,327	)		(9,064	)		(14,644	)		(18,413	)		(17,789	)		(15,613	)		(9,567	)		(4,191	)
Income (loss) before taxes and minority interests		1,306			11,364			998			506			(960	)		(2,169	)		(3,049	)		(1,892	)		(2,057	)
Income tax expense		(836	)		—			—			(702	)		—			—			—			—			—

Income (loss) before minority interests		470			11,364			998			(196	)		(960	)		(2,169	)		(3,049	)		(1,892	)		(2,057	)
Minority interest in losses (earnings)		(6	)		44			(21	)		3			16			30			110			20			—

Net income (loss)	$	464		$	529		$	977		$	(193	)	$	(944	)	$	(2,139	)	$	(2,939	)	$	(1,872	)	$	(2,057	)

Pro forma basic earnings (loss) per share (unaudited)(1)	$	0.04								$	(0.02	)
Pro forma diluted earnings (loss) per share (unaudited)(2)	$	0.04								$	(0.02	)
Pro forma weighted average common shares outstanding—basic (unaudited)		12,100,000									12,100,000
Pro forma weighted average common shares outstanding—diluted (unaudited)		12,256,061									12,256,061

Balance Sheet Data:

(in thousands)


	As of June 30, 2004				As of December 31,
	Pro Forma Company		Historical		Historical–Predecessor Entities
	Pro Forma Company		Historical		2003		2002		2001		2000		1999
	(Unaudited)
Student housing properties, net	$	322,593	$	330,379	$	292,620	$	279,428	$	265,989	$	202,874	$	118,962
Other assets, net		41,649		30,089		37,946		28,230		29,648		14,277		13,173

Total assets	$	364,242	$	360,468	$	330,566	$	307,658	$	295,637	$	217,151	$	132,135

Construction debt and accounts payable	$	—	$	61,828	$	23,645	$	2,502	$	18,925	$	21,922	$	1,123
Mortgage and other long term notes		138,009		188,827		188,067		189,884		156,584		117,715		58,538
Bonds		61,010		61,010		61,010		57,865		58,940		38,640		39,270
Other liabilities		19,345		21,253		29,934		21,597		20,485		13,242		10,997

Total liabilities		218,364		332,918		302,656		271,848		254,934		191,519		109,928
Minority interests		1,857		194		252		284		131		23		—
Owners’ equity		144,021		27,356		27,658		35,526		40,572		25,609		22,207

Total liabilities and owners’ equity	$	364,242	$	360,468	$	330,566	$	307,658	$	295,637	$	217,151	$	132,135

Other Data:

(in thousands)


	Six Months Ended June 30,						As of December 31,
	Pro Forma Company 2004		Historical				Pro Forma Company 2003			Historical–Predecessor Entities
	Pro Forma Company 2004		2004		2003		Pro Forma Company 2003			2003			2002			2001			2000			1999
	(Unaudited)						(Unaudited)
Funds from operations(3):
Net income (loss) before minority interest	$	470	$	485	$	998	$	(196	)	$	(960	)	$	(2,169	)	$	(3,049	)	$	(1,892	)	$	(2,057	)
Plus depreciation		4,486		4,565		4,445		8,781			8,937			8,233			6,807			4,188			2,258

Funds from operations(3)(4)	$	4,956	$	5,050	$	5,443	$	8,585		$	7,977		$	6,064		$	3,758		$	2,296		$	201


	Six Months Ended June 30,						As of December 31,
	Historical						Historical–Predecessor Entities
	2004			2003			2003			2002			2001			2000			1999
	(Unaudited)
Cash flow information:
Net cash provided by operations	$	7,467		$	1,632		$	6,258		$	7,959		$	5,338		$	3,577		$	1,512
Net cash (used in) investing	$	(42,546	)	$	(13,204	)	$	(33,737	)	$	(21,678	)	$	(68,540	)	$	(87,652	)	$	(44,087	)
Net cash provided by financing	$	34,887		$	8,311		$	22,141		$	11,335		$	72,832		$	84,215		$	43,997

Selected Property Information(5):


	As of June 30, (6)				As of December 31,
	2004		2003		2003		2002		2001		2000		1999
Units	3,643		3,459		3,567		3,459		3,377		2,781		1,461
Beds	10,826		10,336		10,546		10,336		10,027		8,232		4,668
Occupancy	51.7	%	55.7	%	91.5	%	91.0	%	93.5	%	93.3	%	N/A

(1)

Pro forma basic earnings per share is computed assuming this Offering was consummated as of the first day of the period presented and equals pro forma net income divided by the number of shares of our common stock to be outstanding after this Offering.

(2)

Pro forma diluted earnings per share is computed assuming this Offering was consummated as of the first day of the period presented. Pro forma diluted earnings per share equals pro forma net income divided by the sum of the number of shares of our common stock to be outstanding and common equivalent shares outstanding after this Offering.

(3)

As defined by the National Association of Real Estate Investment Trusts or NAREIT, funds from operations or FFO represents income (loss) before allocation to minority interest (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization (excluding amortization of loan origination costs) and after adjustments for unconsolidated partnerships and joint ventures. We present FFO because we consider it an important supplemental measure of our operating performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income.

We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to such other REITs. Further, FFO does not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments and uncertainties. FFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions.

(4)

When considering our FFO, we believe it is also a meaningful measure of our performance to exclude certain revenues and expenses from our on-campus participating properties. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Funds from Operations.”

(5)

Includes The Village at Riverside and Coyote Village, but does not include three properties currently under construction.

(6)

Occupancy rates at June 30 are typically lower since they reflect vacancies resulting from expirations of academic year leases prior to June 30. Accordingly, we believe occupancy rates at March 31 are more representative of academic year occupancies. The occupancy rate was 91.0% as of March 31, 2004 and 92.4% as of March 31, 2003.

This Offering

Common stock offered by us

12,100,000 shares(1)

Common stock to be outstanding after this Offering

12,100,000 shares(1)

Common stock and Operating Partnership Units to be outstanding after this Offering

12,256,061 shares/Units(1)(2)

Use of proceeds

We intend to use the net proceeds of this Offering:

•

to redeem the interests held by our existing investors in our Predecessor Entities in the Formation Transactions ($100.6 million)(3)(4);

•

to repay certain existing indebtedness and construction accounts payable ($109.9 million as of June 30, 2004), including prepayment penalties and exit fees;

•

to fund the remaining costs associated with the completion and opening by August 2004 of three of our properties ($11.5 million as of June 30, 2004); and

•

for general corporate purposes.

New York Stock Exchange symbol

ACC

(1)

Excludes 1,815,000 shares issuable upon exercise of the underwriters’ overallotment option, 1,047,689 shares available for future issuance under our 2004 Incentive Award Plan and 6,250 shares underlying restricted stock units initially granted under our 2004 Incentive Award Plan to our non-employee directors.

(2)

Includes 156,061 PIUs (based on the midpoint of the range of the Offering prices referred to on the cover page of this prospectus) issued by us concurrently with this Offering to certain key employees of our Company. Upon the occurrence of certain capital account equalization events, the PIUs will become ordinary Units exchangeable for cash or, at the option of the Operating Partnership, for shares of our Company on a one-for-one basis.

(3)

This amount will increase or decrease depending upon whether the shares in this Offering are sold above or below $20 per share (the midpoint of the range of the Offering prices referred to on the cover page of this prospectus). Our existing investors will receive certain additional distributions from us. This amount does not include the $5.7 million being paid to Titan for substantially all of its interest in the American Campus–Titan Properties that will be funded from our revolving credit facility.

(4)

Our executive officers and certain of our senior officers will receive on account of their beneficial interest in ACP approximately $2.3 million (based on the midpoint of the range of the Offering prices referred to on the cover page of this prospectus) from the cash redemption amount to be paid to RAP. These officers have advised the underwriters of their intention to use their distribution from ACP, net of applicable taxes, to purchase common stock in this Offering.

RISK FACTORS

Investment in our common stock involves a high degree of risk. You should therefore carefully consider the material risks of an investment in our common stock, which are discussed in this section, as well as the other information contained in this prospectus before making your investment decision. The occurrence of any of the following risks could materially and adversely affect our financial condition, results of operations, cash flow, per share trading price and ability to satisfy our debt service obligations and pay dividends or distributions to you and could cause you to lose all or a part of your investment. Some statements in this prospectus, including statements in the following risk factors, constitute forward looking statements. Please refer to the section entitled “Forward Looking Statements.”

Risks Related to Our Properties and Our Business

We generally lease our owned properties under 12-month leases, and in certain cases, under ten-month, nine-month or shorter-term semester leases. As a result, we may experience significantly reduced cash flows during the summer months at properties leased under leases having 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 typically 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 (e.g., 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 effect 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 (see below). The 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, the increased costs or failure to obtain such lists could also have 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 in the vicinity of, or on the premises 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.

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 offer 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 a property and other general economic conditions.

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 in accordance with our growth strategies, including our three off-campus properties currently under construction. These activities may also include any of the following risks:

•

We may be unable to obtain construction financing on favorable terms or at all.

•

We may be unable to obtain permanent financing on favorable terms or at all if we finance development projects through construction loans.

•

We may not complete development projects on schedule, within budgeted amounts or in conformity with building plans and specifications, including our three construction properties under development.

•

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.

•

We may encounter strikes, weather, government regulations and other conditions beyond our control.

As we develop additional properties, we 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 quarter in which the charge is taken.

We may in the future develop properties nationally, internationally or in other geographic regions than we currently operate. While we believe the development of properties will result in favorable returns on our investment, presently, we do not possess the same level of familiarity with development in these 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 dependent upon our ability to successfully acquire new properties on favorable terms. As we acquire additional properties, we will be subject to risks associated with managing new properties, including lease-up and integration risks. Newly acquired properties may not perform as expected and newly acquired properties 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 may be exposed to the following significant risks:

•

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.

•

We may be unable to finance an acquisition on favorable terms or at all.

•

We may have to incur significant 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 vacancy rates and lower than expected rental rates.

•

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.

Our debt level reduces cash available for distribution and may expose us to the risk of default under our debt obligations.

reduce (or eliminate) cash resources that are available to operate our business or pay distributions that are necessary to maintain our REIT qualification. There is no limit on the amount of indebtedness that we may incur except as provided by our revolving credit facility. This Offering is contingent on us concurrently entering into a revolving credit facility with affiliates of Citigroup Global Markets Inc. and Deutsche Bank Securities Inc., two of our underwriters, as joint lead arrangers. We expect to incur additional indebtedness under this facility to fund future property acquisitions and for other working capital needs, which may include the payment of distributions to our shareholders. The amount available to us and our ability to borrow from time to time under this facility will be subject to certain conditions and the satisfaction of specified financial 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 payment or other obligations as a result of insufficient cash flow or otherwise, which may result in a cross-default on our other obligations, 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 which could hinder our ability to meet the REIT distribution requirements imposed by the Code.

We may not be able to recover pre-development costs for 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 did not ultimately approve our selection and the underlying terms of the pending development, 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.

Three of our properties are under construction, and we may encounter delays in completion or experience cost overruns.

Three of our properties, which upon completion will comprise over 21.5% of the beds at our 12 off-campus properties, are under construction and 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 these three projects may experience cost overruns.

These three properties may not be completed on time for the 2004-2005 academic year. In the event we do not complete the construction of our owned property at Temple University by the beginning of the 2004-2005 academic year, we are required to provide alternative housing to the students with whom we have signed leases. In addition, if we do not complete the construction of the San Bernardino and Fresno properties by the beginning of the 2004-2005 academic year we may likewise seek to provide alternative housing to the students with whom

we have signed leases. We have not made any arrangements for such alternative housing for any of these three projects and we would likely incur significant expenses in the event we provide such housing. If construction is not completed prior to the beginning of the 2004-2005 academic year, students may attempt to break their leases and our occupancy at these properties for the 2004-2005 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. Our obligation under these guarantees typically expires upon completion of certain of our obligations with respect to 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; the purchase price is calculated at the discounted present cash value of our leasehold interest. The exercise of such buyouts would result in a significant reduction in our portfolio.

California State University, San Bernardino may exercise its option to buy University Village at San Bernardino.

The California State University has an option to purchase for $28.3 million the University Village at San Bernardino from us, which is currently under construction, which option expires 150 days after notice of completion of construction has been given to the University. We expect to give this notice during the month of August 2004. We believe the University will seek approval to exercise this option. If California State University exercises its option, we will no longer own or manage this property and may be unable to reinvest the proceeds we receive at similar yields in a timely manner.

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 make expected distributions to our stockholders depends on our ability to generate cash revenues in excess of expenses, scheduled debt service obligations 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:

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general economic conditions;

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rising level of interest rates;

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local oversupply, increased competition or reduction in demand for student housing;

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inability to collect rent from tenants;

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vacancies or our inability to rent space on favorable terms;

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inability to finance property development and acquisitions on favorable terms;

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increased operating costs, including insurance premiums, utilities, and real estate taxes;

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costs of complying with changes in governmental regulations;

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the relative illiquidity of real estate investments;

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decreases in student enrollment at particular colleges and universities;

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changes in university policies related to admissions; and

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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 comprehensive liability, fire, earthquake, terrorism, business interruption, vandalism and malicious mischief, extended coverage perils, all physical loss perils, commercial general liability, flood (when the property is located in whole or in material part in a designated flood plain area), workers’ compensation and rental loss 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, employment discrimination losses, punitive damage awards or acts of God) that may be either uninsurable or not economically insurable. Some of our policies are insured subject to limitations involving large deductibles or co-payments and policy limits which 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 for any of these policies exceeds, in our judgment, the value of the coverage discounted for the risk of loss.

If we experience a loss which is uninsured or which 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. In the event of a significant loss at one or more of the option or excluded properties covered by our policies that cover the properties in our portfolio, the remaining insurance under our policy, if any, could be insufficient to adequately insure our existing properties. In such event, securing additional insurance, if possible, could be significantly more expensive than our current policy.

Future terrorist attacks in the U.S. could harm the demand for and the value of our properties.

Future terrorist attacks in the U.S., such as the attacks that occurred in New York and Virginia on September 11, 2001, and other acts of terrorism or war, or threats of the same, could harm the demand for and the value of our properties. Certain of our properties are near universities which contain well-known landmarks and may be perceived as more likely terrorist targets than similar, less recognizable properties. A decrease in demand in our markets would make it difficult for us to renew or re-lease our properties at lease rates equal to or above historical rates.

Terrorist attacks also could directly impact the value of our properties through damage, destruction, loss, or increased security costs, and the availability of insurance for such acts may be limited or may cost more. If we receive casualty proceeds, we may not be able to reinvest such proceeds profitably or at all, and we may be forced to recognize taxable gain on the affected property.

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, stormwater 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, as described below in “Business and Properties—Regulation—Environmental Matters.”

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.

Some of the properties in our portfolio may contain microbial matter such as mold, mildew and viruses. The presence of microbial matter could adversely affect our results of operations. In addition, if any property in our portfolio is not properly connected to a water or sewer system, or if the integrity of such systems are breached, microbial matter or other contamination can develop. If this were to occur, we could incur significant remedial costs and we may also be subject to material private damage claims and awards, which could be material. If we become subject to claims in this regard, it could materially and adversely affect us and our insurability for such matters in the future.

of Commons on Apache, The Village at University and University Village at San Bernardino are located within federal Superfund sites. EPA designated these areas as Superfund sites because groundwater beneath these areas is contaminated. We have not been named as a PRP with respect to these sites.

Independent environmental consultants conducted Phase I environmental site assessments on all of the owned properties and on-campus participating properties in our existing portfolio. Phase I environmental site assessments are intended to evaluate information regarding the environmental condition of the surveyed property and surrounding properties based generally on visual observations, interviews and certain publicly available databases. These assessments do not typically take into account all environmental issues including, but not limited to, testing of soil or groundwater, comprehensive asbestos survey or an invasive inspection for the presence of mold contamination. In some cases where prior use was a concern, additional study was undertaken.

These assessments may have failed to reveal all environmental conditions, liabilities, or compliance concerns. Material environmental conditions, liabilities, or compliance concerns may have arisen after the assessments were conducted or may arise in the future. In addition, future laws, ordinances or regulations may impose material additional environmental liability. The costs of future environmental compliance may affect our ability to pay distributions to you and such costs or other remedial measures may be material to us.

We only carry environmental insurance on certain properties and may incur environmental liabilities.

We do not carry environmental insurance on most of the properties in our portfolio. We only carry environmental insurance on our on-campus participating properties and University Village at TU. Environmental liability at a property not covered by insurance or not covered by sufficient insurance may have a material adverse effect on our financial condition, results of operations, cash flow, the trading price of our common stock or our ability to satisfy our debt service obligations and pay dividends or distributions to you.

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 private litigants and also could result in an order to correct any non-complying feature. 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 may co-invest in the future 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 such event, we would 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 partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions. Partners or co-venturers also may have economic or other business interests or goals which 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 the partner or co-venturers would have full control over the partnership or joint venture. Disputes between us and 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 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 third party partners or co-venturers.

Risks Related to Our Organization and Structure

We are recently organized and have no operating history.

We have been recently organized and have no operating history. In addition, all of our properties have been acquired or developed by the Predecessor Entities within the past eight years and have limited operating histories under current management. William C. Bayless, Jr., our President and Chief Executive Officer since October 2003, was one of our co-founders and previously served as our Chief Operating Officer since 1995. In October 2003, Mr. Bayless replaced our former president and chief executive officer who had served in that capacity since 1997. Consequently, our historical operating results and the financial data set forth in this prospectus may not be useful in assessing our likely future performance. The operating performance of the properties may decline under our management. We may not be able to generate sufficient cash from operations to make anticipated distributions.

We will also be subject to the risks generally associated with the formation of any new business. Our management has no experience in running a public company or in operating in accordance with the requirements for maintaining our qualification as a REIT.

To maintain our REIT status, we may be forced to limit the activities of our Services Company.

To maintain our status as a REIT, no more than 20% of the value of our total assets may consist of the securities of one or more taxable REIT subsidiaries, such as our Services Company. Certain of our activities, such as our third party development, management and leasing services, must be conducted through our Service Company for us to maintain our REIT qualification. In addition, certain non-customary services must be provided by a taxable REIT subsidiary or an independent contractor. If the revenues from such activities create a risk that the value of our Services Company, based on revenues or otherwise, approaches the 20% threshold, we will be forced to curtail such activities or take other steps to remain under the 20% threshold. Since the 20% threshold is based on value, it is possible that the IRS could successfully contend that the value of our Services Company exceeds the 20% threshold even if our Services Company accounts for less than 20% of our consolidated revenues, income or cash flow. After the Formation Transactions, our on-campus participating properties and our third party services will be held by our Services Company. Consequently, income earned from our 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 stockholders.

A taxable REIT subsidiary 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 have been advised by counsel that the proposed method of operating our Services Company 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 the conclusion of our counsel. In such event we might be forced to change our method of operating our Services Company, which could adversely affect us, or the Services Company could fail to qualify as a taxable REIT subsidiary, which could cause us to fail to qualify as a REIT.

Failure to qualify as a REIT would have significant adverse consequences to us and the value of our stock.

We intend to operate in a manner that will allow us to qualify as a REIT for federal income tax purposes under the Code. Although we currently intend to ask the IRS for a private letter ruling on some of the federal income tax issues raised by our activities, this private letter ruling, if granted, will not address all of our federal tax issues, including whether we generally satisfy the various requirements to be taxed as a REIT. Furthermore, the various statements of fact and interpretations of rules governing REITs in this prospectus are not binding on the IRS or any court. If we lose our REIT status, we will face serious tax consequences that would substantially reduce or eliminate the funds available for distribution to you for each of the years involved, because:

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we would not be allowed a deduction for dividends to stockholders in computing our taxable income and such amounts would be subject to federal income tax at regular corporate rates;

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we also could be subject to the federal alternative minimum tax and possibly increased state and local taxes; and

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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 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 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 our Services Company enters into agreements with us or our tenants on a basis that is determined to be other than an arm’s length basis.

To maintain our REIT status, we may be forced to borrow funds on a short-term basis during unfavorable market conditions.

In order to maintain our qualification as a REIT, we are required under the 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. 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:

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general market conditions;

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our current debt levels and the number of properties subject to encumbrances;

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our current performance and the market’s perception of our growth potential;

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our cash flow and cash dividends; and

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the market price per share of our common 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 the cash distributions to our stockholders, including those necessary to maintain our qualification as a REIT.

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 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 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 stockholders.

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 stockholders from receiving a premium for their shares of common stock over then-prevailing market prices. These provisions include:

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the REIT ownership limit described above;

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authorization of the issuance of our preferred shares with powers, preferences or rights to be determined by our board of directors;

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the right of our board of directors, without a stockholder vote, to increase our authorized shares and classify or reclassify unissued shares;

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advance-notice requirements for stockholder nomination of directors and for other proposals to be presented to stockholder meetings; and

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the requirement that a majority vote of the holders of common stock is needed to remove a member of our board of directors.

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 stockholders. 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.

We have the right to change some of our policies that may be important to our stockholders without stockholder consent.

Our major policies, including our policies with respect to investments, leverage, financing, growth, debt and capitalization are determined by our board of directors or those committees or officers to whom our board of directors has delegated that authority. Our board of directors also establishes the amount of any dividends or distributions that we pay to our stockholders. Our board of directors may amend or revise the listed policies, our dividend or distribution payment amounts and other policies from time to time without stockholder vote. Accordingly, the stockholders may not have control over changes in our policies.

Our rights and the rights of our stockholders 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 capacitates to the maximum extent permitted by Maryland law. As a result, we and our stockholders 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.

Our success depends on key personnel whose continued service is not guaranteed.

We are dependent upon the efforts of our key personnel, particularly William C. Bayless, Jr., our President and Chief Executive Officer, and Brian B. Nickel, our Executive Vice President, Chief Investment Officer and Secretary. Mr. Bayless, who was one of our co-founders, has directed the company’s key business segments since inception and possesses nearly 20 years of student housing development and management experience. Messrs. Bayless and Nickel each has a substantial industry reputation that attracts business and investment opportunities and assists us in negotiations with lenders, universities and industry personnel. Mark J. Hager, our Executive Vice President, Chief Financial and Accounting Officer and Treasurer, possesses detailed knowledge of and experience with our financial and ancillary support operations that are critical to our operations and financial reporting obligations as a public company. Greg A. Dowell, our Senior Vice President–Chief of Operations, Ronnie L. Macejewski, our Senior Vice President–Development and Construction, Jason R. Wills, our Senior Vice President–Marketing and Business Development, and Brian N. Winger, our Senior Vice

President–Development, have strong industry reputations and specialized experience, which aid us in developing, acquiring and managing our properties. The loss of the services of any of such personnel could materially and adversely affect us.

The majority of our management have no experience operating a REIT or a public company.

We have no operating history as a REIT or a public company. Our board of directors and executive officers will have overall responsibility for our management. While our executive and senior officers have extensive experience in real estate marketing, development, management and finance, they do not have prior experience in operating a business in accordance with the Code requirements for maintaining qualification as a REIT, operating a public company or complying with the Securities and Exchange Commission, or the SEC, regulations. Failure to maintain our REIT status would have an adverse effect on our cash available for distribution to our stockholders. Failure to properly comply with SEC regulations and requirements could impair our ability to operate as a public company.

In addition to the underwriting discounts and advisory fees to be received by Citigroup Global Markets Inc. and Deutsche Bank Securities Inc., affiliates of Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. may receive benefits from this Offering.

In addition to the underwriting discounts and financial advisory fees to be received by Deutsche Bank Securities Inc., its affiliate, BT Holdings (NY), Inc., is a creditor of, and holds a security interest in certain assets of, RSVP’s parent company, FrontLine Capital Group. FrontLine filed for protection from creditors pursuant to Chapter 11 of the Bankruptcy Code in June 2001. BT Holdings (NY), Inc. would therefore potentially receive benefits from this Offering to the extent Frontline received and paid to its unsecured creditors any portion of the net proceeds of this Offering or otherwise used such proceeds to repay any of its senior or secured indebtedness. To the extent proceeds are used to repay senior or secured indebtedness, proceeds from future asset sales by FrontLine may be available for distribution to BT Holdings (NY), Inc. and other unsecured creditors. Deutsche Bank Securities Inc. may therefore have an interest in the successful completion of this Offering beyond the underwriting discounts and financial advisory fees that it will receive.

In May 2004, we replaced our existing $1.0 million revolving credit facility with a $3.0 million line of credit with affiliates of Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. as lead arrangers. As of June 30, 2004, approximately $1.7 million of borrowings are outstanding under this facility and bear interest at the prime rate, which at June 30, 2004 was 4.25%. We will retire this facility upon repayment of all outstanding borrowings with the proceeds from our new revolving credit facility.

Risks Related to this Offering

We may not be able to maintain our initial distribution rate.

Our estimated initial annual distribution is expected to significantly exceed our estimated cash available for distribution to our common stockholders for the 12-month period ended June 30, 2005. Our ability to fund this distribution will depend, in part, upon the receipt of cash flow from three properties that are currently under construction and are scheduled to open in August 2004 and from development fee income, the timing and amount of which are inherently uncertain. After giving effect to the revenue from leases currently in place at these construction properties, we may have to fund approximately $10.0 million of our estimated initial annual distribution with borrowings under our revolving credit facility. In the event these properties do not open on schedule, we may incur additional costs to provide alternative housing arrangements for students with signed leases and such students may attempt to terminate their leases. To the extent we use our working capital or borrowings under our revolving credit facility to fund our distributions, our financial condition and our ability to access these funds for other purposes, such as the expansion of our business or future distributions, could be

adversely affected. Any such distributions from working capital or borrowings may represent a return of capital for federal income tax purposes. We expect that approximately 72.2% of our estimated initial annual distribution will represent a return of capital for federal income tax purposes.

Our distributions will not be eligible for the new lower tax rate on dividends except in limited situations.

Unlike dividends received from a corporation that is not a REIT, our distributions to individual shareholders generally will not be eligible for the new lower tax rate on dividends except in limited situations.

We have not obtained recent appraisals of the properties in connection with this Offering.

We have not obtained recent appraisals of the properties in connection with this Offering. The price to be paid to our existing investors for their interests in our Predecessor Entities is based upon the valuation of our business as a going concern and may therefore exceed our properties’ individual market values. The price paid for these interests will increase or decrease depending upon whether the shares in this Offering are sold above or below $20 per share (the midpoint of the range of the Offering prices referred to on the cover page of this prospectus). Factors considered in determining the Offering price included our Predecessor Entities’ historical operations, management, estimated net income, estimated funds from operations, estimated cash available for distribution, growth prospects, and the current state of the commercial real estate industry and the economy as a whole.

Our value, represented by the public offering price of our shares, may exceed the market value of our properties.

The initial public offering price of our common stock was determined in consultation with the underwriters and may not necessarily bear any relationship to our book value or the market value of our properties. As a result, our value, represented by the public offering price of our shares, may exceed the market value of our properties.

Differences between the net tangible book value of our assets and the public offering price of our shares of common stock will result in an immediate and material dilution.

The initial public offering price of our common stock was determined in consultation with the underwriters and does not necessarily bear any relationship to our book value or the market value of our assets. As a result, our value, represented by the public offering price of our shares, may exceed the market value of our assets. As of June 30, 2004, the aggregate historical combined net tangible book value of the interests and assets to be transferred to our Operating Partnership was approximately $20.6 million, or $1.70 per share of our common stock on a fully-diluted basis. The pro forma net tangible book value per share of our common stock after the consummation of this Offering and the Formation Transactions will be less than the initial public offering price. You will therefore experience immediate dilution of $8.66 per share immediately after this Offering.

Our existing investors will receive substantial economic benefits from this Offering.

RAP will receive approximately $100.6 million in cash from the net proceeds of this Offering for the redemption of its interests in RAPSH. This amount will increase or decrease depending upon whether the shares in this Offering are sold above or below $20 per share (the midpoint in the range of the Offering prices referred to on the cover page of this prospectus). Additionally, RAP will receive a final working capital distribution from cash on hand of $1.5 million, $170,000 in budgeted development fees relating to the construction properties to be paid from the remaining construction budget and, upon completion of the construction at University Village at TU, $450,000 relating to the completion and construction guarantee fee with regard to the property, which amount will also be paid from the remaining construction budget. RAP will also receive other economic benefits as a result of the Formation Transactions and this Offering. RSVP will, through its significant ownership interest in RAP, including interests in RAP received in the Formation Transactions, be entitled to participate in a significant portion of the benefits of this Offering realized by RAP. RAP and RSVP were the principal prior owners of our

Predecessor Entities and played a significant role in structuring our formation. In the course of structuring our formation, RAP and RSVP had the ability to influence the type and level of benefits that they and our executive officers would receive from us. They also had the ability to influence the other terms of the Formation Transactions, including, without limitation, the representations and warranties that they made to us in the Formation Transactions and the indemnities that they provided to us for breaches of such representations and warranties. Our existing investors will not own any continuing interest in us following this Offering.

In addition, RAP and RSVP will be entitled to any savings in the budgeted completion cost of our three off-campus construction properties, including any insurance proceeds that we receive with respect to the fire at University Village at Fresno that are not applied to the construction costs of University Village at TU.

Market interest rates may have an effect on the value of our common stock.

One of the factors that will influence the price of our common stock will be the dividend yield on our common stock (as a percentage of the price of our common stock) relative to market interest rates. An increase in market interest rates, which are currently at low levels relative to historical rates, may lead prospective purchasers of our common stock to expect a higher dividend yield in order to maintain their investment and higher interest rates would likely increase our borrowing costs and potentially decrease funds available for distribution. Thus, higher market interest rates could cause the market price of our common stock to go down.

The number of shares available for future sale could adversely affect the market price of our common stock.

We cannot predict whether future issuances of shares of our common stock or the availability of shares for resale in the open market will decrease the market price per share of our common stock. Sales of substantial amounts of shares of our common stock in the public market, or upon exchange of Units, or the perception that such sales might occur could adversely affect the market price of the shares of our common stock.

The exercise of the underwriters’ overallotment option, the exchange of Units for common stock, the exercise of any options or the vesting of any restricted stock granted to certain directors, executive officers and other employees under our incentive award plan, the issuance of our common stock or Units in connection with property, portfolio or business acquisitions and other issuances of our common stock could have an adverse effect on the market price of the shares of our common stock, and the existence of Units, options, shares of our common stock exercisable upon conversion of, or exchange or exercise for, other securities or reserved for issuance as restricted shares of our common stock or upon exchange of Units may adversely affect the terms upon which we may be able to obtain additional capital through the sale of equity securities. In addition, future sales of shares of our common stock may be dilutive to existing stockholders.

FORWARD-LOOKING STATEMENTS

We make statements in this prospectus that are forward-looking statements. In particular, statements pertaining to our capital resources, portfolio performance and results of operations contain forward-looking statements. Likewise, our pro forma financial statements and all of our statements regarding anticipated growth in our funds from operations and anticipated market conditions, demographics and results of operations are forward-looking statements. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

•

changing university admission and housing policies;

•

adverse economic or real estate developments;

•

general economic conditions;

•

future terrorist attacks in the U.S. or hostilities involving the U.S.;

•

defaults on or non-renewal of leases by student-tenants;

•

increased interest rates and operating costs;

•

debt levels and property encumbrances;

•

our failure to obtain necessary third party financing;

•

decreased rental rates or increased vacancy rates resulting from competition or otherwise;

•

difficulties in identifying properties to acquire and completing acquisitions;

•

our failure to successfully operate acquired properties and operations;

•

our failure to successfully develop properties in a timely manner;

•

our failure to maintain our status as a REIT;

•

environmental costs, uncertainties and risks, especially those related to natural disasters;

•

financial market fluctuations; and

•

changes in real estate and zoning laws and increases in real property tax rates.

For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section above entitled “Risk Factors.”

USE OF PROCEEDS

Assuming an offering price of $20 per share based upon the midpoint of the range of the Offering prices on the cover page of this prospectus, we estimate we will receive gross proceeds from this Offering of $242.0 million and approximately $278.3 million if the underwriters’ overallotment is exercised in full. After deducting the underwriting discount, financial advisory fees, and estimated expenses of this Offering (excluding prepaid expenses), we expect net proceeds from this Offering of approximately $222.1 million and approximately $255.8 million if the underwriters’ overallotment is exercised in full. If the underwriters’ overallotment option is exercised in full, we expect to use the additional net proceeds (which will be approximately $33.7 million) for working capital and other general corporate purposes.

We will contribute the net proceeds from this Offering to our Operating Partnership. In addition, prior to or simultaneously with the consummation of this Offering, we will make an initial draw under our revolving credit facility.

Pending application of any portion of the net Offering proceeds, we will invest it in interest-bearing accounts and short-term, interest-bearing securities as is consistent with our intention to qualify for taxation as a REIT. Such investments may include, for example, obligations of the Government National Mortgage Association, other government and governmental agency securities, certificates of deposit and interest-bearing bank deposits.

The following table provides information related to the expected Offering proceeds, revolving credit facility and uses of such proceeds. Amounts related to repayment of indebtedness and completion of construction properties were determined utilizing June 30, 2004 balances and will differ at the time of the consummation of this Offering due to principal amortization, borrowings under construction facilities and progress on our construction projects.


*Sources (in thousands***)			Uses *(in thousands)*
Gross Offering Proceeds	$	242,000	Offering Expenses:
Initial drawdown under Revolving Credit Facility		8,265	Underwriting Discount	$	15,488
			Structuring Fee		1,452
			Other Fees and Expenses		3,000

			Subtotal		19,940

			Reduction of Indebtedness:
			Repayment of Development Property Indebtedness		52,059	(1)
			Repayment of Construction Accounts Payable		10,433
			Repayment of Other Property Indebtedness		45,991	(2)
			Payment of Accrued Interest Payable		889
			Prepayment Penalties		508

			Subtotal		109,880

			Payments to RAP and Titan:
			Redemption of RAP’s interests in RAPSH		100,646	(3)
			Purchase of Titan minority interest in American Campus–Titan Properties		5,726

			Subtotal		106,372

			Capital to complete Construction Properties		11,534	(4)
			Repayment of Existing Line of Credit		1,695
			Financing Cost–Revolving Credit Facility		844
			Working Capital		—	(5)

Total Sources	$	250,265	Total Uses	$	250,265

(1)

This indebtedness bears interest at a weighted average rate of 5.20% and matures in 2005.

(2)

This indebtedness bears interest at a weighted average rate of 6.67% and matures in 2005.

(3)

This amount will increase or decrease depending upon whether the shares in this Offering are sold above or below $20 per share (the midpoint of the range of the Offering prices referred to on the cover page of this prospectus). Approximately $2.3 million of this amount will be paid to our executive officers and certain of our senior officers who own interests in ACP. Following receipt and distribution of the funds, ACP will be dissolved.

(4)

Any savings in this item (currently estimated to be approximately $1.2 million) will be distributed to RAP and RSVP. Additionally, included in this item is $620,000 of previously earned development and construction guarantee fees which will be paid to RAP upon completion of the construction properties.

(5)

Working capital needs will be met by utilizing existing working capital and funds available under the revolving credit facility.

DISTRIBUTION POLICY

We intend to pay regular quarterly distributions to holders of our common stock. We intend to pay a pro rata initial distribution with respect to the period commencing on the completion of this Offering and ending September 30, 2004, based on $0.3375 per share for a full quarter. On an annualized basis, this would be $1.35 per share, or an initial annual distribution rate of approximately 6.75% based on the initial public offering price of $20 per share, which is the midpoint of the range of the Offering prices referred to on the cover page of this prospectus. This estimated initial annual distribution is expected to significantly exceed our per-share estimated cash available for distribution to our common stockholders for the 12-month period ending June 30, 2005. Our ability to fund this distribution will depend, in part, upon the receipt of cash flow from properties that are first scheduled to open in August 2004, from continued successful leasing of our existing portfolio and from fee income from third party services, primarily development services, the timing and amount of which is inherently uncertain. To the extent these sources are insufficient, we intend to use our working capital or borrowings under our new revolving credit facility to fund these distributions. After giving effect to the revenue from leases currently in place at our construction properties, we may have to fund 60% of our estimated initial annual distribution with borrowings under our revolving credit facility. This estimate is based on our historical operating results and does not take into account our growth initiatives which are intended to improve our operating results, nor does it take into account any unanticipated expenditures we may have to make or any debt we may have to incur.

Our estimate of cash available for distribution does not reflect:

•

cash flow from beds at our construction properties that are scheduled to open in August 2004 for which we have received student applications accompanied by refundable deposits but not executed leases (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Expected to Affect our Operating Results—Properties under Construction”);

•

fee income from development services awards received from educational institutions but with respect to which no formal contract has yet been executed pending the receipt of project financing (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Expected to Affect our Operating Results—Third Party Services,” which includes a description of the award process);

•

cash to be used for capital expenditures, such as property acquisitions and development activities, other than a reserve for recurring capital expenditures at our owned properties; or

•

cash estimated to be used for financing activities, other than scheduled amortization payments on mortgage indebtedness that will be outstanding upon consummation of this Offering.

Although we have included all material investing and financing activities that we have commitments to undertake as of June 30, 2004, during the twelve months ending June 30, 2005 we may undertake other investing and/or financing activities in the future. Any such investing and/or financing activities may have a material effect on our estimate of cash available for distribution. Because we have made the assumptions set forth above in estimating cash available for distribution, we do not intend this estimate to be a projection or forecast of our actual results of operations or our liquidity, and have estimated cash available for distribution for the sole purpose of determining our initial annual rate of distribution amount. Our estimate of cash available for distribution should not be considered as an alternative to cash flow from operating activities (computed in accordance with GAAP) or as an indicator of our liquidity or our ability to pay dividends or make distributions. In addition, the methodology upon which we made the adjustments described below is not necessarily intended to be a basis for determining future distributions.

We intend to maintain our initial distribution rate for the twelve-month period following completion of this Offering unless actual results of operations, economic conditions or other factors differ materially from the assumptions used in our estimate. Distributions made by us will be authorized and determined by our board of

directors out of funds legally available therefor and will be dependent upon a number of factors, including restrictions under applicable law or contained in our indebtedness or any future preferred stock. We believe that our estimate of cash available for distribution constitutes a reasonable basis for setting the initial distribution; however, no assurance can be given that the estimate will prove accurate, and actual distributions may therefore be significantly different from the expected distributions. We do not intend to reduce the expected distribution per share if the underwriters’ overallotment option is exercised; however, this could require us to pay distributions from net Offering proceeds.

We anticipate that, at least initially, our distributions will exceed our then current and then accumulated earnings and profits as determined for U.S. federal income tax purposes due to non-cash expenses, primarily depreciation and amortization charges that we expect to incur. Therefore, a portion of these distributions will represent a return of capital for federal income tax purposes. Distributions in excess of our current and accumulated earnings and profits and not treated by us as a dividend will not be taxable to a taxable U.S. stockholder under current federal income tax law to the extent those distributions do not exceed the stockholder’s adjusted tax basis in his or her common stock, but rather will reduce the adjusted basis of the common stock. Therefore, the gain (or loss) recognized on the sale of that common stock or upon our liquidation will be increased (or decreased) accordingly. To the extent those distributions exceed a taxable U.S. stockholder’s adjusted tax basis in his or her common stock, they generally will be treated as a capital gain realized from the taxable disposition of those shares. We expect that approximately 72.2% of our estimated initial annual distribution will represent a return of capital for federal income tax purposes. The percentage of our stockholder distributions that exceeds our current and accumulated earnings and profits may vary substantially from year to year. For a more complete discussion of the tax treatment of distributions to holders of our common stock, see “Federal Income Tax Considerations.”

We cannot assure you that our estimated distributions will be made at all, or at the rate estimated below, or if made, that such distributions will be sustained. Any distributions we pay in the future will depend upon our actual results of operations, economic conditions and other factors that could differ materially from our current expectations. Our actual results of operations will be affected by a number of factors, including the revenue we receive from our properties (including properties currently under construction) and third party services, our operating expenses, interest expense, the ability of our student-tenants to meet their obligations and unanticipated expenditures. For more information regarding risk factors that could materially adversely affect our actual results of operations, please see “Risk Factors.”

If our properties do not generate sufficient cash flow with which to pay our estimated distributions, we will be required either to fund distributions from working capital or borrowings under our revolving credit facility or to reduce our distributions. Our revolving credit facility will contain covenants that restrict our ability to pay distributions or other amounts to our stockholders unless certain tests are satisfied and also will contain certain provisions restricting or limiting our ability to draw funds under the facility.

Availability under our revolving credit facility will be limited to a “borrowing base amount” equal to the lesser of (i) 60% of the appraised value of the properties securing the facility and (ii) the adjusted net operating income from these properties divided by a formula amount. Based upon the current level of leasing and pre-leasing at these properties, we believe that we will have sufficient availability under this facility with which to fund any amounts necessary to make our estimated initial annual distribution through June 30, 2005.

Our revolving credit facility will contain customary affirmative and negative covenants and will also contain financial covenants which, among other things, require us to maintain certain minimum ratios of “EBITDA” (earnings before interest, taxes, depreciation and amortization) for interest expense and fixed charges. The first test date for these EBITDA covenants will be the earlier of December 31, 2005 and the date upon which our borrowings under the revolving credit facility exceed $25 million. Additionally, before December 31, 2005, we may not pay dividends greater than $5 million in any quarter. After December 31, 2005, we will also be prohibited from making distributions which exceed 95% of our funds from operations over any four consecutive fiscal quarters. We believe that these covenants will not preclude us from paying our estimated initial annual

distribution through June 30, 2005, which estimated distribution totals $4.1 million per quarter (or $4.7 million if the underwriters’ overallotment option is exercised in full). The financial covenants will also include consolidated net worth and leverage ratio tests.

Federal income tax law requires that a REIT distribute annually at least 90% of its REIT taxable income determined without regard to the dividends paid deduction and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income, including capital gains. For more information, please see “Federal Income Tax Considerations.” We anticipate that our estimated cash available for distribution will exceed the annual distribution requirements applicable to REITs. However, under some circumstances, we may be required to pay distributions in excess of cash available for distribution in order to meet these distribution requirements and we may need to borrow funds to pay some distributions.

The following table describes our pro forma income for the twelve months ended June 30, 2004, and the adjustments we have made thereto in order to estimate our initial cash available for distribution for the twelve months ending June 30, 2005 (amounts in thousands except share data, per share data and percentages):


Pro forma net loss before minority interests for the twelve months ended December 31, 2003			(196	)
Add:	Pro forma net income before minority interests for the six months ended June 30, 2004		470
Add:	Pro forma net loss before minority interests for the six months ended June 30, 2003		15

Pro forma net income for the twelve months ended June 30, 2004			289
Add:	Depreciation and amortization		9,525
Less:	Net decrease in development services revenue from existing contracts for the twelve months ending June 30, 2005 compared to during the twelve months ended June 30, 2004, net of income taxes		(7,018	)	(1)
Add:	Net increase in management services revenue from existing contracts for the twelve months ending June 30, 2005 compared to during the twelve months ended June 30, 2004		374		(2)
Add:	Increase in development service revenues from contracts commencing during the twelve months ending June 30, 2005		564		(3)
Add:	Non-recurring compensation expense, net of contractual amounts payable during the twelve months ending June 30, 2005		635		(4)
Add:	Increase in net income before depreciation from initial operations of three developed properties scheduled to open in Fall 2004		5,506		(5)
Add:	Increase in net income before depreciation from operating property leases commencing during the twelve months ending June 30, 2005 compared to the twelve months ending June 30, 2004		1,064		(6)
Less:	Increase in interest expense related to borrowings under the credit facility		(114	)
Less:	Decrease in net income before depreciation from a full year’s operation of a participating property phase that opened in September 2003		(77	)	(7)
Less:	Decrease in net income before depreciation for the participating property Coyote Village, this facility lease was transferred to the University on April 2, 2004.		(84	)	(8)


Estimated cash flows from operating activities for the twelve months ending June 30, 2005			10,664

Estimated cash flows used in investing activities:
Less:	Annual provision for recurring capital expenditures—student housing properties		(1,008	)	(9)
Less:	Annual provision for recurring capital expenditures—participating properties		(221	)	(10)

Total estimated cash flow used in investing activities			(1,229	)

Estimated cash flows used in financing activities:
Less:	Scheduled loan principal repayments—student housing properties		(1,271	)	(11)
Less:	Scheduled loan principal repayments—participating properties		(1,607	)	(12)

Total estimated cash flows used in financing activities			(2,878	)


Total estimated annual cash available for distribution twelve months ending June 30, 2005			6,557		(13)

Total estimated initial annual distribution to shareholders and profit interest unitholders			16,546		(14)
	Estimated annual distribution per share	$	1.35		(15)
	Payout ratio based on estimated cash available for distribution		252	%	(16)

Cash generated from our new revolving line of credit utilized to fund the excess of estimated initial annual distributions over estimated cash available for distribution to our common stockholders for the twelve months ending June 30, 2005			9,989

Estimated cash available for distribution to:
	Profit interest units		211
	Common shares		16,335

(1)

Adjustment reflects the net decline in contractual development services revenues to be earned and recognized in the twelve months ending June 30, 2005 compared to that which was earned and recognized in the twelve months ended June 30, 2004.

The following table schedules the change in development services revenues for the twelve months ending June 30, 2005 compared to the twelve months ended June 30, 2004, for contracts in place during the twelve months ended June 30, 2004.


	(in thousands)
	Existing Contracts
Vista Del Campo–University of California, Irvine	$	(3,234	)
Williams Village–University of Colorado		(558	)
Coyote Village–Weatherford College		(427	)
Bayou Oaks–University of Houston		(648	)
Texan Hall–Angelo State University		(438	)
St. Leo University		(160	)
Texas State University Phase 2		(841	)
Sam Houston Hall–Sam Houston State		(561	)
Lamar University Phase 4		(479	)
Purdue University–Calumet		(75	)
Indiana University–Purdue University, Fort Wayne		25
Purdue University		(350	)
Washington State University		26

Subtotal		(7,720	)
Less income tax effect		702

Total	$	(7,018	)

(2)

Adjustment reflects the net increase in contractual management fee revenues for the twelve months ending June 30, 2005 compared to the same period ended June 30, 2004 from contracts in place during the twelve months ended June 30, 2004, resulting from full year’s fees for contracts commencing in Fall 2003, and increases due to increased rental rates and occupancies.

The following table schedules the change in management services revenues for the twelve month period ending June 30, 2005, compared to the same period ended June 30, 2004 for contracts in place during the twelve months ended June 30, 2004.


	(in thousands)
	Existing Contracts
Cardinal Village I–Lamar University	$	61
University Village–Savannah State		20
Towson University		5
Winston-Salem University Rams Commons		4
Bear Creek Apartments–University of Colorado		137
Bayou Oaks–University of Houston		19
Texan Hall–Angelo State University		19
Coyote Village–Weatherford College		44
Campus Estates–Austin, Texas		65

Total	$	374

(3)

The following table schedules the change in development services revenues for the twelve months ending June 30, 2005, for contracts in place during the twelve months ended June 30, 2004. The Company does not anticipate any additional overhead or other expenses as a result of these new contracts.


	(in thousands)
	New Contracts
Vista Del Campo–University of California, Irvine		442
Indiana University–Purdue University, Fort Wayne		122

Total	$	564

(4)

Non-recurring compensation expense related to the former severed chief executive officer representing $1.0 million charged to expense in 2003, offset by the amounts to be paid during the twelve months ending June 30, 2005.

(5)

Represents expected net income before depreciation from leasing activities related to three projects for the eleven-month period from expected opening in August 2004 through June 2005, as follows:


	Total Beds	Signed Leases (a)	Average Monthly Per Bed Rental Rate (b)		Average Monthly Historical Portfolio Operating Expense Per Occupied Bed (c)			Contribution to Income Before Depreciation (d)
University Village at Fresno	406	333	$	501	$	251		$	915,750
University Village at San Bernardino (e)	480	477	$	664	$	251			1,773,009
University Village at TU (f)	749	749	$	612	$	270	(g)		2,817,738

Total								$	5,506,497

(a)

Reflects beds leased as evidenced by signed leases as of July 25, 2004. As of July 25, 2004, we have also received an additional 39 applications with refundable deposits for University Village at Fresno and 7 additional applications with refundable deposits for University Village at San Bernardino.

(b)

Weighted average monthly rent for Leased Beds for 2004-2005 academic year, commencing Fall 2004.

(c)

Represents the highest monthly average operating cost per occupied bed at our off-campus properties for the three year period ended December 31, 2003.

(d)

Calculated as Average Monthly Per Bed Rental Rate less Average Monthly Historic Portfolio Operating Expense Per Occupied Bed multiplied by eleven months (August 2004 through June 2005) for University Village at Fresno and University Village at TU and 9 months for University Village at San Bernardino (September 2004 through June 2005) multiplied by the number of signed leases.

(e)

The California State University has an option to purchase the University Village at San Bernardino for $28.3 million. We believe the university will seek approval to exercise this option.

(f)

Under the terms of the Bed Leasing Agreement with Temple University, the University has committed to procure tenants for 400 beds at the average rental rate of all leased beds. To the extent the University does not procure such tenants by the day on which rent is first due, the University must pay the applicable rent. See “Business and Properties—Our Properties—University Village at TU, Philadelphia, Pennsylvania.”

(g)

In addition to the operating cost described in (c) above, $19 is included to reflect the amount of participating rent owed under the terms of the ground lease with the University, expressed on a per bed basis.

(6)

The following table reflects the economic impact on the twelve months ending June 30, 2005 resulting from our executed lease status as of July 25, 2004 for our operating properties, when compared to the twelve months ended June 30, 2004 as follows:


	Economic Occupancy for the Twelve Months Ended June 30, 2004 (a)		Economic Occupancy for the Twelve Months Ended June 30, 2005 (b)		(in thousands) Impact on Net Income Before Depreciation for the Twelve Months Ended June 30, 2005
Off-Campus Properties
The Village at Alafaya Club	97.9	%	91.9	%	$	(234	)
The Village at Science Drive	98.3	%	99.6	%		139
River Club Apartments	92.9	%	87.0	%		(360	)
River Walk Townhomes	85.9	%	94.4	%		21
The Village at Blacksburg	75.4	%	94.4	%		373
The Callaway House	65.6	%	96.3	%		1,220
Commons on Apache	84.8	%	91.8	%		16
The Village on University	70.0	%	83.4	%		516
University Village at Boulder Creek	96.1	%	79.6	%		(135	)

TOTAL	84.4	%	91.2	%	$	1,556

On-Campus Properties (c)(d)
University Village - PVAMU	97.9	%	66.3	%		(39	)
University Village - TAMIU	98.3	%	44.4	%		—
University College - PVAMU	92.9	%	85.4	%		(404	)
Cullen Oaks	85.9	%	79.6	%		(49	)

TOTAL	94.7	%	73.4	%	$	(492	)

					$	1,064

(a)

Economic occupancy for the historic twelve months ended June 30, 2004 reflects occupancy rates in effect during that period and the impact of rent concessions given during that period.

(b)

Occupancy based on two months of the current economic occupancy and ten months based on leases in hand.

(c)

Under the terms of our on-campus participating property arrangements our economic impact from these arrangements is limited to 50% of the net cash flows and does not require us to fund any operational shortfalls.

(d)

Historically at our on-campus participating properties, a significant number of our residents do not execute leases until returning to campus for the start of the fall semester.

(7)

A 210-bed phase was opened at a participating property in September 2003. Accordingly the twelve months ended June 30, 2004 included ten months operations of this phase. Adjustment reflects the impact on net income before depreciation for its operations during the two months from July 2004 through August 2004. These are the months during which only summer school is in session.

(8)

As contemplated in the structuring of our ground lease with Weatherford College for the construction of Coyote Village, the facility lease was transferred to the college in April of 2004. This adjustment reflects the reduction in net income from this participating property for the period September 2003 (opening) through June 30, 2004.

(9)

Represents recurring capital expenditures for off-campus owned student housing properties based on historic average recurring capital expenditures calculated as follows:


	2003		2002		2001
Recurring Capital Expenditures	$	1,154,384	$	1,092,397	$	688,910
Beds (at December 31)		6,070		6,070		5,338
Average Recurring Capital Expenditures Per Bed	$	190	$	180	$	129

Average recurring capital expenditures for the three years ended December 31, 2003 approximated $166 per bed and excludes the three properties under construction and University Village at Boulder Creek, a new property that has not yet required recurring capital expenditures. For 2001, total beds have been adjusted to exclude The Village at Science Drive (732 beds), which we acquired in November 2001.

(10)

Represents recurring capital expenditures for on-campus participating properties based on historic average recurring capital expenditures calculated as follows:


	2003		2002		2001
Recurring Capital Expenditures	$	276,359	$	205,077	$	160,316
Beds (at December 31)		4,167		3,957		3,957
Average Recurring Capital Expenditures Per Bed	$	66	$	52	$	41

Average recurring capital expenditures for the three years ended December 31, 2003 approximated $53 per bed.

(11)

Represents required mortgage loan payments for owned off-campus student housing properties after the repayment of certain loans with proceeds from this Offering.

(12)

Represents required payments under bond and loan agreements for our on-campus participating properties, which are generally non-recourse and/or subject to a break-even guarantee from the related university system.

(13)

Reflects estimated cash flows less cash flow used in financing and investing activities.

(14)

Estimated initial annual distribution calculated by multiplying the assumed issued shares of 12,100,000 and 156,061 PIUs (based on the midpoint of the range of the Offering prices referred to on the cover page of this prospectus) by the assumed offering price of $20 by the assumed distribution rate of 6.75%.

(15)

Per share distribution calculated by multiplying the assumed per share offering price of $20 by the assumed distribution rate of 6.75%.

(16)

Payout ratio calculated by dividing the estimated initial annual distribution to shareholders and PIU holders by the estimated annual cash available for distribution.

CAPITALIZATION

The following table sets forth the historical combined capitalization of the Predecessor Entities as of June 30, 2004 and our pro forma consolidated capitalization as of June 30, 2004, adjusted to give effect to the Formation Transactions, this Offering, the use of the net proceeds from this Offering, borrowings under our revolving credit facility and cash released in connection with this Offering as set forth in “Use of Proceeds.” You should read this table in conjunction with “Use of Proceeds,” “Selected Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and our consolidated financial statements and the notes to our financial statements appearing elsewhere in this prospectus.


	(in thousands)
	Historical Combined at June 30, 2004		Pro Forma as Adjusted for Impact of Formation, Repayment, Borrowing, and Grant of Profit Interest Units			Pro Forma as Adjusted for Impact of Formation, Borrowing and Offering Transactions
Mortgages and Other Secured Loans	$	301,896	$	199,019	(1)	$	199,019
Minority Interests		194		1,857	(2)		1,857
Owners’ Equity		27,356		—	(3)		—
Preferred Stock, $0.01 par value, 200,000,000 shares authorized, none issued or outstanding		—		—			—
Common Stock, $0.01 par value, 800,000,000 shares authorized, 12,100,000 shares issued and outstanding on a pro forma basis		—		—			121
Additional Paid in Capital and Stockholders’/Owners’ equity		—		(78,039	)(4)		143,900

Total Stockholders’/Owners’ Equity (Deficit)		27,356		(78,039	)(4)		144,021	(5)

Total Capitalization	$	329,446	$	122,837		$	344,897

(1)

Reflects repayment of certain construction and mortgage notes payable, including the reduction in debt relating to the distribution of The Village at Riverside, totaling approximately $109,447, net of borrowings of $5,726 to finance the acquisition of Titan’s minority interests and $844 to finance the revolving credit facility loan origination costs.

(2)

Reflects acquisition of Titan’s minority interests of approximately $194 and issuance of PIUs totaling approximately $1,901.

(3)

Reflects reclassification of historical owner’s equity to additional paid in capital.

(4)

Reflects adjustments consisting of the following transactions:


Reclassification of historic owners’ equity	$	27,356
Distribution to existing investors		(100,646	)
Distribution of certain properties to existing investors		(2,199	)
Final working capital distribution to existing investors		(1,500	)
Issuance of PIUs		(1,857	)
Write off of unamortized deferred finance costs and expense of prepayment		(857	)
Acquisition of Titan’s minority interests		194
Deferred income tax asset and reclassification of prepaid Offering costs, net		1,470

Total impact of transactions	$	(78,039	)

(5)

Reflects proceeds of Offering in the amount of $242,000, net of Offering costs of $19,940.

DILUTION

Purchasers of our common stock offered in this prospectus will experience an immediate and substantial dilution of net tangible book value of their common stock from the initial public offering price. At June 30, 2004, we had a tangible net book value of approximately $20.6 million or $1.70 per share of our common stock assuming our predecessor owners interests were exchanged for shares of our common stock on a one-for-one basis. After giving effect to the sale of shares of our common stock offered hereby, the deduction of underwriting discounts and commissions and other estimated Offering and Formation Transaction expenses, the receipt by us of the net proceeds of this Offering and the use of these funds by our Operating Partnership as described in our pro forma financial statements included elsewhere in this prospectus, the pro forma net tangible book value at June 30, 2004 attributable to the common stockholders would have been $137.2 million or $11.34 per share of common stock. This amount represents an immediate dilution in pro forma net tangible book value of $8.66 per share from the Offering price of $20 per share of our common stock, which is the midpoint of the range of the Offering prices referred to on the cover page of this prospectus, to new public investors. The following table illustrates this per share dilution(1):


Assumed Initial Offering Price Per Share						$	20.00
Net tangible book value per share before the Formation Transactions, acquisition of minority interests in the American Campus–Titan properties, distribution of properties and cash to our existing investors, and this Offering(2)				$	1.70
Net tangible book value per share after the effect of the Formation Transactions, acquisition of minority interests in the American Campus–Titan properties, repayment of certain obligations, distribution of properties to our existing investors, the establishment of estimated deferred tax assets, and the reclassification of pre-paid Offering costs(3)	$	(0.24	)
Increase in pro forma net tangible book value per share attributable to this Offering(4)		18.35
Decrease in pro forma net tangible book value per share attributable to the distribution of cash to our existing investors(5)		(8.32	)
Decrease in pro forma net tangible book value per share attributable to the issuance of a 1.3% minority interest in our Operating Partnership to certain members of senior management in the form of Profit Interest Units(6)		(0.15	)
Net increase in pro forma net tangible book value per share attributable to the Formation Transactions, distribution, acquisitions, repayment of debt, and this Offering					9.64
Pro Forma net tangible book value per share							11.34

Dilution in pro forma net tangible book value per share to new investors						$	8.66

(1)

The number of shares and units reflected in the calculations above assumes that the initial public offering price of our common stock is at the midpoint of the range of the Offering prices referred to on the cover page of this prospectus. If we were to price below the range, we would either borrow additional funds under our revolving credit facility or increase the amount of shares in this Offering and decrease the amount of cash to be given to contributors in exchange for the assets contributed by them in the Formation Transactions. We may choose to not consummate this Offering at prices below the bottom of the range. We do not currently anticipate changing the number of shares if we price above the range of the Offering prices referred to on the cover page of this prospectus.

(2)

Net tangible book value per share is calculated as follows:


Net book value at June 30, 2004	$	27,356,000
Less deferred finance costs (Intangible Asset)		(6,786,000	)

Net tangible book value	$	20,570,000
Number of shares to be issued in the Offering		12,100,000
Net tangible book value per share	$	1.70

(3)

The net tangible book value per share prior to the effect of this Offering, distribution of cash to our existing investors, and grant of a minority interest to certain members of our senior management was impacted by the following transaction:


Transaction	In Thousands			Per Share
Transfer of certain properties to our existing investors	$	(2,199	)	$	(0.18	)
Final working capital distribution to existing investors		(1,500	)		(0.12	)
Acquisition of minority interest held by Titan		194			0.02
Write off of unamortized deferred finance costs and expense prepayment penalty in conjunction with the repayment of certain debt		(857	)		(0.07	)
Establishment of estimated deferred tax assets		3,583			0.29
Reclassification of prepaid Offering costs		(2,113	)		(0.18	)

Total decrease in tangible book value	$	(2,892	)	$	(0.24	)

(4)

Increase in net tangible book value per share attributable to this Offering is computed as follows:


Assumed shares		12,100,000
Assumed offering price	$	20.00
Assumed Gross Proceeds	$	242,000,000
Less “Offering Costs”	$	(19,940,000	)
Assumed net offering proceeds	$	222,060,000
Increase in net tangible book value per share	$	18.35

(5)

Expected distribution to existing investors is approximately $100,646,000 or $8.32 per share.

(6)

Issuance of PIUs in our Operating Partnership to certain members of our senior management creating a 1.3% minority ownership in our Operating Partnership.

SELECTED FINANCIAL DATA

•

the development and management service operations and real estate operations of American Campus Communities, LLC;

•

the real estate operations of RAPSH and its subsidiaries (including The Village at Riverside, which we will not own after the Formation Transactions and completion of this Offering and Coyote Village, which was transferred to Weatherford College in April 2004); and

•

the joint venture properties and operations of American Campus–Titan, LLC and American Campus–Titan II, LLC.

The Predecessor Entities’ unaudited historical combined balance sheet information as of June 30, 2004 and combined statement of operations for the six months ended June 30, 2004 and 2003 are derived from our unaudited historical combined financial statements which we believe include all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information set forth therein. Our results of operations for the interim period ended June 30, 2004 are not necessarily indicative of the results to be obtained for the full fiscal year.

Our unaudited summary selected pro forma consolidated statements of operations, for the six months ended June 30, 2004 and for the year ended December 31, 2003, assumes the completion of this Offering, the Formation Transactions, the repayment of certain indebtedness and the incurrence of certain other indebtedness as contemplated under “Use of Proceeds” had occurred as of the beginning of the periods indicated, and the summary selected pro forma consolidated balance sheet is presented as if this Offering, the Formation Transactions, the repayment of certain indebtedness and the incurrence of certain other indebtedness had been consummated on the last day of the period indicated, and therefore reflects certain assumptions that are described in Notes to Pro Forma Condensed Consolidated Financial Statements beginning on page F-6. The pro forma information does not purport to represent what our financial condition or results of operations actually would have been had this Offering, the Formation Transactions, the repayment of certain indebtedness and the incurrence of certain other indebtedness, in fact, occurred on such date or at the beginning of the periods indicated, or to project our financial condition or results of operations at any future date or for any future period.

Statement of Operations Data:


	(in thousands, except for shares and per share data)
	Six Months Ended June 30,									Year Ended December 31,
	Pro Forma Company 2004			Historical						Pro Forma Company 2003			Historical–Predecessor Entities
	Pro Forma Company 2004			2004			2003			Pro Forma Company 2003			2003			2002			2001			2000			1999
	(Unaudited)									(Unaudited)

Revenues:
Rental revenue	$	24,529		$	25,529		$	25,490		$	48,563		$	50,765		$	48,984		$	39,907		$	22,587		$	9,527
Third party services		4,998			4,974			4,212			9,181			9,128			6,019			3,910			2,558			1,560
Other (expense)		(8	)		—			28			(35	)		28			355			88			—			2

Total revenues		29,519			30,503			29,730			57,709			59,921			55,358			43,905			25,145			11,089
Operating expenses:
Facility operating expenses		11,164			11,753			11,438			23,250			24,503			24,220			18,727			9,712			4,319
Third party development and management services		2,791			2,791			2,540			5,389			5,389			4,441			3,373			1,955			1,593
General and administrative		1,795			1,045			840			4,278			2,778			2,001			1,659			1,492			675
Depreciation		4,627			4,706			4,591			9,058			9,214			8,412			6,951			4,300			2,318
Ground lease expense		396			396			259			584			584			664			631			11			50

Total operating expenses		20,773			20,691			19,668			42,559			42,468			39,738			31,341			17,470			8,955

Operating income		8,746			9,812			10,062			15,150			17,453			15,620			12,564			7,675			2,134
Nonoperating income and expenses:
Interest income		25			25			48			71			85			167			350			304			12
Interest expense		(7,299	)		(9,070	)		(8,833	)		(14,362	)		(17,911	)		(17,392	)		(15,557	)		(9,404	)		(4,153	)
Amortization–deferred finance costs		(224	)		(340	)		(279	)		(353	)		(587	)		(564	)		(406	)		(467	)		(50	)
Other nonoperating income		58			58			—			—			—			—			—			—			—

Total nonoperating expenses, net		(7,440	)		(9,327	)		(9,064	)		(14,644	)		(18,413	)		(17,789	)		(15,613	)		(9,567	)		(4,191	)
Income (loss) before taxes and minority interests		1,306			11,364			998			506			(960	)		(2,169	)		(3,049	)		(1,892	)		(2,057	)
Income tax expense		(836	)		—			—			(702	)		—			—			—			—			—

Income (loss) before minority interests		470			11,364			998			(196	)		(960	)		(2,169	)		(3,049	)		(1,892	)		(2,057	)
Minority interest in (income) losses		(6	)		44			(21	)		3			16			30			110			20			—

Net income (loss)	$	464		$	529		$	977		$	(193	)	$	(944	)	$	(2,139	)	$	(2,939	)	$	(1,872	)	$	(2,057	)

Pro Forma basic earnings (loss) per share (unaudited)(1)	$	0.04								$	(0.02	)
Pro Forma diluted earnings (loss) per share (unaudited)(2)	$	0.04								$	(0.02	)
Pro Forma weighted average common shares outstanding–basic (unaudited)		12,100,000									12,100,000
Pro Forma weighted average common shares outstanding–diluted (unaudited)		12,256,061									12,256,061

Balance Sheet Data (at period end):


	(in thousands)
	As of June 30, 2004				As of December 31,
	Pro Forma Company		Historical		Historical–Predecessor Entities
	Pro Forma Company		Historical		2003		2002		2001		2000		1999
	(Unaudited)
Student housing properties, net	$	322,593	$	330,379	$	292,620	$	279,428	$	265,989	$	202,874	$	118,962
Other assets, net		41,649		30,089		37,946		28,230		29,648		14,277		13,173

Total assets	$	364,242	$	360,468	$	330,566	$	307,658	$	295,637	$	217,151	$	132,135

Construction debt and accounts payable	$	—	$	61,828	$	23,645	$	2,502	$	18,925	$	21,922	$	1,123
Mortgage and other long term notes		138,009		188,827		188,067		189,884		156,584		117,715		58,538
Bonds		61,010		61,010		61,010		57,865		58,940		38,640		39,270
Other liabilities		19,345		21,253		29,934		21,597		20,485		13,242		10,997

Total liabilities		218,364		332,918		302,656		271,848		254,934		191,519		109,928
Minority interests		1,857		194		252		284		131		23		—
Owners’ equity		144,021		27,356		27,658		35,526		40,572		25,609		22,207

Total liabilities and owners’ equity	$	364,242	$	360,468	$	330,566	$	307,658	$	295,637	$	217,151	$	132,135

Other Data:


	(in thousands)
	Six Months Ended June 30,						Year Ended December 31,
	Pro Forma Company 2004		Historical				Pro Forma Company 2003			Historical–Predecessor Entities
	Pro Forma Company 2004		2004		2003		Pro Forma Company 2003			2003			2002			2001			2000			1999
	(Unaudited)
Funds from operations(3):
Net income (loss) before minority interest	$	470	$	485	$	998	$	(196	)	$	(960	)	$	(2,169	)	$	(3,049	)	$	(1,892	)	$	(2,057	)
Plus depreciation		4,486		4,565		4,445		8,781			8,937			8,233			6,807			4,188			2,258

Funds from operations(3)(4)	$	4,956	$	5,050	$	5,443	$	8,585		$	7,977		$	6,064		$	3,758		$	2,296		$	201


	Six Months Ended June 30,						As of December 31,
	Historical						Historical–Predecessor Entities
	2004			2003			2003			2002			2001			2000			1999
	(Unaudited)
Cash flow information:
Net cash provided by operations	$	7,467		$	1,632		$	6,258		$	7,959		$	5,338		$	3,577		$	1,512
Net cash (used in) investing	$	(42,546	)	$	(13,204	)	$	(33,737	)	$	(21,678	)	$	(68,540	)	$	(87,652	)	$	(44,087	)
Net cash provided by financing	$	34,887		$	8,311		$	22,141		$	11,335		$	72,832		$	84,215		$	43,997

Selected Property Information(5):


	As of June 30,				As of December 31,
	2004		2003		2003		2002		2001		2000		1999
Units	3,643		3,459		3,567		3,459		3,377		2,781		1,461
Beds	10,826		10,336		10,546		10,336		10,027		8,232		4,668
Occupancy(6)	51.7	%	55.7	%	91.5	%	91.0	%	93.5	%	93.3	%	N/A

(1)

Pro Forma basic earnings per share is computed assuming this Offering was consummated as of the first day of the period presented and equals pro forma net income divided by the number of shares of our common stock to be outstanding after this Offering.

(2)

Pro Forma diluted earnings per share is computed assuming this Offering was consummated as of the first day of the period presented. Pro Forma diluted earnings per share equals pro forma net income divided by the sum of the number of shares of our common stock to be outstanding and common equivalent shares outstanding after this Offering.

(3)

As defined by NAREIT, funds from operations or FFO represents income (loss) before allocation to minority interest (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization (excluding amortization of loan origination costs) and after adjustments for unconsolidated partnerships and joint ventures. We present FFO because we consider it an important supplemental measure of our operating performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income.

(4)

When considering our FFO, we believe it is also a meaningful measure of our performance to exclude certain revenues and expenses of our on-campus participating properties. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Funds from Operations.”

(5)

Includes The Village at Riverside and Coyote Village, but does not include three properties currently under construction.

(6)

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our financial statements, related notes and other financial information appearing elsewhere in this prospectus. Where appropriate, the following discussion includes an analysis of the effects of the Formation Transactions and this Offering. These effects are reflected in the pro forma combined financial statements located elsewhere in this prospectus. This discussion also analyzes the effects of certain matters that may occur following the completion of this Offering.

Overview

We are a fully integrated, self-administered, and self-managed equity REIT engaged in the development, acquisition, ownership, and operation of high-quality student housing properties. We also provide student housing development and management services to universities, charitable foundations and others. We are one of the largest private owners, developers and managers of high-quality student housing properties in the United States in terms of total beds owned, developed and under management.

We were formed in connection with this Offering to continue the student housing business of our Predecessor Entities that commenced in 1993. As part of the transactions relating to our formation, RAPSH will redeem all of the interests of RAP in RAPSH for $100.6 million in cash and thereby assume ownership of substantially all of the properties and operations of our Predecessor Entities.

One property previously owned by these Predecessor Entities (The Village at Riverside) will be distributed to an entity owned by RAP and RSVP and will therefore not become a part of our portfolio. Concurrently with this Offering, we will be granted a four-year option to purchase this property and will continue to manage it following this Offering. We did not acquire this property as part of our Formation Transactions because the considerable oversupply of multi-family properties in its submarket have negatively impacted its operating results and prospects, and we therefore believe that our ownership of this property at this time would be inconsistent with our growth strategy.

Concurrently with this Offering, we will also acquire substantially all of the interests held by Titan in the American Campus–Titan Properties for approximately $5.7 million in cash to be drawn from our revolving credit facility, and we will restructure the terms of our joint venture with Titan with respect to our future joint development activities. We do not intend to acquire any other third party property interests prior to or in conjunction with this Offering.

We will use approximately $109.9 million of the proceeds of this Offering to repay indebtedness and related expenses which, as of June 30, 2004, had a weighted average interest rate of approximately 5.9%.

We will elect to be taxed as a REIT for federal income tax purposes commencing with our tax year ending December 31, 2004.

We will account for the Formation Transactions as a reorganization of entities under common control in a manner similar to a pooling of interests. We will account for our cash purchase of additional interests in the American Campus–Titan Properties using the purchase method of accounting.

Our historical financial data represents the combined historical financial data for our Predecessor Entities and therefore includes The Village at Riverside and reflects Titan’s minority ownership interest in the American Campus–Titan Properties as well as our pre-Offering levels of indebtedness. The information contained in this Management’s Discussion and Analysis section reflects our historical information, as adjusted for the Formation Transactions and this Offering.

Impact of Construction Properties

Our revenues are derived primarily from the ownership and operation of our off-campus student housing properties. These revenues have grown from approximately $26.2 million in 2001 to $32.3 million in 2002 and $33.8 million in 2003. We currently have three off-campus properties under construction that are scheduled to

open in Fall 2004 and therefore have not been reflected in our historical or pro forma operating results. When completed, these construction properties will increase the number of our units by 26.4% from 1,728 to 2,185 and increase the number of our beds by 27.4% from 5,971 to 7,606. We therefore expect that these construction properties will have a material effect on our future results of operations. See “—Factors Expected to Affect Our Operating Results” below, which provides information that is intended to assist prospective investors in considering the possible effect that the completion and leasing of these properties may have on our results of operations in 2004 and thereafter.

Structure of On-Campus Participating Properties

We operate four on-campus student housing properties under participating ground leases with the related university systems. These properties comprise 35.4% of our owned beds. The following table reflects the contribution to our consolidated income and expense of our owned on-campus student housing properties in each of 2003, 2002 and 2001 and for the six months ended June 30, 2004 and 2003. These results include the contribution of certain on-campus properties that were developed by us and by pre-arrangement transferred to the university after the necessary financing had been secured:


	(in thousands)
	Six Months Ended June 30,						Year Ended December 31,
	2004			2003			2003(2)			2002(3)			2001(4)
Revenues	$	8,807		$	8,011		$	17,002		$	16,670		$	13,672
Direct Operating Expenses(1)		3,686			3,310			7,517			7,273			5,560
Depreciation		1,710			1,599			3,270			3,158			2,683
Amortization		145			75			181			154			133
Ground Lease Expense		396			259			584			664			632

Net Operating Income		2,870			2,768			5,450			5,421			4,664
Interest Income		12			19			30			67			146
Interest Expense		(2,820	)		(2,547	)		(5,293	)		(5,291	)		(4,853	)
Other Non-operating Expense		(43	)		—			—			—			—

Net Income (Loss)	$	19		$	240		$	187		$	197		$	(43	)

(1)

Excludes property management fees of approximately $0.8 million in each of 2001, 2002 and 2003 and $0.4 million in the six months ended June 30, 2004 that were paid to us. This expense and the corresponding fee revenue recognized by us have been eliminated in consolidation. Also excludes allocation of expense related to corporate management and oversight.

(2)

Includes results of Coyote Village that opened in August 2003 and was transferred to Weatherford College on April 1, 2004.

(3)

Includes results of Cardinal Village II that opened in August 2002 and was transferred to Lamar University in December of that year.

(4)

Includes results of Cardinal Village I that opened in August 2001 and was transferred to Lamar University in December of that year.

Under our participating ground leases, we receive an annual distribution representing 50% of these properties’ net cash available for distribution after payment of operating expenses (which includes our management fees), debt service (which includes repayment of principal) and capital expenditures. In 2003, 2002 and 2001, our share of these net cash distributions was approximately $0.6 million, $0.7 million and $0.6 million, respectively. We also manage these properties under multi-year management agreements and received management fees of approximately $0.8 million in each of those years, and $0.4 million in the six months ended June 30, 2004.

We do not have access to the cash flows and working capital of these participating properties except for the annual net cash distribution as described above. Additionally, a substantial portion of these properties’ cash flow is dedicated to capital reserves required under the applicable property indebtedness and to the amortization of such indebtedness. These amounts do not increase our economic interest in these properties since our interest, including our right to share in the net cash available for distribution from the properties, terminates upon the amortization of their indebtedness.

Our economic interest in these properties is therefore limited to our interest in the net cash flow and management fees from these properties. Accordingly, when considering these properties’ contribution to our operations, we believe that prospective investors should focus upon our share of these properties’ net cash available for distribution and the management fees that we receive from these properties rather than upon their contribution to our gross revenues and expenses for financial reporting purposes.

Three of our on-campus participating properties are encumbered by $61.0 million of taxable insured bond financing that are without recourse to us. The fourth property (Cullen Oaks) is encumbered by approximately $17.2 million as of June 30, 2004 of floating rate construction financing that matures in November 2008. We have purchased an interest rate swap that effectively fixes the interest rate of this construction financing at 5.5% through its maturity. The university is obligated to us to lease beds at this property for an amount sufficient to pay all property expenditures, including debt service. In turn, we have guaranteed payment of this property’s indebtedness. We will refinance it on or before its maturity with non-recourse bond or other long-term financing, although there can be no assurance that we will be able to do so on favorable terms or at all.

Factors Expected to Affect Our Operating Results

Unique Leasing Characteristics

Student housing properties are typically leased by the bed on an individual lease liability basis, unlike multi-family housing where leasing is by the unit. Individual lease liability limits each resident’s liability for his or her own rent without liability for a roommate’s rent. A parent or guardian is required to execute each lease as a guarantor unless the resident provides adequate proof of income. The number of lease contracts that we administer are therefore equivalent to the number of beds occupied not the number of units.

Due to our predominantly private bedroom accommodations, the high level of student oriented amenities offered at our properties and the individual lease liability for our residents and their parents, we believe that we typically command higher per-unit and per-square foot rental rates than most multi-family properties in the same markets. We are also typically able to command higher rental rates than on-campus student housing, which tend to offer properties with fewer amenities as a lower cost alternative.

Unlike traditional multi-family housing, most of our leases commence and terminate on the same dates. In the case of our typical 12-month leases, these dates coincide with the commencement of the universities’ Fall academic term and typically terminate at the completion of the last subsequent summer school session. As such, we must re-lease each property in its entirety each year, resulting in significant turnover in our tenant population from year to year. In 2003, approximately 71.3% of our beds were leased to students who were first-time residents at our properties. As a result, we are highly dependent upon the effectiveness of our marketing and leasing efforts during the annual leasing season that typically begins in January and ends in August of each year. Our properties’ occupancy rates are therefore typically stable during the August to July academic year but are susceptible to fluctuation at the commencement of each new academic year, which may be greater than the fluctuation in occupancy rates upon expiration of traditional multi-family leases. See “—Recent Trends and Events—Leasing Activity” below for a comparison of our leasing activity to date for the 2004-2005 academic year and our leasing activity for the 2003-2004 academic year.

We maintain students with outstanding balances in our receivable subsidiary system for a number of years to ensure we are able to collect should the student attempt to return to school or request a transcript to attend a

different school, as it is not uncommon for students to leave school but return for a later semester or academic year, or attempt to be admitted to another institution in a later semester or academic year. While this methodology results in seemingly high gross receivable balance and allowance for doubtful account balance, because we review and adjust our allowance for doubtful accounts on a monthly basis and recognize the appropriate charge to expense for amounts determined to be doubtful as to collectibility, our methodology of maintaining accounts for a longer period of time does not impact the appropriate expense recognition in our operations. Over time, the increase in the allowance will level off as accounts will be charged off.

Properties Under Construction

Three of our properties are currently under construction: University Village at Fresno (Fresno, CA), University Village at San Bernardino (San Bernardino, CA), and University Village at TU (Philadelphia, PA). Our results of operations and ability to make our contemplated distribution payments to shareholders will, to a significant extent, be dependent upon the results of operations from these properties. These results cannot be predicted with certainty. The amount of revenues to be realized from these properties in 2004 will be contingent upon a number of factors, including the completion of their construction on budget and in time for commencement of the 2004-2005 academic year in Fall 2004 and their successful lease-up at the anticipated monthly rental per bed. See “Risk Factors—Risks Related to Our Properties and Our Business—Three of our properties are under construction,” and we may encounter delays in completion or experience cost overruns.” The information provided in this section is intended to assist prospective investors in considering the possible effect that the completion and leasing of these properties may have on our results of operations in 2004 and thereafter.

The following table sets forth certain information about our construction properties as of July 25, 2004, which information should be considered when considering the rental revenues that may be generated at these properties for the 2004-2005 academic year that commences in Fall 2004:


Property	Beds	Average Monthly Rent(1)		Leased Beds(2)		Beds Under Application(3)	On-Campus Capacity(4)
University Village at Fresno(5)	406	$	501	333		39	4.9	%
University Village at San Bernardino(6)	480		664	477		7	6.2	%
University Village at TU	749		612	749	(7)	0	13.7	%

Total/Average	1,635	$	600	1,559		46

(1)

Weighted average monthly rent for Leased Beds for 2004-2005 academic year, commencing Fall 2004. See the individual description for each of these properties under “Business and Properties.”

(2)

Beds leased for 2004-2005 academic year.

(3)

Beds (other than Leased Beds) for which we have received applications with refundable deposits for the 2004-2005 academic year.

(4)

Percentage of total 2003 enrollment at the particular university that can be housed on-campus. See “Industry Outlook” for a discussion of each property’s competition from on-campus and off-campus properties.

(5)

We are party to a 2-year agreement with the University pursuant to which we will be the exclusive approved off-campus student housing property recommended by the University to prospective students and parents.

(6)

We are party to an affiliation agreement with the University pursuant to which it will actively assist in our direct marketing efforts for this property.

(7)

Of our 749 beds, Temple University has agreed to master lease up to 400 beds that they intend to make available to their students as part of their annual “Housing Lottery.” Students who are eligible to lease these Lottery Beds will execute a lease directly with us. To the extent that all 400 Lottery Beds are not leased by eligible students prior to the commencement of the 2004–2005 lease period, Temple University will lease and pay rent on the remaining unleased beds. The total includes these 400 lottery beds.

Occupancy at these properties during the 2004-2005 academic year, beyond the number of leased beds indicated above, cannot be predicted with certainty at this time. However, we believe that the information regarding on-campus capacity is important when considering the extent of competition that these construction properties will initially face from on-campus student housing. For a further discussion of the competitive market for each of these properties, see the specific property description under “Business and Properties.”

Based on our historical experience at our other off-campus properties, we believe that student applications accompanied by refundable deposits have been an effective indicator of ultimate leasing at these properties. During the 2003-2004 academic year leasing period for our owned off-campus properties, we received 5,788 applications, 5,400 of which were converted to leases, representing a conversion rate of 93.3%. See also “—Recent Trends and Events—Leasing Activity” below for a comparison of our leasing activity to date for the 2004-2005 academic year and our leasing activity for the 2003-2004 academic year.

The following table provides certain information with respect to our historical operating costs at the off-campus properties that we have owned and operated since 2001, which should be taken into account when considering the operating costs that we may incur at our construction properties. The historical operating costs at these off-campus properties may not be indicative of the operating costs that we will experience at our properties currently under construction:


	2003			2002			2001
Student Housing Operating Expense	$	16,472,000		$	15,971,000		$	12,258,000	(6)
Total Beds		6,379			6,070			5,338	(7)
Occupancy Rate(1)		88.6	%		87.3	%		92.1	%(7)
Occupied Beds(2)		5,650			5,299			4,915	(7)
Student Housing Operating Expense per Bed(3)	$	2,582		$	2,631		$	2,296
Student Housing Operating Expense per Occupied Bed(4)	$	2,915		$	3,014		$	2,494
Student Housing Net Operating Income(5)	$	17,291,000		$	16,344,000		$	13,977,000

(1)

Calculated as of December 31 of the respective year.

(2)

The product of the Number of Beds and the Occupancy Rate.

(3)

Student Housing Operating Expense divided by Number of Beds.

(4)

Student Housing Operating Expense divided by the Number of Occupied Beds.

(5)

The difference between Student Housing Rental and Ancillary Revenue less Student Housing Operating Expenses.

(6)

Includes a partial year for the Callaway House (acquired March 2001) and University at Science Drive (acquired November 2001).

(7)

For 2001, total beds have been adjusted to exclude The Village at Science Drive (732 beds), which we acquired in November 2001.

The California State University has an option to purchase the University Village at San Bernardino for $28.3 million, which option expires 150 days after we have given notice of completion of construction to the University. We believe the university will seek approval to exercise this option. We expect to give this notice during the month of August 2004.

Third Party Services

Development Services. Our revenues from third party development services have grown from approximately $2.9 million in 2001 to $5.1 million in 2002 and $7.9 million in 2003. The amount and timing of future revenues from development services will typically be contingent upon our ability to successfully compete in public universities’ competitive procurement processes, our ability to successfully structure and finance these projects,

and our ability to complete construction within the agreed construction timelines and budgets. To date, all of our third party development projects have completed construction in time for their targeted Fall occupancy. However, delays in the completion of the construction of our third party development projects would delay our receipt of anticipated revenues and subject us to significant liabilities under our completion guarantees as well as other unbudgeted costs.

As of June 30, 2004, development fees totaling approximately $0.6 million remained to be earned by us with respect to third party properties that began construction in 2003 and are scheduled to open in Fall 2004. The following table provides certain information with respect to third party properties under construction as of June 30, 2004:

Contracted Projects


	(in thousands)
Property	Total Contractual Fee Amount		Fees Previously Earned and Recognized			Balance to be Earned and Recognized
Bear Creek at Williams Village Phase Ib	$	2,420	$	2,663	(1)	$	22
Cardinal Village (Phase III)		862		616			246
IPFW Student Housing		250		225			25
Purdue University–Calumet		225		225			0
Purdue University		350		350			0
Coyote Village		430		430			0
Sam Houston Village		768		664			104
San Marcos Hall Phase II		1,128		984			144
Vista Del Campo Apartments Phase I		3,974		3,882			92

Total	$	10,407	$	10,039		$	633

(1)

Reflects recognition of $0.3 million of incentive fee based on construction savings.

We generally receive a significant percentage of our fees for development services upon closing of the project financing, a portion of the fee over the construction period, and the balance upon substantial completion of construction. Because revenue from these services is recognized for financial reporting purposes utilizing the percentage of completion method, differences occur between amounts received and revenues recognized. Differences also occur between amounts recognized for tax purposes and those recognized for financial reporting purposes. Since, as a REIT, we will be required to distribute 90% of our taxable income, our distribution requirement with respect to our income from third party services may exceed that reflected as net income for financial reporting purposes from such activities.

The following table provides certain information as of June 30, 2004 with respect to our awarded development services projects:

Awarded Projects


Awarded Project(1)	Proposed Fee Amount(2) (in thousands)		Anticipated Commencement Date
Cleveland State University	$	1,511	January 2005
Saint Leo University Phase II		375	September 2004
Vista Del Campo Apartments Phase II		3,503	December 2004
West Virginia University		750	Spring 2005

Total	$	6,139

(1)

Projects for which we have received notice from the university that it will negotiate exclusively with us.

(2)

Fee amount included in our proposal to the university.

When responding to formal competitive requests for proposal (RFPs) from educational institutions that relate to specific student housing projects, we submit a “Proposal” to the institution which reflects our response to the principal requirements of the proposed transaction. Our Proposal typically addresses matters such as preliminary construction plans, construction budget (including our proposed fee), operating cash flows, and project schedule. Following a formal selection process by the educational institution, a developer’s proposal is selected, and the developer is notified of the institution’s intent to begin exclusive negotiations related to the project. We refer to this stated intention to exclusively negotiate as an “Award,” and we refer to the services performed with respect to the project from the grant of the Award until the formal execution of development services agreement as “Pre-development” services. During the Pre-development services period, the development budget, construction plans and cost, financing structure, development schedule, operating cash flows, and terms of the development contract are finalized. Generally all contracts, including the general contractor’s agreement, construction professional agreements and our development services agreement, are executed concurrently with the closing of financing for the project.

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. Historically, the development projects that we have been awarded have been successfully structured and financed, however they 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. There can be no assurance that our current awards will be successfully structured and financed in a timely manner or that projects will be completed as and when expected.

Management Services. Our revenues from third party property management services were approximately $1.0 million in each of 2001 and 2002 and approximately $1.2 million in 2003 and $0.8 million for the six months ended June 30, 2004. Due to the continued growth in our development services revenues, these management services have, in recent years, represented a declining percentage of our revenues from third party services (13.0%, 15.7% and 26.4% of such revenues in 2003, 2002 and 2001, and 15.5% for the six months ended June 30, 2004, respectively). Our revenues from management services are typically derived from multi-year management agreements. Approximately $0.6 million of additional management fees is due in 2004 under management agreements that commenced in 2003.

Critical Accounting Policies

Our historic combined financial statements include the accounts of all majority-owned investments and the consolidated subsidiaries of the Predecessor Entities. The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions in certain circumstances that affect amounts reported in our combined financial statements and related notes. In preparing these financial statements, management has utilized all available information, including its past history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments of certain amounts included in the combined financial statements, giving due consideration to materiality. It is possible that the ultimate outcome anticipated by management in formulating its estimates may not be realized. Application of the critical accounting policies below involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. In addition, other companies in similar businesses may utilize different estimation policies and methodologies, which may impact the comparability of our results of operations and financial condition to those companies.

Revenue and Cost Recognition of Third Party Development and Management Services

Costs associated with the pursuit of third party development and management service contracts are expensed as incurred until such time as we have been notified of a contract award or otherwise believe that it is probable a contract will be awarded. At such time, the reimbursable portion of such costs are recorded as receivables with the remaining portion deferred and expensed in relation to the revenues earned on such contracts. Development revenues are recognized and related costs (including the costs of our development personnel involved in the

project) deferred and expensed using the percentage of completion method as determined by construction costs incurred relative to the total estimated construction costs. Fees received in excess of those recognized are reflected as deferred development and construction revenue. Revenues recognized in excess of amounts received are included in other current assets. Incentive fees are recognized when the project is complete and the incentive amount has been confirmed by an independent third party.

Third party management fees are generally received and recognized on a monthly basis and are computed as a percentage of property receipts, revenues or a fixed monthly amount, in accordance with the applicable management contract. Incentive management fees are recognized when the contractual criteria have been met.

Student Housing Rental Revenue Recognition and Accounts Receivable

Student housing rental revenue is recognized on a straight-line basis over the term of the contract. Ancillary and other property related income is recognized in the period earned.

In estimating the collectibility of our accounts receivables, we analyze specific resident receivables, historical bad debts, and current economic trends. These estimates have a direct impact on our net income, as an increase in allowance for doubtful accounts reduces our net income.

Long-Lived Assets–Impairment

On a periodic basis, management is required to assess whether there are any indicators that the value of the real estate properties may be impaired. A property’s value is considered impaired if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. These estimates of cash flows consider factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors. To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the fair value of the property, thereby reducing our net income.

Long-Lived Assets–Held for Sale

Long-lived assets to be sold are classified as held for sale in the period in which all of the following criteria are met:

•

Our management (having the authority to approve the action) commits to a plan to sell the asset.

•

The asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets.

•

An active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated.

•

The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year.

•

The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value.

•

Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Discontinued Operations

When material, the results of operations of a property that either has been disposed of or is classified as held for sale is reported in discontinued operations if both of the following conditions are met: (a) the operations and cash flow of the component have been (or will be) eliminated from the ongoing operations of the Company as a result of the disposal transaction and (b) the Company will not have any significant continuing involvement in the operations of the component after the disposal transaction.

Construction Property Savings and Fire Proceeds

An entity newly formed by RAP and RSVP will be entitled to any savings in the budgeted completion cost of our three off-campus construction properties, including any insurance proceeds that we receive with respect to the fire at University Village at Fresno that are not applied to the construction costs of University Village at TU. If, upon completion, there are designated funds that are unspent, the Company will distribute these unspent amounts to such entity and will credit cash and debit equity for the distribution. The Company does not have any ownership interest in such entity and the entity does not have any ownership interest in the Company.

Recent Trends and Events

Industry Outlook

We believe that our operations have benefited because of a number of factors impacting the student housing market in the United States. According to a report that we have commissioned from Rosen Consulting Group, LLC, a real estate economic consulting firm, these factors include:

•

a surge in college enrollment in the United States, fueling a demand for student housing;

•

budget shortfalls at universities have reduced the availability of capital resources for new housing to accommodate the projected surge in enrollment;

•

the existing traditional dormitory-style facilities are becoming obsolete and are in need of renovation or replacement;

•

universities are turning to private sector developers to bridge the gap between the demand for on and off-campus student housing and their ability to provide it from their own capital resources; and

•

a highly fragmented ownership of student housing properties in which the total size of the private sector pales in comparison to the size of the national demand in the market with no private student housing owner-operator managing more than 25,000 beds.

We believe that these factors will continue to have a significant impact on the United States student housing market for the foreseeable future. As a result of these factors, institutions of higher learning have increasingly turned to the private sector to provide modern student housing through off-campus development or through public-private partnerships, such as our on-campus participating properties. Additionally, privately developed modern student housing projects have become a popular alternative to traditional dorms and apartments.

Formation Transactions

This Offering and our Formation Transactions will affect our business and results of operations in a number of ways:

•

We will cease to be affiliated with RAP and RSVP and will therefore be required to seek to fund our operations and growth strategy by accessing new sources of investment capital.

•

As a publicly traded REIT, we will, following this Offering, potentially have greater access to the public capital markets and other sources of investment capital. Our status as a publicly traded REIT will also enable us to use our shares or the units of our Operating Partnership as currency with which to acquire properties. Moreover, we believe that our prominence as the sole publicly traded REIT focused exclusively on student housing in the United States will afford us a competitive advantage in acquiring additional student housing properties.

•

Our total consolidated indebtedness, including construction accounts payable, will be reduced from $280.9 million (year end 2003 historical) to $199.0 million (June 30, 2004 pro forma), resulting in a reduction of our pro forma interest expense by $3.5 million and $1.8 million for the year ended December 31, 2003 and the six months ended June 30, 2004, respectively.

•

We expect to have available to us a $75 million senior secured revolving credit facility with which to fund future property acquisitions and our working capital needs.

•

In order to qualify as a REIT, a specified percentage of our gross income must be derived from real property sources, which would generally exclude our income from providing development and management services to third parties as well as our income from certain services afforded residents in our owned properties. See “Federal Income Tax Considerations—Taxation of Our Company.” In order to avoid realizing such income in a manner that would adversely affect our ability to qualify as a REIT, we will provide certain services through our Services Company, which will elect, together with us, to be treated as our “taxable REIT subsidiary” or “TRS.” See “Federal Income Tax Considerations—Taxation of Our Company.” Our Services Company will also own our on-campus participating properties. The income earned by our Services Company will, unlike its predecessor entity, be subject to regular federal income tax and state and local income tax where applicable and will therefore be subject to an additional level of tax as compared to the income earned from our properties. This will reduce our results of operations, funds from operations and the cash otherwise available for distribution to our stockholders.

Leasing Activity

Generally, prospective residents complete and sign a cancelable lease application accompanied by a refundable security deposit and a non-refundable application of administration fee. Upon processing their application, the prospective resident executes and delivers the lease agreement and, if required, an accompanying parental guarantee. See “Business and Properties—Leasing and Marketing—Student Leases.”

The following tables reflect a monthly comparison of the leasing activity of the 2003-2004 academic year and our leasing activity for the 2004-2005 academic year through July 25, 2004 with respect to our same store off-campus owned properties that were open in both periods. The first table indicates the percentage of our beds available for lease in the upcoming student year that either were subject to an application or were leased as of the end of the indicated month (except for the month of July 2004, which is as of July 25, 2004). The second table indicates the percentage of our beds available for lease in the upcoming student year that were leased as of the end of the indicated month (except for July 2004, which is as of July 25, 2004).

LOGO

Results of Operations

Comparison of Six Months ended June 30, 2004 to Six Months ended June 30, 2003

The following table presents our results of operations for the six months ended June 30, 2004 and 2003, including the amount and percentage change in these results between the two periods:


	(in thousands)
	6/30/2004			6/30/2003			Change($)			Change(%)
Revenues:
Student housing rental and ancillary revenue	$	16,722		$	17,479		$	(757	)	(4.3	)%
On-campus participating properties rental revenue		8,807			8,011			796		9.9	%
Third party development services		4,202			3,631			571		15.7	%
Third party facility property management services		772			581			191		32.9	%
Other income		—			28			(28	)	(100.0	)%

Total revenues		30,503			29,730			773		2.6	%
Operating Expenses:
Student housing		7,769			7,889			(120	)	(1.5	)%
On-campus participating properties		3,984			3,549			435		12.3	%
Third party development and property management services		2,791			2,540			251		9.9	%
General and administrative		1,045			840			205		24.4	%
Depreciation		4,706			4,591			115		2.5	%
Ground lease (on-campus participating properties)		396			259			137		52.9	%

Total operating expenses		20,691			19,668			1,023		5.2	%

Operating income		9,812			10,062			(250	)	(2.5	)%
Nonoperating income and (expenses):
Interest income		25			48			(23	)	(47.9	)%
Interest expense		(9,070	)		(8,833	)		(237	)	2.7	%
Amortization of deferred financing costs		(340	)		(279	)		(61	)	21.9	%
Other nonoperating income		58			—			58		100.0	%

Total nonoperating expenses, net		(9,327	)		(9,064	)		(263	)	2.9	%
Minority interest in earnings (losses)		44			(21	)		65		(309.5	)%

Net income	$	529		$	977		$	(448	)	(45.9	)%

Student Housing Properties Operations (Off-Campus)

We had ten properties containing 6,379 beds during the six months ended June 30, 2004 and 2003, which includes The Village at Riverside with 408 beds that we will not own subsequent to the Offering. Revenues from our off-campus student housing properties of $16.7 million decreased by $0.8 million or 4.3% as compared to $17.5 million for the six months ended June 30, 2003. This decrease resulted primarily from a decline in same property occupancy rates to 86.4% for the six months ended June 30, 2004 as compared to 87.3% for the six months ended June 30, 2003. This decline is the continued effect of the overall softening of the multifamily submarket impacting two of our properties, Blacksburg and Callaway, during the 2003/2004 leasing cycle.

Operating expenses of $7.8 million for the six months ended June 30, 2004 decreased $0.1 million or 1.5% from $7.9 million for the six months ended June 30, 2003. This decrease was comprised primarily of reductions in marketing expense of approximately $0.3 million, offset by an increase in compensation and benefits expense of approximately $0.2 million.

Student Housing Properties Subject to Leases (On-Campus Participating Properties) Operations

Revenues from our on-campus participating properties represented 28.9% of our total revenues for the six months ended June 30, 2004 as compared to 26.9% for the six months ended June 30, 2003. Revenues were $8.8 million for the six months ended June 30, 2004, an increase of $0.8 million or 9.9% from $8.0 million for the six months ended June 30, 2003, due primarily to operations of a new phase and a new property constructed in 2003, as described below.

New Property Operations. We completed and opened a 210-bed phase of University College-Prairie View A&M University and a 280-bed property on the campus of Weatherford College in August 2003 (Coyote Village). For the six months ended June 30, 2004, these properties represented approximately $0.7 million of revenue and approximately $0.3 million of operating expenses. The Coyote Village ground lease was transferred to the lessor in April 2004.

Same Property Operations (Excluding New Property Activity). We had four properties totaling 3,957 beds in our on-campus participating properties portfolio during each of the six month periods ended June 30, 2004 and 2003. Revenues at these properties increased from $8.0 million for the six months ended June 30, 2003 to $8.1 million for the six months ended June 30, 2004, an increase of $0.1 million or 1.3%, primarily due to an increase in average occupancy from 73.0% for the six months ended June 30, 2003 to 81.5% for the six months ended June 30, 2004.

Operating expenses for our existing properties increased to $3.7 million for the six months ended June 30, 2004 from $3.5 million for the six months ended June 30, 2003, an increase of $0.2 million or 5.7%. This increase is primarily due to an increase in compensation and benefits expense of $0.2 million and an increase in maintenance expenses of $0.1 million, offset by a decrease in utilities expenses of $0.1 million.

Third Party Services

Third party service revenues increased from $4.2 million for the six months ended June 30, 2003 to $5.0 million for the six months ended June 30, 2004, an increase of $0.8 million or 19.0%. Third party service revenues represented 16.3% of total revenues for the six months ended June 30, 2004, compared to 14.2% for the six months ended June 30, 2003.

Development Services. Third party development services revenues of $4.2 million for the six months ended June 30, 2004 represented an increase of $0.6 million or 15.7% from $3.6 million for the six months ended June 30, 2003. This increase resulted primarily from $0.3 million in construction savings recognized during the six months ended June 30, 2004 as well as $0.3 million of deferred revenue recognized upon the transfer of the Coyote Village ground lease to the lessor in April 2004.

Management Services. Third party property management revenues of $0.8 million for the six months ended June 30, 2004 represented an increase of $0.2 million or 32.9% from $0.6 million for the six months ended June 30, 2003. The increase consisted of five contracts that commenced in Fall 2003.

Operating expenses for third party services increased to $2.8 million for the six months ended June 30, 2004 from $2.5 million for the six months ended June 30, 2003, an increase of $0.3 million or 9.9%. This increase was primarily due to $0.2 million in pursuit costs, as well as an increase in compensation and benefits expense of $0.1 million related to annual merit increases.

General and Administrative

General and administrative costs increased to $1.0 million for the six months ended June 30, 2004 from $0.8 million for the six months ended June 30, 2003, an increase of $0.2 million or 24.4%. This increase was primarily due to a $0.1 million increase in pursuit costs, as well as an increase in compensation and benefits expense of $0.1 million related to annual merit increases.

Interest Expense

Interest expense of $9.1 million for the six months ended June 30, 2004 represented an increase of $0.3 million or 2.7% from $8.8 million for the six months ended June 30, 2003. This increase is a result of interest on the Coyote Village project and the additional phase at University College-Prairie View.

Depreciation and Amortization

Depreciation remained relatively constant at $4.7 million and $4.6 million for the six months ended June 30, 2004 and June 30, 2003, respectively. Amortization of deferred financing costs also remained relatively constant at $0.3 million for both the six months ended June 30, 2004 and the six months ended June 30, 2003.

Comparison of Years Ended December 31, 2003 and December 31, 2002

The following table presents our results of operations for the years ended December 31, 2003 and 2002, including the amount and percentage change in these results between the two periods:


	(in thousands)
	2003			2002			Change ($)			Change (%)
Revenues:
Student housing rental and ancillary revenue	$	33,763		$	32,314		$	1,449		4.5	%
On-campus participating properties rental revenue		17,002			16,670			332		2.0	%
Third party development services		7,939			5,074			2,865		56.5	%
Third party property management services		1,189			945			244		25.8	%
Other income		28			355			(327	)	(92.1	)%

Total revenues		59,921			55,358			4,563		8.2	%
Operating Expenses:
Student housing		16,472			15,970			502		3.1	%
On-campus participating properties		8,031			8,250			(219	)	(2.7	)%
Third party development and property management services		5,389			4,441			948		21.3	%
General and administrative		2,778			2,001			777		38.8	%
Depreciation		9,214			8,412			802		9.5	%
Ground lease (on-campus participating properties)		584			664			(80	)	(12.0	)%

Total operating expenses		42,468			39,738			2,730		6.9	%

Operating income		17,453			15,620			1,833		11.7	%
Nonoperating income and expenses:
Interest income		85			167			(82	)	49.1	%
Interest expense		(17,911	)		(17,392	)		(519	)	3.0	%
Amortization–deferred finance costs		(587	)		(564	)		(23	)	4.1	%

Total nonoperating expenses, net		(18,413	)		(17,789	)		(624	)	3.5	%
Minority interest in losses		16			30			(14	)	(46.7	)%

Net loss	$	(944	)	$	(2,139	)	$	1,195		55.9	%

Student Housing Properties Operations (Off-Campus)

Revenues from our off-campus student housing properties increased in 2003 by $1.4 million or 4.5% as compared to 2002. This growth resulted primarily from a full year of operations at a property we developed and opened in 2002, as described below.

New Property Operations. In August of 2002 we completed construction of a 309-bed property (University Village at Boulder Creek) and opened the property at 100% occupancy for the 2002/2003 academic year. This

property contributed revenues of $2.6 million and operating expenses of $0.8 million in 2003, its first full calendar year of operations, an increase of approximately $1.6 million and $0.5 million, respectively, from its partial first year of operation in 2002.

Same Property Operations (Excluding New Property Activity). Excluding the new University Village at Boulder Creek, we had nine properties and 6,070 beds in our owned off-campus portfolio in 2003 and 2002 which produced revenues of $31.2 million and $31.3 million in those years, respectively. Our weighted average occupancy of 87.8% for 2003 decreased from 88.0% in 2002. We believe that the decrease in both revenue and occupancy from December 31, 2002 to December 31, 2003 was primarily due to a softening overall multi-family submarket impacting three properties, including The Village at Riverside.

Operating expenses of $15.7 million for 2003 increased $0.2 million or 1.3% from $15.5 million in 2002. In response to the market pressures described above, we significantly increased our marketing efforts in certain markets resulting in marketing expense of $0.8 million in 2003, an increase of $0.2 million or 33.3% from $0.6 million in 2002.

Student Housing Properties Subject to Leases (On-Campus Participating Properties) Operations

Revenues from our on-campus participating properties represented 28.4% of our total revenues for 2003 compared to 30.1% for 2002. Revenues were $17.0 million in 2003, an increase of $0.3 million or 2.0% from $16.7 million in 2002 due primarily to operations of a new phase and a new property constructed in 2003.

New Property Operations. We completed and opened a 521-bed property (Cardinal Village II) in August 2002 on the campus of Lamar University and, as contemplated in the deal structure with the University, subsequently transferred our interest in the ground lease to the ground lessor in December of that year. In 2002 this property represented revenue of $0.6 million and operating expenses of $0.1 million. We completed and opened a 210-bed phase of University College–Prairie View A&M University and a 280-bed property on the campus of Weatherford College in August 2003 (Coyote Village). In 2003 these properties represented $0.9 million of revenue and $0.4 million of operating expenses. As contemplated in the deal structure with the College, the Weatherford ground lease was transferred to the Lessor in April 2004.

Same Property Operations (Excluding New Property Activity). We had four properties and 3,957 beds in our on-campus participating properties portfolio in 2003 and 2002. Revenues at these properties remained relatively constant from 2003 to 2002 at approximately $16.1 million. Weighted average occupancy was 98.0% for 2003 compared to 97.6% in 2002.

Operating expenses for our existing properties were approximately $7.6 million and $8.2 million in 2003 and 2002, respectively, a decrease of $0.6 million or 7.3%. This decline was the result of a reduction in insurance premiums and reductions in expenses related to Corporate Management and oversight.

Third Party Services

Third party service revenues increased from $6.0 million in 2002 to $9.1 million in 2003, an increase of $3.1 million or 51.7%. Third party service revenues represented 15.2% of total revenues for 2003, compared to 10.9% for 2002.

Development Services. Third party development services revenues of $7.9 million in 2003 represented an increase of $2.8 million or 56.5% from $5.1 million in 2002. This increase resulted primarily from an increase in the number of development projects in progress (twelve in 2003 compared to nine in 2002, a 33% increase). Incentive fees based on cost savings were $0.2 million for 2002 and 2003.

Management Services. Third party property management revenues of $1.2 million in 2003 represented an increase of $0.2 million or 25.8% from $1.0 million in 2002. The increase consisted of $0.2 million from a full

year of fees from contracts beginning in 2002 and an increase of $0.2 million from five contracts that commenced in Fall 2003, offset, in part, by the final amortization in 2002 of a deferred cancellation fee in the amount of $0.2 million.

This increase in the volume of our third party service business required us to correspondingly increase the resources and related costs dedicated to the pursuit and delivery of third party services. Consequently, our compensation and benefits, insurance and pursuit costs, increased by $1.0 million or 21.3% from $4.4 million in 2002 to $5.4 million in 2003. In part, these increased expenses reflect our increased staffing needs in this area.

Interest and Other Income

In 2003, interest and other income of $0.1 million decreased by $0.4 million or 78.4% from $0.5 million in 2002. In conjunction with the construction of our Boulder Creek project, we constructed 43 permanently affordable condominiums for sale and received a $0.3 million grant from the local governmental authorities. We deferred this grant and included it in the calculation of the gain from the sale of the units which were approximately $0.3 million and $0.02 million in 2002 and 2003, respectively.

General and Administrative

General and administrative costs of $2.8 million in 2003 represented an increase of $0.8 million or 38.8% from $2.0 million in 2002. The increase was caused primarily by a severance accrual for our former chief executive officer.

Interest Expense

Interest expense of $17.9 million in 2003 represented an increase of $0.5 million or 3.0% from $17.4 million in 2002. The increase consisted primarily of a full year’s interest expense in 2003 relating to a developed property that opened in Fall of 2002 and a partial year’s interest expense on two developed on-campus participating properties that opened in Fall 2003, partially offset by a decrease in interest expense resulting from principal amortization.

Depreciation and Amortization

Depreciation of $9.2 million for 2003 represented an increase of $0.8 million or 9.5% due to a full year’s depreciation of one property placed in service during 2002 and depreciation an on-campus participating property placed in service in 2003. Amortization of deferred financing costs remained constant at $0.6 million for 2003 and 2002.

Comparison of Years Ended December 31, 2002 and December 31, 2001

The following table presents our results of operations for the years ended December 31, 2002 and 2001, including the amount and percentage change in these results between the two periods:


	(in thousands)
	2002			2001			Change ($)			Change (%)
Revenues:
Student housing rental and ancillary revenue	$	32,314		$	26,235		$	6,079		23.2	%
On-campus participating properties rental and ancillary revenues		16,670			13,672			2,998		21.9	%
Third party development services		5,074			2,878			2,196		76.3	%
Third party property management services		945			1,032			(87	)	(8.4	)%
Other income		355			88			267		303.4	%

Total revenues		55,358			43,905			11,453		26.1	%
Operating expenses:
Student housing		15,970			12,258			3,712		30.3	%
On-campus participating properties		8,250			6,469			1,781		27.5	%
Third party development and property management services		4,441			3,373			1,068		31.7	%
General and administrative		2,001			1,659			342		20.6	%
Depreciation		8,412			6,951			1,461		21.0	%
Ground lease (on-campus participating properties)		664			632			32		5.1	%

Total operating expenses		39,738			31,342			8,396		26.8	%

Operating income		15,620			12,563			3,057		24.3	%
Nonoperating income and expenses:
Interest income		167			350			(183	)	(52.3	)%
Interest expense		(17,392	)		(15,556	)		(1,836	)	11.8	%
Amortization–deferred finance costs		(564	)		(406	)		(158	)	38.9	%

Total nonoperating expenses		(17,789	)		(15,612	)		(2,177	)	13.9	%
Minority interest in losses		30			110			(80	)	(72.7	)%

Net loss	$	(2,139	)	$	(2,939	)	$	800		(27.2	)%

Student Housing Properties Operations (Off-Campus)

Revenues from our off-campus student housing properties increased in 2002 by $6.1 million or 23.2% as compared to 2001. This growth came primarily from a full calendar year of operations at two properties that we acquired in 2001 and a property that we developed and opened in 2002, as described below.

New Property Operations. In March 2001 we acquired The Callaway House, a 538-bed property and in November we acquired The Village at Science Drive, a 732-bed property. These properties contributed revenues of $9.3 million and operating expenses of $4.7 million for the full calendar year of operation in 2002, an increase of approximately $5.3 million and $2.6 million, respectively, from their partial first year of operations in 2001, the year of their acquisition. Additionally, in August 2002 we completed construction of a 309-bed property (University Village at Boulder Creek) and opened the property at 100% occupancy for the 2002/2003 academic lease term. This new property contributed revenues of $1.0 million and operating expenses of $0.3 million from its partial first year of operations in 2002.

Same Property Operations (Excluding New Property Activity). We had seven properties containing 4,800 beds in our owned off-campus portfolio in 2002 and 2001 which produced revenues of approximately $22.0 million and $22.2 million in 2002 and 2001, respectively. Our weighted average occupancy of 88.3% for 2002 decreased from 90.3% in 2001.

At these existing properties, operating expenses of $11.0 million in 2002 increased by $0.8 million, or 7.8%, as compared to $10.2 million in 2001. The increase resulted primarily from increases of $0.2 million in property and liability insurance caused by premium increases, $0.2 million in additional provisions for allowance for doubtful accounts related to our implementation of a standardized collections process in early 2002, and increases in allocated expenses related to corporate management and oversight. These increases were partially offset by reductions in other expenses, which include $0.2 million or 12.6% reduction in maintenance and unit “make-ready” costs due to our implementation of an enhanced process.

Student Housing Properties Subject to Leases (On-Campus Participating Properties) Operations

Revenues from our on-campus participating properties represented 30.1% of our total revenues for 2002 compared to 31.1% for 2001. Revenues were $16.7 million in 2002, an increase of $3.0 million or 21.9% from $13.7 million in 2001 due primarily to a full calendar year of operations at a new property constructed in 2001.

New Property Operations. We completed and opened on the campus of Lamar University a 521-bed property in August 2001 and a similar property in August 2002. As contemplated in the deal structure with the University, we transferred our interest in the ground leases to the ground lessor in those same years. In 2002 and 2001, these properties represented revenues of $0.6 million and $0.9 million, respectively, and operating expenses of $0.1 million and $0.3 million, respectively. Additionally we constructed and opened a 525-bed property for the University of Houston in August 2001. In 2002, this property represented revenues of $2.9 million and operating expenses of $1.3 million, compared to revenues of $1.2 million and operating expenses of $0.5 million in 2001.

Same Property Operations (Excluding New Property Activity). We had three properties containing 3,432 beds in our on-campus participating properties portfolio in 2002 and 2001. Revenues from these properties approximated $13.2 million and $11.6 million for 2002 and 2001, respectively an increase of $1.6 million or 13.8%. Weighted average occupancy was 97.4% for 2002 compared to 95.8% for 2001.

Operating expenses for existing properties totaled $6.9 million in 2002, an increase of $1.2 million or 21.0% from $5.7 million in 2001. The increase was largely attributable to payroll and related benefits increases of $0.1 million, maintenance expense increases of $0.2 million, utilities increases $0.2 million, and property and liability insurance expense increases of $0.1 million due to higher premiums.

Third Party Services

Third party service revenues increased from $3.9 million in 2001 to $6.0 million in 2002, an increase of $2.1 million or 53.9%. Third party service revenues represented 10.9% of total revenues for 2002, compared to 8.9% for 2001.

Third party development services revenues of $5.1 million in 2002 increased $2.2 million or 76.3% from $2.9 million in 2001. While there were nine projects underway for both 2002 and 2001, the total contract fees for projects under construction in 2002 approximated $8.3 million compared to $6.3 million for projects under construction in 2001. Incentive fees based on construction savings increased from $0.1 million in 2001 to $0.2 million in 2002.

Third party property management revenues of $0.9 million in 2002 decreased by $0.1 million or 8.4% from $1.0 million in 2001. During 2002, we acquired the ownership interest of a former minority owner, resulting in the elimination in consolidation of the minority owner’s relative share of third party management fee revenue, resulting in the slight decrease in revenues. Four new contracts increased revenues by $0.3 million in 2002. This increase was offset by a non recurring consultation fee earned in 2001 of approximately $0.3 million.

This increase in the volume of third party service business required a corresponding increase in resources related to the pursuit and delivery of third party services. Consequently, these expenses, primarily related to compensation and benefits for increased levels of staffing, insurance and pursuit costs, increased by $1.0 million or 31.7% from $3.4 million in 2001 to $4.4 million in 2002.

Interest and Other Income

Interest and other income of $0.5 million in 2002 increased by $0.1 million or 19.5% from $0.4 million in 2001. The increase consisted of $0.3 million from gains on sales of condominium units related to the Boulder Creek project in 2002 compared to a $0.1 million gain resulting from the sale of a property lease in 2001, offset in part by higher interest income in 2001 due to higher cash balances.

General and Administrative Expense

General and administrative expense of $2.0 million in 2002 increased by $0.3 million or 20.6% from $1.7 million in 2001. The increase consisted primarily of expenses related to personnel costs and increased office expense required by the continued growth of our Company, and increases in insurance expense related to increased coverages and higher premiums.

Interest Expense

Interest expense of $17.4 million for 2002 increased by $1.8 million or 11.8% from $15.6 million in 2001. The increase in interest expense consisted of an increase of $1.2 million from a full year’s interest expense from two properties acquired in 2001 and $0.5 million from one constructed property subject to lease that opened in 2001, and $0.3 million from a developed property opened in 2002 offset by $0.2 million from reductions caused by principal amortization.

Depreciation and Amortization

Depreciation of $8.4 million in 2002 increased by $1.5 million or 21.0% from $7.0 million in 2001 consisting of a full calendar year’s depreciation on three properties acquired or developed in 2001 and a partial year’s depreciation on one property developed in 2002. Amortization of deferred financing costs of $0.6 million in 2002 increased $0.2 million or 38.9% from $0.4 million in 2001 due to the expensing in 2002 of unamortized deferred financing costs of $0.3 million in conjunction with the refinancing of a construction loan.

Pro Forma Operating Results

Comparison of Pro Forma Six Months Ended June 30, 2004 to Historical Six Months Ended June 30, 2004

The following table presents our historic and pro forma results of operations for the six months ended June 30, 2004, including the amount and percentage change in the results between the two periods.

Our pro forma condensed consolidated statement of operations for the six months ended June 30, 2004 is presented as if this Offering and the Formation Transactions, as well as the repayment of certain indebtedness with the proceeds of this Offering and the incurrence of certain other indebtedness, the distribution of The Village at Riverside to an entity jointly owned by RAP and RSVP, and the acquisition of Titan’s minority interests in the ACT Properties, all had occurred on January 1, 2004.


	(in thousands)
	Company Pro Forma			Historical– Predecessor Entities			Change ($)			Change (%)
Revenues:
Student housing rental and ancillary revenue	$	15,722		$	16,722		$	(1,000	)	(6.0	)%
On-campus participating properties rental revenue		8,807			8,807			—		—
Third party development services		4,202			4,202			—		—
Third party property management services		796			772			24		3.1	%
Other income		(8	)		—			(8	)	—

Total revenues		29,519			30,503			(984	)	(3.2	)%
Operating Expenses:
Student housing		7,180			7,769			(589	)	(7.6	)%
On-campus participating properties		3,984			3,984			—		—
Third party development and property management services		2,791			2,791			—		—
General and administrative		1,795			1,045			750		71.8	%
Depreciation		4,627			4,706			(79	)	(1.7	)%
Ground lease (on-campus participating properties)		396			396			—		—

Total operating expenses		20,773			20,691			82		0.4	%

Operating income		8,746			9,812			(1,066	)	(10.9	)%
Nonoperating income and (expenses):
Interest income		25			25			—		—
Interest expense		(7,299	)		(9,070	)		1,771		(19.5	)%
Amortization–deferred finance costs		(224	)		(340	)		116		(34.1	)%
Other nonoperating expenses		58			58			—		—

Total nonoperating expenses, net		(7,440	)		(9,327	)		1,887		(20.2	)%
Provision for income tax		(836	)		—			(836	)	—
Minority interest in (earnings) losses		(6	)		44			(50	)	(113.6	)%

Net income (loss)	$	464		$	529		$	(65	)	(12.3	)%

Student Housing Properties Operations

The distribution of The Village at Riverside resulted in a pro forma reduction of student housing revenues of approximately $1.0 million and direct operating expenses of $0.6 million.

General and Administrative

Pro forma general and administrative expense increased by approximately $0.8 million to reflect adjustments to staffing and compensation to support the needs of a public company and increases in premiums related to directors’ and officers’ liability insurance.

Depreciation

The reduction of $0.08 million reflects the distribution of The Village at Riverside of $0.18 million, offset by an increase of $0.1 million from the acquisition in Titan’s minority interests.

Interest Expense

Pro forma interest expense reflects reductions totaling approximately $1.8 million comprised of $1.6 million related to the repayment of three loans totaling approximately $46.0 million and $0.4 million related to the distribution of The Village at Riverside, partially offset by $0.2 million of additional interest expense resulting from the financing of $5.7 million related to the acquisition of the minority interest in the American Campus–Titan Properties.

Amortization—Deferred Finance Costs

The $0.1 million decrease in amortization expense reflects the write-off of deferred financing costs resulting from the repayment of indebtedness on The Village at Science Drive and The Village on University.

Minority Interest in Losses

The change in minority interest in earnings resulted from the acquisition of Titan’s minority ownership interests in the American Campus–Titan Properties, which eliminated approximately $0.04 million in minority interest in earnings, and a new minority interest in income of $0.01 million which represents the approximately 1.3% minority interest held by the PIU holders.

Comparison of Pro Forma Year Ended December 31, 2003 to Historic Year Ended December 31, 2003

Our pro forma condensed consolidated statement of operations for the year ended December 31, 2003 is presented as if this Offering and the formation transactions, as well as the repayment of certain indebtedness with the proceeds of this Offering and the incurrence of certain indebtedness, the distribution of The Village at Riverside to an entity owned by RAP and RSVP, and the acquisition of Titan’s minority interests in the American Campus–Titan Properties, all had occurred on January 1, 2003.


	(in thousands)
	Company Pro Forma 2003			Historical– Predecessor Entities
	Company Pro Forma 2003			2003			Change ($)			Change (%)
Revenues:
Student housing rental and ancillary revenue	$	31,561		$	33,763		$	(2,202	)	(6.5	)%
On-campus participating properties rental		17,002			17,002			—		—
Third party development services		7,939			7,939			—		—
Third party property management services		1,242			1,189			53		4.5	%
Other income		(35	)		28			(63	)	(225.0	)%

Total revenues		57,709			59,921			(2,212	)	(3.7	)%
Operating Expenses:
Student housing		15,219			16,472			(1,253	)	(7.6	)%
On-campus participating properties		8,031			8,031			—		—
Third party development and property management services		5,389			5,389			—		—
General and administrative		4,278			2,778			1,500		54.0	%
Depreciation		9,058			9,214			(156	)	(1.7	)%
Ground lease (on-campus participating properties)		584			584			—		—

Total operating expenses		42,559			42,468			91		0.2	%

Operating income		15,150			17,453			(2,303	)	(13.2	)%
Nonoperating income and expenses:
Interest income		71			84			(13	)	(15.5	)%
Interest expense		(14,362	)		(17,911	)		3,549		(19.8	)%
Amortization–deferred financing costs		(353	)		(586	)		233		(39.8	)%

Total nonoperating expenses, net		(14,644	)		(18,413	)		3,769		(20.5	)%
Provision for income tax		(702	)		—			(702	)	—
Minority interest in (income) losses		3			16			(13	)	(81.3	)%

Net income (loss)	$	(193	)	$	(944	)	$	751		(79.6	)%

Student Housing Properties Operations

The distribution of The Village at Riverside resulted in a pro forma reduction of student housing revenues of approximately $2.2 million and direct operating expenses of $1.2 million.

Depreciation

The reduction of $0.2 million reflects the distribution of The Village at Riverside of $0.4 million, offset by an increase of $0.2 million resulting from the acquisition of Titan’s minority interests.

Interest Expense

Pro forma interest expense reflects reductions totaling approximately $3.5 million comprised of $3.1 million related to the repayment of five loans totaling approximately $69.8 million and $0.8 million related to the distribution of The Village at Riverside, partially offset by $0.4 million of additional interest expense resulting from the financing of $5.7 million related to the acquisition of the minority interests in the American Campus–Titan Properties.

Amortization—Deferred Finance Costs

The $0.2 million decrease in amortization expense represents the write-off of deferred financing costs from the repayment of indebtedness on The Village at Science Drive and The Village on University.

Minority Interests

The minority interest in losses of $0.02 million was eliminated due to the acquisition of Titan’s minority ownership interests in the American Campus–Titan Properties and a new minority interest in income of $0.01 million which represents the approximately 1.3% minority interest held by the PIU holders.

Cash Flows

Comparison of Six Months Ended June 30, 2004 and June 30, 2003

Operating Activities

For the six months ended June 30, 2004, net cash provided by operating activities before changes in working capital accounts provided $5.6 million, compared to $5.8 million for the six months ended June 30, 2003, a decrease of $0.2 million resulting from the corresponding decrease in net income of $0.4 million and increase in depreciation and amortization of $0.2 million for the six months ended June 30, 2004. Changes in working capital accounts provided $1.9 million for the six months ended June 30, 2004 while $4.2 million was used by changes in working capital accounts for the six months ended June 30, 2003. The change was primarily the result of a decrease in other current assets of $2.7 million for the six months ended June 30, 2004 as compared to an increase of $1.5 million for the six months ended June 30, 2003. This activity was the result of an increase in receivables at June 30, 2003 related to the Williams Village and the Bayou Oaks projects for which payment was subsequently received in the months preceding June 30, 2004. Accounts payable and accrued expenses increased by $0.2 million for the six months ended June 30, 2004 as compared to a decrease of $2.0 million for the six months ended June 30, 2003. The increase in the six months ended June 30, 2004 related primarily to the accrual of Offering costs, offset by a reduction in accrued expenses related to the Fresno fire reconstruction. The decrease in the six months ended June 30, 2003 related primarily to the reduction of accrued pre-development expenses.

Investing Activities

Investing activities used $42.5 million and $4.9 million for the six months ended June 30, 2004 and 2003, respectively. The increase in the cash flows used in investing activities during the six months ended June 30, 2004 related to the Village at Fresno, Village at San Bernardino, and Village at TU off-campus construction projects.

Financing Activities

Cash provided by financing activities totaled $34.9 million and $8.3 million for the six months ended June 30, 2004 and 2003, respectively. Financing of the construction of the Fresno, San Bernardino, and TU projects accounted for $33.7 million and $4.9 million in the six months ended June 30, 2003, respectively. Costs related to this Offering totaled $2.4 million for the six months ended June 30, 2004. Distributions, net of contributions, totaled $1.2 million and $2.4 million for the six months ended June 30, 2004 and 2003, respectively.

Comparison of Years Ended December 31, 2003 and December 31, 2002

Operating Activities

Net cash provided by operating activities before changes in working capital accounts totaled $8.9 million and $6.8 million for 2003 and 2002, respectively, an increase of $2.1 million or 29.5%. The increase was due primarily to an increase in rental revenues representing the impact of the addition of properties and increased development services revenues. Changes in working capital accounts reduced cash from operating activities by $2.6 million in 2003, while changes in capital accounts increased cash by $1.1 million in 2002.

Investing Activities

Net cash used in investing activities totaled $33.7 million and $21.7 million for 2003 and 2002, respectively, an increase of $12.0 million or 55.6%. The increase related to the construction of two on-campus participating properties that opened in 2003 and three off-campus owned properties under construction during 2003 that are scheduled to open in August 2004.

Financing Activities

Net cash provided by financing activities totaled $22.1 million and $11.3 million for 2003 and 2002, respectively, an increase of $10.8 million or 95.3%. This increase was due primarily to borrowings and contributions to fund construction of two on-campus participating properties and three off-campus owned properties under construction during 2003, offset by an increase in distributions to RAP and RSVP of $2.1 million.

Comparison of Years Ended December 31, 2002 and December 31, 2001

Operating Activities

Net cash provided by operating activities before changes in working capital accounts totaled $6.8 million and $4.4 million for 2002 and 2001, respectively, an increase of $2.4 million or 54.7%. The increase was due primarily to acquisitions of two owned off-campus properties in 2001, that resulted in a partial year of operation in 2001 and a full year of operation in 2002, results from on-campus participating properties that were developed in 2001 and 2002, and increases in development services revenues. Changes in working capital accounts increased cash from operating activities by $1.1 million in 2002.

Investing Activities

Net cash used in investing activities totaled $21.7 million and $68.5 million in 2002 and 2001, respectively, a decrease of $46.8 million or 68.3%. Investing activities in 2001 related to the completed construction of one on-campus participating property and the commencement of construction of one owned off-campus property as well as the acquisition of two off-campus properties. Investing activities in 2002 consisted of continued construction of one off-campus owned property and the Commencement of construction of one on-campus property and one off-campus owned property.

Financing Activities

Net cash provided by financing activities totaled $11.3 million and $72.8 million in 2002 and 2001, respectively, a decrease of $61.5 million or 84.5%. Financing activities in 2002 included borrowings and contributions to fund construction of two off-campus owned properties, borrowings to fund construction of one on-campus participating property which was sold to the ground lessor and the related debt repaid in 2002. Financing activities in 2001 included borrowings and contributions to commence construction of one off-campus owned property and the acquisition of two off-campus owned properties and borrowings to fund construction of one on-campus participating property. Additionally, in 2001 $15.5 million was contributed by owners, the majority of which was subsequently distributed back to owners, $8.3 million in 2001 and $4.6 million in 2002.

Liquidity and Capital Resources

We believe that this Offering and the Formation Transactions will improve our financial performance by enabling us to reduce the overall indebtedness encumbering our properties and positioning us to access the public capital markets to fund our growth. Upon completion of this Offering, the Formation Transactions and the repayment of certain of our property-related indebtedness, we will have outstanding long-term indebtedness of approximately $112.6 million that is associated with our off-campus owned properties. We will also have outstanding approximately $61.0 million of long-term bond financing and $17.2 million of mortgage loans associated with our on-campus participating properties, and we will use approximately $5.7 million of the revolving credit facility to acquire substantially all of Titan’s interests in the American Campus–Titan Properties, approximately $1.7 million to retire our outstanding borrowings under our existing line of credit and approximately $0.8 million for the payment of the revolving credit facility loan origination costs. Our total indebtedness will be approximately $199.0 million.

•

consummation of this Offering;

•

the absence of any material adverse change; and

•

satisfactory completion of the lenders’ legal and financial due diligence.

The revolving credit facility will initially be secured, among other things, by mortgages on four of our off-campus properties. The revolving credit facility matures on the third anniversary of the closing date of the Offering. All borrowings under the revolving credit facility are subject to the satisfaction of customary conditions, including the absence of a default and accuracy of representations and warranties.

The Company may increase the size of the revolving credit facility by up to an additional $25 million.

Our revolving credit facility will contain customary affirmative and negative covenants and will also contain financial covenants which, among other things, will require us to maintain certain minimum ratios of “EBITDA” (earnings before interest, taxes, depreciation and amortization) for interest expense and fixed charges. The first test date for

these EBITDA covenants will be the earlier of December 31, 2005 and the date upon which our outstanding borrowings under the revolving credit facility exceed $25 million. Additionally, before December 31, 2005, we may not pay dividends greater than $5 million in any quarter. After December 31, 2005, we will be prohibited from making distributions which exceed 95% of our funds from operations over any four consecutive fiscal quarters. We believe that these covenants will not preclude us from paying our estimated initial annual distribution through June 30, 2005, which estimated distribution totals $4.1 million per quarter (or $4.7 million if the underwriters’ overalloment option is exercised in full). The financial covenants will also include consolidated net worth and leverage ratio tests.

We expect that the interest rates per annum applicable to loans under the revolving credit facility will, at our option, be equal to either a base rate or one-, two-, three- or six-month LIBOR as chosen by us, in each case, plus an applicable margin based upon our leverage. We expect the alternate base rate to be the greater of (1) Deutsche Bank Trust Company Americas’s prime rate or (2) 50 basis points over the Federal Funds Rate as published by the Federal Reserve Bank of New York. The applicable margin is a percentage rate per annum that ranges from 0.25% to 1.25% for base rate loans and 1.50% to 2.50% for LIBOR loans.

Our short-term liquidity needs include funds for distribution payments to our stockholders, including those required to maintain our REIT status and satisfy our current distribution policy, funds for capital expenditures and, potentially, funds for new developments and acquisitions. We expect to meet our short-term liquidity requirements generally through net cash provided by operations and, if necessary, by borrowings under our revolving credit facility.

Our ability to meet our long-term liquidity requirements for the funding of property development, property acquisitions and other non-recurring capital improvements will depend upon our ability to generate sufficient net cash from operations, incur long-term secured and unsecured indebtedness, including borrowings under our revolving credit facility, and issue equity and debt securities, including Units of our Operating Partnership, as to which no assurances can be given. We may seek to replace borrowings under our revolving credit facility with long-term mortgage financing.

We anticipate that, following this Offering, our existing working capital, cash from operations and the cash available from borrowings under our revolving credit facility will be adequate to meet our liquidity requirements for at least the next twelve months.

Properties Under Construction

The outstanding balance of the construction notes and liabilities payable with respect to our three off-campus owned properties currently under construction will be repaid with the net proceeds of this Offering. The remainder of the construction costs will thereafter generally also be funded with the net proceeds of this Offering. At June 30, 2004, the outstanding amounts related to these construction properties, and the remaining budgeted construction costs, were as follows:


	(in thousands)
	Note Payable		Construction Payables Due		Accrued Interest		Remaining Construction Budget(1)		Total to Be Paid From Proceeds		Interest Rate
University Village at Fresno	$	11,461	$	1,386	$	91	$	1,719	$	14,657	3.4	%
University Village at San Bernardino		14,734		3,323		39		1,704		19,800	3.3	%
University Village at TU–Mezzanine		6,550		—		504		—		7,054	18.0	%(2)
University Village at TU–Construction		19,314		5,724		—		8,111		33,149	3.3	%

Total/Weighted Average Rate	$	52,059	$	10,433	$	634	$	11,534	$	74,660	5.2	%

(1)

Will be paid with the net proceeds of this Offering as amounts come due.

(2)

Mezzanine debt–requires an 18% total return.

Recurring Capital Expenditures

Our properties require periodic investments of capital for general capital expenditures and improvements. Our historical recurring capital expenditures at our owned off-campus properties are set forth below:


	As of and for the Years Ended December 31,
	2003		2002		2001
Total units		1,802		1,802		1,610
Total beds		6,070		6,070		5,338	(1)
Total recurring capital expenditures	$	1,154,000	$	1,092,000	$	689,000
Average per unit	$	640	$	606	$	428
Average per bed	$	190	$	180	$	128

(1)

For 2001, total beds have been adjusted to exclude The Village at Science Drive (732 beds), which we acquired in November 2001.

Capital expenditures associated with newly acquired or developed properties are typically capitalized as part of their acquisition price or development budget, so that such properties typically begin to require recurring capital expenditures only following their first year of ownership.

Additionally, we are required by certain of our lenders to contribute amounts to reserves for capital repairs and improvements at their mortgaged properties. These annual contributions may exceed the amount of capital expenditures actually incurred in such year at such properties.

Pre-Development Expenditures

Our third party development activities have historically required us to fund pre-development expenditures such as architectural fees, permits and deposits. Because the closing of a development project’s financing is often subject to third party delay, we cannot always predict accurately the liquidity needs of these activities. We frequently incur these predevelopment expenditures before a financing commitment has been obtained and, accordingly, bear the risk of the loss of these predevelopment expenditures if a financing cannot ultimately be

arranged on acceptable terms. Historically, the development projects that we have been awarded have been successfully structured and financed; however, their development has at times been delayed beyond the period initially scheduled, causing revenue to be recognized in later periods.

Commitments

Upon completion of this Offering, we will have outstanding significant long-term obligations under the participating ground leases with respect to our on-campus participating properties. These ground leases typically provide for payment of a nominal fixed rent (e.g., $100 per annum over the lease term) but require, in addition, payment to the university-ground lessor of 50% of the properties’ net cash available for distribution, calculated and distributed on an annual basis after payment of operating expenses, debt service (which includes significant amounts towards repayment of principal) and capital expenditures. In the years 2003, 2002 and 2001, this amount totaled approximately $0.6 million, $0.7 million and $0.6 million, respectively. We are not contractually required to fund the liquidity needs (if any) of these properties and do not have access to their cash flow (except as indicated above) for any purpose other than operations at these properties.

We hold a leasehold interest in University Village at TU pursuant to a 75-year ground lease with Temple University that requires us to pay annual minimum rent of $0.1 million, plus (i) an annual “preferred return” (defined as the amount by which net revenues exceed $150,000, not to exceed $50,000), and (ii) 1% of the amount by which net revenues exceed the sum of the preferred return plus $150,000. In addition, we must pay the University (a) 1% of the amount, if any, of the refinancing net proceeds and (b) 1% of the amount, if any, of the net proceeds from any sale of our leasehold interest, excluding sales to an affiliate or the University. This property is expected to open in Fall 2004.

We are required to pay $0.5 million in minimum lease payments over the next 5 years under two capital lease obligations relating to technology, furniture, fixtures and equipment.

Under certain third party development agreements, we provide guarantees of alternate housing for students in the event a project is not completed on time for reasons other than force majeure. These guarantees are limited to our related development fees (approximately $4.5 million at December 31, 2003) and would be partially offset by claims that we would have under such circumstances against our general contractor as well as certain savings on budgeted operating expenses that would not be incurred until the property opened. We also provide customary project cost guarantees that do not apply in the event of force majeure. These guarantees are also limited to the amount of the related development fees. Our general contractors are typically liable to us, subject to force majeure and approved change orders, to cover any cost overruns at our projects. These general contractor obligations are typically secured with payment and performance bonds. Our guarantees expire upon our satisfaction of certain “walk through” and other conditions with respect to the development projects, typically not later than one year after completion. In one instance, we have also guaranteed losses of up to $3.0 million in excess of our development fee that result from our failure to maintain, or cause our professionals to maintain, required insurance for a period of five years beyond completion of the project (August 2009).

In connection with our Formation Transactions, we will assume pre-existing guarantees by RAPSH of certain contingent obligations of RAP and RSVP under the non-recourse indebtedness encumbering The Village at Riverside. This indebtedness is scheduled to mature in January 2011 and, as of December 31, 2003, had an outstanding balance of $11.5 million.

The following table summarizes (in thousands) as of December 31, 2003 in the periods in which they are due our contractual obligations after giving effect to the application of the net proceeds from this Offering and the Formation Transactions:


	(in thousands)
Contractual Obligations	Total			Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Long-Term Debt Obligations(1)	$	199,530	(2)	$	2,787	$	6,220	$	7,110	$	183,413
Capital Lease Obligations		491			161		252		78		—
Operating Lease Obligations(3)		10,482			569		1,065		937		7,911
Purchase Obligations		—			—		—		—		—
Other Long-Term Liabilities		—			—		—		—		—

Total	$	210,503		$	3,517	$	7,537	$	8,125	$	191,324

(1)

Includes required monthly principal amortization and amounts due at maturity.

(2)

Includes $8.1 million of indebtedness of Coyote Village that was transferred to Weatherford College in April 2004 and the related indebtedness was repaid by the College.

(3)

Includes only the required annual payment of $100,000 to Temple University under terms of ground lease. Contingent payments to the university-ground lessors with respect to our on-campus participating properties and under the Temple University ground lease are not included because the amounts and timing of these payments cannot be determined with certainty. Our contingent obligation under our Operating Partnership’s guaranty of certain obligations under the indebtedness securing The Village at Riverside has similarly not been reflected.

Long-Term Indebtedness to Be Outstanding After this Offering

Upon completion of this Offering and the Formation Transactions, we will have outstanding long-term indebtedness totaling approximately $199.0 million. This amount includes approximately $61.0 million of long-term bond financing, $17.2 million in mortgage financing associated with our on-campus participating properties and borrowings under our revolving credit facility of $5.7 million related to the acquisition of the American Campus–Titan Properties, approximately $1.7 million to retire our outstanding borrowings under our existing line of credit and approximately $0.8 million for the payment of the revolving credit facility loan origination costs. The following table summarizes our repayment obligations for each of the five years following December 31, 2003 under the consolidated long-term indebtedness that will be outstanding upon consummation of this Offering and the Formation Transactions.


	(in thousands)
	Off-Campus Owned Properties		On-Campus Participating Properties			Total
2004	$	1,190	$	1,597		$	2,787
2005		1,303		1,699			3,002
2006		1,404		1,814			3,218
2007		1,513		1,929			3,442
2008		1,609		2,059			3,668
Thereafter		106,135		77,278	(1)		183,413

Total	$	113,154	$	86,376		$	199,530

(1)

Includes maturity of the $17.3 million Cullen Oaks construction loan, which we intend to refinance at or prior to maturity, and the Coyote Village construction loan, which was repaid in April 2004 by Weatherford College upon our transfer of the ground lease to them.

The weighted average annual interest rate on our total long-term indebtedness as of December 31, 2003 was approximately 7.1%, representing a weighted average annual interest rate of 7.4% on our off-campus property indebtedness and 6.5% on the indebtedness encumbering our on-campus participating properties. Following this Offering, all of our outstanding indebtedness will be fixed rate except for borrowings under our revolving credit facility and the Cullen Oaks construction loan, which had an outstanding balance of $17.2 million as of June 30, 2004 and bears interest at the lender’s prime rate or LIBOR plus 1.9%, at our election. We have in place an interest rate swap agreement which effectively fixes the interest rate on the outstanding balance of the Cullen Oaks indebtedness at 5.5% through maturity in 2008. After completion of this Offering and the Formation Transactions, and the contemplated $5.7 million borrowings under our revolving credit facility to finance the purchase of Titan’s minority interest in the American Campus–Titan Properties, approximately $1.7 million to retire our outstanding borrowings under our existing line of credit and approximately $0.8 million for the payment of the revolving credit facility loan origination costs, and based upon the Offering price of our shares, our ratio of debt to total market capitalization will be approximately 45.1% (41.7% if the underwriters’ over-allotment option is exercised in full), but only 33.3% (30.3% if the underwriters’ overallotment option is exercised in full) if we exclude from this calculation the $78.2 million of indebtedness on our on-campus participating properties. For further information concerning our long-term indebtedness, see “Business and Properties—Indebtedness.”

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Funds from Operations

As defined by NAREIT, FFO represents income (loss) before allocation to minority interest (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization (excluding amortization of loan origination costs) and after adjustments for unconsolidated partnerships and joint ventures. We present FFO because we consider it an important supplemental measure of our operating performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income.

The following table presents a reconciliation of our FFO to our net loss for the years ended December 31, 2003, 2002 and 2001 and to our net income for the six months ended June 30, 2003 and 2004:


	(in thousands)
	Six Months Ended June 30,					Years Ended December 31,
	2004			2003		2003			2002			2001
Net Income (Loss)	$	529		$	977	$	(944	)	$	(2,139	)	$	(2,939	)
Plus: Minority Interest In Income (Losses)		(44	)		21		(16	)		(30	)		(110	)

Loss Before Minority Interest		485			998		(960	)		(2,169	)		(3,049	)
Plus: Depreciation		4,565			4,445		8,937			8,233			6,807

Funds From Operations	$	5,050		$	5,443	$	7,977		$	6,064		$	3,758

While our on-campus participating properties contributed $17 million to our 2003 revenues, under our participating ground leases, we and the participating university systems each receive 50% of the properties’ net cash available for distribution after payment of operating expenses, debt service (which includes significant amounts towards repayment of principal) and capital expenditures. A substantial portion of our revenues attributable to these properties is reflective of cash that is required to be used for capital expenditures and for the amortization of applicable property indebtedness. These amounts do not increase our economic interest in these properties or otherwise benefit us since our interest in the properties terminates upon the repayment of the applicable property indebtedness.

As noted above, FFO excludes GAAP historical cost depreciation and amortization of real estate and related assets because these GAAP items assume that the value of real estate diminishes over time. However, unlike the ownership of our off-campus properties, the unique features of our ownership interest in our on-campus participating properties cause the value of these properties to diminish over time. For example, since the ground leases under which we operate the participating properties require the reinvestment from operations of specified amounts for capital expenditures and for the repayment of debt while our interest in these properties terminates upon the repayment of the debt, such capital expenditures do not increase the value of the property to us and mortgage debt amortization only increases the equity of the ground lessor. Accordingly, when considering our FFO, we believe it is also a meaningful measure of our performance to exclude the operations of our on-campus participating properties and to consider their impact on performance by including only that portion of our revenues from those properties that are reflective of our share of net cash flow and the management fees that we receive, both of which increase and decrease with the operating measure of the properties.

Funds From Operations—Participating Properties:


	In Thousands
	Six Months Ended June 30,						Years Ended December 31,
	2004			2003			2003			2002			2001
Net Income (Loss)	$	529		$	977		$	(944	)	$	(2,139	)	$	(2,939	)
Plus: Minority Interest In Income (Losses)		(44	)		21			(16	)		(30	)		(110	)

Loss Before Minority Interest		485			998			(960	)		(2,169	)		(3,049	)
Plus: Depreciation		4,565			4,445			8,937			8,233			6,807

Funds From Operations		5,050			5,443			7,977			6,064			3,758
Elimination of operations of on-campus participating properties:
Plus: Net (Income) Loss from on-campus participating properties		(19	)		(240	)		(187	)		(197	)		43
Less: Depreciation from on-campus participating properties		(1,710	)		(1,599	)		(3,270	)		(3,158	)		(2,683	)

Funds From Operations Excluding Participating Properties		3,321			3,604			4,520			2,709			1,118
Adjustments to reflect operational performance of on-campus participating properties:
Our Share of Net Cash Flow(*)		396			259			584			664			632
Management Fees		428			384			809			796			806

Impact of Participating Properties		824			643			1,393			1,460			1,438

Funds from Operations—Adjusted for Operational Performance of On-Campus Participating Properties	$	4,145		$	4,247		$	5,913		$	4,169		$	2,556

(*)

50% of the properties’ net cash available for distribution after payment of operating expenses, debt service (including repayment of principal) and capital expenditures. Schedule reflects actual cash received in years 2003, 2002 and 2001, and the amounts accrued for the 50% lessor distribution in the six months ended June 30, 2004 and 2003.

This narrower measure of performance measures our profitability for these properties in a manner that is similar to the measure of our profitability from our services business where we similarly incur no initial or ongoing capital investment in a property and derive only consequential benefits from capital expenditures and debt amortization. We believe, however, that this narrower measure of performance is inappropriate in traditional real estate ownership structures where debt amortization and capital expenditures enhance the property owner’s long-term profitability from its investment. Most of our properties are owned through traditional real estate structures, and we therefore believe that our FFO continues to represent the preferred supplemental measure of our operating performance.

Inflation

Our leases do not typically provide for rent escalations. However, they typically do not have terms that extend beyond 12 months. Accordingly, although on a short term basis we would be required to bear the impact of rising costs resulting from inflation, we have the opportunity to raise rental rates at least annually to offset such rising costs. However, a weak economic environment or declining student enrollment at our principal universities may limit our ability to raise rental rates.

Quantitative and Qualitative Disclosures About Market Risk

Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. The fair value of our fixed rate debt is impacted by changes in interest rates, as an example, a 1% increase in interest rates would cause a $12.1 million decline in the fair value of our fixed rate debt. Conversely, a 1% decrease in interest rates would cause a $14.2 million increase in the fair value of our fixed rate debt. Due to the structure of our floating rate debt and interest rate protection instruments, the impact of a 1% increase or decrease in interest rates on our cash flows would not be significant. Following this Offering, all of our outstanding indebtedness will be fixed rate except for the Cullen Oaks construction loan, which has an outstanding balance of $17.2 million at June 30, 2004 and bears interest at the lender’s prime rate or LIBOR plus 1.9%, at our election, and our revolving credit facility, which bears interest at the lender’s prime rate or LIBOR plus, in each case, a spread based on our total leverage. We have in place an interest rate swap agreement which effectively fixes the interest rate on the outstanding balance of the Cullen Oaks indebtedness at 5.5% through maturity in 2008. We intend to borrow $5.7 million under our revolving credit facility to finance the purchase substantially all of Titan’s interest in American Campus–Titan Properties, $1.7 million to retire our outstanding borrowings under our existing line of credit and approximately $0.8 million for the payment of the revolving credit facility loan origination costs. We anticipate incurring additional variable rate indebtedness in the future, including draws under our $75 million senior secured revolving credit facility. As it relates to the initial $8.3 million draw under our revolving credit facility, if LIBOR or the lender’s prime rate, as applicable, were to increase 1.00%, the increase in interest expense on this variable rate debt would decrease future earnings and cash flows by approximately $83,000 annually. If LIBOR or the lender’s prime rate, as applicable, were to decrease 1.00%, the decrease in interest expense on this variable rate debt would increase future earnings and cash flow by approximately $83,000 annually. We may in the future use derivative financial instruments to manage, or hedge, interest rate risks related to such variable rate borrowings. We do not, and do not expect to, use derivatives for trading or speculative purposes, and we expect to enter into contracts only with major financial institutions.

New Accounting Standards and Accounting Changes

In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Guarantees of Indebtedness of Others,” an interpretation of FASB Statements No. 5, 57 and 107 and rescission of FASB Interpretation No. 34. This interpretation outlines disclosure requirements in a guarantor’s financial statements relating to any obligations under guarantees for which it may have potential risk or liability, as well as clarifies a guarantor’s requirement to recognize a liability for the fair value, at the inception of the guarantee, of an obligation under that guarantee. The initial recognition and measurement provisions of this interpretation are effective for guarantees issued or modified after December 31, 2002 and the disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. As of December 31, 2003, the effect of adoption of FIN 45 on our financial statements was immaterial.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” The standard requires the recognition of costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. This statement is effective for exit or disposal activities initiated after December 31, 2002. This statement did not have a significant impact on our financial statements.

In January 2003, the FASB issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities,” an interpretation of Accounting Research Bulletin No. 51, “Consolidated Financial Statements” (FIN 46). This interpretation requires an existing unconsolidated variable interest entity to be consolidated by its primary beneficiary if the entity does not effectively disperse risk among all parties involved or if other parties do not have significant capital to finance activities without subordinated financial support from the primary beneficiary. The primary beneficiary is the party that absorbs a majority of the entity’s expected losses, receives a majority of its expected residual returns, or both as a result of holding variable interests, which are the ownership, contractual, or other interests in an entity. FASB Interpretation No. 46 was revised in December 2003 (FIN 46(R)) and effectively replaces FIN 46. While retaining a majority of the provisions and concepts of FIN 46, FIN

46(R) provides additional scope exceptions and clarifies the description of variable interests. Public companies are required to apply FIN 46(R) no later than the end of the first reporting period that ends after March 15, 2004. However, prior to the required application of FIN 46(R), public companies are required to apply either FIN 46 or FIN 46(R) to any interests in special purpose entities (SPEs) as of the first interim or annual period ending after December 15, 2003 and the decision to apply FIN 46 or FIN 46(R) may be made on an SPE by SPE basis. This interpretation had no impact on our financial statements.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging.” SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133. The provisions of SFAS No. 149 are effective for contracts entered in after June 30, 2003. Our adoption of SFAS No. 149 did not have a material effect on our results of operations or our financial statements.

INDUSTRY OUTLOOK

Following are excerpts from a market study that we commissioned from the Rosen Consulting Group, LLC, a copy of which is included as an exhibit to the registration statement of which this prospectus is a part. Founded in 1990, Rosen Consulting Group is a California-based real estate and regional economics research and consulting firm. The firm provides expert viewpoints and forecasts on the economy, the capital markets, and the real estate markets for banks, insurance companies and real estate investors. The firm also publishes the quarterly Rosen Report, which provides comprehensive proprietary forecasts and interpretive analysis of key national and regional economic, demographic and real estate market conditions. Certain statistical information included in this report has been licensed by us from Peterson’s, a part of the Thomson Corporation, based in Lawrenceville, New Jersey. Peterson’s publishes and distributes information for consumers about colleges and universities, career schools, graduate programs, distance learning, executive training, private secondary schools, summer opportunities, study abroad, financial aid, test preparation, and career exploration. See “Where You Can Find More Information.”

Privatized Student Housing Outlook: Highlights

We believe there will be a surge in college enrollment in the United States, fueling demand for student housing. Markets in which the Company is currently operating will experience among the largest increases in enrollment, largely as a result of favorable demographic trends.

The major catalyst for enrollment increases and subsequently student housing demand in the coming decade will be the growth in the college-aged population represented by the “Echo Boom” and the increase in the percentage of graduating high school students attending college.

The “Echo Boom” generation are the children of the Baby Boomers who represent a demographic group as large as the Baby Boom generation that was born between 1946 and 1964. While the Baby Boom generation is nearing retirement, much of the Echo Boom generation, which was born between 1977 and 1997, is entering or has yet to enter adulthood. In 2003, 4.0 million Americans turned 18; by 2010, that number will peak at 4.4 million and remain above 4.0 million annually through 2020.

College Enrollment: 1988-2013

LOGO

Additionally, the percentage of high school graduates attending college has been increasing. According to the 2002 report of the U.S. Census Bureau, the share of high school graduates choosing to attend college increased from

45% in 1997 to 65% in 2002. As such, the pool of future college students has been expanding and is poised to increase to record numbers in the coming decade.

During 2003, an estimated 16.4 million students were enrolled in colleges and universities, representing an increase of 14.6% from ten years earlier and adding 2.1 million more students to the college rolls. The Department of Education projects that nationally, enrollments will climb to 18.2 million students by 2013 for an increase of 1.8 million from 2003.

U.S. Regions

LOGO

The impact of demographic changes on college enrollment levels will not be felt equally across all states. During the past decade, the fastest growth of post-secondary enrollment has primarily been concentrated in the Mountain States and the Sunbelt (Southeast and Southwest). The Sunbelt, the Pacific and the Northeast are projected to be the fastest growing regions in college enrollment between 2000 and 2010, fueled by above average growth projections in the young adult population in these regions.

College Enrollment Growth: 2000-2010

LOGO

Among individual states, California, Texas, New York and Florida are projected to have the four largest populations of 18 to 24 year olds during the next decade, according to the U.S. Census Bureau. The fact that these states are major immigration gateways will also bolster future demographic and accompanying college enrollment growth. These four states are forecasted to experience the greatest absolute upsurge in college enrollment. Rounding out the top ten states with the highest absolute enrollment growth projections are Massachusetts, North Carolina, Virginia, Arizona, Illinois and Georgia. Most of the student housing properties currently owned by the Company are located in these “top ten” states. Pennsylvania and Colorado, the only states that are not in the top ten in which the Company currently owns student housing properties, are still expected to have a high rate of natural increase in the 18 to 24 age group and are ranked in the top twenty in projected college enrollment.

Absolute Change in College Enrollment: 2000-2010 (in thousands)

LOGO

The following tables provide information with respect to the states projected to experience the most significant changes in population growth and growth in higher education enrollment between 2000 and 2010. The states in which American Campus Communities currently owns student housing properties are indicated in bold face type:

Population Growth Projections

(Age 18-24)


Rank	State	Change (2000-2010)	% Change (2000-2010)
1	California	1,196,012	38.2	%
2	Texas	395,320	18.6	%
3	New York	302,794	18.6	%
4	Florida	274,826	21.9	%
5	Massachusetts	142,520	26.0	%
6	Georgia	134,177	16.9	%
7	North Carolina	131,863	18.2	%
8	Virginia	122,361	18.5	%
9	New Jersey	105,659	15.1	%
10	Illinois	97,118	8.3	%
11	Arizona	96,911	20.8	%
12	Maryland	94,938	20.3	%
13	Pennsylvania	85,846	8.1	%
14	Washington	73,766	13.2	%
15	Tennessee	55,653	10.2	%
16	Connecticut	53,506	19.4	%
17	South Carolina	49,999	13.6	%
18	Colorado	49,826	12.0	%
19	Michigan	38,027	4.1	%
20	Alabama	35,155	8.1	%

	National Avg.	70,067	14.8	%

Source: U.S. Census Bureau

Enrollment Growth Projections


Rank	State	Change (2001-2010)	% Change (2001-2010)
1	California	783,020	34.0	%
2	New York	174,633	16.6	%
3	Texas	161,494	15.3	%
4	Florida	131,348	18.2	%
5	Massachusetts	93,166	21.6	%
6	North Carolina	62,817	15.3	%
7	Virginia	61,833	16.0	%
8	Arizona	57,206	16.2	%
9	Illinois	50,144	6.7	%
10	Georgia	48,951	13.9	%
11	Maryland	47,497	17.1	%
12	New Jersey	46,459	13.8	%
13	Pennsylvania	39,318	6.4	%
14	Washington	34,192	10.5	%
15	Connecticut	27,816	17.1	%
16	District of Columbia	27,301	35.9	%
17	South Carolina	22,713	12.2	%
18	Colorado	22,707	8.4	%
19	Tennessee	21,319	8.0	%
20	Michigan	17,749	3.1	%

	National Avg.	40,334	13.3	%

Note: Boldface type indicates campuses whose students are served by properties currently owned or managed by American Campus Communities.

Source: U.S. Census Bureau

The states in which American Campus Communities currently owns properties are projected to experience an average 14.7% growth in the population aged 18-24 (an average of 217,634 persons) and 13.4% growth in enrollment (an average of 112,809 persons) between 2001 and 2010.

Several emerging trends will also influence enrollment and demand for student housing in the longer term. Among other things, an increasing number of college students will, in the future, be full-time students. Students attending college full-time are more likely to relocate locally, further increasing the demand for student housing. On the other hand, potential changes in immigration laws related to national security may adversely impact the growth in foreign student enrollment, indirectly impacting student housing.

On the supply side, universities are facing budget shortfalls that we believe are expected to affect their ability to build new housing to accommodate the projected surge in enrollment.

According to data provided by Peterson’s, when analyzing the on-campus housing capacity of each state’s largest public four-year institutions, only 12 of the 50 had the capacity to accommodate more than 30% of their total enrollment in 2003 (see the following chart). The average on-campus capacity for these 50 institutions was only 23%. Therefore, nearly 80% of the students attending these institutions had to rely upon alternatives to university-provided housing. With enrollment set to rise, the number of students who must rely upon off-campus housing alternatives will increase unless the subject universities develop additional housing capacity.

University On-Campus Housing Capacity


American Campus Communities’ Primary Universities Served:	State	Total Enrollment Fall 2003	Total Enrollment Fall 2002	Undergrad Enrollment Fall 2003	Undergrad Enrollment Fall 2002	On-Campus Beds		Beds: % Total Enrollment
Cal State University, Fresno	California	21,209	20,007	17,309	16,086	1,035		4.9	%
Cal State University, San Bernardino	California	16,341	15,985	11,256	11,019	1,012		6.2	%
Texas A&M International University	Texas	3,753	3,373	2,933	2,609	250	(1)	6.7	%
The University of Central Florida	Florida	38,598	35,927	32,044	30,036	3,750		9.7	%
The University of Houston	Texas	34,443	33,007	26,283	25,230	4,124	*(1)	12.0	%
Arizona State University Main Campus	Arizona	47,359	45,693	36,802	35,191	5,600		11.8	%
Temple University	Pennsylvania	32,351	29,872	21,429	19,606	4,429		13.7	%
The University of Georgia–Athens	Georgia	32,941	32,317	24,983	24,395	5,817		17.7	%
The University of Colorado at Boulder	Colorado	30,983	26,609	25,158	23,998	7,100		22.9	%
Texas A&M University	Texas	45,083	44,618	36,775	36,603	10,413		23.1	%
Virginia Polytechnic Institute and State University	Virginia	27,662	26,490	21,468	21,869	8,900		32.2	%
Prairie View A&M University	Texas	7,255	6,747	5,754	5,387	3,390	*(1)	46.7	%

Source: Peterson’s (Rosen Consulting Group is the source of the data contained in the On-Campus Beds column with an “*”).

(1)

Includes on-campus properties owned in partnership with American Campus Communities.

University On-Campus Housing Capacity


Largest Four-Year University in Each of the 50 States:	State	Total Enrollment Fall 2003	Undergrad Enrollment Fall 2003	On-Campus Beds		Beds: % Total Enrollment
Boise State University	Idaho	17,637	15,826	850		4.8	%
University of Alaska Anchorage	Alaska	15,843	15,091	954	*	6.0	%
University of Nevada, Las Vegas	Nevada	24,679	19,761	1,500		6.1	%
Portland State University	Oregon	21,841	15,808	1,560		7.1	%
University of New Mexico	New Mexico	24,593	17,166	2,362	*	9.6	%
Arizona State University	Arizona	47,359	36,802	5,600	*	11.8	%
The University of Texas at Austin	Texas	52,261	39,661	6,613		12.7	%
University of Washington	Washington	39,246	28,362	5,000		12.7	%
University of Minnesota, Twin Cities Campus	Minnesota	48,677	32,457	6,271	*	12.9	%
University of Southern Maine	Maine	11,382	9,017	1,569		13.8	%
Auburn University	Alabama	23,276	19,603	3,339	*	14.3	%
University of Maryland, College Park	Maryland	57,169	57,169	8,714	*	15.2	%
West Virginia University	West Virginia	23,492	16,692	3,600		15.3	%
University of Florida	Florida	47,373	34,031	7,551		15.9	%
University of Hawaii at Manoa	Hawaii	18,696	12,820	2,986		16.0	%
University of Georgia	Georgia	32,941	24,983	5,817		17.7	%
University of Oklahoma	Oklahoma	23,799	19,570	4,282		18.0	%
The Ohio State University	Ohio	49,676	36,855	9,175	*	18.5	%
The University of Iowa	Iowa	29,697	20,487	5,600		18.9	%
University of California, Los Angeles	California	37,599	24,899	7,159		19.0	%
University of Kansas	Kansas	28,196	20,605	5,452	*	19.3	%
University of Kentucky	Kentucky	25,741	17,878	5,109	*	19.8	%
Brigham Young University	Utah	32,408	29,379	6,488	*	20.0	%
University of Arkansas	Arkansas	15,995	12,889	3,245		20.3	%
University of Wyoming	Wyoming	12,745	9,250	2,795		21.9	%


Largest Four-Year University in Each of the 50 States:	State	Total Enrollment Fall 2003	Undergrad Enrollment Fall 2003	On-Campus Beds		Beds: % Total Enrollment
North Carolina State University	North Carolina	29,940	22,780	6,700		22.4	%
University of Colorado at Boulder	Colorado	30,983	25,158	7,100		22.9	%
Louisiana State University and Agricultural and Mechanical College	Louisiana	32,228	26,660	7,599		23.6	%
Mississippi State University	Mississippi	16,610	13,373	4,000		24.1	%
University of Nebraska–Lincoln	Nebraska	22,988	18,118	5,568		24.2	%
University of Rhode Island	Rhode Island	15,929	15,929	3,900	*	24.5	%
University of Wisconsin–Madison	Wisconsin	41,515	29,708	10,565	*	25.4	%
University of North Dakota	North Dakota	12,423	10,277	3,192		25.7	%
The University of Tennessee	Tennessee	27,971	19,956	7,337		26.2	%
University of Illinois at Urbana–Champaign	Illinois	39,999	28,947	10,855		27.1	%
University of South Carolina	South Carolina	25,140	16,567	6,825		27.1	%
The Pennsylvania State University University Park Campus	Pennsylvania	41,445	34,829	11,757		28.4	%
New York University	New York	38,096	19,490	10,961		28.8	%
Virginia Polytechnic Institute and State University	Virginia	27,662	21,468	8,900		32.2	%
Indiana University Bloomington	Indiana	38,903	30,752	12,869	*	33.1	%
South Dakota State University	South Dakota	9,952	8,445	3,400		34.2	%
University of Delaware	Delaware	20,676	17,486	7,072		34.2	%
The University of Montana–Missoula	Montana	13,026	11,152	4,500		34.5	%
Boston University	Massachusetts	28,982	17,860	10,775		37.2	%
Michigan State University	Michigan	44,937	35,197	17,000		37.8	%
Rutgers, The State University of New Jersey, New Brunswick	New Jersey	35,886	28,070	13,851	*	38.6	%
University of New Hampshire	New Hampshire	14,248	11,496	5,500		38.6	%
University of Vermont	Vermont	10,314	8,792	3,977		38.6	%
University of Missouri–Columbia	Missouri	26,124	19,698	10,160		38.9	%
University of Connecticut	Connecticut	21,427	14,716	11,321	*	52.8	%

Note: Boldface type indicates campuses whose students are served by properties currently owned or managed by American Campus Communities.

Source: Peterson’s (Rosen Consulting Group is the source of the data contained in the On-Campus Beds column with an “*”).

However, budget deficits for many states are the worst they have been at any time in the last 50 years, limiting states’ ability to increase funding for education. This is the first time in U.S. history that states have had to face enrollment increases at a time of economic decline. State appropriations for higher education have decreased for a second consecutive year. Except for Florida, each of the states in which the Company currently owns student housing properties has experienced a decline in state appropriations for higher education during the past two years. The ability of each state to boost post-secondary education spending, while simultaneously handling the strain on health care budgets from a rapidly aging population and restoring funding cuts to primary and secondary education, remains to be seen. Traditionally, both health care and primary education have taken precedence over higher education for political reasons and there is unlikely to be enough money to fund all programs completely.

As a result, public university finances are worsening and threatening their capacity to fund significant capital projects such as student housing. A recent survey by the Common Fund for Nonprofit Organizations found that approximately 1,260 colleges and universities in the United States plan to make across-the-board cuts in all academic programs. The same number plans to trim building and maintenance expenditures, which includes new construction projects. Maintenance spending has absorbed the majority of facilities-related budget cuts, though many new construction projects are also being postponed.

The impact of these spending cuts on new student housing construction has been muted so far. According to estimates by the U.S. Census Bureau, university spending on student dormitories actually increased nearly 20% in 2003. However, as this figure measures the value of construction put-in-place, it includes the value of projects that were initiated several years ago under a more favorable funding environment as well as spending on renovating and replacing existing facilities that are aging (see below). Moreover, student housing expenditures

will have to grow significantly in future years to meet the forecasted surge in post-secondary enrollment over the next ten years. A 2003 survey of 118 four-year institutions by College & Planning Management found that an estimated 29,000 new beds will be built over the next five years. Projecting nationally from that sample size, it is estimated that approximately 291,000 new beds will be constructed through 2008. In contrast, college enrollment is expected to increase by 1,031,000 new students over the same period, creating a shortfall of more than 700,000 beds. As a result, growth in state allocations for higher education will need to outpace the increases of the previous decade just to maintain the current public services already in place. It is also questionable whether public universities will be able to allocate increasing percentages of a shrinking state education budget to student housing rather than to other educational facilities and operations.

Putting further pressure on universities’ ability to provide living accommodations, the existing traditional dormitory-style facilities are becoming obsolete and are in need of renovation or replacement.

As Baby Boomers entered college in the 1960s, universities quickly built student housing complexes to accommodate the large influx of incoming students. This stock of student housing is aging and is increasingly in need of major renovations or replacement. Based on a survey conducted by Rosen, the average age of student housing facilities at 20 of the largest institutions in country is over 36 years old, with a low of over 10 years old (University of Central Florida and Florida International University) and high of over 54 years old (University of Michigan) (see chart below). Therefore in addition to the need for additional housing to accommodate an expanding student population, universities must also deal with the problems of maintaining, refurbishing and marketing their aging existing inventory. Many schools have undertaken large-scale renovations and others are under pressure to follow suit to stay competitive. In addition to significant cosmetic upgrades, outdated heating and plumbing systems as well as roofs and windows are being replaced in many on-campus housing facilities. In some cases institutions are finding that the costs of renovations are often prohibitive and are opting to take existing facilities out of service.

This previous building expansion in response to the Baby Boom has also left many colleges and universities with high-density living accommodations that are outmoded for today’s Echo Boom students. What used to be considered rare luxuries, such as kitchens, private bedrooms and bathrooms, Internet connectivity and cable television systems, are now more common and increasingly becoming a factor in a student’s housing and university selection. A survey of 20 of the largest universities in the country revealed that private bedrooms accounted for only 23% of total on-campus capacity. Furthermore, only 33% of students living in on-campus facilities had a bathroom shared with four people or less, and only 17% had a kitchen in their accommodation (see chart below). Student housing that includes such amenities is also more expensive to build. According to a survey by the American School and University’s magazine, the cost per square foot to construct a new residence hall has nearly doubled over the past ten years, from $82 in 1993 to $150 in 2002.

University On-Campus Housing, Age and Amenities


University	Total Enrollment Fall 2003	Average Year Built: On-Campus Housing	Average Building Age	% On-Campus Beds with a Private Bedroom		% On-Campus Beds with a Semi-Private Bathroom*		% On-Campus Beds with a Kitchen
University of Texas	52,261	1966	37.6	16	%	29	%	22	%
Ohio State University	49,676	1961	42.9	17	%	32	%	9	%
University of Minnesota	48,677	1961	42.6	30	%	20	%	15	%
University of Florida	47,373	1962	41.6	24	%	37	%	23	%
Arizona State	47,359	1965	38.6	4	%	18	%	12	%
University of Wisconsin	41,515	1953	51.5	45	%	40	%	40	%
University of Washington	39,246	1962	41.6	17	%	10	%	10	%
University of Michigan	38,972	1949	54.7	36	%	10	%	0	%
University of South Florida	38,854	1986	17.8	39	%	42	%	37	%
University of Central Florida	38,598	1994	10.3	42	%	100	%	40	%
Purdue University	38,546	1960	44.4	19	%	30	%	23	%
University of California, Los Angeles	37,599	1977	27.2	0	%	48	%	10	%
University of Arizona	36,847	1966	38.4	2	%	19	%	0	%
Florida State University	36,210	1988	16.4	5	%	14	%	5	%
California State University, Long Beach	34,566	1975	28.8	2	%	0	%	0	%
University of Houston	34,443	1969	34.5	34	%	60	%	20	%
San Diego State University	34,304	1978	26.2	15	%	28	%	10	%
Florida International University	33,451	1994	10.3	81	%	81	%	81	%
University of California, Berkeley	33,145	1961	42.9	6	%	25	%	5	%
University of Georgia	32,941	1969	34.9	16	%	25	%	16	%
Average**		1967	36.5	23	%	33	%	17	%

Source: Rosen Consulting Group.

Includes bathrooms located in suites with up to four students per bathroom.

Average is weighted by number of beds.

Universities are turning to private sector developers to bridge the gap between demand for on- and off-campus student housing and their ability to provide it from their own capital resources.

To bridge the gap between demand for student housing and the increasing difficulty in providing it, public universities have increasingly looked to the private sector to either develop off-campus housing or to form partnerships to build and renovate on-campus housing. This has allowed the public universities to reduce their capital outlays and administrative costs dedicated to housing as well as preserve limited debt capacity for other uses. Private developers are seeing opportunities to fulfill unmet demand in this niche market and are building fully private off-campus apartment complexes catering specifically to students. A small number of mid-size developers specializing in student housing have been successfully building and managing student apartments off-campus for more than a decade, while larger traditional multi-family developers have recently begun to show interest in the market.

According to a survey conducted in 2003, between 1995 and 2004, $4.5 billion worth of private student housing projects were scheduled to be delivered to the market, for a total of 281 projects. Approximately 70% of these projects were on-campus dormitories, with the remaining 30% being off-campus developments. In total, the survey includes 141,500 beds that have been developed by the private sector.

Several state systems are participating in this trend towards student housing privatization, including Texas, Arizona, Florida, Nebraska, North Carolina, Oklahoma and Tennessee. As college enrollment increases and students demand more and more out of their residences, the trend toward private sector development of student housing is expected to continue and spread to more cities with large student populations.

There is a highly fragmented ownership of student housing properties in which the total size of the private sector pales in comparison to the size of the national demand in the market. None of the top private student housing owner-operators manages more than 25,000 beds.

The student housing market is highly fragmented and so far consolidation in the industry has been limited. According to data provided by Peterson’s, there are more than 16 million students enrolled at post-secondary

institutions as of 2003. By comparison, each of the top eight firms in the student housing market manages only 10,000 to 25,000 beds in both on-campus and off-campus properties. The total of all beds owned and/or managed by these firms represents less than 2% of the total demand for student housing. There are less than 10 firms, including American Campus Communities, that own a multi-regional network of properties and are able to offer an integrated range of specialized student housing services, including design, construction and financing.

None of the specialized student housing firms dominate a particular region. Instead, they each seek to maintain a presence in multiple markets with large student populations. Most are therefore active in the same markets, particularly Texas, California, Florida, Georgia, North Carolina, Arizona and Pennsylvania, due primarily to the presence of large state university systems that allow developers to take advantage of economies of scale. In contrast, the Pacific Northwest and Northeast are two regions in which small, local owner-operators have significant market share.

Although a number of major multi-family developers are known to be considering entering the student housing market, none has yet done so in a meaningful way, perhaps due to the specialized nature of the segment that sets it apart from traditional multi-family housing operations.

THE STUDENT HOUSING BUSINESS

The student housing business is a specialized real estate segment with certain unique operational, marketing and leasing characteristics. It services three distinct customer groups: students, parents and the educational institution that the students attend.

Students. The expectations and demands of college students regarding the amenities and other attributes of student housing have increased over time. Traditional multiple occupancy dormitory rooms with group baths are often viewed today by many students as unacceptable. Instead, many students seek accommodations with private bedrooms and private or semi-private bathrooms, independent cooking facilities and technological capabilities. In addition, our properties’ amenities offer students opportunities for recreational and social interaction with peers. Traditionally, many on-campus facilities have not met these consumer needs.

Parents. While parents are typically receptive to accommodating their child’s desire for modern housing, privacy and appropriate amenities, their primary concern is to ensure that their child is housed in an academically-oriented environment that is conducive to achieving academic success. Management supervision and a safe environment are of primary value to parents. On-campus student housing has therefore been the preferred choice of many parents, particularly for incoming freshmen. Our specialized student housing management and classic Resident Assistant program provide parents with a comfort level that they typically do not have with privately owned off-campus student communities.

Universities and Colleges. Most universities are able to house only a small percentage of their overall enrollment, and are, therefore, highly dependant 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. Accordingly, we view the university or college as a partner rather than as a competitor. Developing and maintaining a good relationship with an educational institution can result in a privately-owned off-campus facility becoming, in effect, an informal extension of the institution’s housing program, with the institution providing highly valued references and recommendations to students and parents.

Our success has in large part resulted from our proven ability to balance our products and services to meet these varying needs and concerns of students, parents and educational institutions. We provide high quality student accommodations that feature private or semi-private bedrooms and baths, extensive recreational and social amenities and the opportunity for the active lifestyle most students are seeking. At the same time, we seek to establish an academic environment that gives parents peace of mind. In addition, we believe educational institutions view us as a premier student housing manager who successfully implements an effective residence life and student development program at each of its communities in a manner consistent with each institution’s own standards and student development objectives. Indeed, a growing number of top educational institutions are calling upon us to provide development, management and leasing services to their own on-campus facilities.

Types of Student Housing

There are two major types of student housing properties: on-campus and off-campus. The most significant differences between them are governance, ownership and location. On-campus student housing is provided under the guidance and regulations of an educational institution, is typically owned by the institution and is located near or adjacent to the classroom buildings and other campus facilities. Off-campus housing is located in proximity to the school campus, generally within walking or bicycling distance and is typically owned by private owner-operators. Off-campus housing facilities tend to offer more relaxed rules and regulations and therefore are more appealing to upper-classmen. For example, off-campus facilities do not have stringent guidelines governing student behavior such as quiet hours or gender visitation limitations.

On-Campus Student Housing. Traditionally, on-campus housing was owned and operated by colleges and universities. As described earlier in “Industry Outlook—Privatized Student Housing Outlook: Highlights,” there

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has been a growing trend to “privatize” on-campus housing. We believe this trend will create significant business opportunities for us. We believe that we are recognized as a premier developer and manager of student housing, and have therefore been able to forge strong and, in some cases, unique relationships with leading educational institutions. As part of our development services, we have been able to assist colleges and universities through a variety of creative structures in accessing alternative capital to fund their housing development needs. We believe we have gained a reputation with colleges and universities for completing our projects on-time and within budget. Since our founding in 1993, we have completed 100% of our on-campus development projects prior to the start of the targeted school year. We are also generally retained to manage the on-campus facilities we develop. We only manage on-campus facilities where where we believe our management services will provide us with opportunities for an expanding relationship with the educational institution.

Our relationships with colleges and universities are fostered through close and continuous working relationships with the appropriate institutional authorities. Each year we have management committee meetings with college and university officials to create budgets, analyze improvement needs and set rental rates. Managing on-campus housing also requires a knowledge and understanding of college and university rules and regulations. Each of our staff members at each facility enforces these rules and regulations to ensure that a comfortable and safe atmosphere is maintained.

Off-Campus Student Housing. We believe that it is of great benefit for an off-campus student housing facility to be in close proximity to the campus and to have sufficient access to the educational institution, such that student residents and parents are able to view it as an attractive alternative to an on-campus facility. Because many educational institutions give on-campus housing priority to incoming freshmen, the student-tenant mix at off-campus facilities tends to be comprised mostly of upper-classmen. Accordingly, at our off-campus facilities, we seek to offer an environment that is more conducive to older students, including rules and regulations that tend to be more relaxed than those at on-campus facilities, but are consistent with maintaining an educational and safe environment for our student-tenants.

We believe that the support of colleges and universities can be beneficial to the success of our off-campus properties. We actively seek to have these institutions recommend our off-campus 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 offer recommendations for off-campus housing or mailing lists, most nonetheless provide 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. Of our 12 off-campus properties, nine are listed either in university publications provided to prospective students and their parents or on the university website.

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BUSINESS AND PROPERTIES

Overview

We are one of the largest private owners, managers and developers of high quality student housing properties in the United States in terms of beds owned and under management. We are a fully integrated, self-managed and self-administered equity REIT with expertise in the acquisition, design, finance, development, construction management, leasing and management of student housing properties. We own 16 high-quality student housing properties, which include 201 buildings containing approximately 3,900 apartment units and 11,800 beds, including three properties which are scheduled to be completed and opened in August 2004 and are currently in their initial lease-up stages. Our owned portfolio includes primarily off-campus properties that:

•

are in close proximity to public universities;

•

contain modern housing units featuring private bedroom accommodations, private or semi-private bathrooms, in-unit washers and dryers, and full kitchens with modern appliances;

•

contain resort-style amenities featuring swimming pools, sand volleyball, basketball, and/or tennis courts, and clubhouses which typically include fitness centers, tanning beds, computer labs, recreation/game rooms, and study rooms; and

•

are supported by a classic Resident Assistant system and other student-oriented programming and services that create a collegiate environment.

•

a surge in college enrollment in the United States, fueling a demand for student housing;

•

budget shortfalls at universities have reduced the availability of capital resources for new student housing to accommodate the projected surge in enrollment;

•

the existing traditional dormitory-style facilities are becoming obsolete and are in the need of renovation or replacement;

•

the growing number of partnerships between universities and the private sector developers to provide on and off-campus student housing; and

•

a highly fragmented ownership of student housing properties in which the total size of the private sectors pales in comparison to the size of the national demand in the market, with no private student housing owner-operator managing more than 25,000 beds.

Our Business

We own and operate 12 off-campus student housing properties within close proximity to nine primary colleges and universities in eight states, including three properties under construction. Additionally, we participate with two university systems in the ownership of four on-campus properties under long-term participating ground/facility leases; we refer to these properties as our “on-campus participating properties.” We are required to pay to the participating universities 50% of the net cash flow from these on-campus participating properties. We manage all 16 of our owned properties.

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System, the University of North Carolina System, the Purdue University System and the University of Colorado System. We have developed student housing properties for these clients and often have been retained to manage and lease these properties following their opening. Since 1996, we have developed and secured financing for 23 third party student housing properties. The aggregate development cost of these properties exceeds $525 million.

We also provide third party management and leasing services for 16 student housing properties that represent approximately 10,500 beds in approximately 3,900 units. We developed 13 of these properties, including four of which are currently under construction and in initial lease-up. Our third party management and leasing services are typically provided pursuant to multi-year management contracts that have an initial term that ranges from two to five years. Together with our owned properties discussed above, we currently manage 32 student housing properties, representing approximately 22,300 beds.

Following is an overview of our Predecessor Entities’ historic business:


	Number of Projects	Number of Beds
PROPERTIES OWNED	16	11,773
Off-Campus	12	7,606
Acquired	8	5,662
Developed	1	309
Under Construction	3	1,635
On-Campus Participating	4	4,167
Developed	4	4,167

	Number of Projects	Number of Beds
PROPERTIES DEVELOPED	31	18,483
Owned	8	6,111
Completed	5	4,476
Under Construction	3	1,635
Third Party	23	12,372
Completed	17	8,304
Under Construction	6	4,068

	Number of Projects	Number of Beds
PROPERTIES MANAGED	32	22,281
Off-Campus	16	11,152
Owned	12	7,606
Third Party	4	3,546
On-Campus	16	11,129
Participating	4	4,167
Third Party	12	6,962

We will elect to be taxed as a REIT for federal income tax purposes commencing with our tax year ending December 31, 2004. In order to qualify as a REIT, our third party services will generally be provided through our Services Company, which is a wholly-owned subsidiary of our Operating Partnership. Our Services Company will be a “taxable REIT subsidiary” under the Code, and, therefore, the income earned by our Services Company will be subject to federal income tax at regular corporate rates and state and local income tax where applicable. See “Federal Income Tax Considerations—Taxation of Our Company.”

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The operations of our participating properties and our third party services are conducted through the Services Company, which is our taxable REIT subsidiary. As such, the net income from these operations is 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 shareholders.

Upon completion of the Offering, we will own 98.7% of the Units in our Operating Partnership and we will serve as its sole general partner. Certain of our officers will own PIUs in the Operating Partnership representing a 1.3% limited partnership interest.

Following this Offering, our board of directors will consist of eight directors, at least five of whom are expected to be classified under applicable New York Stock Exchange listing standards as “independent” directors.

History

We were formed on March 9, 2004 at the direction of RAP and RSVP to continue the student housing business of our Predecessor Entities that had been engaged in the student housing business since 1993.

William C. Bayless, Jr., our President and Chief Executive Officer, Brian B. Nickel, our Executive Vice President, Chief Investment Officer and Secretary, and Mark J. Hager, our Executive Vice President, Chief Financial and Accounting Officer and Treasurer, were our initial directors and RSVP was our sole stockholder. Accordingly, RAP, RSVP and Messrs. Bayless, Nickel and Hager may be considered our promoters. From 1993 to 1997 our Predecessor Entities operated primarily as a third party provider of student housing management and development services to private owners and public institutions of higher education.

In May 1997, an indirect subsidiary of Reckson acquired a majority interest in certain of our Predecessor Entities, which was subsequently contributed to RSVP. In June 1998, FrontLine, RSVP’s indirect parent, was spun off to the shareholders of Reckson. Following the spin-off, Reckson became a principal lender to FrontLine, which used this financing, among other things, to fund RSVP’s investment activities.

From 1996 through 2002, our Predecessor Entities accumulated 14 properties through acquisitions and development, principally through RAP, an entity jointly owned by Reckson and RSVP. This included the acquisition of nine student housing properties, during the 30-month period from May 1999 to November 2001, eight of which are part of our current portfolio. Our business was principally performed through ACCL, a subsidiary of RSVP, and through RAPSH, a subsidiary of RAP. RAP and RSVP provided the equity capital necessary for us to re-focus our Predecessor Entities’ core business primarily on the ownership, acquisition, development and management of owned student housing assets. Our Predecessor Entities continued to provide third party development, management and leasing services to facilitate their new primary objective of asset ownership.

In mid-2001, FrontLine began to experience financial difficulties and subsequently filed for protection under chapter 11 of the Bankruptcy Code. Since that time, additional capital investments in our Predecessor Entities by RAP and RSVP have been significantly reduced and, as a result, the acquisition program of our Predecessor Entities has been curtailed. Among our goals in this Offering is to reinvigorate our program of growth by accessing new sources of investment capital.

Our Properties

We seek to own high quality, well designed and well located student housing properties, through acquisitions or development in under-serviced markets that have stable or increasing student populations and/or in which our reputation and close relationship with the local universities can help us overcome high barriers to entry or provide a competitive marketing advantage. We also target properties that provide the opportunity for substantial economic growth as a result of their quality or proximity to campuses, or through our superior operational capabilities.

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The following table presents certain summary information about our properties. Our properties are generally modern facilities, with 11 of our 16 properties having been built less than six years ago and 14 of our properties having been built less than 10 years ago. Amenities at most of our properties include a swimming pool, basketball courts and a large community center featuring a fitness center, computer center, recreation room with billiards and other games, tanning beds and study areas. Some properties also have a jacuzzi/hot tub, volleyball courts, tennis courts and in-unit washers and dryers. Callaway House also has a food service facility. Three of our off-campus properties are currently under construction and are scheduled to open in August 2004. In the year ended December 31, 2003, and the six months ended June 30, 2004, our properties represented 84.7% and 83.7%, respectively, of our revenues in these periods.

We own fee title to all of these properties except for:

•

The Callaway House (property #6), in which we own an 80% partnership interest and are entitled to significant preferred distributions;

•

University Village at TU (property #12), which is subject to a 75-year ground lease from Temple University; and

•

Four properties (properties #13, 14, 15 and 16) that are on-campus participating properties held under participating ground/facility leases with two university systems. See “—On-Campus Participating Properties.”


Name	Year Built	Date Acquired/ Developed	Primary University Served	Term of Lease	Twelve Months Ended June 30, 2004 Revenue (in thousands)			Average Monthly Revenue/ Bed (1)			Occupancy Rates (1)		Fall 2004 Leases (2)		# of Bldgs	# of Units	# of Beds
Off-Campus Properties
1 Commons on Apache	1987	May-99	Arizona State University Main Campus	12-month	$	1,591		$	331		95.9	%(3)	100.0	%(4)	6	111	444
2 The Village at Blacksburg	1990/1998	Dec-00	Virginia Polytechnic Institute and State University	12-month		3,660			348		75.7		98.3		26	288	1,056
3 The Village on University	1998	Dec-99	Arizona State University Main Campus	10- or 12-month		4,074			470		73.1		86.3		20	288	918
4 River Club Apartments	1996	Aug-99	The University of Georgia– Athens	12-month		3,444			352		97.2		86.8		18	266	794
5 River Walk Townhomes	1998	Aug-99	The University of Georgia– Athens	12-month		1,376			340		95.3		95.6		20	100	340
6 The Callaway House (5)	1999	Mar-01	Texas A&M University	9-month		4,541	(6)		N/A	(6)	73.4	(6)	102.8	(7)	1	173	538
7 The Village at Alafaya Club	1999	Jul-00	The University of Central Florida	12-month		5,028			485		98.5		91.0		20	228	840
8 The Village at Science Drive	2000	Nov-01	The University of Central Florida	12-month		4,540			491		94.3		100.0		17	192	732
9 University Village at Boulder Creek (8)	2002	Aug-02	The University of Colorado at Boulder	12-month		2,663			655		96.1		75.7		4	82	309
10 University Village at Fresno (9)	2004	Aug-04(10)	California State University, Fresno	12-month		N/A			N/A		N/A		82.0		9	105	406
11 University Village at San Bernardino (9) (10)	2004	Sep-04(10)	California State University, San Bernardino	9-month		N/A			N/A		N/A		99.4		6	132	480
12 University Village at TU (9) (11)	2004	Aug-04(10)	Temple University	12-month		N/A			N/A		N/A		100.0	(12)	3	220	749

*Sub Total of Owned Properties:*					$	30,917		$	425		87.1	%	93.7	%	150	2,185	7,606

On-Campus Participating Properties (13)
13 University Village—PVAMU (14)	1996/97/98	Aug-96– Aug-98	Prairie View A&M University	9-month	$	7,271		$	374		95.6	%(16)	82.7	%	30	612	1,920
14 University Village—TAMIU (14)	1997	Aug-97	Texas A&M International University	9-month		1,067			397		96.0	(16)	71.0		4	84	252
15 University College—PVAMU (14)	2000/ 2003	Aug-00 Aug-03	Prairie View A&M University	9-month		5,634			412		94.9	(16)	87.1		14	756	1,470
16 Cullen Oaks (15)	2001	Aug-01	The University of Houston	9- and 12-month		3,017			541		97.9	(16)	95.4		3	231	525

*Sub Total of On-Campus Participating Properties:*					$	16,989		$	410		95.7	%	85.1	%	51	1,683	4,167

*Totals:*					$	47,906	(16)	$	418	(17)	90.6	%	90.7	%	201	3,868	11,773


(1)		Represents average monthly revenue per occupied bed calculated based upon our net student rent (twelve months ended June 30, 2004 revenues less non-rent income) divided by the average occupied beds (total number of beds multiplied by the occupancy rate), then divided by the average lease term. Occupancy Rates are calculated as of June 30, 2004 except where indicated. Occupancy is based on the number of total occupied beds (including beds occupied by staff) divided by total beds.

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(2)		Fall 2004 Leases represents the percentage of total beds that are subject to executed leases for the 2004-2005 academic year as of July 25, 2004.

(3)		Occupancy reflected is as of March 31, 2004. Property has a majority of 10-month leases resulting in occupancy as of June 30, 2004 of 29.2%. We believe the occupancy for June 30, 2004 is not representative of 2003-2004 academic year occupancy.

(4)		Commons on Apache is 100% leased for the 2004-2005 academic year by Arizona State University for a minimum rental of approximately $1,660,000.

(5)		Although we hold an 80% interest in the property, because of our preferred distribution rights, we currently receive substantially all of the property's net cash flow.

(6)		As rent at this property includes food services, revenue is not comparable to the other properties in this chart. For a description of asking monthly rent per bed type at the property, see “Business and Properties—Our Properties—The Callaway House, College Station, Texas.” Occupancy reflected is as of March 31, 2004. Property has primarily 9-month leases resulting in occupancy as of June 30, 2004 of 6.2%. We believe the occupancy for June 30, 2004 is not representative of the 2003-2004 academic year occupancy.

(7)		Based on demand, we are adding double occupancy beds in order to increase capacity over the 538 bed count up to a maximum of 566 beds.

(8)		We are developing and will manage a competing 994-bed on-campus residence hall for the University of Colorado that opened 495 beds in the Fall 2003 semester. The second phase of 499 beds is scheduled to open in the Fall 2004 semester.

(9)		These properties are under construction and scheduled to open in August 2004.

(10)		The California State University has an option to purchase this property for $28.3 million, which option expires 150 days after notice of completion of construction has been given to the University. We believe the university will seek approval to exercise this option.

(11)		Subject to a 75-year ground lease from Temple University.

(12)		Of our 749 beds, Temple University has agreed to master lease up to 400 beds that they intend to make available to their students as part of their annual “Housing Lottery.” As of July 16, 2004, we have executed leases for all of the remaining 349 beds for the 2004-2005 academic year.

(13)		Although our on-campus participating properties account for 43.5% of our units, 35.4% of our beds and 28.9% of our revenues for the twelve months ended June 30, 2004, because of the structure of their ownership and financing we have only received approximately $471,000 in distributions of excess cash flow during the twelve months ended June 30, 2004. 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.

(14)		Subject to a participating ground lease with its primary university system.

(15)		Occupancy reflected is as of March 31, 2004. The properties have primarily 9-month leases resulting in occupancy as of June 30, 2004 of 12.7% for University Village—PVAMU, 31.8% for University Village—TAMIU, 0.0% for University College—PVAMU, and 63.4% for Cullen Oaks. We believe the occupancy for June 30, 2004 is not representative of the 2003-2004 academic year occupancy.

(16)		Excludes revenue from Coyote Village, which was transferred to Weatherford College in 2004, and revenue from The Village at Riverside, which following the Formation Transactions will be owned by an entity affiliated with RAP and RSVP. These revenues are included in our historical revenues.

(17)		Does not include revenues from The Callaway House because of its food service component.

The following describes certain of our material properties:

The Village at Blacksburg, Blacksburg, Virginia. The Village at Blacksburg is located in Blacksburg, Virginia approximately one mile north from the main campus of Virginia Polytechnic Institute and State University, which had a Fall 2003 student enrollment of approximately 27,700.

The University’s on-campus student housing properties can accommodate approximately 8,900 students, and these facilities were 99% occupied in Fall 2003. These on-campus facilities are residence hall style buildings with freshmen accounting for 60% of on-campus occupancy. The University has a residence requirement for freshmen without a permanent address in Montgomery County. The University had planned to erect new housing in 2005 which would include an additional 250 beds in a residence hall facility, but has postponed this plan due to budgetary constraints. The University is building 150 beds for graduate students in a residence hall scheduled to open in Fall 2004.

The off-campus market consists mostly of conventional multi-family housing that is targeted to students. We believe there are 14 competing student housing properties that consist of 9,750 beds (including The Village at Blacksburg). We believe the average occupancy among this group is approximately 86%. We are aware of two prospective developments in the market that would total approximately 300 units.

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The property was built in two phases: Phase I was built in 1990 by a private developer and Phase II was built in 1998 by a competing owner-operator of student housing. Our Predecessor Entities acquired the property in December 2000. The property is located on a 13.6-acre site and consists of 26 two- and three-story, garden-style residential buildings (plus two clubhouses) consisting of wood-frame construction with a brick and siding exterior. There is a total of approximately 337,000 rentable square feet (“rsf”) with 288 apartment units and 1,056 beds, offered in a Two Bedroom/One Bathroom, Two Bedroom/One Bathroom Deluxe, or a Four Bedroom/Two Bathroom unit configuration. Units feature semi-private baths, full kitchen with all appliances (including a microwave and a dishwasher), full-size washer/dryer and high-speed network, cable and telephone hook-ups in each bedroom. All units are fully furnished. Community amenities include computer center with connection to the Internet, fitness center, game room, tanning bed, two swimming pools, jacuzzi, sand volleyball court, tennis court and basketball court. The property has 1,106 parking spaces (1.0 spaces per bed) and is located on the University’s shuttle bus route.

Rental rates include water/sewer, trash and basic cable television, with Internet access as an optional service. The unit mix is as follows:

Phase I


Unit Type	No. Units	Beds/Unit	Beds	Unit SF	Total RSF	Monthly Asking Rent/Bed for 2003-2004
Four Bedroom/Two Bath	132	4	528	1,215	160,380	$	360-370
Two Bedroom/One Bath	36	2	72	745	26,820	$	390-410
Two Bedroom/One Bath Deluxe	12	2	24	776	9,312	$	415-435

Phase I Total	180		624		196,512

Phase II

Unit Type

No. Units

Beds/Unit

Beds

Unit SF

Total RSF

Monthly Asking
Rent/Bed for

2003-2004

Four Bedroom/Two Bath

108

432

1,300

140,400

375-385

Phase II Total

108

432

140,400

Property Total

288

1,056

336,912

The property is rented primarily on full-year leases running from mid-August to mid-August. Rent is collected in 12 equal consecutive installments paid July through June. The occupancy rate was 75.7% as of June 30, 2004 compared to 96.1% as of June 30, 2003, 99.6% as of June 30, 2002, and 100.0% as of June 30, 2001 (the property was acquired in December 2000). As of July 25, 2004, we have received applications with refundable deposits for the upcoming 2004-2005 academic year for 98.6% of the 1,056 beds and executed leases for 98.3% of the 1,056 beds. The average effective annual rental revenue (including ancillary revenue) per bed was $3,976 for 2003, $4,149 for 2002, and $3,946 for 2001 (the property was acquired in December 2000).

The total revenue of the property for the 12 months ended June 30, 2004 was approximately $3.7 million compared to $4.4 million for the 12 months ended June 30, 2003. We believe that the decrease in both revenue and occupancy from June 30, 2003 to June 30, 2004 was due to a softening overall multi-family market in Blacksburg coupled with aggressive rate increases for 2003 that were not well received in the market. We have revised the rental rates to conform with current market conditions for the 2004-2005 academic year. The property is now offering a limited amount of unfurnished units and removing included services (local telephone, Internet) from base rental rates in order to market a lower cost alternative to students. Approximately 82% of the units are estimated to be leased as fully furnished in Fall 2004. With the property being fully leased for the upcoming 2004-2005 academic year, contracted revenue is projected to increase by more than $700,000 over the 2003-2004 academic year.

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Following the Offering, this property will be encumbered by non-recourse mortgage indebtedness in the original principal amount of approximately $22,160,000. This indebtedness bears interest at a fixed annual rate of 7.5% and requires monthly debt service payments sufficient to amortize the debt over a 30-year period. The indebtedness matures in January 2011, at which time it is scheduled to have an outstanding principal balance of approximately $19,600,000.

We have budgeted approximately $399,500 for capital expenditures at this property in 2004. This amount is in excess of our standard per bed capital expense due to the scheduled first time replacement of floor covering, appliances, furniture and roofs of Phase I as well normal recurring items for both phases. Real estate taxes at this property totaled approximately $247,000 for the 12 months ended June 30, 2004. For federal tax purposes, this property has a basis of $22.1 million and is depreciated using the straight-line method and rate over a depreciable life of 27.5 years.

The Village on University, Tempe, Arizona. The Village on University is located in Tempe, Arizona approximately one mile east from the main campus of Arizona State University, which had a Fall 2003 student enrollment of approximately 47,400.

The University’s on-campus facilities can accommodate approximately 5,600 students, and these facilities are currently 100% occupied with a significant wait list. The majority of these on-campus facilities are residence hall style buildings with freshmen accounting for 74% of on-campus occupancy; the University has stated a goal of increasing freshman occupancy to 85% for Fall 2004. The University does not currently have an on-campus housing requirement and does not guarantee housing for its students. The University has plans to develop additional housing projects in the next two years: a 2000-bed freshman housing facility is scheduled to open in 2005 on the south campus and 264-bed fraternity housing facility, also on the south campus, is currently under construction and scheduled to open this August.

The off-campus market consists mostly of conventional multi-family properties that either have been converted to a student housing format or, because of softness in the Phoenix and Tempe multi-family market, are directly targeting students. We believe the directly competing student housing properties consist of 15 complexes with over 7,100 beds (including both of our owned properties, Commons on Apache and The Village on University). We believe the average occupancy for this group of properties is approximately 90%.

Originally built in 1998 by a private developer, The Village on University was acquired by our Predecessor Entities in December 1999. The property occupies a 19.2-acre site and consists of 19 three-story, garden-style residential buildings and a community center/leasing office consisting of wood-frame construction with stucco exterior. The property totals approximately 299,000 rsf with 288 apartment units and 918 beds, offered in a One Bedroom/One Bathroom, Two Bedroom/Two Bathroom, Two Bedroom/Two Bathroom Deluxe, Three Bedroom/Two Bathroom, Four Bedroom/Two Bathroom, or a Four Bedroom/Four Bathroom unit configurations. Units feature private or semi-private baths, full kitchen appliances (including a microwave and dishwasher), full-size washer/dryer and high-speed network, cable and telephone hook-ups in each bedroom. Community amenities include business center with computers connected to the Internet, fitness center, swimming pool, jacuzzi, tanning bed, carports, sports court, game room and sand volleyball court. The property has 956 parking spaces (1.0 spaces per bed) and is located on the University’s shuttle bus route.

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Rental rates include water/sewer, trash, basic cable television and local telephone. The unit mix is as follows:


Unit Type	No. Units	Beds/Unit	Beds	Unit SF	Total RSF	Monthly Asking Rent/ Bed for 2003-2004
Four Bedroom/Four Bath	48	4	192	1,320	63,360	$	470-490
Four Bedroom/Two Bath	96	4	384	1,065	102,240	$	445-455
Three Bedroom/Two Bath	72	3	216	1,165	83,880	$	465-475	(1)
						$	500-510	(2)
Two Bedroom/Two Bath	36	2	72	759	27,324	$	570
Two Bedroom/Two Bath (Deluxe)	18	2	36	774	13,932	$	585
One Bedroom/One Bath	18	1	18	477	8,586	$	780-785

Total	288		918		299,322

(1)

Reflects a two-bedroom configuration that offers a shared bath.

(2)

Reflects a one-bedroom configuration that offers a private bath.

The property is rented primarily on full-year leases running August to August. Rent is collected in 12 equal consecutive installments paid August through July. The occupancy rate as of June 30, 2004 was 73.1% compared to 85.4% as of June 30, 2003, 94.8% as of June 30, 2002, 82.4% as of June 30, 2001, and 99.2% as of June 30, 2000. As of July 25, 2004, we have received applications with refundable deposits for the 2004-2005 academic year for 94.0% of the 918 beds and executed leases for 86.3% of the 918 beds. The average effective annual rental revenue (including ancillary revenue) per bed was $4,719 for 2003, $5,425 for 2002, $5,170 for 2001, and $5,226 for 2000 (the property was acquired in December 1999).

The total revenue of the property for the 12 months ended June 30, 2004 was approximately $4.1 million as compared to approximately $4.7 million for the 12 months ended June 30, 2003. The decrease in revenue and occupancy was the result of competitive pressures from newly constructed conventional multi-family complexes near the property coupled with a softness in the overall Phoenix/Tempe multi-family market. We have instituted changes to this property’s operations, including property- and regional-level managerial changes and re-pricing for a certain number of the units. Moreover, we have leased all of the units at Commons on Apache, our other property in this market, to Arizona State University for a minimum one-year period for a minimum annual rental of approximately $1,660,000 ($14,955 per unit), increasing by 3% a year for each subsequent year. We believe that the University intends to include this facility as part of its on-campus housing lottery. We anticipate being able to absorb a significant number of students being relocated from Commons on Apache to The Village on University property, thereby further enhancing its occupancy rate.

Following the Offering, we expect that this property will be encumbered by a first priority mortgage to the extent of our borrowings under our revolving credit facility to be entered into concurrently with the Offering. We have budgeted capital expenditures of approximately $250,800 in 2004 for this property, mostly for recurring capital expense items such as carpet and furniture replacement. Real estate taxes at this property totaled approximately $208,000 for the 12 months ended June 30, 2004. For federal tax purposes, this property has a basis of $31.2 million and is depreciated using the straight-line method and rate over a depreciable life of 27.5 years.

River Club Apartments, Athens, Georgia. River Club is located in Athens, Georgia approximately four miles west of the main campus of the University of Georgia, Athens, which had a Fall 2003 student enrollment of approximately 32,900. The property also services students from Gainesville College, a local two-year college with two campuses that is part of the University System of Georgia and had a Fall 2003 enrollment of approximately 5,400 students.

The University of Georgia is currently able to accommodate approximately 5,800 students, or approximately 18% of total enrollment. For Fall 2003, on-campus housing was currently 100% occupied with a wait list. The University currently has an additional 1,200-bed residence with dining facility under construction for a Fall 2004

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opening. All current on-campus beds are in residence hall style buildings with double or triple occupancy bedrooms; however the new on-campus development will be all private bedrooms in two- or four-bedroom suites. The University will begin instituting a freshman housing requirement on-campus for Fall 2004.

The off-campus market consists of mostly student housing properties as well as conventional multi-family facilities that directly targets students located within five miles of the University. All of these facilities offer by-the-bed leases and fully furnished units. We believe that there are eight student complexes in the off-campus market that comprise 4,700 beds (including both of our owned properties, River Club Apartments and River Walk Townhomes) and are approximately 91% leased. There are approximately 400 additional off-campus beds under construction in three complexes scheduled to open in Fall 2004.

Originally built in 1996 by a private developer, our Predecessor Entities acquired the property in August 1999 together with the smaller River Walk Townhomes. The property occupies a 92.5-acre site and consists of 17 three-story, garden-style residential buildings and a community center/leasing office of wood-frame construction with Hardiplank^® exterior. There is a total of approximately 315,000 rsf with 266 apartment units and 794 beds, offered in a Two Bedroom/Two Bathroom, Three Bedroom/Three Bathroom, or a Four Bedroom/Four Bathroom unit configuration. Units feature full kitchen appliances (including microwave), full-size washer/dryer, and high-speed network, cable and telephone hook-ups in each bedroom. Approximately 75% of the units are estimated to be leased as fully furnished in Fall 2004. Community amenities include business center with computers connected to the Internet, fitness center, swimming pool, billiards room, sand volleyball court, tennis court and basketball court. Parking at the property is provided for 794 spaces (1.0 spaces per bed). A shuttle bus to the University campus also serves the property throughout the day.

Rental rates include water/sewer, trash and basic cable television. The unit mix is as follows:


Unit Type	No. Units	Beds/Unit	Beds	Unit SF	Total RSF	Monthly Asking Rent/ Bed for 2003-2004
Four Bedroom/Four Bath	104	4	416	1,398	145,392	$	345-355
Three Bedroom/Three Bath	54	3	162	1,167	63,018	$	370-380
Two Bedroom/Two Bath	108	2	216	987	106,596	$	410-420

Total	266		794		315,006

The property is rented primarily on full-year leases running from August to August. Rent is collected in 12 equal consecutive installments paid August through July. The occupancy rate was 97.2% as of June 30, 2004 compared to 96.2% as of June 30, 2003, 80.0% as of June 30, 2002, 91.4% as of June 30, 2001, and 84.1% as of June 30, 2000. As of July 25, 2004, we have received applications with refundable deposits for the 2004-2005 academic year for 89.2% of the 794 beds and executed leases for 86.8% of the 794 beds. The total revenue of the property for the 12 months ended June 30, 2004 was approximately $3.4 million as compared to $3.3 million for the 12 months ended June 30, 2003. The average effective annual rental revenue (including ancillary revenue) per bed was $4,375 for 2003, $3,983 for 2002, $4,008 for 2001, and $4,074 for 2000 (the property was acquired in August 1999).

Following the Offering, this property will be encumbered by non-recourse mortgage indebtedness in the original principal amount of approximately $19,200,000. This indebtedness bears interest at a fixed annual rate of 8.18% and requires monthly debt service payments sufficient to amortize the debt over a 30-year period. The indebtedness matures in August 2010, at which time it is scheduled to have an outstanding principal balance of approximately $17,260,000.

We have budgeted approximately $140,000 for capital expenditures at this property in 2004, mostly for recurring capital items such as carpet and furniture replacement. Real estate taxes at this property totaled approximately $290,000 for the 12 months ended June 30, 2004. For federal tax purposes, this property has a basis of $19.5 million and is depreciated using the straight-line method and rate over a depreciable life of 27.5 years.

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The Callaway House, College Station, Texas. The Callaway House is located in College Station, Texas adjacent to the main campus of Texas A&M University, which had a Fall 2003 student enrollment of approximately 45,100. The property also services Blinn College, a regional two-year college with three campuses that had Fall 2003 enrollment of approximately 13,000. The University can accommodate approximately 10,400 students in its on-campus housing facilities, including 2,600 beds for members of its Corps of Cadets. On-campus housing is currently 95% occupied. Over two thirds of the on-campus facilities are residence hall type buildings with shared or community-style bathrooms. The University does not currently have a housing requirement and does not guarantee housing for its students. Caine Hall, a 210-bed residence hall, will be closed for renovations during the 2004-2005 academic year. We are not aware of any immediate plans by the University to develop any additional on-campus housing.

The off-campus market consists of both garden apartment style student housing and residence hall type buildings with food service that caters to students (such as The Callaway House). We believe that the direct competitive properties in the market consist of four complexes and approximately 2,900 beds (including The Callaway House). Average occupancy at these facilities is approximately 49%. An existing garden apartment style student housing project is constructing a second phase of 336 beds that is scheduled to open in Fall 2004, and we are aware that a potential condominium development may begin construction for a Fall 2004 opening. We have been advised that the prior owner of The Callaway House is seeking to construct a student housing property on an adjacent parcel. There is a restrictive covenant that runs to us in such parcel that restricts the parcel’s development as a full service student accommodation comparable to The Callaway House. The prior owner has advised us that he intends to seek declaratory relief from the courts to interpret the restrictive covenant in a manner that would allow him to develop his planned project. We intend to defend our rights under this restrictive covenant and the competitive position of our property.

Originally built in 1999 in a co-development with our Predecessor Entities and a private developer, the property was acquired by our Predecessor Entities in March 2001 through an acquisition of 80% of a limited partnership. We are the sole general partner and are entitled to receive a preferred 18% return compounded monthly on our unreturned invested capital in the partnership and 80% of all distributions thereafter. As of December 31, 2003, our unreturned invested capital and accrued but unpaid preferred distributions totaled $5.6 million. We believe that our partnership interest and management fees will entitle us to receive substantially all of this property’s cash flow for the foreseeable future.

The property occupies a 3.5-acre site and consists of a single five-story mid-rise residential building constructed of concrete curtain walls with steel support. The property totals approximately 145,000 rsf with 173 units. The property was designed to accommodate 438 beds; however, during peak periods, several unit types can be equipped to accommodate bunk beds and thereby increase the total number of beds to a maximum of 566. The property is currently configured to accommodate 538 beds. Unit configurations include Efficiency, One Bed/One Bath, Two Bed/One Bath (single or double occupancy), Three Bed/Two Bath and Four Bed/Two Bath units in a residence hall-style layout. All units feature private or semi-private baths, full-size refrigerator, microwave and housekeeping. All units are fully furnished. Community amenities include 24-hour customer service desk, fitness center, laundry facilities, game room, mini-theatre, swimming pool with sun deck and secluded study rooms. The property also features an on-site dining hall that is open seven days a week while the University is in session. The property also includes a 5.5-story, 474-space parking garage located next to the property and an additional 120 spaces in an adjacent surface parking lot.

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Rental rates include water/sewer, trash and cable television, and have 61 different payment plans, depending upon floor plan, lease term and food plan. The unit mix is as follows:


Unit Type	No. Units	Beds/Unit	Beds	Unit SF	Total RSF	Monthly Asking Rent/Bed for 2003-2004*
Four Bedroom/Two Bath	56	4	224	1,205	67,480	$	939
Three Bedroom/Two Bath	4	3	12	940	3,760	$	1,028-1,215
Two Bedroom/One Bath (Double)	50	4	200	724	36,200	$	745
Two Bedroom/One Bath (Single)	39	2	78	724	28,236	$	1,110
Efficiency	4	1	4	313	1,252	$	1,267
One Bedroom/One Bath	20	1	20	407	8,140	$	1,462

Total	173		538		145,068

Includes 10 meals per week.

The property is rented primarily on a nine-month lease paid in ten installments paid June through March. As a result of the nine-month lease, occupancy as of June 30 has averaged 10.0% over the past five years, with occupancy at 6.2% for June 30, 2004. The property is being used for conferences during the summer of 2004. During the summer of 2003, the Company generated $694,000 in revenues for similar uses and related food services. We believe the March 31 occupancy to be more representative of historical academic year occupancies. The occupancy rate was 73.4% as of March 31, 2004 compared to 93.3% as of March 31, 2003, 92.0% as of March 31, 2002, and 97.8% as of March 31, 2001 (The property was acquired in March 2001). As of July 25, 2004, we have received applications with refundable deposits for the 2004-2005 academic year for 570 of the 538 design beds and executed leases for 553 of the 538 design beds. The total revenue of the property for the 12 months ended June 30, 2004 was approximately $4.5 million compared to approximately $5.5 million for the 12 months ended June 30, 2003. The decrease in revenue and decline in occupancy reflects a softening in the residence hall market due to the entry of competitive properties. In order to address the increased competition, we have reduced rental rates at this property. With the property being fully leased for the upcoming 2004-2005 academic year, contracted revenue is projected to increase by more than $971,000 over the 2003-2004 academic year. The average effective annual rental revenue (including ancillary revenue) per bed was $9,295 for 2003 and $10,132 for 2002 (the property was acquired in March 2001). It should be noted that rental revenues include food service and summer conference revenues.

Following the Offering, this property will be encumbered by non-recourse mortgage indebtedness in the original principal amount of approximately $20,475,000. This indebtedness is held by an institutional lender, bears interest at a fixed annual rate of 7.10% and requires monthly debt service payments sufficient to amortize the debt over a 30-year period. The indebtedness matures in April 2011, at which time it is scheduled to have an outstanding principal balance of approximately $17,930,000.

The property has experienced some movement in its foundation that has led to cosmetic imperfections on interior walls. A July 2003 property condition report did not find evidence of any apparent major structural damage or mechanical distress at the complex and concluded that it would not be necessary to spend $1.5 million to fully halt future shifting at the foundation. However, we have budgeted $60,000 annually for ongoing wall repairs. In addition to wall repair, we have budgeted approximately $121,500 in capital expenditures for 2004, mostly for recurring expenses such as carpet and furniture replacement.

Real estate taxes at this property totaled approximately $468,000 for the 12 months ended June 30, 2004. For federal tax purposes, this property has a basis of $19.2 million and is depreciated using the straight-line method and rate over a depreciable life of 27.5 years.

The Village at Alafaya Club, Orlando, Florida. The Village at Alafaya Club is located in Orlando, Florida approximately one mile southwest of the main campus of The University of Central Florida, which had a Fall

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2003 student enrollment of approximately 38,600. The property also services students from Valencia Community College, a local two-year college with six campuses in Orange and Osceola County and a Fall 2003 enrollment of approximately 53,000 students, with approximately 16,000 of those being full-time.

The University of Central Florida can accommodate in its on-campus facilities approximately 3,750 students, and these are currently over 100% occupied with a waiting list. Approximately 2,370 beds are in a residence hall style building containing approximately 1,380 beds in an apartment-style configuration. Approximately 62% of the on-campus housing is comprised of double occupancy bedrooms, and approximately 80% of the on-campus housing is occupied by freshmen students. The University does not currently have an on-campus housing requirement and limits available renewals to 20% of existing residents to maximize freshman occupancy on-campus. The University has explored building an additional 800 double occupancy beds on-campus, but no construction has begun at this time. The University also has off-campus affiliated housing bringing the total on-campus or university affiliated beds to 7,947 beds.

The off-campus market consists of established student housing properties located within two miles of the University that offer furnished units, comparable amenities and by-the-bed leases. We believe that the direct competitive properties in the market are comprised of 12 competitive student housing complexes consisting of approximately 10,200 beds (including both of our owned properties, The Village at Alafaya Club and The Village at Science Drive) and approximately 95% are leased for the current period. We are aware of one potential project of 700 beds located over 1.5 miles south of the University that has been in the planning stage for over two years; however, construction has yet to begin.

Originally built in 1999 by a private developer, our Predecessor Entities acquired the property in July 2000. The property occupies a 20.0-acre site and consists of 19 three-story, garden-style residential buildings and a community center/leasing office of wood-frame construction with stucco exterior. The property totals approximately 327,000 rsf with 228 units and 840 beds, offered in either a Three Bedroom/Three Bathroom or Four Bedroom/Four Bathroom unit configuration. Units feature walk-in closets, private baths, full kitchen appliances (including a microwave and dishwasher), full-size washer/dryer and high-speed network, cable and telephone hook-ups in each bedroom. All units are fully furnished. Community amenities include business center with computers connected to the Internet, fitness center, swimming pool, valet trash pick-up, sand volleyball court and basketball court. The property has 851 parking spaces (1.0 spaces per bed). A shuttle bus to the University campus also serves the property every 15 minutes.

Rental rates include water/sewer, trash, basic cable television, local telephone and $30 per person electric allowance. The unit mix is as follows:


Unit Type	No. Units	Beds/Unit	Beds	Unit SF	Total RSF	Monthly Asking Rent/Bed for 2003-2004
Four Bedroom/Four Bath	156	4	624	1,520	237,120	$	465-479
Three Bedroom/Three Bath	72	3	216	1,250	90,000	$	485-499

Total	228		840		327,120

The property is rented primarily on full-year leases running from August to August. Rent is collected in 12 equal consecutive installments paid August through July. The occupancy rate was 98.5% as of June 30, 2004 compared to 97.1% as of June 30, 2003, 97.3% as of June 30, 2002, and 91.4% as of June 30, 2001 (the property was acquired in July 2000). As of July 25, 2004, we have received applications with refundable deposits for the 2004-2005 academic year for 92.4% of the 840 beds and executed leases for 91.0% of the 840 beds. The total revenue of the property for the 12 months ended June 30, 2004 was approximately $5.0 million compared to approximately $4.5 million for the 12 months ended June 30, 2003. The average effective annual rental revenue (including ancillary revenue) per bed was $5,757 for 2003, $5,460 for 2002, and $5,228 for 2001 (the property was acquired in July 2000).

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Following the Offering, this property will be encumbered by non-recourse mortgage indebtedness in the original principal amount of approximately $21,200,000. This indebtedness bears interest at a fixed annual rate of 8.16% and requires monthly debt service payments sufficient to amortize the debt over a 30-year period. The indebtedness matures in August 2010, at which time it is scheduled to have an outstanding principal balance of approximately $19,050,000.

We have budgeted approximately $183,800 in capital expenditures for 2004, mostly for recurring expenses such as carpet and furniture replacement. Real estate taxes at this property totaled approximately $374,000 for the 12 months ended June 30, 2004. For federal tax purposes, this property has a basis of $21.7 million and is depreciated using the straight-line method and rate over a depreciable life of 27.5 years.

The Village at Science Drive, Orlando, Florida. The Village at Science Drive is located in Orlando, Florida approximately one mile southeast of the main campus of The University of Central Florida and, like The Village at Alafaya Club, also services students from Valencia Community College.

The off-campus market consists of established student housing properties located within two miles of the University that offer furnished units, comparable amenities and by-the-bed leases. We believe that the direct competitive properties in the market consist of 12 complexes and approximately 10,200 beds (including both of our owned properties, The Village at Alafaya Club and The Village at Science Drive) and approximately 95% are leased for the current period. We are aware of one potential project of 700 beds located over 1.5 miles south of the University that has been in the planning stage for over two years; however, construction has yet to begin.

Originally built in 2000 by a private developer, the property was acquired by our Predecessor Entities in November 2001. The property occupies a 14.8-acre site and consists of 16 three-story, garden-style residential buildings and a community center/leasing office of wood-frame construction with Hardiplank^® and stucco exterior. The property totals approximately 288,000 rsf with 192 apartment units and 732 beds, offered in either a Three Bedroom/Three Bathroom or Four Bedroom/Four Bathroom unit configuration. Units feature walk-in closets, private baths, full kitchen appliances (including a microwave and dishwasher), full-size washer/ dryer and high-speed network, telephone and cable hook-ups in each bedroom. All units are fully furnished. Community amenities include business center with computers connected to the Internet, fitness center, swimming pool, gated entry, sand volleyball court and basketball court. The property has 732 parking spaces (1.0 spaces per bed). The property is located on the University’s shuttle bus route.

Rental rates include water/sewer, trash, basic cable television, Internet access and electric. The unit mix is as follows:


Unit Type	No. Units	Beds/Unit	Beds	Unit SF	Total RSF	Monthly Asking Rent/Bed for 2003-2004
Four Bedroom/Four Bath	156	4	624	1,557	242,892	$	480-495
Three Bedroom/Three Bath	36	3	108	1,261	45,396	$	500-515

Total	192		732		288,288

The property is rented primarily on full-year leases running from August to August. Rent is collected in 12 equal consecutive installments paid August through July. The occupancy rate was 94.3% as of June 30, 2004 compared to 98.9% as of June 30, 2003 and 91.7% as of June 30, 2002 (the property was acquired in November 2001). As of July 25, 2004, we have received applications with refundable deposits for the 2004-2005 academic year for 100.4% of the 732 beds and executed leases for 100.0% of the 732 beds. The total revenue of the property for the 12 months ended June 30, 2004 was approximately $4.5 million compared to approximately $3.9 million for the 12 months ended June 30, 2003. The average effective annual rental revenue (including ancillary revenue) per bed was $5,871 for 2003 and $5,295 for 2002 (the property was acquired in November 2001).

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budgeted approximately $100,900 in capital expenditures for 2004. Real estate taxes at this property totaled approximately $342,000 for the 12 months ended June 30, 2004. For federal tax purposes, this property has a basis of $18.8 million and is depreciated using the straight-line method and rate over a depreciable life of 27.5 years.

University Village, Fresno, California. University Village is located in Fresno, California adjacent to the campus of California State University, Fresno. The University had a Fall 2003 student enrollment of approximately 21,200.

The University can accommodate approximately 1,000 students in its on-campus facilities, and these facilities are currently 100% occupied. All of the on-campus housing is residence halls. The University does not currently have a housing requirement and does not guarantee housing for any of its students. We actively participate in University sponsored events and marketing opportunities. We are currently partnering with the University for its orientation program as the preferred off-campus housing choice to the approximately 7,500 freshmen and transfer students and parents that attend the orientation sessions throughout the summer. The University has not communicated any further plans to build additional on-campus housing facilities.

The off-campus market consists mostly of older, conventional multi-family units that either have been converted to a student housing format or are directly targeted to students. We believe there are six competing complexes that contain over 1,200 units (containing an unknown number of beds), including University Village. We believe the average occupancy in the market is 97%. We are not aware of any plans to develop any additional multi-family housing in the vicinity of the University.

The property is being built on a four-acre site and will consist of nine connected three-story, garden-style residential buildings and community center consisting of wood-frame construction with stucco exterior. The property will total approximately 121,000 rsf with 105 apartment units and 406 beds, offered in Two Bedroom/Two Bathroom and Four Bedroom/Four Bathroom unit configurations. Units are expected to range in size from 737 rsf to 1,184 rsf and all will feature private bedrooms and baths, washer and dryer, full kitchen appliances (including a microwave and dishwasher) and high-speed network, cable and telephone hook-ups in each bedroom. All units are expected to be fully furnished. Community amenities will include business center with computers connected to the Internet, fitness center, tanning bed, swimming pool, sand volleyball court and basketball court. The property will be rented primarily on a 12-month basis.

In August 2002 our Predecessor Entities commenced construction on the property with a construction budget of approximately $16.1 million. In May 2003 the project was destroyed by a fire set by vandals who were subsequently apprehended. Reconstruction recommenced in August 2003 and the project is scheduled to open in August 2004. The project was insured to a limit of $10 million (with certain sublimits) with an additional excess policy of $2 million. Through May 2004, we have received advance payments from the insurer in the amount of $7.75 million, including $4 million received following December 31, 2003. We have submitted a formal claim to the insurer for approximately $10 million. There can be no assurance as to the amount and timing of any final settlement. Our December 31, 2003 financial statements reflected a $3.7 million receivable due to us with respect to this claim, which was received in the first four months of 2004.

Rental rates are expected to include water/sewer, gas, trash, cable and Internet access. Parking is available at an additional monthly charge per person of $20 for uncovered and $30 for covered parking. The unit mix is as follows:


Unit Type	No. Units	Beds/Unit	Beds	Unit SF	Total RSF	Monthly Asking Rent/Bed*
Four Bedroom/Four Bath	98	4	392	1,184	116,032	$	499
Two Bedroom/Two Bath	7	2	14	737	5,159	$	575

Total	105		406		121,191

Asking prices for 2004-2005 academic year.

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As of July 25, 2004, applications with deposits for the 2004-2005 academic year were received for approximately 91.6% of the 406 beds in the property and executed leases for 82.0% of the 406 beds. Through June 30, 2004, we had incurred approximately $15.9 million in developing this property, and our budget for the project is approximately $16.2 million, although there can be no assurance that the actual cost will not exceed our budgeted amount.

Following this Offering, we expect that the property will be encumbered by a first priority mortgage to the extent of our borrowings under our revolving credit facility to be entered into concurrently with the Offering. We have budgeted approximately $3,000 in capital expenditures for 2004. Real estate taxes at this property totaled approximately $25,000 for the 12 months ending June 30, 2004.

See “Risk Factors—Risks Related to Our Properties and Our Business—Three of our properties are under construction, and we may encounter delays in completion or experience cost overruns.”

University Village at San Bernardino, San Bernardino, California. University Village at San Bernardino is located in San Bernardino, California adjacent to the campus of California State University, San Bernardino. The University had a Fall 2003 student enrollment of approximately 16,300.

The University can accommodate approximately 1,000 students in its on-campus facilities, and these facilities are currently 90% occupied due to some attrition from the commencement of the academic year. Approximately 55% of the on-campus housing are residence halls, with the remainder being apartment style buildings with kitchenettes. The University does not currently have a housing requirement and does not guarantee housing for any of its students. We have an affiliation agreement with the University requiring the University to actively promote the property as part of its housing offering and provide marketing assistance.

The off-campus market consists mostly of older, conventional multi-family units that either have been converted to a student housing format or are directly targeted to students. We believe that the off-campus competitive student housing market consists of seven complexes that contain over 1,500 units (an unknown number of beds), including University Village, of which approximately 97% are leased for the current period.

The property is being built on a nine-acre site and will consist of 5 three-story, garden-style residential buildings and community center consisting of wood-frame construction with stucco exterior. The property will total approximately 134,000 rsf with 132 apartment units and 480 beds, offered in a Two Bedroom/One Bathroom, Four Bedroom/Two Bathroom, or a Four Bedroom/Four Bathroom unit configuration. Units are expected to range in size from 672 rsf to 1,190 rsf and all will feature private or semi-private baths, full kitchen appliances (including a microwave and dishwasher) and high-speed network, cable and telephone hook-ups in each bedroom. All units are expected to be fully furnished. Community amenities will include laundry center, business center with computers connected to the Internet, fitness center, swimming pool, sand volleyball court and basketball court. The property will be rented primarily on a 9-month lease and corresponding 3-month summer session lease.

Rental rates are expected to include water/sewer, gas, trash, electric, cable and Internet access. The unit mix is as follows:


Unit Type	No. Units	Beds/Unit	Beds	Unit SF	Total RSF	Monthly Asking Rent/Bed*
Four Bedroom/Four Bath	24	4	96	1,190	28,560	$	680
Four Bedroom/Two Bath	84	4	336	1,064	89,376	$	650
Two Bedroom/One Bath	24	2	48	672	16,128	$	725

Total	132		480		134,064

Asking prices for 2004-2005 academic year.

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The California State University has an option to purchase this property for $28.3 million, which option expires 150 days after notice of completion of construction has been given to the University. We expect to give this notice during the month of September 2004. We believe the University will seek approval to exercise this option.

As of July 25, 2004, applications with deposits for the 2004-2005 academic year were received for approximately 100.8% of the 480 beds in the property and executed leases for 99.4% of the 480 beds. Through June 30, 2004, we had incurred approximately $21.9 million in developing this property, and our budget for the project is approximately $23.6 million, although there can be no assurance that the actual cost will not exceed budgeted amount.

We have budgeted approximately $3,000 in capital expenditures for 2004. Real estate taxes at this property totaled approximately $29,700 for the months ended June 30, 2004.

See “Risk Factors—Risks Related to Our Properties and Our Business—Three of our properties are under construction, and we may encounter delays in completion or experience cost overruns.”

University Village at TU, Philadelphia, Pennsylvania. University Village at TU is located in Philadelphia, Pennsylvania less than one-quarter mile east of the Temple University campus. The University had a Fall 2003 student enrollment of approximately 32,400.

The University’s current on-campus housing can accommodate approximately 4,400 students, and these facilities are 100% occupied with a significant wait list. The University also leases approximately 1,200 “sponsored beds” in various off-campus apartment complexes. The majority of on-campus housing is either residence hall style or residence suites. The University does not currently have a residence requirement.

There currently are over 800 beds of dedicated student housing in the area, which includes the Kardon Building, a converted loft building located one block east of the campus, and Oxford House, a new student housing development one block west of the campus that is scheduled to open by Fall 2004. In addition to dedicated and sponsored student housing, there is a significant amount of conventional multi-family housing throughout the city (estimated to be over 140,000 units). There is also a significant concentration of multi-family housing in Center City, the Philadelphia downtown area, that is located approximately three miles south of the University’s main campus.

The property is being built on a 2.3-acre site and will consist of three buildings that will be three, four and six stories. Construction will be of steel and concrete with a brick, stucco and metal exterior. The property will total approximately 182,000 rsf with 220 apartment units and 749 beds, offered in a Two Bedroom/One Bathroom, Three Bedroom/Three Bathroom, Four Bedroom/Two Bathroom (double occupancy), or a Four Bedroom/Four Bathroom unit configuration. Units are expected to range in size from approximately 448 rsf to approximately 1,125 rsf, and all will feature private or semi-private baths, full kitchen appliances (including microwave), nine-foot ceilings and high-speed network, cable and telephone hook-ups in each bedroom. All units are expected to be fully furnished. Community amenities will include laundry center, business center with computers connected to the Internet, fitness center, social lounge with big-screen televisions and a game room.

Residents will be required to sign-up for a communications package that includes cable television and Internet access. The property will be rented primarily on full-year leases running mid-August to mid-August. Rent will be collected in 12 equal installments from July through June. The unit mix will be as follows:


Unit Type	No. Units	Beds/Unit	Beds	Unit SF	Total RSF	Monthly Asking Rent/Bed*
Four Bedroom/Four Bath	105	4	420	1,125	118,125	$	655-665
Two Bedroom/Two Bath (Double Occ.)	49	4	196	682	33,418	$	500
Three Bedroom/Three Bath	1	3	3	905	905	$	670-680
Two Bedroom/One Bath	65	2	130	448	29,120	$	625

Total	220		749		181,568

Asking prices for 2004-2005 academic year.

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Of our 749 beds, Temple University has agreed to master lease up to 400 beds that they intend to make available to their students as part of their annual “Housing Lottery.” Students who are eligible to lease these Lottery Beds will execute a lease directly with us. To the extent that all 400 Lottery Beds are not leased by eligible students prior for the commencement of the 2004-2005 lease period, Temple University will lease and pay rent on the remaining unleased beds.

As of July 25, 2004, we have executed leases for 349 of the 349 remaining beds. Through June 30, 2004, we had incurred approximately $32.9 million in developing this property, and our budget for the project is approximately $41.5 million, although there can be no assurance that the actual cost will not exceed the budgeted amount.

We hold a leasehold interest in the property pursuant to a 75-year ground lease (with four six-year options, which may be unilaterally denied by the University) with Temple University that requires us to pay annual minimum rent of $0.1 million, plus (i) an annual “Preferred Return” (defined as the amount by which Net Revenues exceed $150,000, not to exceed $50,000), and (ii) 1% of the amount by which Net Revenues exceed the sum of the Preferred Return plus $150,000. In addition, we must pay the University (a) 1% of the amount, if any, of the refinancing net proceeds and (b) 1% of the amount, if any, of the Sale Net Proceeds from any sale of our leasehold interest, excluding sales to an affiliate or the University. After substantial completion of the property, we may not transfer the lease without the University’s consent, which consent may not be unreasonably withheld. Any proposed transfer of our rights to the property must first be offered to the University. The University has the option at any time, commencing on the 40th anniversary of the rent commencement date (such option vesting date estimated to be no later than September 1, 2044), to purchase our interest in the lease. The purchase price for our leasehold interest is the fair market value of the lease as determined by an appraisal process set forth in the lease. The closing of such transaction will occur within 60 days following the determination of the purchase price. The University also has a right of first offer with respect to any third party receiving or purchasing our leasehold interest.

Following this Offering, we expect that the property (and our leasehold interest) will be encumbered by a first priority mortgage to the extent of our borrowings under our revolving credit facility to be entered into concurrently with the Offering. We have budgeted approximately $3,000 in capital expenditures for 2004. Real estate taxes at this property totaled approximately $3,500 for the 12 months ended June 30, 2004.

See “Risk Factors—Risks Related to Our Properties and Our Business—Three of our properties are under construction, and we may encounter delays in completion or experience cost overruns.”

On-Campus Participating Properties

We currently participate in the ownership of four on-campus properties with two university systems. Under the terms of these arrangements, an affiliate of our Company leases the land under the property (or the facility itself) from the local educational institution and funds the development and construction costs generally with long-term financing that is secured by our leasehold interest. The debt service and maturity of the financing is structured to closely coincide with the terms of the ground lease. Legal title to the land and improvements is owned by the local educational institution. We manage the facility and, after payment of our management fees, the property’s net cash flow is shared with the educational institution. The institution typically retains the option to purchase our interest in and assume the management of the facility; the purchase price is calculated at the discounted present value of the present cash value of our leasehold interest.

While the terms of each specific ground lease agreement tend to vary in certain respects, the following terms are generally common to all:

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Term: 30-40 years, subject to early termination upon repayment of the mortgage financing, which generally has a 25-year amortization.

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Ground Lease Rent: Typically a nominal amount (e.g., $100 per annum over the lease term) plus 50% of net cash flow.

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Financing: The mortgage financings for University Village–PVAMU, University College–PVAMU and University Village–TAMIU are non-recourse and limited to our leasehold interest in the facility. Loans are structured either as conventional leasehold or taxable bond financing. We are permitted to grant additional mortgage liens on our leasehold interest without the educational institution’s consent provided that the funds are used for the facility’s operation and maintenance, to pay funds owed to the institution or to repay existing mortgage debt. The loan for Cullen Oaks is a construction loan with customary recourse provisions. See “—Indebtedness” below.

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Contingent Master Lease Obligation: If, at the beginning of a semester, the student rentals are projected to be insufficient to cover project expenditures (other than management fees) as estimated in the property’s annual budget (the so-called “Financial Break-Even Point”), the educational institution (or university system) is obligated to lease beds for an amount sufficient to cause the project to achieve the Financial Break-Even Point. Until such supporting lease payments by the institution are repaid, our management fee is deferred and the institution is entitled to receive 100% of the property’s net cash flow. Once these supporting lease payments have been repaid, net cash flow is used first to pay our deferred management fees. This “contingent master lease obligation” expires once the project debt receives an investment grade bond rating, which to date has been achieved at University Village–PVAMU and University College–PVAMU.

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Policy Committee: We and the educational institution each appoint representatives to a Policy Committee which approves policies and operating procedures regarding residents, budgeting and successors to our manager entity at the project.

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Property Manager: Generally, the initial manager has been one of our subsidiaries. The management agreements typically have an initial 5-year term, and thereafter are automatically renewed on a month-to-month basis with mutual termination rights upon 30 days’ notice. Our duties as manager are similar to those as a manager of our owned properties. The management agreements terminate upon termination of our ground lease.

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Transferability: The educational institution’s consent, which may not be unreasonably withheld, is required prior to our assignment of any interest in our ground lease; provided, however, that consent is not required for any assignment to one of our affiliates. Other than with respect to student rentals, the institution’s consent is required prior to our subletting of the site.

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Default/Remedies: We have 60 days to cure any monetary default and 180 days to cure any non-monetary default, following our receipt of written notice of such default.

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Purchase Option & Right of First Refusal:

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The educational institution typically has an option to purchase our leasehold interest for the lesser of:

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(i) the fair market value, or

•

(ii) the present cash value of our leasehold interest discounted to present value at a 9.5% per annum discount rate, plus the cost of repayment or defeasance of all debt secured by our leasehold interest.

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The institution typically has a right of first refusal to purchase our leasehold interest in the event we propose to sell it to any third party.

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University Promotions: The educational institution has an obligation to promote the project, include information relative to the project in brochures and mailings and to permit us to advertise the project.

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Student Occupancy Rents: Without the educational institution’s consent, we may not increase rental rates by a percentage greater than the percentage increase in our property operating expenses plus the amount of any increases in debt service.

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Indebtedness: Our on-campus participating properties are secured by approximately $78.2 million of indebtedness, including the construction loan on Cullen Oaks.

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Although our on-campus participating properties account for 43.5% of our units, 35.4% of our beds and 28.9% of our revenues for the six months ended June 30, 2004, because of the structure of their ownership and financing we have only received approximately $471,000 in distributions of excess cash flow for the twelve months ended June 30, 2004. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Structure of On-Campus Participating Properties.”

University Village (PVAMU), Prairie View, Texas. University Village was developed by our Predecessor Entities in three phases between 1996 and 1998 in conjunction with the Texas A&M System on behalf of Prairie View A&M University on sites totaling 31.2-acres on the campus of the University. The property is located in the heart of the campus adjacent to the University’s core academic buildings. The Prairie View A&M University campus is located in Prairie View, Texas and had a Fall 2003 enrollment of approximately 7,300 students. University Village and University College represent all of Prairie View A&M University’s on-campus housing. There is no substantial or comparable off-campus product in the market that caters to students of the University.

The property occupies a 31-acre site on the University campus and consists of 30 three-story, garden-style residential buildings of wood-frame construction with brick and Hardiplank^® exterior. The property totals approximately 505,000 rsf with 612 apartment units and 1,920 beds, offered in a Two Bedroom/Two Bathroom or a Four Bedroom/Two Bathroom unit configuration. Units feature private and semi-private baths, microwave, refrigerator and high-speed network hook-ups in each bedroom. All units are fully furnished. Community amenities include three community centers featuring computer lab, fitness centers, a self-service hair salon, television/social lounges, sub-divisible multipurpose room, sand volleyball court, basketball sport court and picnic/barbecue gathering areas. The property has 1,924 parking spaces (1.0 space per bed).

Rental rates include water/sewer, trash services and a $25 monthly electric allowance. The unit mix is as follows:

Phases I & II


Unit Type	No. Units	Beds/Unit	Beds	Unit SF	Total RSF	Monthly Asking Rent/Bed for 2003-2004
Four Bedroom/Two Bath	294	4	1,176	900	264,600	$	402
Two Bedroom/Two Bath	72	2	144	630	45,360	$	453

Total Phases I & II	366		1,320		309,960

Phase III


Unit Type	No. Units	Beds/Unit	Beds	Unit SF	Total RSF	Monthly Asking Rent/Bed for 2003-2004
Four Bedroom/Two Bath	54	4	216	1,030	55,620	$	464
Two Bedroom/Two Bath	192	2	384	727	139,584	$	523

Total Phase III	246		600		195,204

Property Total	612		1,920		505,164

The property is rented primarily on an academic year basis, with rent paid in eight consecutive monthly installments. As a result of the academic year leases, occupancy as of June 30 has averaged 13.0% over the past five years, with occupancy at 12.7% for June 30, 2004. We believe the March 31 occupancy to be more representative of historical academic year occupancies. The occupancy rate was 95.6% as of March 31, 2004 compared to 97.2% as of March 31, 2003, 93.9% as of March 31, 2002, 91.3% as of March 31, 2001, and 94.9% as of March 31, 2000. As of July 25, 2004, we have received applications with refundable deposits for the 2004-2005 academic year for 114.6% of the 1,920 beds and executed leases for 82.7% of the 1,920 beds. The property

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had total revenue for the 12 months ended June 30, 2004 of approximately $7.3 million compared to $7.2 million for the year ended June 30, 2003. The average effective annual rental revenue (including ancillary revenue) per bed was $3,774 for 2003, $3,747 for 2002, $3,410 for 2001, $3,300 for 2000, and $3,060 for 1999.

Per our ground lease agreement, we receive 50% of net distributable cash in addition to management fee income. Our total revenue from this property was approximately $379,000 for the 12 months ended June 30, 2004 compared to $351,000 for the 12 months ended June 30, 2003. Our ground lease expires on August 31, 2038; however, the facility lease agreement states that in no event will the lease extend beyond the full and final repayment of all indebtedness incurred. Pursuant to the facility lease agreement, the scheduled final maturity of the debt will not be later than September 1, 2023 (current debt expires September 1, 2023).

Following the Offering, this property will be encumbered by non-recourse mortgage indebtedness in the original principal amount of approximately $34,060,000 securing a taxable bond financing that also was used to finance University Village–TAMIU. Following are the next five scheduled debt service payments under this financing, which payments will fully amortize this loan by its scheduled maturity in 2023:


YEAR	INTEREST		PRINCIPAL		TOTAL
2004	$	2,412,249	$	733,000	$	3,145,249
2005	$	2,360,866	$	781,000	$	3,141,866
2006	$	2,303,227	$	841,000	$	3,144,227
2007	$	2,241,162	$	902,000	$	3,143,162
2008	$	2,174,594	$	967,000	$	3,141,594
Thereafter through Maturity .	$	19,782,723	$	27,360,000	$	47,142,723

We have budgeted approximately $296,500 in capital expenditures for 2004, mostly for recurring expenses such as carpet and furniture replacement. Due to its financing structure, this property is exempt from real estate taxes and did not pay any taxes for the 12 months ended June 30, 2004. For federal tax purposes, this property has a basis of $31.5 million and is depreciated using the straight-line method and rate over a depreciable life of 27.5 years.

University College (PVAMU), Prairie View, Texas. University College was developed by our Predecessor Entities in two phases between 2000 and 2003 in conjunction with the Texas A&M system and on behalf of Prairie View A&M University. The property is dedicated housing for freshman students at the University. The property is located in the heart of the campus adjacent to the University’s core academic buildings.

The property occupies a 10.5-acre site on the campus of the University and consists of 14 three-story, garden-style residential buildings of wood-frame construction with brick and Hardiplank^® exterior with interior corridors. The property totals approximately 202,000 rsf with 756 apartment units and 1,470 beds offered in a Two Bedroom/One Bathroom unit configuration with One Bedroom/One Bathroom and Efficiency Staff Units. Units feature private bedrooms, semi-private baths, micro-fridge and high-speed network hook-ups in each bedroom. All units are fully furnished. Community amenities include a computer center, fitness center, movie theater, academic counseling center and housekeeping service. Parking at the property is provided for 150 spaces (0.1 spaces per bed), as freshman are required to park on the north- and west-side lots of campus.

Rental rates include water/sewer, trash, cable television, local telephone and electric. The unit mix is as follows:


Unit Type	No. Units	Beds/Unit	Beds	Unit SF	Total RSF	Monthly Asking Rent/Bed for 2003-2004
Two Bed/One Bath Suite (Double)	714	2	1,428	253	180,642	$	442
One Bed/One Bath Suite (Single)	18	1	18	567	10,206		Staff Bed
Efficiency	24	1	24	471	11,304		Staff Bed

Total	756		1,470		202,152

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The property is rented primarily over the academic year with eight consecutive monthly payments. As result of the academic year leases, as of June 30 each year, the property is typically vacant. However, the property is expected to generate $425,000 this summer in summer conference revenue. We believe the March 31 occupancy to be more representative of historical academic year occupancies. The occupancy rate was 94.9% as of March 31, 2004 compared to 98.7% as of March 31, 2003, 99.3% as of March 31, 2002, 97.4% as of March 31, 2001 (the first phase of the property was developed in August 2000). As of July 25, 2004, we have received applications with refundable deposits for the 2004-2005 academic year for 99.3% of the 1,470 beds and executed leases for 87.1% of the 1,470 beds. The property had total revenue for the 12 months ended June 30, 2004 of approximately $5.6 million compared to $5.0 million for the 12 months ended June 30, 2003. The average effective annual rental revenue (including ancillary revenue) per bed was $3,968 for 2003, $3,831 for 2002, and $3,162 for 2001 (the property was developed in August 2000).

Per the ground lease agreement, we receive 50% of net distributable cash along with management fee income. The total revenue (including management fees) received by us from this property for the 12 months ended June 30, 2004 was approximately $577,000 compared to $530,000 for the 12 months ended June 30, 2003. Our ground lease expires on August 31, 2039; however, the facility lease agreement states that in no event will the lease extend beyond the full and final repayment of all indebtedness incurred. Pursuant to the facility lease agreement, the scheduled final maturity of the debt will be no later than August 31, 2028 (current debt expires in August 2025 and August 2028).

Following the Offering, this property will be encumbered by two non-recourse mortgage loans in the aggregate original principal amount of approximately $25,320,000 securing two series of taxable bond financings. Following are the next five scheduled debt service payments under this financing, which payments will amortize these loans through their scheduled maturities in 2028.


YEAR	INTEREST		PRINCIPAL		TOTAL
2004	$	1,726,024	$	510,000	$	2,236,024
2005	$	1,699,278	$	540,000	$	2,239,278
2006	$	1,666,449	$	570,000	$	2,236,449
2007	$	1,631,655	$	605,000	$	2,236,655
2008	$	1,594,703	$	640,000	$	2,234,703
Thereafter through Maturity .	$	17,297,678	$	21,830,000	$	39,127,678

We have budgeted approximately $189,500 in capital expenditures for 2004, mostly for recurring expenses such as carpet and furniture replacement. Due to its financing structure, this property is exempt from real estate taxes and did not pay any taxes for the 12 months ended June 30, 2004. For federal tax purposes, this property has a basis of $22.8 million and is depreciated using the straight-line method and rate over a depreciable life of 27.5 years.

American Campus–Titan Development Relationship

Since April 2000 our Predecessor Entities were party to two joint ventures with Titan Investments, a third party developer, for the development of off-campus student housing properties. One such property, University Village at Boulder Creek, has been open and operating since Fall 2002. Three other properties, University Village at San Bernardino, University Village at Fresno and University Village at TU, are currently in construction and are scheduled to open in Fall 2004. Titan invested 5% of the equity in these joint ventures and was entitled to receive an additional 28% promoted interest following receipt by our Predecessor Entities and Titan of a cumulative return on their invested capital. In conjunction with this Offering and as part of the Formation Transactions, we will acquire substantially all of Titan’s minority interest in these properties for an aggregate purchase price of approximately $5.7 million and will acquire the balance through our acquisition of RAPSH.

After this Offering, we will continue to pursue selected developments with Titan. Titan will be required to offer us a right of first refusal on all of Titan’s student housing investment opportunities. In the event that we elect to

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undertake the development opportunity, we will fund all of Titan’s predevelopment costs, escrow amounts and land acquisition costs. If we elect not to undertake the development opportunity, Titan will have the right to pursue such opportunity at its discretion, subject to certain non-compete provisions. We will, at all times, have the right to pursue student housing activities and the acquisition, development and ownership of student housing properties outside of the framework of our development arrangement with Titan.

Upon the closing of any future project that we elect to undertake, Titan will earn a development fee and will own a 30% carried interest in the project after we have received a cumulative preferred return on total project costs (including costs funded with indebtedness). The preferred return will initially be 7.5% and will be adjusted for each project to reflect our then-current cost of equity and debt capital. We will provide construction management services for each such property and will receive a construction management fee equal to 2.5% of total development costs.

Following completion of the project’s first full calendar year of operations, Titan will have the right to have its property interest valued and put to us for cash or Units, at our election. If Titan elects to put its interest in a property to us, we will have the right at that time to purchase Titan’s interest in any other projects that, based upon their valuation at that time, fail to exceed our preferred return. Upon completion of a project’s fifth full year of operations, we will have the right to call Titan’s property interest at its market value at that time, for cash or Units, at our election.

Third Party Services

During the last decade, colleges and universities have turned to the private sector for assistance in developing and managing their on-campus student housing properties. We believe that we are considered one of the leaders in the privatization of student housing. Our clients have included some of the nation’s most prominent systems of higher education including the State University of New York System, the University of California System, the Texas A&M University System, the Texas State University System, the University of Georgia System, the University of North Carolina System, the Purdue University System and the University of Colorado System.

Our reputation and track record have enabled us to selectively pursue those third party services that enhance our Company’s reputation and franchise value as well as those that may enhance our primary goal of developing and acquiring assets. Our development services provide us with ancillary benefits with respect to product development, development and construction management infrastructure and purchasing power. Our management and leasing services provide us with inroads into additional markets as well as providing an expanded geographical and human resource infrastructure for the management of our owned assets.

Development Services

We typically provide our third party development 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 or RFP process that qualifies developers based on their overall capability to provide specialized student housing design, development, construction management and financial structuring services.

We believe that we are recognized today as one of the nation’s premier student housing development companies, having developed 31 student housing properties, including six that are currently under construction, for 20 client institutions. The aggregate development costs for these projects exceeds $525 million.

In the year ended December 31, 2003, and the six months ended June 30, 2004, our fees from development services represented 13.2% and 12.2%, respectively, of our revenues in these periods.

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Our development services typically include our pre-development services, construction management and financial structuring services. Our pre-development services typically include feasibility studies for third party owners and design services. Feasibility studies include (i) initial feasibility analysis, (ii) approval and review of conceptual design and (iii) assistance with creation of master planning scenario. Some of the documents produced in this process include the site plan, conceptual design, preliminary budget and cash flow statements and preliminary marketing assessment. Our design services include (i) coordination with the architect, (ii) review of construction plans and (iii) assistance with project due diligence and project budget.

Construction management is supervision of the construction, equipping and furnishing process on behalf of the project owner, including site visits, hiring of a general contractor and engineers, and coordination of project completion in accordance with plans and specifications and with adequate insurance. In certain cases (Weatherford College and two phases of housing at Lamar University), we performed these services by entering into a ground lease with the university and constructing the facility which was then acquired by the university.

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 and in development and construction projects under various labor conditions, including right-to-work labor markets, markets subject to prevailing wage requirements and fully unionized environments.

In third party developments, we typically provide guarantees of the obligations of the developer, including development budgets and timely project completion. We seek to mitigate our risk under these completion guarantees by, among other things, obtaining similar guarantees from the project contractors. We have never had any of our guarantees called by any university.


Property		University	Location	Description of Services
Under Construction

1.	IPFW Student Housing	Indiana University–Purdue University Fort Wayne	Fort Wayne, IN	Design and development services for a 568-bed apartment building community scheduled to open in August 2004. We are also managing this community and are currently setting up the initial operations and lease-up.

2.	Cardinal Village (Phase III)	Lamar University	Beaumont, TX	Design, development and construction management services for a 499-bed apartment building community scheduled to open in August 2004. We are also managing this community and are currently setting up the initial operations and lease-up.

3.	Sam Houston Village	Sam Houston State University	Huntsville, TX	Design, development and construction management services for a 543-bed apartment building community scheduled to open in August 2004.

4.	San Marcos Hall Phase II	Texas State University	San Marcos, TX	Design, development and construction management for a 471-bed residence hall scheduled to open in August 2004.

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Property		University	Location	Description of Services

5.	Vista Del Campo Apartments Phase I	The University of California, Irvine	Irvine, CA	Design, development and construction management services for a 1,488-bed garden apartment community scheduled to open in September 2004. We are also managing this community and are currently setting up the initial operations and lease-up.

6.	Bear Creek at Williams Village Phase I(b)	The University of Colorado at Boulder	Boulder, CO	Design, development and construction management for a 499-bed mid-rise apartment community scheduled to open in August 2004. We are also managing this community and are currently setting up the initial operations and lease-up.

Pre-Development

7.	Fenn Tower	Cleveland State University	Cleveland, OH	We have been awarded the design, redevelopment and refurbishment of an existing high rise. Upon completion, it will contain approximately 400 beds. We have also received a management and development award letter for all on-campus housing facilities with a term of 10 years.

8.	Purdue University–Calumet	Purdue University–Calumet	Hammond, IN	Feasibility and design oversight services. We also will assume management for this property.

9.	Purdue University	Purdue University	West Lafayette, IN	Feasibility and design oversight services.

10.	Saint Leo University Phase II	Saint Leo University	Tampa, FL	We have been awarded the design, development and construction management services of a 232-bed apartment community scheduled to open in August 2005.

11.	Washington State University	Washington State University	Pullman, WA	Feasibility and design oversight services for future projects, yet undetermined.

12.	West Virginia University	West Virginia University	Morgantown, WV	Feasibility and design oversight services for future projects yet undetermined

13.	Vista Del Campo Apartments Phase II	The University of California, Irvine	Irvine, CA	We have been awarded the design, development and construction management services of a 1,500-bed garden apartment community scheduled to open in Fall of 2006. We will assume management of this property.

The Public University Developer Selection Process

It is typical for public institutions to utilize a competitive public process when selecting a student housing development partner. This process typically qualifies the prospective developers based on ability to arrange financing and to provide pre-development, development and construction management capabilities as opposed to a lowest bid system. This process typically involves two stages:

Developer Selection Stage

When a public institution decides it needs additional student housing, public institutions typically seek their governing board’s approval prior to issuing a request for proposals, which we refer to as an RFP. After receiving the

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RFP, each developer prepares a response package with its proposals for the project. Response packages are typically reviewed by a selection committee that includes representatives from the administration, the business and finance office, residence life and student development, the facilities department and often the student body. The committee then makes a recommendation of a “preferred developer” to the institution’s governing board, which may ratify the selection. Typically, the selected developer is notified by an award letter from the institution.

Pre-Development and Financing Stage

After receiving the award letter, the developer is typically required to incur the costs for the pre-development activities prior to the successful structuring and obtaining the financing commitments. These pre-development activities include site evaluation, preparation of construction documents and legal and financial structuring. These transactions costs are typically reimbursed upon closing of the transaction. Generally, the transaction closing is dependant on the final approval of the governing board and successful closing of the project financing.

If an institution’s governing board awards us the transaction, but does not ultimately issue a final approval, we may not be able to recoup our pre-development costs from the institution and the resulting losses could be material. To date, we have never failed to receive final approval of an institution’s governing board following our receipt of an award from the institution.

Management Services

Educational institutions seek to use the on-campus lifestyle experience to create a sense of community and academic orientation that will facilitate a student’s personal development and achievement of academic objectives. Because they view their student housing as an integral part of this educational mission, colleges and universities typically do not outsource the management of their student housing properties as they do book stores, dining services and other facilities management and maintenance.

We currently provide third party management and leasing services for 16 student housing properties owned by educational institutions, charitable foundations and others, representing approximately 10,508 beds in approximately 3,903 units. Thirteen of these student housing properties were developed by us. Together with our owned properties, we currently manage 32 student housing properties, representing approximately 22,281 beds in approximately 7,771 units, making us one of the largest private managers of student housing properties in the United States in terms of beds managed. Our management and leasing services are typically provided pursuant to multi-year management contracts that have an initial term between two and five years.

In the year ended December 31, 2003, and the six months ended June 30, 2004, our fees from management services represented 2.0% and 2.0%, respectively, of our revenues in these periods.

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Property	University	Contract End Date(1)	# of Units	# of Beds
1. Texan Hall(2)	Angelo State University	Aug 2006	262	512
2. IPFW Student Housing(3)	Indiana University–Purdue University Fort Wayne	Jul 2005	220	568
3. Cardinal Village (Phase I)	Lamar University	Aug 2008	261	521
4. Cardinal Village (Phase II)	Lamar University	Aug 2008	261	521
5. Cardinal Village (Phase III)(3)	Lamar University	Aug 2008	251	499
6. University Village–Savannah State	Savannah State University	Aug 2007	192	660
7. Vista Del Campo Apartments Phase I(3)	The University of California, Irvine	Aug 2009	488	1,488
8. Bear Creek at Williams Village Phase I(a)(2)	The University of Colorado at Boulder	Jul 2008	170	495
9. Bear Creek at Williams Village Phase I(b)(3)	The University of Colorado at Boulder	Jul 2008	172	499
10. Bayou Oaks Greek Housing(2)	The University of Houston	Jul 2008	176	471
11. Campus Estates(4)	The University of Texas–Austin	Nov 2004(5)	498	1,548
12. Dobie Center(6)	The University of Texas–Austin	May 2008	383	975
13. The Village at Riverside(7)	The University of Texas–Austin	Dec 2005	156	408
14. University Village at Sheppard Pratt	Towson University	Aug 2004(5)	187	615
15. Coyote Village(2) (8)	Weatherford College	Jul 2005	76	280
16. RAMS Commons	Winston Salem State University	Aug 2007	150	448

Totals:			3,903	10,508

(1)

Management agreements generally convert to 30-day notice upon expiration of the initial term.

(2)

Property began operation in August 2003.

(3)

Property was under construction as of June 30, 2004, and is scheduled to open in Fall 2004.

(4)

Property management was awarded to us by the foreclosing lender in November 2003.

(5)

We are currently in discussions with the owner for renewal.

(6)

An indirect subsidiary of RSVP owns a 23% interest in this property. RSVP has granted us a four-year option to acquire this interest. See “Certain Relationships and Related Transactions—Description of Contribution Agreement.”

(7)

After the Formation Transactions, an affiliate of RAP and RSVP will own this property. It has granted us a four-year option to acquire the property. See “Certain Relationships and Related Transactions—Description of Contribution Agreement.”

(8)

Property was transferred to The Weatherford College in April 2004.

Operations

Objectives

Our management philosophy is based upon meeting the following objectives:

•

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

•

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 the prudent control of expenses.

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On-Site Operations

Each of our properties is staffed to implement all aspects of the property’s operations, including marketing, leasing administration, business administration, financial reporting, ongoing maintenance, capital projects and and residence life and student development. In addition, we provide full corporate support in each of these functional areas.

General Managers and Assistant General Managers. The General Manager is responsible for all facets of a property’s operation, including the development and implementation of the annual budget, collection of rents, administration of accounts payable, implementation of the annual marketing plan, administration of LAMS and all lease administration functions and coordination of facilities maintenance, asset preservation and capital improvement projects. The General Manager also supervises the residence life program through the Assistant General Manager and conducts all hiring, termination, and staff development of on-site personnel. The Assistant General Manager, typically an on-site position, assists the General Manager with the operations of the property. The Assistant General Manager is also responsible for supervising the residence life program and the on-site staff.

Resident Assistants (Community Assistants). Each property typically has 50-75 students per Resident Assistant. Our Resident Assistants are typically students selected for their interpersonal skills, leadership capabilities and willingness to meet the challenges and expectations of the position. It is a position that fits well with many students’ academic goals while affording them opportunities for personal growth and leadership development. Each Resident Assistant performs his or her position in exchange for room and, in some cases, board. Resident Assistants are trained to provide support and assistance to students on a variety of issues. The Resident Assistant acts as a community facilitator by developing an atmosphere that promotes a sense of belonging, support, and affiliation. In addition, the Resident Assistant participates actively in developing and implementing the property’s programs and events. These activities include social, recreational and educational activities and are coordinated with the staff to reach community goals. At all times, a Resident Assistant is expected to be a role model and maintain the highest standards of personal conduct. Through observation, availability and interaction with the community, the Resident Assistant helps to identify potential problems and make appropriate referrals so students may overcome obstacles to their academic achievement. Our Resident Assistants collect and submit pertinent data to us for our tracking, marking and evaluation processes. Through their efforts to provide timely, accurate and thorough information in the appropriate format, Resident Assistants contribute to the smooth and effective operations of the property. We believe that this position is critical to the success of our properties; maintaining a high level of performance is therefore essential. At some of our larger properties, our Resident Assistants are managed by one senior Resident Assistant, whom we refer to as a Resident Director.

Leasing and Marketing

Unlike multi-family housing, where entire apartment units are leased and vacated on a monthly basis, student housing properties are typically leased by the bed and leases are based on the academic year. Most leases typically commence and end on a single date, usually in August. Students typically move in and move out within a three day moving period. Our leasing effort is therefore focused almost entirely in the period between February through August.

Each year we implement an aggressive marketing and leasing plan to re-lease each property. We divide each school’s student population into various sub-groups, including, for example, current living arrangements, class, and gender. Each property typically has six to ten target groups and we develop a customized marketing message to position our property to meet that specific target market’s needs. We then identify specific marketing media to deliver our marketing message. These media include print advertising in newspapers, magazines and trade publications; direct mailers; radio advertising; promotional events and supporting public relation campaigns. Of our 12 owned properties, eight of them are listed in university publications or on university websites.

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We typically compete in the rental of off-campus student housing on the basis of:

•

the quality of our facilities, including their proximity to the university campus as well as our properties’ physical location, the size and layout of units, and the types of resident amenities offered;

•

rental terms, including price, which varies based on the student market in which the property is located, and per-bed rental (individual lease liability), which allows individual student-tenants to avoid responsibility for the rental of an entire apartment unit;

•

community environment, including community facilities and amenities and programming, which is overseen by our staff of Resident Assistants; and

•

our relationships with universities, which results in our facilities being recommended or at least listed by the primary universities near our facilities.

Cooperation in Leasing with Educational Institutions

We believe that both direct and indirect support of our communities by colleges and universities is beneficial to the successful leasing of our off-campus properties. We therefore actively seek to have these institutions to either formally recommend our off-campus facilities to their students or to provide us with access to their students to implement our direct marketing efforts. In some cases, the institutions actually promote our off-campus facilities in their recruiting and admissions literature. In other cases where the educational institutions do not offer direct recommendations for off-campus housing, most nonetheless provide mailing lists to us to access student or the universities directly distribute to students a listing 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.

LAMS–Lease Administration and Marketing System

We believe we have developed the industry’s only specialized, fully integrated leasing administration and marketing software program, LAMS. Through LAMS, each of our properties’ ongoing marketing and leasing efforts can be supervised at the corporate office on a real time basis. Among other things, LAMS provides:

•

a fully integrated prospect tracking and follow-up system. Prospect information from all types of inquiries–walk-in, telephone, website/email, or fax–is recorded and entered into the LAMS database, and an aggressive, fully-automated follow-up and tracking program is then implemented, with LAMS generating all follow-up marketing pieces, labels and electronic communications.

•

a built-in marketing effectiveness program to measure the success of our marketing efforts on a real-time basis. LAMS generates a weekly traffic analysis that shows the quantity of each type of inquiry received for that period as well as the marketing medium that generated each piece of traffic. This enables us to track the effectiveness of each marketing program being utilized. In addition, LAMS generates a period-to-period comparative traffic and leasing analysis that allows us to compare the pace of the current year’s traffic and leasing activity to that of previous years.

•

a real-time monitor of lease closings and leasing terms. LAMS automatically generates closing reports allowing us to measure the staff’s closing ratios. The closing ratios are calculated by LAMS on an individual basis so that we may better evaluate performance and optimize our staffing. LAMS generates application and leasing status reports that detail the current period and year-to-date status of applications and leasing broken down by type of accommodation. This enables us to quickly identify potential problems related to pricing and/or desirability of our various types of accommodations.

•

an automated lease generation system. Each property’s lease term and rental rate information is set up in LAMS by authorized corporate staff. This enables the corporate office to maintain tight controls on pricing changes and special promotions. LAMS generates each resident lease, eliminating the potential for manual errors of our on-site staff. In addition, as we are leasing for the next academic year, LAMS maintains the upcoming academic year’s rent roll, assisting with future quarters’ cash planning.

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Student Leases

Our off-campus and on-campus property leases typically contain the following provisions:

•

The lease term for off-campus properties generally is twelve months and our lease term for on-campus properties generally is nine months. We do some limited leasing on a per-semester basis.

•

Rent is generally payable monthly. At The Callaway House and our on-campus participating properties, students typically pay a semester’s rent in advance. At some of our on-campus participating properties the universities transfer financial aid on behalf of students receiving financial assistance at our on-campus properties.

•

Rent typically includes charges for all amenities provided at the property (for example, basic cable, fitness center, pool) and usually parking, which, where available, is optional and may have a separate charge. Some properties, depending on local market practices, will also charge a separate monthly technology or administrative fee. At The Callaway House, a choice of meal plans is included in the rent.

•

Parents or legal guardians are required to guarantee, among other things, the amounts payable under the leases, unless the student provides evidence of satisfactory personal income.

•

Each student tenant pays a security deposit, which averages approximately $200 depending on local market practices. This deposit is applied against any damage caused by the student to the unit (including furnishings and household items within the unit). Students (and guarantors) also assume personal responsibility for any damage caused to a unit or the property’s common areas.

•

Apartments in most off-campus properties contain their own washer/dryer. On-campus properties typically contain communal laundry rooms with machines operated by a regional third party vendor.

•

Subletting units is prohibited without our prior written consent.

•

Defaults by the tenant under a lease include failure to pay rent when due, breach of any other covenant contained in the lease or abandonment of the unit.

•

In on-campus properties only, students may request an early termination of their leases, which we must reasonably grant, if they withdraw from the university, are denied admission or are placed on academic suspension or dismissal by the university.

Programming

At all of our properties, we provide an array of educational, recreational and social programs to build a sense of community and foster an active student lifestyle. Examples of programs include:

•

extensive community participation in university intramural sports;

•

on site basketball, volleyball, ping pong and billiard tournaments;

•

social events including pool parties and movie nights;

•

term paper writing workshops;

•

community participation in major university events such as homecoming;

•

CPR training;

•

study skills and test preparation;

•

resume writing and job interview rehearsals; and

•

nutrition and health programs.

Programming greatly facilitates an environment conducive to achieving academic objectives. We believe this environment creates market value for which parents are willing to pay a premium price.

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Competition and Competitive Advantages

Competition from Universities and Colleges

We are subject to competition for student-tenants from on-campus housing operated by educational institutions, charitable foundations and others. On-campus student housing has certain inherent advantages over off-campus student housing in terms of physical proximity to the university campus, captive student body, perception of a more secure environment and the fuller 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), thereby decreasing their costs of operating new on-campus student housing. Residence halls owned and operated by the primary colleges and universities in the markets of our owned properties typically charge lower rental rates, but offer fewer amenities than those charged by our properties.

On the other hand, most universities are able to house only a small percentage of their overall enrollment, and are therefore highly dependant 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. Accordingly, a university or college, rather than being a competitor, may actually become a potential customer of off-campus student housing. Developing and maintaining a good relationship with an educational institution 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.

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The following tables sets forth certain historical enrollment information regarding the primary universities served for our properties. The information is excerpted from a market study prepared by Rosen. For more information, see “Industry Outlook”:


	University Served:		Total Enrollment			Undergraduate Enrollment				On- Campus Capacity		% of Fall 2003 Total Enrollment
Property	University Served:		Fall 2003	Fall 2002	Change	Fall 2003	Fall 2002	Change		On- Campus Capacity		% of Fall 2003 Total Enrollment
Owned Off-Campus Properties
Commons on Apache	Arizona State University Main Campus	Arizona	47,359	45,693	1,666	36,802	35,191	1,611		5,600	(1)	11.8	%
The Village on University	Arizona State University Main Campus	Arizona	47,359	45,693	1,666	36,802	35,191	1,611		5,600	(1)	11.8	%
University Village at Fresno	Cal State University, Fresno	California	21,209	20,007	1,202	17,309	16,086	1,223		1,035		4.9	%
University Village at San Bernardino	Cal State University, San Bernardino	California	16,341	15,985	356	11,256	11,019	237		1,012		6.2	%
University Village at TU	Temple University	Pennsyl- vania	32,351	29,872	2,479	21,429	19,606	1,823		4,429		13.7	%
The Callaway House	Texas A&M University	Texas	45,083	44,618	465	36,775	36,603	172		10,413		23.1	%
University Village at Boulder Creek	The University of Colorado at Boulder	Colorado	30,983	29,609	1,374	25,158	23,998	1,160		7,100		22.9	%
River Club Apartments	The University of Georgia–Athens	Georgia	32,941	32,317	624	24,983	24,395	588		5,817		17.7	%
River Walk Townhomes	The University of Georgia–Athens	Georgia	32,941	32,317	624	24,983	24,395	588		5,817		17.7	%
The Village at Alafaya	The University of Central Florida	Florida	38,598	35,927	2,671	32,044	30,036	2,008		7,947	(1)	20.6	%
The Village at Science Drive	The University of Central Florida	Florida	38,598	35,927	2,671	32,044	30,036	2,008		7,947	(1)	20.6	%
The Village at Blacksburg	Virginia Polytechnic Institute and State University	Virginia	27,662	26,490	1,172	21,468	21,869	(401	)	8,900		32.2	%
On-Campus Participating Properties (2)
Cullen Oaks	The University of Houston	Texas	34,443	33,007	1,436	26,283	25,230	1,053		2,937	(1)	8.5	%
University Village– PVAMU	Prairie View A&M University	Texas	7,255	6,747	508	5,754	5,387	367		0	(1)	0.0	%(3)
University College– PVAMU	Prairie View A&M University	Texas	7,255	6,747	508	5,754	5,387	367		0	(1)	0.0	%(3)
University Village– TAMIU	Texas A&M International University	Texas	3,753	3,373	380	2,933	2,609	324		0		0.0	%(3)

(1)

Data collected by Rosen. All other data licensed from Peterson’s.

(2)

On-campus beds shown at these properties do not include the Company’s participating properties.

(3)

These universities do not have any on-campus housing other than our on-campus participating properties.

Competition from Private Owners

We also compete with other regional and national owner-operators of off-campus student housing in a number of markets as well as with smaller local or regional 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 to or in the same general vicinity of many of our owned properties and that compete directly with us. We

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believe that a number of other large national companies with substantial financial 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 or development of other student housing properties.

Competitive Strengths

We believe that we have the following competitive advantages:

•

We have expertise in the unique and specialized aspects of the student housing industry and focus on student housing as our core business.

•

We have assembled one of the industry’s most experienced teams of student housing professionals. Our senior management has been involved in the development and/or management of more than 90 student communities collectively throughout their individual careers. Our seven most senior officers have more than 74 years of cumulative student housing experience.

•

Our portfolio consists of high quality student housing assets which contain modern unit plans and extensive student oriented amenities. Substantially all of our properties have been built in the last five years, and include private bedrooms, private or semi-private bathrooms, and full kitchens with modern appliances. Our properties typically offer extensive amenities and services, including swimming pools, basketball, sand volleyball and/or tennis courts and clubhouses with fitness centers, recreational rooms and computer labs. Each of our properties is managed and cared for by our trained on-site staff of managers, maintenance and business personnel and Resident Assistants.

•

We are a self-managed, self administered and fully integrated organization. We have a fully integrated organization that is capable of conducting market analysis, administering the entitlement and municipal approval process, coordinating product design, securing financing, administering the development process, and providing construction management, leasing and property management services.

•

Our track record. We have a proven track record as a developer, acquirer, and manager of high quality student housing properties, having completed the development of more than 30 projects, acquiring nine projects and currently managing more than 30 student communities.

•

We have an extensive network of relationships with university systems and individual educational institutions, which provide us with acquisition and development opportunities. Our clients have included some of the nation’s most prominent systems of higher education including the State University of New York System, the University of California System, the Texas A&M University System, the Texas State University System, the University of Georgia System, the University of North Carolina System, the Purdue University System and the University of Colorado System.

•

We are industry innovators. We have developed and implemented specialized student housing operating systems and are industry innovators, having created proprietary lease administration and marketing software for the student housing industry that enables us to quickly respond to market changes.

•

Our unique focus. Subsequent to this Offering, we will be the only publicly traded REIT solely focused on student housing in the United States. We believe this will further enhance our reputation and prominence in the student housing industry and will provide us with access to capital markets. It will also enable us to use our shares or Units as currency with which to acquire properties.

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Indebtedness

Off-Campus Properties

The following table contains certain summary information concerning the mortgage indebtedness that will encumber seven of our off-campus properties immediately following this Offering and the Formation Transactions:


Asset	Lender	Original Date	Interest Rate		Maturity Date	Balance as of June 30, 2004
The Callaway House	Bank of America	03/30/2001	7.1	%	April 2011	$	19,831,613
Commons on Apache	GE Capital Corp.	05/14/1999	7.7	%	June 2009	$	7,712,528
River Club Apartments	GE Capital Corp.	07/28/2000	8.2	%	August 2010	$	18,632,071
River Walk Townhomes	GE Capital Corp.	08/31/1999	8.0	%	September 2009	$	7,722,592
The Village at Alafaya Club	PW Real Estate Investments	07/11/2000	8.2	%	August 2030	$	20,569,865
The Village at Blacksburg	GE Capital Corp.	12/15/2000	7.5	%	January 2011	$	21,460,335
University Village at Boulder Creek	GE Capital Corp.	12/01/2002	5.7	%	December 2012	$	16,647,950

Total						$	112,576,954

The weighted average interest rate of such indebtedness is 7.4%. Each of these mortgages is a non-recourse obligation subject to customary exceptions. Each of these mortgages have 30 year amortization. None of these mortgages are cross-defaulted or cross-collateralized to any other indebtedness. The loans generally may not be prepaid prior to maturity; in certain cases, prepayment is allowed, subject to prepayment penalties.

On-Campus Participating Properties

We have bonds outstanding secured by three of our on-campus participating properties–University Village–PVAMU, University College–PVAMU and University Village–TAMIU. Under the terms of these financings, one of our special purpose subsidiaries publicly issued three series of taxable bonds and loaned the proceeds to three special purpose subsidiaries that each hold a separate leasehold interest. Although a default in payment by these special purpose subsidiaries could result in a default under one or more series of bonds, the indebtedness of any of these special purpose subsidiaries is not cross-defaulted or cross-collateralized with indebtedness of the REIT, the Operating Partnership or other special purpose subsidiaries. Repayment of principal and interest on these bonds is insured by MBIA, Inc.

The following table sets forth certain information concerning these mortgage financings:


Asset	Bond Trustee	Original Date	Original Term	Balance as of June 30, 2004
University Village–PVAMU(1)	JPMorgan Chase	September 1999	24 years	$	31,584,000
University College–PVAMU (Phase I)(2)	JPMorgan Chase	May 2001	22 years	$	20,270,000
University College–PVAMU (Phase II)(2)	JPMorgan Chase	July 2003	25 years	$	4,325,000
University Village–TAMIU(1)	JPMorgan Chase	September 1999	24 years	$	4,831,000

Total				$	61,010,000

(1)

Part of combined bond issuance. Separate loan agreements are not cross-collateralized or cross-defaulted.

(2)

Multiple financings of single facility.

These loans encumbering our leasehold interests of University Village–PVAMU, University Village–TAMIU and University College–PVAMU are non-recourse, subject to customary exceptions. For further information concerning these financings, see “—On-Campus Participating Properties” above.

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Cullen Oaks is currently encumbered by a construction loan originated in September 2000 in the original principal amount of approximately $17,700,000. The loan bears interest at the prime rate, or LIBOR plus 1.9%, at our election. We have in place an interest rate swap agreement which effectively caps the interest on the outstanding balance of $17.2 million at 5.5%. The loan matures in November 2008. We have fully guaranteed this loan.

The weighted average interest rate of the indebtedness encumbering our on-campus participating properties is 6.5%.

Revolving Credit Facility

We have obtained commitments for a $75 million senior secured revolving credit facility from affiliates of Citigroup Global Markets Inc. and Deutsche Bank Securities Inc., two of our underwriters, as joint lead arrangers, which we intend to enter into concurrently with this Offering to, among other things, fund future property acquisitions and working capital needs. We may increase the size of the revolving credit facility by up to an additional $25 million. The facility is expected to have a maximum term of 36 months. The facility is expected to bear interest at a variable rate, at our option, based upon a base rate or one-, two-, three- or six-month LIBOR plus, in each case, a spread based on our total leverage. The revolving credit facility is expected to include customary affirmative and negative covenants, and financial covenants including EBITDA, net worth and leverage tests. Our revolving credit facility is also expected to contain covenants that restrict our ability to pay dividends or other amounts to our stockholders unless certain tests are satisfied. The facility will initially be secured by mortgages on four of our off-campus properties. Concurrently with this Offering, we will use approximately $5.7 million of this facility to acquire substantially all of Titan’s interests in the American Campus–Titan Properties, approximately $1.7 million to retire our outstanding borrowings under our existing line of credit and approximately $0.8 million for the payment of the revolving credit facility loan origination costs. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

Insurance

We carry comprehensive liability, fire, extended coverage, terrorism and rental loss insurance covering all of the properties in our portfolio under various policies. We believe the policy specifications and insured limits are appropriate given the relative risk of loss, the cost of the coverage and industry practice and, in the opinion of our Company’s management, the properties in our portfolio are adequately insured. Our terrorism insurance is subject to exclusions for loss or damage caused by nuclear substances, pollutants, contaminants and biological and chemical weapons. We do not carry insurance for generally uninsured losses such as loss from riots or acts of God. In addition, we carry earthquake insurance on our properties located in seismically active areas and terrorism insurance on all of our properties, in each case in an amount and with deductibles which we believe are commercially reasonable. See “Risk Factors—Risks Related to the Real Estate Industry—Potential losses may not be covered by insurance.”

In August 2002 we commenced construction on a student housing project in Fresno, California with a construction budget of approximately $16.1 million. In May 2003 the project was destroyed by a fire set by vandals who were subsequently apprehended. Reconstruction recommenced in August 2003 and the project is scheduled to open in August 2004. The project was insured to a limit of $10 million (with certain sublimits) with an additional excess policy of $2 million. Our December 31, 2003 financial statements reflected a $3.7 million receivable due to us with respect to this claim, which amount was subsequently received. Through June 2004, we have received advance payments from the insurer totaling $7.75 million. We have submitted a formal claim to the insurer for approximately $10 million. There can be no assurance as to the amount and timing of any final settlement. We have a remaining claim from the insurer for approximately $2.25 million, which is not reflected on our financial statements. Any payments received pursuant to this claim are subject to the escrow provisions of the Contribution Agreement. For more information see “Certain Relationship and Related Transactions—Description of Contribution Agreement.”

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Regulation

General

Student housing properties are subject to various laws, ordinances and regulations, including regulations relating to common areas. We believe that each of the existing properties has the necessary permits and approvals to operate its business. Apartment community properties are subject to various laws, ordinances and regulations, including regulations relating to recreational facilities such as swimming pools, activity centers and other common areas.

Americans With Disabilities Act

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 will continue to assess our properties and to make alterations as appropriate in this respect.

Fair Housing Act

The Federal Fair Housing Act, its state law counterparts and the regulations promulgated by the U.S. Department of Housing and Urban Development or “HUD” and various state agencies, prohibit discrimination in housing on the basis of race or color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women and people securing custody of children under 18) or handicap (disability) and, in some states, on financial capability. A failure to comply with these laws in our operations could result in litigation, fines, penalties or other adverse claims, or could result in limitations or restrictions on our ability to operate, any of which could have an adverse effect on our cash flows from operations. We believe that the existing properties are in substantial compliance with the Federal Fair Housing Act.

Environmental Matters

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.

Some of the properties in our portfolio may contain microbial matter such as mold, mildew and viruses. The presence of microbial matter could adversely affect our results of operations. In addition, if any property in our portfolio is not properly connected to a water or sewer system, or if the integrity of such systems is breached, microbial matter or other contamination can develop. If this were to occur, we could incur significant remedial costs and we may also be subject to material private damage claims and awards, which could be material. If we become subject to claims in this regard, it could materially and adversely affect us and our insurability for such matters in the future.

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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 chose to pursue PRPs based on their actual contribution to the contamination. PRPs are liable for the costs of responding to the hazardous substances. Each of Commons on Apache, The Village at University and University Village at San Bernardino are located within federal Superfund sites. 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.

None of the site assessments revealed any past or present environmental liability that we believe would be material to us. However, the assessments may have failed to reveal all environmental conditions, liabilities, or compliance concerns. Material environmental conditions, liabilities, or compliance concerns may have arisen after the assessments were conducted or may arise in the future; and future laws, ordinances or regulations may impose material additional environmental liability.

We cannot assure you that costs of future environmental compliance will not affect our ability to pay distributions to you or that such costs or other remedial measures will not be material to us. See “Risk Factors—Risks Related to the Real Estate Industry—Existing conditions at some of our properties may expose us to liability related to environmental matters.”

Employees

As of June 30, 2004, we had approximately 570 employees, consisting of:

•

approximately 510 on-site employees, including 210 Resident Assistants;

•

approximately 20 persons in our management services department;

•

approximately 20 persons in our development services department; and

•

approximately 20 executive, corporate administration and financial personnel.

Our employees are not currently represented by a labor union.

Offices

Our principal executive offices are located at 805 Las Cimas Parkway, Suite 400, Austin, Texas 78746. We also have a regional office located at 4199 Campus Drive, Suite 550, Irvine, California 92612 and have management offices in each of our properties.

Legal Proceedings

Neither we nor our subsidiaries are currently involved in any material litigation nor, to our management’s knowledge, is any material litigation currently threatened against us or our subsidiaries or properties, other than routine litigation arising in the ordinary course of business, all of which is expected to be covered by liability insurance.

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STRATEGY FOR GROWTH

Our primary business objectives are to maximize distributable cash flow and to enhance the value of our portfolio in order to maximize total returns to our shareholders. We believe that significant investment opportunities exist in the private sector ownership, development and management of high-quality student housing properties because of:

•

the projected growth in student enrollment at colleges and universities generally;

•

a shortage of high-quality student housing and premium student housing services; and

•

fragmented ownership in the student housing market.

We believe we can achieve these objectives by continuing to implement our business strategies described below.

Acquisition and Development

We seek to own high quality, well designed and well located student housing properties. We seek to acquire or develop properties in under-serviced markets that have stable or increasing student populations. We also target properties that provide an opportunity for substantial economic growth as a result of their quality or proximity to campuses, or through our superior operational capabilities. We believe that our reputation and close relationship with the local universities gives us an advantage in securing acquisitions and obtaining municipal approvals and community support for our development projects.

Acquisitions. During the 30-month period from May 1999 to November 2001, we acquired nine properties (eight of which we still own) containing approximately 1,800 units and 6,000 beds. We believe that our relationship with university systems and individual educational institutions, our knowledge of the student housing market, our prominence as the sole publicly traded REIT focused exclusively on student housing in the United States, will afford us a competitive advantage in acquiring additional student housing properties. Concurrently with this Offering, we will enter into a $75 million revolving credit facility with affiliates of Citigroup Global Markets Inc. and Deutsche Bank Securities Inc., two of our underwriters, as joint lead arrangers, which facility will be available following this Offering to, among other things, fund future property acquisitions and other working capital needs.

Development. Since 1996, we have developed eight of our owned properties, including three that are scheduled to be completed and open in August 2004. In addition, through a joint venture with a current land owner, we have recently entered into an agreement to purchase a 19.5-acre property in close proximity to the State University of New York at Buffalo that we plan to develop into an owned, off-campus student housing complex consisting of approximately 800 beds. This property is targeted to open in the 2005-2006 academic year. We had previously provided third party development services for two on-campus projects at the State University of New York at Buffalo which led us to this off-campus development opportunity.

Third Party Management and Development Services

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Proactive Management

We aggressively seek to enhance cash flow from our properties. We intend to enhance cash flow through maximizing rental revenue from increased rental rates and/or occupancy, expanding the range of income-generating tenant services, where applicable, and controlling expenses through the implementation of cost control management and systems. These include:

•

periodically reviewing and re-bidding utility and service contracts;

•

periodically analyzing benchmarking data to identify areas of potential savings;

•

analyzing marketing data from our proprietary lease administration and marketing software for the student housing industry database to determine the effectiveness of marketing initiatives and reduce marketing costs;

•

customizing our marketing and leasing programs based upon our knowledge of each individual student housing market and our desired product positioning; and

•

monitoring resident satisfaction to ensure that cost saving measures do not negatively impact our leasing efforts or our customers’ attitudes or perceptions.

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MANAGEMENT

Directors, Executive Officers and Senior Management

Upon consummation of this Offering, our board of directors will consist of eight members, at least five of whom are expected to be classified under applicable New York Stock Exchange listing standards as “independent” directors. Pursuant to our Charter, each of our directors is elected by our stockholders to serve until the next annual meeting and until their successors are duly elected and qualify. See “Certain Provisions of Maryland Law and of Our Charter and Bylaws—Our Board of Directors, Vacancies on Our Board of Directors and Removal of Directors.” Subject to rights granted under any employment agreements, officers serve at the pleasure of our board of directors.

The following table sets forth certain information concerning the individuals who are our directors, executive officers and certain of our other senior officers upon the consummation of this Offering:


Name	Age	Position
William C. Bayless, Jr.* (1)	40	President, Chief Executive Officer and Director
Brian B. Nickel* (1)	31	Executive Vice President, Chief Investment Officer, Secretary and Director
Mark J. Hager* (1)	42	Executive Vice President, Chief Financial and Accounting Officer and Treasurer
R.D. Burck (1)(2)(4)	71	Chairman of the Board and Independent Director
Cydney Donnell (1)(4)	44	Independent Director
G. Steven Dawson (1)(2)(3)	46	Independent Director
Winston W. Walker (1)(2)(3)	60	Independent Director
Edward Lowenthal (1)(3)(4)	59	Independent Director
Scott H. Rechler (1)	36	Director
Greg A. Dowell	40	Senior Vice President–Chief of Operations
Ronnie L. Macejewski	38	Senior Vice President–Development and Construction
Brian N. Winger	36	Senior Vice President–Development
Jason R. Wills	32	Senior Vice President–Marketing and Business Development

Named Executive Officers

(1)

Messrs. Bayless, Nickel and Hager currently serve as the sole directors of our Company. Mr. Hager will serve as a director of the Company until the consummation of this Offering at which time he will be replaced by an independent director. Messrs. Burck, Dawson, Walker, Lowenthal, Rechler and Ms. Donnell will become directors upon consummation of this Offering.

(2)

Member of Audit Committee.

(3)

Member of Compensation Committee.

(4)

Member of Nominating and Corporate Governance Committee.

The following is a biographical summary of the experience of our directors, executive officers and certain other senior officers.

William C. Bayless, Jr. serves as our President and Chief Executive Officer and is a member of our board of directors. Mr. Bayless, a co-founder of our Company, assumed the position of President and Chief Executive in October of 2003. Prior to that time, he served as the Company’s Executive Vice President and Chief Operating Officer, where he directed all aspects of the Company’s business segments including business development, development and construction management, acquisitions, and management services. Prior to the formation of American Campus in 1993, Mr. Bayless served as the Director of Operations for Century Development’s student

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housing division from 1991 to 1993. From 1988 to 1991, Mr. Bayless served as the Director of Marketing responsible for business development and marketing for the student housing division of Cardinal Industries. Mr. Bayless began his career in student housing with Allen & O’Hara where he held the positions of Resident Assistant, Resident Manager and Area Marketing Coordinator from 1984 to 1988. He received a Bachelor of Science in Business Administration from West Virginia University in 1986.

Brian B. Nickel serves as our Executive Vice President, Chief Investment Officer, Secretary and is a member of our board of directors. In this capacity, Mr. Nickel has responsibility for all investment activities, oversees our business development and growth related efforts, and is responsible for capital market relationships. Mr. Nickel joined us in June 1996 as Director of Business Development and served in various capacities during his tenure and was appointed Executive Vice President and Chief Investment Officer in October 2003 and Secretary in July 2004. Before joining us, Mr. Nickel held positions in the investment banking firms of Kidder, Peabody Company and with the corporate finance group of LaSalle Partners. Mr. Nickel received a BS in Economics from Northwestern University in 1994.

R.D. Burck has agreed to serve as Chairman of the Board and as an Independent Director of the Company upon the consummation of this Offering. Mr. Burck retired from the position of Chancellor of The University of Texas (“U.T.”) System in 2002. He currently serves as the first advisory director appointed by The University of Texas Investment Management Co., a non-profit corporation created by the U.T. Board of Regents to manage the investment of all assets over which the board has fiduciary responsibility. Mr. Burck joined the U.T. System in 1988 to serve as the vice chancellor of business affairs and then as executive vice chancellor for business affairs before being appointed by the Board of Regents as interim Chancellor in June 2000 and Chancellor six months later, in December 2000. Mr. Burck worked worldwide for Getty Oil Co., headquartered in Los Angeles, from 1955 to 1984. In 1979, he was involved in the creation and early operation of ESPN, the first cable TV sports network. He was a vice president and a director of ESPN. Mr. Burck is currently a member of the board of directors for Adorno/Rogers Technology Inc., infiNET Inc., and is an independent consultant for Aon Risk Services. He also serves on the advisory boards for Frost Bank and G51 Capital Management, L.L.C. In addition, Mr. Burck serves on The Headliners Club Board of Trustees. He also has been a member of the board of the Texas Department of Information Resources; the board of directors of the Texas Life, Accident, Health, and Hospital Service Insurance Guaranty Association; the formal advisory committee of the Texas Higher Education Coordinating Board; and the advisory council of the U.T. Austin College of Natural Sciences. He is a former director of the National Conference of Christians and Jews, and a former member of the board of directors of the American Cancer Society. Mr. Burck graduated from The University of Texas at Austin in 1956 with a B.B.A. He also attended the South Texas School of Law in Houston.

Cydney Donnell has agreed to serve as an Independent Director of the Company upon the consummation of this Offering. Ms. Donnell is currently a Visiting Lecturer at the Mays Business School of Texas A&M University where she teaches courses in the Finance Department. Ms. Donnell was formerly a principal and Managing Director of European Investors/E.I.I. Realty Securities, Inc. From 2002 to 2003, Ms. Donnell served as Chair of the Investment Committee of EII. From 1992 to 2002, Ms. Donnell served as the Head of the Real Estate Securities Group and Portfolio Manager of EII. From 1986 to 1992, Ms. Donnell served as a Vice-President and Analyst of EII. Prior to joining EII, she was a real estate lending officer at Republic Banc Corporation in Dallas from 1983 to 1986. Ms. Donnell has served on the Board of Directors of European Investors Holding Company since 1992 and also currently serves on the Board of Directors of Madison Harbor Balanced Strategies Inc., a closed-end investment fund registered under the Investment Company Act of 1940. Ms. Donnell has served on the Board and Institutional Advisory Committee of NAREIT. She is an active volunteer currently serving on the Board of Directors of the Association of Former Students of Texas A&M University and served in various leadership capacities for the Junior League of the City of New York. Ms. Donnell received a B.B.A. from Texas A&M University in 1981 and an M.B.A. from Southern Methodist University in 1982.

Winston W. Walker has agreed to serve as an Independent Director of the Company upon the consummation of this Offering. Mr. Walker currently serves as President and Chief Executive Officer of Walker & Associates,

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which provides strategic consultation primarily to clients in the healthcare and insurance industries. Prior to forming Walker and Associates in 1993, Mr. Walker served as the Chief Executive Officer of Provident Life and Accident Insurance Company of America (“Provident”). Mr Walker joined Provident in 1974 and was named Associate Actuary of the company’s group pension subsidiary in 1975 and Vice President of Administration in 1978. He was promoted to President of Provident National in 1980 and President of Provident General Insurance Company in 1984. He was then elected Corporate Executive Vice President in 1985, Chief Financial Officer in 1986 and Chief Executive Officer in 1988. Prior to joining Provident, he was a member of the mathematics faculty at Wake Forest University from 1969-1973. Mr. Walker is currently a member of the board of directors and the audit committee chair of CBL & Associates Properties, Inc., a member of the board of directors of Olan Mills, Inc. and a member of the board of directors of MRI Medical. Mr. Walker received a B.A. in Russian from Tulane University in 1965 and a Ph.D in mathematics from the University of Georgia in 1969.

G. Steven Dawson has agreed to serve as an Independent Director of the Company upon the consummation of this Offering. From 1990 to 2003, he served as the Chief Financial Officer of Camden Property Trust (NYSE: CPT) and its predecessors. Camden is a large multifamily REIT based in Houston with apartment operations, construction, and development activities throughout the southern United States. Mr. Dawson serves on the boards of US Restaurant Properties, Inc. (NYSE: USV, based in Dallas) as audit committee chair, AmREIT (AMEX: AMY, based in Houston) as audit and compensation committee chair, Desert Capital REIT, Inc. (an unlisted, public mortgage REIT based in Las Vegas), Medical Properties Trust (a REIT based in Birmingham) as audit committee chair, and a private Houston-based national cabling & electrical contracting company. He generally serves on the audit committees as chairman on most of these, and also serves on compensation committees, nominating/governance committees, special committees, and in the case of AmREIT, as the lead outside director. In addition, he is on the boards of various charities and civic organizations and has other private interests. Mr. Dawson holds a degree in Business from Texas A&M University, and though he is no longer a CPA, he is a member of the American Institute of Certified Public Accountants.

Edward Lowenthal has agreed to serve as an Independent Director of the Company upon the consummation of this Offering. Mr. Lowenthal is President of Ackerman Management LLC, a private investment management and advisory company with particular focus on real estate and other asset-based investments. Mr. Lowenthal was a Founder and served as the President of Wellsford Real Properties, Inc. (WRP) from 1997 until 2002. WRP, listed on the American Stock Exchange, manages primarily multifamily and office properties as well as real estate debt held directly and through joint ventures with institutional partners. He continues to serve as a Director of WRP. Mr. Lowenthal was a Founder, Trustee and President of Wellsford Residential Property Trust, a NYSE listed multi-family real estate investment trust, until May 1997 when it was merged into Equity Residential Properties Trust. Mr. Lowenthal has more than 30 years of real estate and merger and acquisition experience in both public and private entities. Mr. Lowenthal serves as a Trustee of Omega Healthcare Investors, Inc., as a Director of Reis, Inc., a privately held real estate information and analytics provider and as a Director of Desarrolladora Homex, S.A. de C.V., a vertically integrated home development company focusing on affordable entry level and middle income housing in Mexico. He has previously served as a director or trustee of other public and private companies including Equity Residential (1997-2003). Mr. Lowenthal serves as a Trustee of The Manhattan School of Music and serves on its Finance and Executive Committees and chairs its New Building Committee. He served as a member of the Board of Governors of the National Association of Real Estate Investment Trusts (NAREIT) from 1992-2000. He earned a B.A. degree from Case Western Reserve University in 1966 and a J.D. degree from Georgetown University Law Center in 1969 where he was an editor of the Georgetown University Law Journal.

Scott H. Rechler has agreed to serve as a director of the Company upon the consummation of this Offering. Mr. Rechler has served as Chief Executive Officer and President of Reckson since December 2003, served as Co-Chief Executive Officer of Reckson from May 1999 until December 2003, serves as the Chairman of the Executive Committee of the Board of Directors of Reckson and has served as a director of Reckson since its formation. He served as President of Reckson from February 1997 to May 2001 and served as Chief Operating Officer of Reckson from its formation until May 1999. In addition, from Reckson’s formation until February

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1997, Mr. Rechler served as Executive Vice President of Reckson. Mr. Rechler has been employed at Reckson since 1989. Mr. Rechler is a member of the Board of Directors of the Long Island Children’s Museum and is a member of the Board of Governors of the National Association of Real Estate Investment Trusts. Since 1997, Mr. Rechler has served as Chief Executive Officer and Chairman of the Board of Directors of Frontline, and also served as the non-executive Chairman of the Board of Directors and as former interim executive officer of HQ Global Holdings, Inc.; both companies have filed for protection from creditors under the federal bankruptcy laws. Mr. Rechler is a graduate of Clark University and received a Master’s Degree in Finance with a specialization in real estate from New York University.

Mark J. Hager serves as our Executive Vice President, Chief Financial and Accounting Officer and Treasurer. Mr. Hager joined us in August 1999 as Senior Vice President and Chief Financial Officer and is responsible for our accounting, tax, corporate finance, human resources, information technology, treasury and risk management functions and during his tenure has led the establishment of these functions during our most significant period of growth. Prior to joining us, Mr. Hager was a Certified Public Accountant in the assurance practice of Ernst & Young from November 1997 to August 1999, serving both public and private clients. In other positions, including Vice President Finance and Chief Financial Officer for Oklahoma Christian University from 1996 to 1997 and Vice President, Corporate Controller for Crested Butte Mountain resort from 1994 to 1996, Mr. Hager has been involved in development and financing in the hotel, single-family residential, and assisted living sectors utilizing conventional, tax-exempt, and public/private financing structures. Mr. Hager also held positions in the audit practices of Grant Thornton and Price Waterhouse. Mr. Hager holds a bachelors degree in Business Administration–Accounting from Abilene Christian University. Mr. Hager is a Certified Public Accountant licensed in Texas and Oklahoma.

Greg A. Dowell serves as our Senior Vice President and Chief of Operations. Mr. Dowell joined us in October 2001 as Senior Vice President–Management Services and in that role has directed all aspects of the Company’s property management operations. Prior to joining us, Mr. Dowell was employed by Century Development from 1991 to 2001 where he began his tenure as accountant and ultimately served as Senior Vice President over the operations of their 29 property student housing portfolio. Prior to his employment at Century Development, Mr. Dowell was an accountant with Belin and Associates, a prominent developer of master planned communities in the Houston area. Mr. Dowell received a BS in Accounting from the University of Louisiana, Lafayette in 1989 and is a Certified Public Accountant licensed in Texas.

Ronnie L. Macejewski serves as our Senior Vice President–Development and Construction and oversees third party development and construction management services. Mr. Macejewski joined us in January 1996 as Vice President–Construction and was promoted to Senior Vice President–Development and Construction in January 2002. Prior to joining us, Mr. Macejewski held construction management positions with Century Development from 1990 to 1996. Mr. Macejewski received a BS in Business Administration from the University of Oklahoma in 1992.

Brian N. Winger serves as our Senior Vice President–Development and is primarily responsible for coordinating, financing, and closing our on-campus development projects. Mr. Winger joined us in March 2000 as Director–On-Campus Development and has since served in increasing capacities and was promoted to Senior Vice President–Development in October 2003. Prior to joining us, Mr. Winger was the Chief Operating Officer with Aspen Gold Development Company (a private real estate developer) from 1999 to 2000. From 1996 to 1999, he was an endowment development officer and ultimately served as General Counsel for Oklahoma Christian University. From 1994 to 1996, Mr. Winger was a real estate analyst with Kabili & Company. Mr. Winger received a Juris Doctor from Oklahoma City University in 1994 and a BS in history/pre-law from Oklahoma Christian University in 1990. Mr. Winger is a licensed attorney in Oklahoma and a real estate broker licensed to practice in Oklahoma and Colorado.

Jason R. Wills serves as our Senior Vice President–Marketing and Business Development and oversees all aspects of property leasing and marketing, as well as corporate communications and public relations. Mr. Wills joined us in February 1997 as Manager–Marketing and Leasing and has served in increasing capacities,

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achieving his current position of Senior Vice President–Marketing and Business Development in October of 2003. Mr. Wills served as Vice President of On-Campus Business Development from 1999 through 2003. Mr. Wills began his career in student housing with Century Development, where he held the positions of Resident Assistant and Marketing Coordinator in 1993. Mr. Wills attended the University of Texas, Arlington where he studied Journalism and Marketing.

Board Committees

Following this Offering, our board of directors will have appointed a nominating and corporate governance committee, an audit committee and a compensation committee. Under our bylaws, the composition of each committee must comply with the listing requirements and other rules and regulations of the New York Stock Exchange, or NYSE, as amended or modified from time to time. Each of these committees will have at least three directors and will be composed exclusively of independent directors. Our bylaws define “independent director” by reference to the rules, regulations and listing qualifications of the NYSE, which generally deem a director to be independent if such director has no material relationship to us or to the members of our management that may interfere with the exercise of the director’s independence from management and has not had such a relationship in the recent past.

Audit Committee. Our audit committee will help oversee the qualifications and independence of our independent auditors as well as the performance of our internal audit function and our independent auditors. The audit committee will select, assist and meet with the independent auditor, oversee each annual audit and quarterly review, oversee our internal audit controls and prepare the report that federal securities laws require be included in our annual proxy statement. Following this Offering, Steven Dawson will be designated as chair and Dan Burck and Winston Walker will be appointed as members of our audit committee.

Compensation Committee. Our compensation committee will review and approve the compensation and benefits of our executive officers, administer and make recommendations to our board of directors regarding our compensation and stock incentive plans, produce an annual report on executive compensation for inclusion in our proxy statement and publish an annual committee report for our stockholders. Following this Offering, Winston Walker will be designated as chair and Steven Dawson and Edward Lowenthal will be appointed as members of our compensation committee.

Nominating and Corporate Governance Committee. Our nominating and corporate governance committee will develop and recommend to our board of directors a set of corporate governance principles, a code of ethics and policies with respect to conflicts of interest; monitor our compliance with corporate governance requirements of state and federal law and the rules and regulations of the NYSE; recommend criteria for prospective members of our board of directors; conduct candidate searches and interviews as directed by our board of directors; evaluate our board of directors and management; evaluate from time to time the appropriate size and composition of our board of directors and recommend, as appropriate, increases, decreases and changes in the composition of our board of directors; and recommend to the board of directors the slate of directors to be elected at each annual meeting of our stockholders. Following this Offering, Edward Lowenthal will be designated as chair and Dan Burck and Cydney Donnell will be appointed as members of our nominating and corporate governance committee.

Our board of directors may from time to time establish certain other committees to facilitate the management of our Company and may change the responsibilities of the board’s existing committees.

Compensation of Directors

Upon consummation of this Offering, each of our directors who is not an employee of our Company or our subsidiaries will receive an annual fee of $25,000 for services as a director, payable quarterly. Our chairman of the board will receive an additional annual fee of $25,000 but will not be entitled to receive any other committee meeting fees. Directors who serve on our audit, nominating and corporate governance and/or compensation

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committees will receive a fee of $2,000 for each committee meeting attended in person or $1,000 for each committee meeting attended by conference telephone or similar communications equipment, except that in lieu of such meeting fee for audit committee meetings, the chair of our audit committee will receive a monthly fee of $2,000. Messrs. Bayless and Nickel will not receive compensation for their services as directors.

Our 2004 Incentive Award Plan provides for formula grants of restricted stock units to non-employee directors on and after the consummation of this Offering. On the date of the closing of this Offering, each non-employee director will receive $25,000 of restricted stock units valued at the Offering price. Thereafter, on the date of each annual meeting of stockholders at which each non-employee director is re-elected to our board of directors, such non-employee director will receive $25,000 of restricted stock units valued at 100% of the fair market value of our common stock on the date of grant. Similarly, each non-employee director who is initially elected to our board of directors after this Offering will receive $25,000 of restricted stock units on the date of such initial election and $25,000 of restricted stock units on the date of each annual meeting of stockholders at which the non-employee director is re-elected to our board of directors, in each case valued at 100% of the fair market value of our common stock on the date of grant. Shares underlying restricted stock units granted to directors shall be settled, in accordance with the terms of the 2004 Incentive Award Plan, on the third anniversary of the date of the grant. Mr. Rechler has agreed to waive receipt of any director compensation until such time as he has been re-elected by our stockholders.

Executive Officer Compensation

The following table sets forth the annual base salary and other compensation paid to our Chief Executive Officer, our other executive officers, and certain other senior officers. We have entered into employment-related agreements with our executive officers which will become effective upon the consummation of this Offering. Under the terms of their respective employment agreements, each executive officer will be eligible to receive annual performance based bonuses under our incentive bonus plan as more fully described in “—Employment Agreements.”

Summary Compensation Table (1)


			Annual Compensation (2)
	Year		Base Salary		Cash Bonus
William C. Bayless, Jr.* Chief Executive Officer, President and Director	2003 2002 2001	(3) (3) (3)	$ $ $	210,000 200,000 167,000	$ $ $	80,000 80,000 101,000
Brian B. Nickel* Executive Vice President, Chief Investment Officer, Secretary and Director	2003 2002 2001		$ $ $	175,000 153,500 140,333	$ $ $	100,000 155,490 100,000
Mark J. Hager* Executive Vice President, Chief Financial and Accounting Officer and Treasurer	2003 2002 2001		$ $ $	132,500 128,116 123,188	$ $ $	50,000 40,000 45,000

Executive Officers

(1)

The table set forth above does not reflect aggregate salary and bonus earned by our former Chief Executive Officer that totaled $416,000, $350,000 and $336,000 in 2003, 2002 and 2001, respectively. Our former Chief Executive Officer is entitled to receive certain severance payments through 2006 totaling approximately $1 million; these amounts have been previously accrued for financial reporting purposes in 2003.

(2)

In addition to the above scheduled compensation, all of our employees (including the executive officers and members of senior management) receive certain standard benefits, including Company contributions toward medical insurance and term life insurance, dental and vision, and access to an employee assistance program.

(3)

Mr. Bayless became our Chief Executive Officer and President in October 2003. Prior to October 2003, Mr. Bayless was our Chief Operating Officer and Executive Vice President.

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Our executive officers and certain of our senior officers will receive on account of their beneficial interest in ACP approximately $2.3 million (based upon the midpoint of the range of the Offering prices referred to on the cover page of this prospectus) from the cash redemption amount to be paid to RAP. These officers have agreed to use their distribution from ACP, net of applicable taxes, to purchase common stock in this Offering.

2004 Incentive Award Plan

We have adopted the American Campus Communities, Inc. 2004 Incentive Award Plan, which provides for the grant to selected employees and directors of our Company and our affiliates of stock options, PIUs, restricted stock units (or RSUs), restricted stock, and other stock-based incentive awards. Only employees of our Company and its affiliates (including, without limitation, employees of our Services Company) are eligible to receive “incentive stock options” under the plan. We have reserved a total of 1,210,000 shares of our common stock for issuance pursuant to the plan, subject to certain adjustments for changes in our capital structure, including by reason of stock dividends, stock splits, reverse stock splits, recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges. Of this amount, the following will be issued upon consummation of this Offering:

•

profits interest units of our Operating Partnership, that are exchangeable for shares of our common stock, will be issued to our executive officers and certain of our senior officers. See “—Profits Interest Units” below for a description of these securities; and

•

restricted stock units representing 6,250 shares of our common stock, which will be issued to our independent directors as compensation. See “—Restricted Stock and Restricted Stock Units” below for a description of these securities.

Additionally, 367,682 shares of our common stock will initially be reserved for issuance to our executive officers and certain senior officers in the event that our Compensation Committee, in its sole discretion, elects to pay any outperformance awards due to these officers in stock rather than cash. See “—Employment Agreements—Outperformance Award” below for a description of these awards. Effective as of the consummation of this Offering, our board of directors intends to delegate general administrative authority of the plan to its compensation committee.

The exercise price of nonqualified stock options and incentive stock options granted under the incentive award plan must be at least 85% and 100%, respectively, of the fair market value of our common stock on the date of grant. However, incentive stock options granted to optionees who own more than 10% of our outstanding common stock on the date of grant must have an exercise price that is at least 110% of fair market value of our common stock on the grant date. Incentive stock options granted under the plan will expire no later than ten years after the date of grant, or five years after the date of grant with respect to optionees who own more than 10% of our outstanding common stock on the grant date.

In the event of certain corporate events, including certain mergers, the sale of all or substantially all of the assets of the Company, or the reorganization or liquidation of the Company, the committee may, in its discretion, provide that all outstanding awards will terminate as of the consummation of such corporate event, and (x) accelerate the exercisability of, or cause all vesting restrictions to lapse on, all outstanding awards to a date at least ten days prior to the date of such corporate event and/or (y) provide that holders of awards will receive a payment in respect of cancellation of their awards based on the amount (if any) by which the per share consideration being paid for the Company’s common stock in connection with such corporate event exceeds the applicable exercise price. In addition, the committee may, in its discretion, provide that all outstanding awards will vest upon any “change in control” of the Company (as defined in the plan).

Our board of directors may amend the plan at any time; provided, however, that without further stockholder approval, the board may not make any amendment to the plan which would increase the maximum number of shares of common stock which may be issued pursuant to the plan, except as contemplated by adjustment provisions for changes in capital structure, or which would otherwise violate the shareholder approval requirements of the national securities exchange on which the common stock is listed or Nasdaq, as applicable.

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The incentive award plan also provides that no participant in the plan will be permitted to acquire, or will have any rights to acquire, shares thereunder if such acquisition would be prohibited by the stock ownership limits contained in our Charter or by any other provision hereof.

We intend to file with the Securities and Exchange Commission a Registration Statement on Form S-8 covering the shares of our common stock issuable under the incentive award plan.

Restricted Stock and Restricted Stock Units

Under our 2004 Incentive Award Plan, our compensation committee may award restricted shares of our common stock and RSUs, to directors, executive officers and eligible employees, subject to conditions and restrictions determined by our compensation committee. RSUs are essentially the same as restricted stock except that instead of actual shares, RSUs represent a promise to pay out shares at some future date. RSUs have a tax advantage over restricted stock because the recipient is not taxed at the time of vesting (as with restricted stock) but only when the shares are actually received.

Profits Interest Units

Profits Interest Units, or PIUs, are a special class of partnership interests in the Operating Partnership. Each PIU awarded will be deemed equivalent to an award of one share of our common stock under our 2004 Incentive Award Plan, reducing availability for other equity awards on a one-for-one basis. PIUs, whether vested or not, will receive the same quarterly per unit distributions as common units of our Operating Partnership, which equal the per share distributions on our common stock. This treatment with respect to quarterly distributions is similar to the expected treatment of our restricted stock awards and RSUs. PIUs vest in accordance with each holder’s PIU Vesting Agreement. All PIUs issued on or prior to the effective date will vest on the effective date.

Initially, PIUs will not have full parity with common units with respect to liquidating distributions. Under the terms of the PIUs, the Operating Partnership will revalue its assets upon the occurrence of certain “book-up events”, and any increase in valuation from the time of this Offering until such book-up event will be allocated first to the holders of PIUs to equalize the capital accounts of such holders with the capital accounts of common unit holders. These book-up events will occur upon a contribution of cash or property to the Operating Partnership, including contributions by us of the proceeds from future issuances of our securities, or upon certain distributions of cash or property by the Operating Partnership to one or more partners of the Operating Partnership. Upon equalization of the capital accounts of the holders of PIUs with the other holders of common units, the PIUs will achieve full parity with common units of the Operating Partnership for all purposes, including with respect to liquidating distributions. If such parity is reached, vested PIUs will thereafter be automatically converted into an equal number of common units. No equalization will occur unless a revaluation of our assets following a book-up event results in an increase in the value of our assets from the date of this Offering. The Formation Transactions will not constitute book-up events and will therefore not impact the capital accounts of the PIU holders. Although we believe it likely that equalization will occur and the PIUs will be converted into common units of our Operating Partnership, there are circumstances under which such equalization would not be achieved and the PIUs would therefore not achieve parity with respect to liquidating distributions. Until and unless such parity is reached, the value that may be realized for a given number of vested PIUs will likely be less than the value of an equal number of shares of our common stock.

Holders of the PIUs will be entitled to customary registration rights, including demand and piggyback registration rights, with respect to the shares of common stock that may be received by the PIU holders upon a conversion/exchange of the PIUs in accordance with the terms of the partnership agreement. In general, we will bear all fees, costs and expenses of such registrations, other than underwriting discounts and commissions.

Unlike RSUs, the grant or vesting of PIUs is not expected to be a taxable transaction to recipients. Therefore, a recipient who wishes to hold incentive equity awards for the long term may be able to do so more efficiently with PIUs and ultimately enjoy a greater after-tax return when disposing of them. Conversely, we will not receive any tax deduction for compensation expense from the grant of PIUs.

We will issue 156,061 PIUs concurrently with this Offering to certain key employees of our Company (based upon the midpoint of the range of the Offering prices referred to on the cover page of this prospectus). The actual

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number of PIUs that we will issue will be based upon the initial public Offering price per share in this Offering and in no event will represent a limited partnership interest in the Operating Partnership that is more than 1.3% or less than 1.0%.

American Campus Partners, LLC

Certain current and former members of our executive officers and senior management are members of American Campus Partners, LLC, or ACP. ACP is entitled to a 28% promoted interest in our Predecessor Entities. ACP’s promoted interest permits ACP to share in a portion of the cash redemption amount realized by RAP and RSVP from the Formation Transactions after receipt by RAP and RSVP of a cumulative preferred return on their invested capital.

At the midpoint of the range of the Offering prices indicated on the front cover of this prospectus, ACP is expected to receive approximately $4.3 million of the $100.6 million cash redemption amount to be paid in the Formation Transactions to RAP. This amount will also include a final settlement of ACP’s interest in the various assets being distributed or retired by entities affiliated with RAP, RSVP and Titan as part of the Formation Transactions. Such proceeds will be allocated among the holders of membership interests in ACP in accordance with their percentage interests approximately as follows:


Employees	Distribution(1)		Percentage of Distribution
William C. Bayless, Jr.	$	934,473	21.8	%
Brian B. Nickel		461,096	10.8	%
Mark J. Hager		279,114	6.5	%
Other Senior Officers		651,265	15.2	%
Other Employees		641,942	15.0	%
Former Employees		1,311,835	30.7	%

(1)

Determined by reference to the midpoint of the range of the Offering prices referred to on the cover page of this prospectus.

Messrs. Bayless, Nickel, Hager and certain other senior officers have advised the underwriters of their intention to use their cash distribution from ACP, net of applicable taxes, to purchase common stock in this Offering. Following the receipt and distribution of these funds, ACP will be dissolved.

Employment Agreements

New Employment Agreements

We have entered into new employment agreements, effective as of the consummation of this Offering, with Messrs. William C. Bayless, Jr., Brian B. Nickel and Mark J. Hager. The employment agreements provide for Mr. Bayless to serve as a member of our board and our President and Chief Executive Officer, Mr. Nickel to serve as a member of our board and our Executive Vice President, Chief Investment Officer and Secretary, and Mr. Hager to serve as our Executive Vice President, Chief Financial and Accounting Officer and Treasurer. These employment agreements require Messrs. Bayless, Nickel and Hager, as applicable, to devote substantially full-time attention and business time to our affairs. The term of each agreement will end upon an executive’s termination of employment as discussed below.

The employment agreements provide for:

•

an annual base salary of $300,000, $250,000 and $200,000 for Messrs. Bayless, Nickel and Hager, respectively, subject in each case to increase in accordance with our normal executive compensation practices;

•

eligibility for annual cash performance bonuses determined by the Board, in accordance with the terms of a bonus plan to be adopted by the Board and on the same basis as other executives of the Company (with appropriate adjustments due to title and salary); and

•

participation in other employee benefit plans applicable generally to our senior executives.

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Under the terms of their respective employment agreements, upon the consummation of this Offering, Mr. Bayless will be issued 62,424 PIUs (representing a 0.51% limited partnership interest in our Operating Partnership and worth $1,248,488 valued at the Offering price of our common stock), Mr. Nickel will be issued 37,455 PIUs (representing a 0.31% limited partnership interest in our Operating Partnership and worth $749,093 valued at the Offering price of our common stock) and Mr. Hager will be issued 15,606 PIUs (representing a 0.13% limited partnership interest in our Operating Partnership and worth $312,122 valued at the Offering price of our common stock). Four other members of our senior management and certain other key employees will be issued a total of 40,576 PIUs representing in the aggregate a 0.33% limited partnership interest in our Operating Partnership. These PIUs are not subject to any vesting period or requirement.

The employment agreements provide that, if an executive’s employment is terminated by us without “cause” or by the executive for “good reason” (each as defined in the applicable employment agreement), the executive will be entitled to the following severance payments and benefits, subject to his execution and non-revocation of a general release of claims:

•

a cash payment equal to 299%, 200% and 100% times the sum of his then-current annual base salary plus the average annual bonus paid or payable in respect of the last prior three years for Messrs. Bayless, Nickel and Hager, respectively, payable over the remaining term of his non-competition agreement;

•

his prorated annual bonus for the year in which the termination occurs; and

•

health benefits for two years following the executive’s termination of employment at the same cost to the executive as in effect immediately preceding such termination, subject to reduction to the extent that the executive receives comparable benefits from a subsequent employer.

Outperformance Award

Upon the consummation of this Offering, we will grant to our executive officers and certain of our key employees a special award that will be based upon their continued service and attaining certain performance measures. This special award will consist of a bonus pool equal to the value on the date of vesting of shares of common stock (representing 3% of our shares of common stock and 1.3% PIUs that will be outstanding immediately following this Offering). No dividends or dividend equivalent payments will accrue with respect to the shares of common stock underlying this bonus pool. Vesting of the award will occur on the third anniversary of this Offering provided that the following have occurred:

•

the designated recipient has remained in continuous employment with us or our affiliates until such date; and

•

at least one of the following performance measures is achieved:

•

Primary Performance Measure. Total return (stock appreciation plus dividends) of at least 25% per annum (cumulative non-compounded) for purchasers of our shares in this Offering who have held their shares through such date;

•

Alternate Performance Measure. Total return (stock appreciation plus dividends) of at least 12% per annum (cumulative non-compounded) for purchasers of our shares in this Offering who have held their shares through such date, and such return is at or above the 60th percentile of the total return to stockholders achieved by members of a group of designated “peer” companies during the same period.

Any individual award that becomes unvested as a result of an early termination of employment will be reallocated among the remaining recipients. In the event of a change of control of our Company, or termination of employment by us other than for “cause” or by a designated recipient for “good reason”, the special award will be fully vested at that time (with the value of the bonus pool to be determined at that time for any affected award

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recipient) if the Primary Performance Measure has been achieved. Otherwise, a portion (but not less than 50%) of the special award (equal to the portion of the initial 3-year vesting period that has elapsed) will be vested at that time if the Alternate Performance Measure has been achieved.

Payments of vested awards will be made within 120 days of vesting. Such payments will be paid in cash; however, the Compensation Committee of the Board may, in its sole discretion, elect to pay such an award through the issuance of shares of common stock, Units, PIUs or similar securities (provided that such issuance will not result in any recognition of taxable income by the recipient), valued at the date of issuance, provided that such securities are available at that time under any of the Company’s existing stock option plans.

Non-Competition Agreements

We have entered into non-competition agreements with each of Messrs. Bayless, Nickel and Hager under which they have covenanted not to (i) conduct, directly or indirectly, any business involving the development, acquisition, sale or management of on-campus or off-campus student housing properties, whether such business is conducted by them individually or as principal, partner, officer, director, consultant, employee, stockholder or manager of any person, partnership, corporation, limited liability company or any other entity; or (ii) own interests in student housing properties that are competitive, directly or indirectly, with any business carried on by us or our successors, subsidiaries and affiliates. Mr. Bayless will be bound by his non-competition covenant for so long as he is our Chief Executive Officer and for a two-year “tail” period thereafter, unless his employment is terminated by us without “cause” or by him with “good reason” (in each case, as defined in his employment agreement) or by him for any reason at any time prior to the one year anniversary of a change of control of our Company, in which case his covenant not to compete will lapse upon the one year anniversary of his termination. Mr. Nickel will be bound by a similar non-competition covenant for so long as he is our Executive Vice President and Chief Investment Officer and for a two-year “tail” period thereafter, and Mr. Hager will be bound by a similar non-competition covenant for so long as he is our Chief Financial Officer and for a two-year “tail” period thereafter. In addition, the members of our senior management who are receiving grants of our common stock as well as any other employees receiving grants of or options for our common stock will be required to execute a “Restricted Stock Grant Notice” or similar notice which will include a Non-Competition Agreement that is substantially similar.

Indemnification Agreements

We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements provide that:

If a director or executive officer is a party or is threatened to be made a party to any proceeding, other than a proceeding by or in the right of our Company, by reason of such director’s or executive officer’s status as a director, officer or employee of our Company, we must indemnify such director or executive officer for all expenses and liabilities actually and reasonably incurred by him or her, or on his or her behalf, unless it has been established that:

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the act or omission of the director or executive officer was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty;

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the director or executive officer actually received an improper personal benefit in money, property or other services; or

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with respect to any criminal action or proceeding, the director or executive officer had reasonable cause to believe that his or her conduct was unlawful.

If a director or executive officer is a party or is threatened to be made a party to any proceeding by or in the right of our Company to procure a judgment in our Company’s favor by reason of such director’s or executive officer’s status as a director, officer or employee of our Company, we must indemnify such director or executive

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officer for all expenses and liabilities actually and reasonably incurred by him or her, or on his or her behalf, unless it has been established that:

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the act or omission of the director or executive officer was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty; or

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the director or executive officer actually received an improper personal benefit in money, property or other services;

provided, however, that we will have no obligation to indemnify such director or executive officer for all expenses and liabilities actually and reasonably incurred by him or her, or on his or her behalf, if it has been adjudged that such director or executive officer is liable to us with respect to such proceeding.

Upon application of a director or executive officer of our Company to a court of appropriate jurisdiction, the court may order indemnification of such director or executive officer if:

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the court determines that such director or executive officer is entitled to indemnification under the applicable section of the laws of the state of Maryland or Maryland law (which includes without limitation, Maryland General Corporation Law, as amended), in which case the director or executive officer shall be entitled to recover from us the expenses of securing such indemnification; or

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the court determines that such director or executive officer is fairly and reasonably entitled to indemnification in view of all of the relevant circumstances, whether or not the director or executive officer has met the standards of conduct set forth in the applicable section of Maryland law or has been adjudged liable for receipt of an improper personal benefit under the applicable section of Maryland law; provided, however, that our indemnification obligations to such director or executive officer will be limited to the expenses actually and reasonably incurred by him or her, or on his or her behalf, in connection with any proceeding by or in the right of our Company or in which the officer or director shall have been adjudged liable for receipt of an improper personal benefit under the applicable section of Maryland law.

Notwithstanding, and without limiting, any other provisions of the agreements, if a director or executive officer is a party or is threatened to be made a party to any proceeding by reason of such director’s or executive officer’s status as a director, officer or employee of our Company, and such director or executive officer is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such proceeding, we must indemnify such director or executive officer for all expenses actually and reasonably incurred by him or her, or on his or her behalf, in connection with each successfully resolved claim, issue or matter, including any claim, issue or matter in such a proceeding that is terminated by dismissal, with or without prejudice.

We must pay all indemnifiable expenses in advance of the final disposition of any proceeding if the director or executive officer furnishes us with a written affirmation of the director’s or executive officer’s good faith belief that the standard of conduct necessary for indemnification by our Company has been met and a written undertaking to reimburse us if a court of competent jurisdiction determines that the director or executive officer is not entitled to indemnification.

We must pay all indemnifiable expenses to the director or executive officer within 20 calendar days following the date the director or executive officer submits proof of the expenses to us.

Insofar as indemnification for liabilities arising under the Securities Act, may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable.

Compensation Committee Interlocks and Insider Participation

None of our executive officers serve as a member of the board of directors or compensation committee of any entity that has an executive officer serving as a member of our board of directors or compensation committee.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Formation Transactions

The initial public offering price of our common stock was determined in consultation with the underwriters. Among the factors that were considered were:

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our record of operations;

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our management;

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our estimated net income;

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our estimated funds from operations;

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our estimated cash available for distribution;

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our anticipated distribution yield;

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our growth prospects;

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the current market valuations, financial performance and distribution yields of publicly traded companies considered by us and the underwriters to be comparable to us; and

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the current state of the commercial real estate industry and the economy as a whole.

The Offering price does not necessarily bear any relationship to our book value or the fair market value of our assets. The aggregate historical combined net tangible book value of the interests and assets that will be owned by us immediately following consummation of this Offering was approximately $137.2 million as of June 30, 2004. We have not obtained any recent third party appraisals of these interests or assets. The price to be paid to our existing investors for their interests in our Predecessor Entities is based upon the valuation of our business as a going concern and may therefore exceed our properties’ individual market values. See “Risk Factors—Risks Related to this Offering—We have not obtained recent appraisals of the properties in connection with this Offering.”

Description of Contribution Agreement

In connection with the Formation Transactions, we, our Operating Partnership, RAP and RSVP have entered into a Contribution Agreement that, among other things, provides as follows:

Transactions among RAP and RSVP

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RSVP, which owns a 67% interest in RAP and, prior to this Offering, was our sole stockholder, will contribute to RAP its interests in ACCL, its interest in University Village at TU and its minority interests in our off-campus properties in exchange for membership interests in RAP. These membership interests will be redeemed by RAP with proceeds received by RAP from the redemption of its interests in RAPSH. RAP will contribute these interests in ACCL and the entities owning University Village at TU to its wholly-owned subsidiary, RAPSH. Consequently, RAPSH will hold all of the interests in ACCL.

Transactions among us, RAPSH, RSVP and RAP

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RAPSH and an affiliate of RSVP will distribute their interests in the entities owning The Village at Riverside to an affiliate of RAP and RSVP.

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RAPSH will distribute to a newly-formed entity affiliated with RAP, RSVP and Titan fee title to an undeveloped parcel of land adjacent to the University Village at San Bernardino. This parcel of land is zoned for commercial development and is currently under a letter of intent to be sold to an unaffiliated purchaser for a purchase price of $875,000. RAPSH will also distribute to this entity all of the interests

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in the entities that previously developed a residential condominium project adjacent to University Village at Boulder Creek (and that currently own one remaining condominium unit in that project).

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We will contribute the net Offering proceeds to our Operating Partnership. Our Operating Partnership will contribute substantially all of these proceeds to RAPSH in exchange for the issuance of interests in RAPSH.

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RAPSH will redeem RAP’s entire interest in RAPSH by making a payment to RAP of $100.6 million (approximately 45.3% of the net proceeds of the Offering). This amount will be increased or decreased, respectively, depending upon whether the shares in this Offering are sold above or below $20 per share (the midpoint of the range of the Offering prices referred to on the cover page of this prospectus).

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We will use up to $11.5 million of the proceeds of the Offering to complete the construction of our three properties (University Village at TU, University Village at Fresno and University Village at San Bernardino) scheduled to be completed and opened in August 2004 with any remaining proceeds after such completion (currently estimated to be approximately $1.2 million) to be distributed to entities affiliated with RAP and RSVP. We have deposited in escrow an amount equal to these anticipated savings. Additionally, any insurance proceeds that we receive after the date of this Offering with respect to our claims related to the Fresno State fire will, unless used by us to fund unanticipated cost overruns at University Village at TU, be distributed to entities affiliated with RAP and RSVP. A portion of these proceeds will be paid by affiliates of RAP and RSVP to affiliates of Titan.

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RAPSH will continue to remain liable for its pre-existing guarantee of certain contingent obligations of RAP and RSVP under the non-recourse mortgage indebtedness, encumbering The Village at Riverside, including, among other things, that proceeds from the operation or disposition of the property will first be applied to the property’s upkeep or to payment of the property’s mortgage indebtedness. RAP and RSVP may not sell the property to a third party or, to the extent in their control, terminate us as managers of the property for so long as this guarantee remains outstanding, and following expiration of the guarantee will use commercially reasonable efforts to ensure that we remain the property manager during their continued ownership of the property and as part of any sale of the property to a third party. While we cannot predict with certainty the amount of losses, if any, that we may incur under this guarantee, we do not believe that they will be material. Subject to certain caps and limitations, RAP and RSVP have jointly and severally agreed to indemnify us for any such losses.

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RAP and RSVP will grant us an option to acquire their indirect 100% ownership interest in The Village at Riverside for a cash price (including the balance of any indebtedness which will be assumed) equal to the property’s most recent net operating income (before debt service) over the preceding four calendar quarters divided by an 8% “cap” rate, but in no case less than $12 million during the option’s first 24 months and $13 million during the option’s last 24 months. This option price will be reduced by the amount of any payment made by us to the property’s mortgagee under our guarantee. Based on the property’s net operating income over the preceding four calendar quarters, the option price would have been $10.8 million before taking into account the minimum price. Our option expires four years from completion of this Offering but may expire earlier if the property is sold to a third party following our election not to exercise our right of first offer.

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RSVP will grant us an option to acquire its indirect 23% ownership interest in Dobie Center. The option price will be based on a $52.0 million valuation of the property less the then outstanding debt, which on June 30, 2004 was approximately $42.8 million, resulting in a $2.1 million option price for RSVP’s 23% interest at the property’s current debt level. Our option expires four years from completion of this Offering but may expire earlier if title to the Dobie Center is transferred to a third party. RSVP will use its commercially reasonable efforts to ensure that we remain the property manager for the Dobie Center during RSVP’s continued ownership of its interest in the property and as part of any sale of the property to a third party.

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A subsidiary of RAP and RSVP will provide us and the underwriters of this Offering with certain limited representations, warranties and indemnities with respect to their ownership of their partnership interests being contributed to or redeemed by our Operating Partnership and certain other matters.

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We have agreed to nominate Mr. Scott Rechler to be a director of our board of directors at our next two annual meetings, subject to his consent and eligibility to serve. Mr. Rechler has agreed to waive receipt of any director compensation until such time as he has been reelected by our stockholders. Mr. Rechler is the Chief Executive Officer and President of Reckson, and the Chief Executive Officer and sole director of FrontLine Capital Group. FrontLine is the indirect parent of RSVP. Reckson is the indirect non-controlling minority owner of RAP and the largest creditor of FrontLine. In 2002, FrontLine filed for protection from creditors under the federal bankruptcy laws.

Description of Titan Agreements

We have entered into an agreement with Titan for the purchase of substantially all of Titan’s interests in the American Campus–Titan Properties. Titan will receive approximately $5.7 million in cash in exchange for its interests and will provide us with customary representations, warranties and indemnities. Titan will also receive certain additional amounts for such interests from affiliates of RAP and RSVP to the extent they receive from us construction savings payments or Fresno fire insurance proceeds. We have also entered into an agreement with Titan with respect to prospective development projects to be owned jointly by us. See “Business and Properties—Our Properties—American Campus—Titan Development Relationship.” Our respective undertakings under these agreements are subject, among other things, to the due execution and closing of the contribution agreement with RAP and RSVP (described above) and the successful consummation of this Offering.

Description of Employment Agreements

We have entered into employment agreements with our executive officers as described in “Management—Employment Agreements” that will become effective upon the consummation of this Offering. These agreements provide for salary, bonuses and other benefits, including, potentially, severance benefits upon a termination of employment, as well as for grants of PIUs, cash bonuses and outperformance awards, among other matters. For a full summary of these agreements, see “Management—Employment Agreements” above.

Description of Management Agreements

Dobie Center

Pursuant to this agreement, a wholly owned subsidiary of our Services Company provides customary property management services to Dobie Center and serves as exclusive leasing agent for the commercial space at the property. The agreement expires on May 31, 2008, after which time the agreement renews on a month to month basis. The fee payable for managing the property is 3% of gross receipts from the operation of property, calculated on cumulative annualized basis (6% for supervision and coordination of restoration activities following a casualty and major rehabilitation/renovation of the property). In addition, the property manager earns a commission equal to 4% of base rents payable under each commercial lease (6% if a co-broker is involved) for acting as exclusive leasing agent for commercial space.

The Village at Riverside

Pursuant to this agreement, a wholly owned subsidiary of our Services Company provides customary property management services to The Village at Riverside. The owner may terminate this agreement at any time upon 30 days prior written notice. The fee payable for managing the property is 2.5% of gross receipts for the operation of property, calculated on a cumulative annualized basis (5% for supervision and coordination of restoration activities following a casualty and major rehabilitation/renovation of the property). RAP and RSVP have agreed not to terminate us as managers for so long as RAPSH continues to guarantee certain contingent obligations under the properties’ mortgage indebtedness. They also agreed to use commercially reasonable efforts to ensure that we remain property managers for so long as they own the property.

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POLICIES WITH RESPECT TO CERTAIN ACTIVITIES

The following is a discussion of certain of our investment, financing and other policies. These policies have been adopted by our board of directors and, in general, may be amended or revised from time to time by our board of directors without a vote of our stockholders.

Investment Policies

Investment in Real Estate or Interests in Real Estate

We will conduct all of our investment activities through our Operating Partnership and its affiliates. Our investment objectives are to provide quarterly cash distributions and achieve long-term capital appreciation through increases in the value of our Company. We have not established a specific policy regarding the relative priority of these investment objectives. For a discussion of the properties and our acquisition and other strategic objectives, see “Business and Properties” and “Strategy for Growth.”

We expect to pursue our investment objectives primarily through the ownership by our Operating Partnership of the properties and other acquired properties and assets. We currently intend to invest primarily in developments of student housing and acquisitions of existing improved properties or properties in need of redevelopment and acquisitions of land which we believe has development potential for student housing. Future investment or development activities will not be limited to any geographic area, product type or to a specified percentage of our assets. While we may diversify in terms of property locations, size and market, we do not have any limit on the amount or percentage of our assets that may be invested in any one property or any one geographic area. We intend to engage in such future investment or development activities in a manner that is consistent with the maintenance of our status as a REIT for federal income tax purposes. In addition, we may purchase or lease income-producing commercial and other types of properties for long-term investment, expand and improve the properties we presently own or other acquired properties, or sell such properties, in whole or in part, when circumstances warrant.

We may also participate with third parties in property ownership, through joint ventures or other types of co-ownership. These types of investments may permit us to own interests in larger assets without unduly restricting our diversification and, therefore, provide us with flexibility in structuring our portfolio. We will not, however, enter into a joint venture or other partnership arrangement to make an investment that would not otherwise meet our investment policies.

Equity investments in acquired properties may be subject to existing mortgage financing and other indebtedness or to new indebtedness, which may be in acquired properties incurred in connection with acquiring or refinancing these investments. Debt service on such financing or indebtedness will have a priority over any distributions with respect to our common stock. We may in the future acquire some, all or substantially all of the securities or assets of other REITs or similar entities where that investment would be consistent with our investment policies. Subject to the limitations imposed by such other REITs on the ownership of their stock and to the requirement that we satisfy the asset tests described in “Federal Income Tax Considerations—Taxable REIT Subsidiaries—Asset Tests,” there are no limitations on the amount or percentage of our total assets that may be invested in any one issuer. However, we do not anticipate investing in other issuers of securities for the purpose of exercising control or acquiring any investments primarily for sale in the ordinary course of business or holding any investments with a view to making short-term profits from their sale. In any event, we do not intend that our investments in securities will require us to register as an “investment company” under the Investment Company Act, and we intend to divest securities before any registration would be required.

Investments in Real Estate Mortgages

While our current portfolio consists of, and our business objectives emphasize, equity investments in real estate, we may, at the discretion of our board of directors, invest in mortgages and other types of real estate interests consistent with our qualification as a REIT. We do not presently intend to invest in mortgages or deeds of trust, but may invest in participating or convertible mortgages if we conclude that we may benefit from the gross

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revenues or any appreciation in value of the property. Investments in real estate mortgages run the risk that one or more borrowers may default under certain mortgages and that the collateral securing certain mortgages may not be sufficient to enable us to recoup our full investment.

Securities of or Interests in Persons Primarily Engaged in Real Estate Activities and Other Issuers

Subject to the percentage of ownership limitations and gross income tests necessary for REIT qualification, we may invest in securities of other REITs, other entities engaged in real estate activities or securities of other issuers, including for the purpose of exercising control over such entities.

Dispositions

We do not currently intend to dispose of any of our properties, although we reserve the right to do so if, based upon management’s periodic review of our portfolio, our board of directors determines that such action would be in the best interest of our stockholders. For example, we may seek to enter into tax-efficient joint ventures in our stabilized properties with third party investors to raise low-cost equity capital that we can reinvest in properties with higher growth potential. Any decision to dispose of a property will be made by our board of directors.

Financing Policies

We presently intend to maintain a ratio of our consolidated total indebtedness-to-total market capitalization of 50% or less (excluding indebtedness encumbering our on-campus participating properties or properties that we subsequently develop or acquire that have similar ownership structures). For purposes of this calculation, our indebtedness does not include the indebtedness encumbering our on-campus participating properties or properties that we subsequently develop or acquire that have similar ownership structures. Our total market capitalization is defined as the sum of the market value of our outstanding common stock and preferred stock (which may decrease, thereby increasing our debt to total capitalization ratio), including shares of restricted stock or restricted stock units that we may issue to our officers and directors under our 2004 Incentive Award Plan, plus the aggregate value of Operating Partnership units not owned by us, plus the book value of our total consolidated indebtedness (excluding indebtedness encumbering our on-campus participating properties or properties that we subsequently develop or acquire that have similar ownership structures). Since this ratio is based, in part, upon market values of equity, it will fluctuate with changes in the price of our common stock; however, we believe that this ratio provides an appropriate indication of leverage for a company whose assets are primarily real estate. We expect that our ratio of debt-to-total market capitalization upon consummation of this Offering will be approximately 33.3% (30.3% if the underwriters’ overallotment option is exercised in full). Our Charter and bylaws do not limit the amount or percentage of indebtedness that we may incur. Our board of directors may from time to time modify our debt policy in light of then-current economic conditions, relative costs of debt and equity capital, market values of our properties, general conditions in the market for debt and equity securities, fluctuations in the market price of our common stock, growth and acquisition opportunities and other factors. Accordingly, we may increase or decrease our ratio of debt-to-total market capitalization beyond the limits described above. If these policies were changed, we could become more highly leveraged, resulting in an increased risk of default on our obligations and a related increase in debt service requirements that could adversely affect our financial condition and results of operations and our ability to pay distributions to our stockholders. See “Risk Factors—Risks Related to Our Properties and Our Business—Our debt level reduces cash available for distribution and may expose us to the risk of default under our debt obligations” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

Conflict of Interest Policies

We have adopted certain policies that are designed to eliminate or minimize certain potential conflicts of interest. In addition, our board of directors is subject to certain provisions of Maryland law, which are also designed to eliminate or minimize conflicts.

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However, there can be no assurance that these policies or provisions of law will always be successful in eliminating the influence of such conflicts, and if they are not successful, decisions could be made that might fail to reflect fully the interests of all stockholders.

Interested Director and Officer Transactions

Pursuant to Maryland law, a contract or other transaction between us and a director or between us and any other corporation or other entity in which any of its directors is a director or has a material financial interest is not void or voidable solely on the grounds of such common directorship or interest. The common directorship or interest, the presence of such director at the meeting at which the contract or transaction is authorized, approved or ratified or the counting of the director’s vote in favor thereof will not render the transaction void or voidable if:

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the material facts relating to the common directorship or interest and as to the transaction are disclosed to our board of directors or a committee of our board, and our board or committee authorizes, approves or ratifies the transaction or contract by the affirmative vote of a majority of disinterested directors, even if the disinterested directors constitute less than a quorum;

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the material facts relating to the common directorship or interest and as to the transaction are disclosed to our stockholders entitled to vote thereon, and the transaction is authorized, approved or ratified by a majority of the votes cast by the stockholders entitled to vote; or

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the transaction or contract is fair and reasonable to us at the time it is authorized, ratified or approved.

Furthermore, under Maryland law (where our Operating Partnership is formed), we, as general partner, have a fiduciary duty to our Operating Partnership and, consequently, such transactions also are subject to the duties of care and loyalty. We will adopt a policy which requires that all contracts and transactions between us, our Operating Partnership or any of our subsidiaries, on the one hand, and any of our directors or executive officers or any entity in which such director or executive officer is a director or has a material financial interest, on the other hand, must be approved by the affirmative vote of a majority of the disinterested directors. Where appropriate in the judgment of the disinterested directors, our board of directors may obtain a fairness opinion or engage independent counsel to represent the interests of nonaffiliated security holders, although our board of directors will have no obligation to do so.

Business Opportunities

Pursuant to Maryland law, each director is obligated to offer to us any business opportunity (with certain limited exceptions) that comes to him or her and that we reasonably could be expected to have an interest in pursuing.

Policies with Respect to Other Activities

We have authority to offer common stock, preferred stock or options to purchase stock in exchange for property and to repurchase or otherwise acquire our common stock or other securities in the open market or otherwise, and we may engage in such activities in the future. Except in connection with the Formation Transactions or employment agreements, we have not issued common stock, Units or any other securities in exchange for property or any other purpose, and our board of directors has no present intention of causing us to repurchase any common stock. We may issue preferred stock from time to time, in one or more series, as authorized by our board of directors without the need for stockholder approval. See “Description of Securities—Preferred Stock.” We have not engaged in trading, underwriting or agency distribution or sale of securities of other issuers other than our Operating Partnership and do not intend to do so. At all times, we intend to make investments in such a manner as to qualify as a REIT, unless because of circumstances or changes in the Code, or the Treasury Regulations, our board of directors determines that it is no longer in our best interest to qualify as a REIT. We have not made any loans to third parties, although we may in the future make loans to third parties, including, without limitation, to joint ventures in which we participate. We intend to make investments in such a way that we will not be treated as an investment company under the Investment Company Act of 1940, as amended.

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Reporting Policies

After this Offering, we will become subject to the full information reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Pursuant to these requirements, we will file periodic reports, proxy statements and other information, including certified financial statements, with the Securities and Exchange Commission. See “Where You Can Find More Information”.

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STRUCTURE AND FORMATION

Our Structure

We will elect to be taxed as a REIT for federal income tax purposes commencing with our tax year ending December 31, 2004. We will own substantially all of our properties and conduct substantially all of our operations through American Campus Communities Operating Partnership LP, our Operating Partnership, and its wholly-owned subsidiary, American Campus Communities Services, Inc., our Services Company. All of our operating expenses will be borne by our Operating Partnership or the Services Company, as the case may be. We will be the sole general partner of our Operating Partnership and, therefore, we will have control over its management and each of our owned properties. Following this Offering, our board of directors will consist of eight directors, at least five of whom are expected to be classified under applicable NYSE listing standards as “independent” directors. See “Management—Directors, Executive Officers and Senior Management.”

The Operating Partnership

Following the consummation of this Offering and the Formation Transactions, substantially all of our assets will be held by, and our operations conducted through, our Operating Partnership. We will own 98.7% of the Units in our Operating Partnership. Certain of our officers will own PIUs in the Operating Partnership representing approximately a 1.3% limited partnership interest. We will be the sole general partner of our Operating Partnership; accordingly, our board of directors will effectively direct all of our Operating Partnership’s affairs.

The Services Company

In order to qualify as a REIT, a specified percentage of our gross income must be derived from real property sources, which would generally exclude our income from providing development and management services to third parties as well as our income from certain services afforded student-tenants in our owned properties. See “Federal Income Tax Considerations—Taxation of Our Company.” In order to avoid realizing such income in a manner that would adversely affect our ability to qualify as a REIT, we will provide certain services through our Services Company, which will elect, together with us, to be treated as our “taxable REIT subsidiary” or “TRS.” See “Federal Income Tax Considerations—Taxation of Our Company.” Our Services Company will be wholly-owned and controlled by our Operating Partnership. Our on-campus participating properties will be owned by our Services Company. The income earned by our Services Company (including income from our on-campus participating properties) will be subject to regular federal income tax and state and local income tax where applicable and will therefore be subject to an additional level of tax as compared to the income earned from our properties.

Formation Transactions

Prior to or simultaneously with the completion of this Offering, we will engage in the Formation Transactions described below. These are designed to:

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consolidate the ownership of our properties and the business of our Predecessor Entities into our Operating Partnership and Services Company;

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facilitate this Offering;

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enable us to raise necessary capital to redeem the interests of RAP and RSVP in our Predecessor Entities and to acquire substantially all of Titan’s 5% interest in the American Campus–Titan Properties;

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repay certain existing property indebtedness; and

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enable us to qualify as a REIT for federal income tax purposes commencing with the taxable year ending December 31, 2004.

Prior to the Formation Transactions, most of the interests in our off-campus properties were owned by RAPSH, which was wholly owned by RAP. Our on-campus participating properties were owned by ACCL. Most of our third party development, management and leasing services were also provided through ACCL. Substantially all of the interests in ACCL and an interest in a number of our off-campus properties were owned by RSVP. Four of

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our off-campus properties, three of which are currently under construction, were owned by our American Campus-Titan joint venture with Titan Investments, an unaffiliated developer. Our executive officers, certain of our senior officers and certain of our former employees are the sole members of ACP, a limited liability company that owns a 28% promoted interest in our Predecessor Entities.

The following is a current ownership chart of the Predecessor Entities prior to the Formation Transactions:

LOGO

Following are the principal steps in the Formation Transactions:

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RSVP, which owns a 67% interest in RAP and, prior to this Offering, was our sole stockholder, will contribute to RAP its interests in ACCL, its interest in University Village at TU and its minority interests in our off-campus properties. RAP will then contribute these interests to RAPSH. Consequently, RAPSH will hold all of the interests in ACCL.

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•

Our Operating Partnership will acquire substantially all of Titan’s 5% interest in the American Campus–Titan Properties in exchange for approximately $5.7 million in cash. The balance of Titan’s interest will be acquired by an affiliate of RAP and RSVP and contributed to RAPSH. As a result, the American Campus–Titan Properties will be wholly-owned by our Operating Partnership. Certain of the terms of our business relationship with Titan with regard to future property developments will also be restructured.

•

RAPSH and an affiliate of RSVP will distribute their interests in the entities owning The Village at Riverside to an affiliate of RAP and RSVP. We will continue to manage this property for so long as RAPSH’s guarantee with respect to this property remains in effect and this property remains under the control of RAP and RSVP. We will also be granted a four-year option from RAP and RSVP to acquire the property for a cash price equal to its most recent net operating income (before debt service) over the preceding four calendar quarters divided by an 8% “cap” rate, but in no case less than $12 million during the option’s first 24 months and $13 million during the option’s final 24 months. See “Certain Relationships and Related Transactions—Description of Contribution Agreement.” RAPSH will also distribute certain non-core assets (consisting of a single condominium unit and an undeveloped parcel of land) to entities affiliated with RAP, RSVP and Titan.

•

Our Operating Partnership will contribute approximately $100.6 million of the net proceeds of the Offering to RAPSH in exchange for interests in RAPSH. RAPSH will use these proceeds to redeem the interest owned by RAP in RAPSH. This amount will increase or decrease depending upon whether the shares in this Offering are sold above or below $20 per share (the midpoint of the range of the Offering prices referred to on the cover page of this prospectus). As a result, our Operating Partnership will own all of the membership interests in RAPSH.

•

We will issue to certain of our senior officers PIUs in our Operating Partnership representing approximately a 1.3% limited partnership interest in our Operating Partnership.

•

We will use up to $11.5 million of the proceeds of this Offering to complete the construction of our three properties (University Village at TU, University Village at Fresno State and University Village at San Bernardino) scheduled to be completed and opened in August 2004, with any remaining proceeds after such completion (currently estimated to be approximately $1.2 million) to be distributed to entities affiliated with RAP and RSVP. Additionally, any insurance proceeds that we receive after the date of this Offering with respect to our claims related to the Fresno State fire will, unless used by us to fund unanticipated cost overruns at University Village at TU, be distributed to entities affiliated with RAP and RSVP. A portion of these proceeds, if any, will be paid by affiliates of RAP and RSVP to affiliates of Titan.

•

As a result of these Formation Transactions:

•

we will own 98.7% of our Operating Partnership’s outstanding Units, and our Operating Partnership will own all of our off-campus properties, including the American Campus–Titan Properties;

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•

certain of our officers will own approximately 156,061 shares of our common stock and PIUs in our Operating Partnership representing approximately a 1.3% limited partnership interest in the Operating Partnership; and

•

the Services Company will become a wholly-owned subsidiary of our Operating Partnership and will continue to own our on-campus participating properties.

Consequences of this Offering and the Formation Transactions

The following diagram depicts our ownership structure and the ownership structure of our Operating Partnership and Services Company upon completion of this Offering and the Formation Transactions:

LOGO

(1)

Represents PIUs in the Operating Partnership.

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Benefits to Related Parties

Upon completion of this Offering or in connection with the Formation Transactions, the former owners of our properties will receive material benefits, including:

•

RAP will receive a cash payment of approximately $100.6 million (45.3% of the net proceeds of this Offering) for the redemption of its interests in RAPSH. This amount will increase or decrease depending on whether the shares in this Offering are sold above or below $20 per share (the midpoint in the range of the Offering prices referred to on the cover page of this prospectus). Additionally RAP will receive a final working capital distribution from cash on hand of $1.5 million and $170,000 in budgeted development fees relating to the construction properties to be paid from the remaining construction budget.

•

RAPSH will distribute to entities affiliated with RSVP, RAP and Titan certain assets that we consider to be unrelated to our core business, including:

•

fee title to a parcel of commercially-zoned land that is adjacent to the University Village at San Bernardino; and

•

Reckson and RSVP will, through their respective ownership interests in RAP, be entitled to participate in the benefits realized by RAP that are described above.

•

Titan will sell substantially all of its interest in the American Campus-Titan Properties to our Operating Partnership and will receive approximately $5.7 million in cash. Titan will also receive from RAP and RSVP on account of such interests a share of any construction cost savings received by RAP and RSVP with respect to our three off-campus construction properties and the Fresno fire insurance proceeds.

•

Our executive officers and certain of our senior officers have or will receive material benefits, including:

•

Issuance of PIUs in our Operating Partnership representing approximately a 1.3% limited partnership interest in the Operating Partnership;

•

Approximately $2.3 million (based upon the midpoint of the range of the Offering prices referred to on the cover page of this prospectus) from the cash redemption amount to be paid to RAP, on account of their beneficial interests in ACP. These officers have advised the underwriters of their intention to use these proceeds, net of applicable taxes, to purchase common stock in this Offering;

•

participation in our program of outperformance awards under our 2004 Incentive Award Plan with respect to the value of 3% of our outstanding stock and Units;

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•

employment agreements providing for salary, bonus and other benefits, including, severance upon a termination of employment under certain circumstances, as described under “Management—Employment Agreements”; and

•

indemnification by us for certain liabilities and expenses incurred as a result of actions brought, or threatened to be brought, against them as officers or directors.

•

Each of our non-employee directors will receive material benefits, including:

•

a grant of $25,000 of restricted stock units with respect to our common stock pursuant to our 2004 Incentive Award Plan;

•

annual and per-meeting fees described under “Management—Compensation of Directors”; and

•

indemnification by us for certain liabilities and expenses incurred as a result of actions brought, or threatened to be brought, against him or her as a director.

•

In addition to the underwriting discounts and financial advisory fees to be received by Deutsche Bank Securities Inc., its affiliate, BT Holdings (NY), Inc., is a creditor of, and holds a security interest in certain assets of, RSVP’s parent company, FrontLine Capital Group. FrontLine filed for protection from creditors pursuant to Chapter 11 of the Bankruptcy Code in June 2001. BT Holdings (NY), Inc. would therefore potentially receive benefits from this Offering to the extent FrontLine received and paid to its unsecured creditors any portion of the net proceeds of this Offering or otherwise used such proceeds to repay any of its senior or secured indebtedness. To the extent proceeds are used to repay senior or secured indebtedness, proceeds from future asset sales by FrontLine may be available for distribution to BT Holdings (NY), Inc. and the other unsecured creditors. Deutsche Bank Securities Inc. may therefore have an interest in the successful completion of this Offering beyond the underwriting discounts and financial advisory fees that it will receive. In addition, concurrently with the closing of this Offering, we will repay all outstanding amounts under our existing line of credit provided by affiliates of Citigroup Global Markets Inc. and Deutsche Bank Securities Inc., as joint lead arrangers, and then retire such line of credit. See “Underwriting.”

Restrictions on Transfer

William C. Bayless, Jr., our President, Chief Executive Officer and a director, Brian B. Nickel, our Executive Vice President, Chief Investment Officer, Secretary and a director, and Mark J. Hager, our Executive Vice President, Chief Financial and Accounting Officer and Treasurer, and other members of our senior management have agreed not to sell or otherwise transfer or encumber any shares of our common stock or securities convertible or exchangeable into our common stock owned by them at the completion of this Offering (including, without limitation, their PIUs) or thereafter acquired by them for a period of 14 months after the completion of this Offering.

Conflicts of Interest

We have adopted policies that are designed to eliminate or minimize certain potential conflicts of interest and the partners of our Operating Partnership have agreed that in the event of a conflict in the fiduciary duties owed by us to our stockholders and, in our capacity as sole general partner of our Operating Partnership, to such partners, we will fulfill our fiduciary duties to such partners by acting in the best interests of our stockholders. See “Policies with Respect to Certain Activities—Conflict of Interest Policies.”

Restrictions on Ownership of Our Capital Stock

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DESCRIPTION OF THE

PARTNERSHIP AGREEMENT OF

AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP

We have summarized the material terms and provisions of the Amended and Restated Agreement of Limited Partnership of American Campus Communities Operating Partnership LP, which we refer to as the “partnership agreement.” For more detail, you should refer to the partnership agreement itself, a copy of which is filed as an exhibit to the registration statement of which this prospectus is a part. For purposes of this section, references to “we,” “our,” “us” and “our company” refer to American Campus Communities, Inc.

Management of Our Operating Partnership

Our operating partnership, American Campus Communities Operating Partnership LP, is a Maryland limited partnership that was formed on July 15, 2004. Through our wholly owned subsidiary, we are the sole general partner of our Operating Partnership and conduct substantially all of our business in or through the Operating Partnership. As sole general partner of our Operating Partnership, we exercise exclusive and complete responsibility and discretion in its day-to-day management and control. We have the power to cause our Operating Partnership to enter into certain major transactions, including acquisitions, dispositions and refinancings, subject to certain limited exceptions. The limited partners of our Operating Partnership may not transact business for, or participate in the management activities or decisions of, our Operating Partnership, except as provided in the partnership agreement and as required by applicable law. Certain restrictions under the partnership agreement restrict our ability to engage in a business combination, as more fully described in “—Termination Transactions” below.

Under the terms of the partnership agreement, the limited partners of our Operating Partnership expressly acknowledge that we, as general partner of our Operating Partnership, are acting for the benefit of the Operating Partnership, the limited partners and our stockholders collectively. We are under no obligation to give priority to the separate interests of the limited partners or our stockholders in deciding whether to cause our Operating Partnership to take or decline to take any actions. If there is a conflict between the interests of our stockholders on one hand and the limited partners on the other, we will endeavor in good faith to resolve the conflict in a manner not adverse to either our stockholders or the limited partners; provided, however, that for so long as we own a controlling interest in our Operating Partnership, any conflict that cannot be resolved in a manner not adverse to either our stockholders or the limited partners shall be resolved in favor of our stockholders. We are not liable under the partnership agreement to our Operating Partnership or to any partner for monetary damages for losses sustained, liabilities incurred, or benefits not derived by limited partners in connection with such decisions, provided that we have acted in good faith.

All of our business activities, including all activities pertaining to the acquisition and operation of properties, must be conducted through our Operating Partnership, and our Operating Partnership must be operated in a manner that will enable us to satisfy the requirements for being classified as a REIT.

Transferability of Interests

Except in connection with a transaction described in “—Termination Transactions” below, we, as general partner, may not voluntarily withdraw from our Operating Partnership, or transfer or assign all or any portion of our interest in our Operating Partnership, without the consent of the holders of a majority of the limited partnership interests, including our 98.7% interest therein.

Amendments of the Partnership Agreement

Amendments to the partnership agreement may be proposed by us, as general partner, or by limited partners owning at least 25% of the Units held by limited partners.

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Generally, the partnership agreement may be amended, modified or terminated with the approval of partners holding 66²/3% of all outstanding Units (including the Units held by us). As general partner, we will have the power to unilaterally make certain amendments to the partnership agreement without obtaining the consent of the limited partners as may be required to:

•

add to our obligations as general partner or surrender any right or power granted to us as general partner for the benefit of the limited partners;

•

reflect the issuance of additional Units or the admission, substitution, termination or withdrawal of partners in accordance with the terms of the partnership agreement;

•

reflect a change of an inconsequential nature that does not adversely affect the limited partners in any material respect, or cure any ambiguity, correct or supplement any provisions of the partnership agreement not inconsistent with law or with other provisions of the partnership agreement, or make other changes concerning matters under the partnership agreement that will not otherwise be inconsistent with the partnership agreement or law;

•

satisfy any requirements, conditions or guidelines contained in any order, directive, opinion, ruling or regulation of a federal or state agency or contained in federal or state law;

•

reflect changes that are reasonably necessary for us to maintain our status as a REIT; or

•

modify the manner in which capital accounts are computed.

Amendments that would, among other things, convert a limited partner’s interest into a general partner’s interest, modify the limited liability of a limited partner, alter a partner’s right to receive any distributions or allocations of profits or losses, or materially alter or modify the redemption rights described below must be approved by each limited partner that would be adversely affected by such amendment.

In addition, without the written consent of the holders of a majority of the limited partnership interests, we, as general partner, may not do any of the following:

•

take any action in contravention of an express prohibition or limitation contained in the partnership agreement;

•

enter into or conduct any business other than in connection with our role as general partner of the Operating Partnership and our operation as a REIT;

•

withdraw from the Operating Partnership or transfer any portion of our general partnership interest; or

•

be relieved of our obligations under the partnership agreement following any permitted transfer of our general partnership interest.

Distributions to Unitholders

The partnership agreement provides that holders of Units are entitled to receive quarterly distributions of available cash on a pro rata basis in accordance with their respective percentage interests.

Redemption/ Exchange Rights

Limited partners who acquire Units have the right to require our Operating Partnership to redeem part or all of their Units for cash based upon the fair market value of an equivalent number of shares of our Company’s common stock at the time of the redemption. Alternatively, we may elect to acquire those Units in exchange for shares of our common stock. Our acquisition will be on a one-for-one basis, subject to adjustment in the event of stock splits, stock dividends, issuance of stock rights, specified extraordinary distributions and similar events. Limited partners who hold Units may exercise this redemption right from time to time, in whole or in part, except when, as a consequence of shares of our common stock being issued, any person’s actual or constructive stock

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ownership would exceed our ownership limits, or any other limit as provided in our Charter or as otherwise determined by our board of directors as described under the section entitled “Description of Securities—Restrictions on Transfer.”

Issuance of Additional Units, Common Stock or Convertible Securities

As sole general partner, we have the ability, without the consent of the other limited partners, to cause the Operating Partnership to issue additional Units representing general and limited partnership interests. These additional Units may include PIUs and preferred limited partnership units. In addition, we may issue additional shares of our common stock or convertible securities, but only if we cause our Operating Partnership to issue to us partnership interests or rights, options, warrants or convertible or exchangeable securities of our Operating Partnership having designations, preferences and other rights, so that the economic interests of our Operating Partnership’s interests issued are substantially similar to the securities that we have issued and we contribute the net proceeds from the issuance of such shares to our Operating Partnership as a capital contribution.

Tax Matters

As general partner, we have authority to make tax elections under the Code on behalf of our Operating Partnership. In addition, we are the tax matters partner of our Operating Partnership.

Allocations of Net Income and Net Losses to Partners

The net income or net loss of our Operating Partnership will generally be allocated to us, as general partner, and the limited partners in accordance with our respective percentage interests in our Operating Partnership. However, in some cases losses may be disproportionately allocated to partners who have guaranteed debt of our Operating Partnership. The allocations described above are subject to special allocations relating to depreciation deductions and to compliance with the provisions of Sections 704(b) and 704(c) of the Code and the associated Treasury Regulations.

Operations

The partnership agreement provides that we, as general partner, will determine and distribute all “available cash”, which includes, without limitation, the net operating cash revenues of our Operating Partnership, as well as the net sales and refinancing proceeds, quarterly, pro rata in accordance with the partners’ percentage interests.

The partnership agreement provides that our Operating Partnership will assume and pay when due, or reimburse us for payment of, all costs and expenses relating to the operations of, or for the benefit of, our Operating Partnership.

Termination Transactions

The partnership agreement provides that we may not engage in any merger, consolidation or other combination with or into another person, any sale of all or substantially all of our assets (a “termination transaction”), unless in connection with a termination transaction either

(a)

all limited partners will receive, or have the right to elect to receive, for each Unit an amount of cash, securities, or other property equal to the product of:

(i)

the number of shares of our common stock into which each Unit is then exchangeable; and

(ii)

the greatest amount of cash, securities or other property paid to the holder of one share of our common stock in consideration of one share of our common stock pursuant to the termination transaction; or

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(b)

the following conditions are met:

(i)

substantially all of the assets of the surviving entity are held directly or indirectly by our Operating Partnership or another limited partnership or limited liability company which is the survivor of a merger, consolidation or combination of assets with our Operating Partnership;

(ii)

the holders of Units own a percentage interest of the surviving entity based on the relative fair market value of the net assets of our Operating Partnership and the other net assets of the surviving entity immediately prior to the consummation of this transaction;

(iii)

the rights, preferences and privileges of such Unit holders in the surviving entity are at least as favorable to those in effect immediately prior to the consummation of the transaction and as those applicable to any other limited partners or non-managing members of the surviving entity; and

(iv)

the limited partners may exchange their interests in the surviving entity for either the consideration available to the common limited partners pursuant to the first paragraph in this section or, if the ultimate controlling person of the surviving entity has publicly traded common equity securities, shares of those common equity securities, at an exchange ratio based on the relative fair market value of those securities and our common stock.

Term

Our Operating Partnership will continue in full force and effect until it is dissolved in accordance with the terms of the partnership agreement or as otherwise provided by law.

Indemnification and Limitation of Liability

To the extent permitted by applicable law, the partnership agreement indemnifies us, as general partner, and our officers, directors, employees, agents and any other persons we may designate from and against any and all claims arising from operations of our Operating Partnership in which any indemnitee may be involved, or is threatened to be involved, as a party or otherwise, unless it is established that:

•

the act or omission of the indemnitee was material to the matter giving rise to the proceeding and either was committed in bad faith or fraud or was the result of active and deliberate dishonesty;

•

the indemnitee actually received an improper personal benefit in money, property or services; or

•

in the case of any criminal proceeding, the indemnitee had reasonable cause to believe that the act or omission was unlawful.

In any event, we, as general partner of our Operating Partnership, and our officers, directors, agents or employees, are not liable or accountable to our Operating Partnership for losses sustained, liabilities incurred or benefits not derived as a result of errors in judgment or mistakes of fact or law or any act or omission so long as we acted in good faith.

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PRINCIPAL STOCKHOLDERS

The following table sets forth the beneficial ownership of shares of our common stock for (i) each person who is expected to be the beneficial owner of 5% or more of the outstanding common stock immediately following the consummation of this Offering, (ii) directors, proposed directors and the executive officers, and (iii) directors, proposed directors and executive officers as a group. This table assumes that the Formation Transactions and this Offering are completed. Each person named in the table has sole voting and investment power with respect to all of the shares of our common stock shown as beneficially owned by such person, except as otherwise set forth in the notes to the table. Unless otherwise indicated, the address of each named person is c/o American Campus Communities, Inc., 805 Las Cimas Parkway, Suite 400, Austin, Texas 78746. The share amounts set forth in the table below are based on an Offering price of $20 per share (the midpoint of the Offering prices referred to on the cover page of this prospectus).


Name of Beneficial Owner	Number of Shares Beneficially Owned	Percent of All Shares
William C. Bayless, Jr.(1)	35,043	*
Brian B. Nickel(1)	17,291	*
Mark J. Hager(1)	10,467	*
R. D. Burck(2)(3)	1,250	*
Cydney Donnell(2)(3)	1,250	*
G. Steven Dawson(2)(3)	1,250	*
Winston W. Walker(2)	1,250	*
Edward Lowenthal(2)(3)	1,250	*
Scott H. Rechler(3)	0	*
All directors, director nominees and executive officers as a group (9 persons)	69,051	*

Less than one percent.

(1)

Represents shares of common stock intended to be purchased in the Offering with the proceeds to be received by such stockholder from his interest in ACP. Messrs. Bayless, Nickel and Hager also own PIUs representing an aggregate of 1% interest in the Operating Partnership calculated based on the midpoint of the Offering price that appears on the cover of this prospectus. The PIUs owned by Messrs. Bayless, Nickel and Hager do not include such person’s entitlement to outperformance awards. The PIUs may not be converted into Units of our Operating Partnership until an appropriate “book-up event” has occurred and are therefore not reflected in the tabular calculation of shares beneficially owned. See “Management—2004 Incentive Award Plan—Profits Interest Units.”

(2)

Reflects the restricted stock units such non-employee director will receive upon such directors’ initial election to the board of directors.

(3)

Does not include shares of our common stock that such directors may purchase in the Company’s directed share program.

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DESCRIPTION OF SECURITIES

We are a Maryland corporation. Your rights as a stockholder are governed by Maryland law, including the Maryland General Corporation Law, and our Charter and bylaws. The following is a summary of the material terms of our capital stock. You should read our Charter and bylaws, copies of which are exhibits to the registration statement of which this prospectus is a part, for complete information. See “Where You Can Find More Information.”

General

Authorized Shares. Our Charter provides that we may issue up to 800,000,000 shares of our common stock, $0.01 par value per share, and 200,000,000 shares of preferred stock, $0.01 par value per share. Upon completion of this Offering, 12,100,000 shares of our common stock (or 13,915,000 shares if the underwriters exercise their overallotment option in full) and no shares of preferred stock will be issued and outstanding.

Authority of Our Board of Directors Relating to Authorized Shares. Our Charter authorizes our board of directors to amend our Charter to increase or decrease the total number of our authorized shares, or the number of shares of any class or series of capital stock that we have authority to issue, without stockholder approval. Our board of directors also has the authority, under our Charter and without stockholder approval, to classify any unissued shares of common or preferred stock into one or more classes or series of stock and to reclassify any previously classified but unissued shares of any series of our common or preferred stock. If, however, there are any laws or stock exchange rules that require us to obtain shareholder approval in order for us to take these actions, we will contact our shareholders to solicit that approval.

We believe that the power to issue additional shares of common stock or preferred stock and to classify or reclassify unissued shares of common or preferred stock and then issue the classified or reclassified shares provides us with increased flexibility in structuring possible future financings and acquisitions and in meeting other needs that may arise in the future. These actions can be taken without stockholder approval, unless stockholder approval is required by applicable law or the rules of any stock exchange or automated quotation system on which our securities may be listed or traded. Although our board of directors has no present intention of doing so, we could issue a class or series of stock that could delay, defer or prevent a transaction or a change of control that would involve a premium price for holders of our common stock or otherwise be favorable to them.

Terms and Conditions of Authorized Shares. Prior to issuance of shares of each class or series, our board of directors is required by Maryland law and our Charter to set, subject to the provisions of our Charter regarding restrictions on transfer of stock, the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. As a result, our board of directors could authorize the issuance of shares of common stock or preferred stock with terms and conditions that could have the effect of delaying, deferring or preventing a transaction or a change of control that would involve a premium price for holders of our common stock or otherwise be favorable to them.

Shareholder Liability. Applicable Maryland law provides that our stockholders will not be personally liable for our acts and obligations and that our funds and property will be the only recourse for our acts and obligations.

Common Stock

All shares of our common stock offered hereby will be duly authorized, fully paid and nonassessable. Subject to the preferential rights of any other class or series of stock and to the provisions of the Charter regarding restrictions on transfer of stock, holders of shares of our common stock are entitled to receive distributions on such stock if, as and when authorized by our board of directors out of assets legally available for the payment of distributions, and declared by us, and to share ratably in our assets legally available for distribution to our stockholders in the event of our liquidation, dissolution or winding up, after payment of or adequate provision for all of our known debts and liabilities.

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Subject to the provisions of our Charter regarding restrictions on transfer of stock, as described in more detail below under “Restrictions on Transfer,” each outstanding share of our common stock entitles the holder to one vote on all matters submitted to a vote of stockholders, including the election of directors and, except as provided with respect to any other class or series of stock, the holders of our common stock will possess the exclusive voting power. There is no cumulative voting in the election of our directors. Under Maryland law, the holders of a plurality of the votes cast at a meeting at which directors are to be elected is sufficient to elect a director unless a corporation’s charter or bylaws provide otherwise. Our bylaws provide for such plurality voting in the election of directors.

Holders of shares of our common stock have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and have no preemptive or other rights to subscribe for any of our securities. Subject to the provisions of our Charter regarding the restrictions on transfer of stock, shares of our common stock will have equal dividend, liquidation and other rights.

Preferred Stock

Under our Charter, our board of directors may from time to time establish and issue one or more series of preferred stock without stockholder approval. Prior to issuance of shares of each series, our board of directors is required by Maryland law and our Charter to set, subject to the provisions of our Charter regarding restrictions on transfer of stock, the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each series. As of the date hereof, no shares of preferred stock are outstanding and we have no present plans to issue any preferred stock.

Restrictions on Transfer

In order for us to qualify as a REIT under the Code, our stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other than the first year for which an election to be a REIT has been made) or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of the outstanding shares of stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities such as qualified pension plans) during the last half of a taxable year (other than the first year for which an election to be a REIT has been made).

Our Charter contains restrictions on the ownership and transfer of our stock which are intended to assist us in complying with these requirements and continuing to qualify as a REIT. The relevant sections of our Charter provide that, subject to the exceptions described below, no person or entity may beneficially own, or be deemed to own by virtue of the applicable constructive ownership provisions of the 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 of 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, as set forth below, 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.

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Our board of directors must waive the ownership limit with respect to a particular person if it:

•

determines that such ownership will not cause any individual’s beneficial ownership of shares of our stock to violate the ownership limit and that any exemption from the ownership limit will not jeopardize our status as a REIT; and

•

determines that such stockholder does not and will not own, actually or constructively, an interest in a tenant of ours (or a tenant of any entity whose operations are attributed in whole or in part to us) that would cause us to own, actually or constructively, more than a 9.8% interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant or that any such ownership would not cause us to fail to qualify as a REIT under the Code.

As a condition of our waiver, our board of directors may require the applicant to submit such information as the board of directors may reasonably need to make the determinations regarding our REIT status and additionally may require an opinion of counsel or IRS ruling satisfactory to our board of directors, and/or representations or undertakings from the applicant with respect to preserving our REIT status.

In connection with the waiver of the ownership limit or at any other time, our board of directors may increase the ownership limitation for some persons and decrease the ownership limit for all other persons and entities; provided, however, that the decreased ownership limit will not be effective for any person or entity whose percentage ownership in our stock is in excess of such decreased ownership limit until such time as such person or entity’s percentage of our stock equals or falls below the decreased ownership limit, but any further acquisition of our stock in excess of such percentage ownership of our common stock will be in violation of the ownership limit. Additionally, the new ownership limit may not allow five or fewer stockholders to beneficially own more than 50% in value of our outstanding stock.

Our Charter provisions further prohibit:

•

any person from beneficially or constructively owning shares of our stock that would result in our being “closely held” under Section 856(h) of the Code or otherwise cause us to fail to qualify as a REIT; and

•

any person from transferring shares of our stock if such transfer would result in shares of our stock being beneficially owned by fewer than 100 persons (determined without reference to any rules of attribution).

Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our stock that will or may violate any of the foregoing restrictions on transferability and ownership will be required to give notice immediately to us and provide us with such other information as we may request in order to determine the effect of such transfer on our status as a REIT. The foregoing provisions on transferability and ownership will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT.

Pursuant to our Charter, if any purported transfer of our stock or any other event would otherwise result in any person violating the ownership limits or such other limit as permitted by our board of directors, then any such purported transfer will be void and of no force or effect as to that number of shares in excess of the ownership limit (rounded up to the nearest whole share). That number of shares in excess of the ownership limit will be automatically transferred to, and held by, a trust for the exclusive benefit of one or more charitable organizations selected by us. The automatic transfer will be effective as of the close of business on the business day prior to the date of the violative transfer or other event that results in a transfer to the trust. Any dividend or other distribution paid to the purported record transferee, prior to our discovery that the shares had been automatically transferred to a trust as described above, must be repaid to the trustee upon demand for distribution to the beneficiary of the trust. If the transfer to the trust as described above is not automatically effective, for any reason, to prevent violation of the applicable ownership limit or as otherwise permitted by our board of directors, then our Charter provides that the transfer of the excess shares will be void.

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Shares of our stock transferred to the trustee are deemed offered for sale to us, or our designee, at a price per share equal to the lesser of (i) the price paid by the purported record transferee for the shares (or, if the event which resulted in the transfer to the trust did not involve a purchase of such shares of our stock at market price, the last reported sales price reported on the NYSE on the trading day immediately preceding the day of the event which resulted in the transfer of such shares of our stock to the trust); and (ii) the market price on the date we, or our designee, accepts such offer. We have the right to accept such offer until the trustee has sold the shares of our stock held in the trust pursuant to the clauses discussed below. Upon a sale to us, the interest of the charitable beneficiary in the shares sold terminates and the trustee must distribute the net proceeds of the sale to the purported record transferee and any dividends or other distributions held by the trustee with respect to such stock will be paid to the charitable beneficiary.

If we do not buy the shares, the trustee must, within 20 days of receiving notice from us of the transfer of shares to the trust, sell the shares to a person or entity designated by the trustee who could own the shares without violating the ownership limits or as otherwise permitted by our board of directors. After that, the trustee must distribute to the purported record transferee an amount equal to the lesser of (i) the price paid by the purported record transferee or owner for the shares (or, if the event which resulted in the transfer to the trust did not involve a purchase of such shares at market price, the last reported sales price reported on the NYSE on the trading day immediately preceding the relevant date); and (ii) the sales proceeds (net of commissions and other expenses of sale) received by the trust for the shares. The purported beneficial transferee or purported record transferee has no rights in the shares held by the trustee.

The trustee shall be designated by us and shall be unaffiliated with us and with any purported record transferee or purported beneficial transferee. Prior to the sale of any excess shares by the trust, the trustee will receive, in trust for the beneficiary, all dividends and other distributions paid by us with respect to the excess shares, and may also exercise all voting rights with respect to the excess shares.

Subject to Maryland law, effective as of the date that the shares have been transferred to the trust, the trustee shall have the authority, at the trustee’s sole discretion:

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to rescind as void any vote cast by a purported record transferee prior to our discovery that the shares have been transferred to the trust; and

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to recast the vote in accordance with the desires of the trustee acting for the benefit of the beneficiary of the trust.

However, if we have already taken irreversible corporate action, then the trustee may not rescind and recast the vote.

Any beneficial owner or constructive owner of shares of our stock and any person or entity (including the stockholder of record) who is holding shares of our stock for a beneficial owner must, on request, provide us with a completed questionnaire containing the information regarding their ownership of such shares, as set forth in the applicable Treasury Regulations. In addition, any person or entity that is a beneficial owner or constructive owner of shares of our stock and any person or entity (including the stockholder of record) who is holding shares of our stock for a beneficial owner or constructive owner shall, on request, be required to disclose to us in writing such information as we may request in order to determine the effect, if any, of such stockholder’s actual and constructive ownership of shares of our stock on our status as a REIT and to ensure compliance with the ownership limit, or as otherwise permitted by our board of directors.

All certificates representing shares of our stock bear a legend referring to the restrictions described above.

This ownership limit could delay, defer or prevent a transaction or a change of control of our Company that might involve a premium price for our stock or otherwise be in the best interest of our stockholders.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is The Bank of New York.

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CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS

The following description summarizes the material terms of certain provisions of Maryland law, including the Maryland General Corporation Law, and our Charter and bylaws. You should review the Maryland General Corporation Law, our Charter and our bylaws for complete information. We have filed our Charter and bylaws as exhibits to the registration statement of which this prospectus is a part. See “Where You Can Find More Information.”

Our Board of Directors, Vacancies on Our Board of Directors and Removal of Directors

Number and Election of Directors. Our bylaws provide that, except for any directors elected by holders of a class or series of shares other than common stock, the number of our directors will be fixed by a majority of our entire board of directors, but may not be fewer than the minimum number permitted under Maryland law or more than fifteen. In establishing the number of directors, the board of directors may not alter the term of office of any director in office at that time.

Pursuant to our Charter, each of our directors is elected by our stockholders to serve until their successors are duly elected and qualify. Holders of shares of our common stock will have no right to cumulative voting in the election of directors. Our bylaws provide that at each annual meeting of stockholders, a plurality of votes cast will be able to elect our directors.

Vacancies on Our Board of Directors. Any vacancy may be filled by a majority of the remaining directors even if the remaining directors do not constitute a quorum, except (i) if the vacancy results from an increase in the number of directors constituting the board, in which case the vacancy shall be filled by a majority of the entire board, (ii) if the vacancy results from a removal of a director, in which case the vacancy may also be filled by our stockholders and (iii) as may be otherwise provided for in the terms of any class or series of preferred stock.

Removal of Directors. Our Charter provides that, except for any directors elected by holders of a class or series of shares other than common stock, a director may be removed by the stockholders only with the affirmative vote of at least a majority of the votes entitled to be cast generally in the election of directors and only for “cause.” In our Charter, “cause” means, with respect to any particular director, conviction of a felony or a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to the Company through bad faith or active and deliberate dishonesty.

Amendment of Our Charter and Bylaws

Our Charter, including its provisions on removal of directors, may be amended by the affirmative vote of the holders of at least a majority of all of the votes entitled to be cast on the matter. Our bylaws may be amended only by a majority of our directors. The stockholders have no right to amend or propose an amendment to our bylaws.

Transactions Outside the Ordinary Course of Business

Under Maryland law, a Maryland corporation may not merge with or into another entity, sell all or substantially all of our assets, engage in a share exchange or engage in similar transactions outside the ordinary course of our business unless the transaction or transactions are approved by the affirmative vote of the holders of not less than two-thirds of all of the votes entitled to be cast on the matter. However, a Maryland corporation may provide in its charter for approval of these matters by a lesser percentage of the shares entitled to vote on the matter, but not less than a majority of all of the votes entitled to be cast on the matter. Our Charter provides for approval of these matters by at least a majority of the votes entitled to be cast except if:

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the merger will merge one of our 90% or more owned subsidiaries into us without amending our Charter other than in limited respects and without altering the contract rights of the stock of the subsidiary (in which case only the approval of our board of directors and the board of directors of the subsidiary is necessary);

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we are the successor corporation in a share exchange (in which case only the approval of our board of directors is necessary); or

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we are the survivor in the merger and the merger does not change the terms of any class or series of our outstanding stock, or otherwise amend our Charter, and the number of shares of stock of each class or series outstanding immediately before the merger does not increase by more than 20% of the number of shares of each such class or series of stock that was outstanding immediately prior to effectiveness of the merger (in which case only the approval of our board of directors is necessary).

Dissolution

A proposal that we dissolve must be approved by the affirmative vote of the holders of at least a majority of all of the votes entitled to be cast on the matter.

Advance Notice of Director Nominations and New Business

Our bylaws provide for advance notice by a stockholder or stockholders wishing to have certain matters considered and voted upon at a meeting of stockholders.

With respect to an annual meeting of stockholders, nominations of persons for election to our board of directors and the proposal of business to be considered by stockholders may be made only:

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pursuant to our notice of the meeting;

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by or at the direction of our board of directors; or

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by a stockholder who is entitled to vote at the meeting and has complied with the advance notice procedures set forth in our bylaws.

These procedures generally require the stockholder to deliver notice to our Secretary not less than 90 days or later than the close of business on the 120th day prior to the first anniversary of the date of mailing of the notice for the preceding year’s annual meeting. If the date of the annual meeting is advanced by more than 30 days from the date of the preceding year’s meeting or if we did not hold an annual meeting the preceding year, notice must delivered not earlier than the 120th day prior to the date of mailing of the notice for that annual meeting and not later than the close of business on the later of the 90th day prior to the date of mailing of the notice for the annual meeting or the 10th day following the day on which disclosure of the date of mailing for the meeting is made.

With respect to special meetings of stockholders, only the business specified in our Company’s notice of meeting may be brought before the meeting of stockholders. Nominations of persons for election to our board of directors may be made only:

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pursuant to our notice of the meeting;

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by or at the direction of our board of directors; or

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provided that our board of directors has determined that directors shall be elected at such meeting, by a stockholder who is entitled to vote at the meeting and has complied with the advance notice provisions set forth in our bylaws.

Notice must be delivered not earlier than the 120th day prior to the date of the special meeting and not later than the close of business on the later of the 90th day prior to the date of the special meeting or the 10th day following the day on which disclosure of the date of the special meeting is made.

The postponement or adjournment of an annual or special meeting to a later date or time will not commence any new time periods for the giving of the notice described above. Our bylaws contain detailed requirements for the contents of stockholder notices of director nominations and new business proposals.

Ownership Limit

Our Charter provides that no person or entity may beneficially own, or be deemed to own by virtue of the applicable constructive ownership provisions of the Code, more than 9.8% (by value or by number of shares,

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whichever is more restrictive) of the outstanding shares of our stock. We refer to this restriction as 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. See “Description of Securities—Restrictions on Transfer.”

Business Combinations

Maryland law establishes special requirements for “business combinations” (including a merger, consolidation, share exchange or, in certain circumstances, an asset transfer or issuance or reclassification of equity securities) between a Maryland corporation and any person who beneficially owns 10% or more of the voting power of the corporation’s shares or an affiliate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding voting stock of the corporation, an interested stockholder, or an affiliate of such an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. Thereafter, any such business combination must be recommended by the board of directors of such corporation and approved by the affirmative vote of at least (a) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation and (b) two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom (or with whose affiliate) the business combination is to be effected, unless, among other conditions, the corporation’s common stockholders receive a minimum price (as defined in Maryland law) for their shares and the consideration is received in cash or in the same form as previously paid by the interested stockholder for its shares. These provisions of Maryland law do not apply, however, to business combinations that are approved or exempted by our board of directors prior to the time that the interested stockholder becomes an interested stockholder. In addition, a person is not considered an interested stockholder under the statute if our board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder.

Unless otherwise determined by our board of directors, pursuant to our Charter, we have opted out of these provisions of Maryland law. Our Charter, however, provides that any business combinations must be approved by the affirmative vote of at least a majority of the votes entitled to be cast by holders of our voting stock.

Control Share Acquisitions

Maryland law provides that “control shares” of a Maryland corporation acquired in a “control share acquisition” have no voting rights except to the extent approved at a special meeting by the affirmative vote of two-thirds of the votes entitled to be cast on the matter, excluding shares of stock in a corporation in respect of which any of the following persons is entitled to exercise or direct the exercise of the voting power of shares of stock of the corporation in the election of directors: (i) a person who makes or proposes to make a control share acquisition; (ii) an officer of the corporation; or (iii) an employee of the corporation who is also a director of the corporation. “Control shares” are voting shares of stock which, if aggregated with all other such shares of stock previously acquired by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting power: (i) one-tenth or more but less than one-third; (ii) one-third or more but less than a majority; or (iii) a majority or more of all voting power. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A “control share acquisition” means the acquisition of control shares, subject to certain exceptions.

A person who has made or proposes to make a control share acquisition, upon satisfaction of certain conditions (including an undertaking to pay expenses), may compel our board of directors to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. If no request for a meeting is made, the corporation may itself present the question at any stockholders’ meeting.

If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then, subject to certain conditions and limitations, the corporation may

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redeem any or all of the control shares (except those for which voting rights have previously been approved) for fair value determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquirer or of any meeting of stockholders at which the voting rights of such shares are considered and not approved. If voting rights for control shares are approved at a stockholders’ meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of such appraisal rights may not be less than the highest price per share paid by the acquirer in the control share acquisition.

The control share acquisition statute does not apply (a) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (b) to acquisitions approved or exempted by the charter or bylaws of the corporation.

Our bylaws contain a provision exempting us from the control share acquisition statute any and all acquisitions by any person of our common stock. There can be no assurance that our board of directors will not amend or eliminate this provision of our bylaws in the future.

Anti-Takeover Effect of Certain Provisions of Maryland Law and of Our Charter and Bylaws

The provisions of our Charter on removal of directors and the advance notice provisions of the bylaws could delay, defer or prevent a transaction or a change of control of our Company that might involve a premium price for holders of our common stock or otherwise be in their best interest. Likewise, if our Company’s board of directors were to opt in to the business combination provisions of Maryland law or if the provision in the bylaws opting out of the control share acquisition provisions of Maryland law were rescinded, these provisions of Maryland law could have similar anti-takeover effects.

Board Consideration of Relevant Factors and Constituencies

Our Charter provides that our board of directors may, in connection with a “business combination,” “change in control” or other potential acquisition of our control, consider the effect of the potential acquisition on our control, consider the effect of the potential acquisition on our stockholders, employees, suppliers, customers and creditors and on communities in which our offices or other establishments are located. As a result of this provision, our board of directors may consider subjective factors that affect or may affect the potential acquisition and may oppose the proposal on that basis.

Duties of Our Directors

Under Maryland law, there is a presumption that the act of a director satisfies the required standard of care under Maryland law. An act of a director relating to or affecting an acquisition or a potential acquisition of control is not subject under Maryland law to a higher duty or to greater scrutiny than those applied to any other act of a director. This provision does not impose an enhanced level of scrutiny when our board of directors implements anti-takeover measures in a change-of-control context, and also shifts the burden of proof for demonstrating that any defensive mechanism adopted by our board is unreasonable.

Indemnification and Limitation of Directors’ and Officers’ Liability

Our Charter and the partnership agreement provide for indemnification of our officers and directors against liabilities to the fullest extent permitted by Maryland law.

Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from actual receipt of an improper benefit or profit in money, property or services or active and deliberate dishonesty established by a final judgment as being material to the cause of action. Our Charter contains such a provision, which eliminates such liability to the maximum extent permitted by Maryland law.

Our Charter also provides that, to the maximum extent that Maryland Law in effect from time to time permits limitation of the liability of directors and officers of a corporation, no director or officer shall be liable to us or our

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stockholders for money damages. Our bylaws obligate us, to the fullest extent permitted by Maryland law in effect from time to time, to indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to:

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any present or former director or officer who is made a party to the proceeding by reason of his or her service in that capacity; or

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any individual who, while a director of our Company and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise as a director, officer, partner or trustee of such corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made a party to the proceeding by reason of his or her service in that capacity.

Our Charter and bylaws also permit us to indemnify and advance expenses to any person who served a predecessor of ours in any of the capacities described above and to any employee or agent of our Company or a predecessor of our Company.

Maryland law requires a corporation (unless its charter provides otherwise, which our Charter does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made a party by reason of his or her service in that capacity. Maryland law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of their service in those or other capacities unless it is established that:

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the act or omission of the director or officer was material to the matter giving rise to the proceeding and:

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was committed in bad faith; or

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was the result of active and deliberate dishonesty;

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the director or officer actually received an improper personal benefit in money, property or services; or

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in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

However, under Maryland law, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that personal benefit was improperly received, unless in either case a court orders indemnification and then only for expenses. In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer only upon the corporation’s receipt of:

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a written affirmation by the director or officer of his good faith belief that he has met the standard of conduct necessary for indemnification by the corporation; and

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a written undertaking by the director or by another on the director’s behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the director did not meet the standard of conduct.

The partnership agreement provides that we, our officers and our directors are indemnified to the fullest extent permitted by law. See “Description of the Partnership Agreement of American Campus Communities Operating Partnership LP—Indemnification and Limitation of Liability.”

Insofar as the foregoing provisions permit indemnification of directors, officers or persons controlling us for liability arising under the Securities Act, we have been informed that, in the opinion of the Securities and Exchange Commission, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Indemnification Agreements

We have entered into an indemnification agreement with each of our executive officers and directors as described in “Management—Indemnification Agreements.”

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SHARES ELIGIBLE FOR FUTURE SALE

General

Upon completion of this Offering, based upon an offering at the midpoint of the range of the Offering prices referred to on the cover page of this prospectus, we expect to have outstanding 12,100,000 shares of our common stock (13,915,000 shares if the underwriters’ overallotment option is exercised in full). In addition, 156,061 shares of our common stock that are reserved for issuance upon exchange of PIUs issued to our officers, directors and employees plus any shares purchased by affiliates in this Offering and the shares of our common stock owned by affiliates upon redemption/exchange of Units or RSUs will be subject to the restrictions of Rule 144.

Of these shares, the 12,100,000 shares sold in this Offering (13,915,000 shares if the underwriters’ overallotment option is exercised in full) will be freely transferable without restriction or further registration under the Securities Act, subject to the limitations on ownership set forth in our Charter, except for those shares held by our “affiliates,” as that term is defined by Rule 144 under the Securities Act.

Rule 144

In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus, a person who has beneficially owned restricted shares of our common stock for at least one year would be entitled to sell, within any three-month period, that number of shares that does not exceed the greater of:

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1% of the shares of our common stock then outstanding, which will equal approximately 121,000 shares immediately after this Offering (139,150 shares if the underwriters exercise their overallotment option in full); or

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the average weekly trading volume of our common stock on the NYSE during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC.

Sales under Rule 144 are also subject to manner of sale provisions, notice requirements and the availability of current public information about us.

Stock Options and 2004 Incentive Award Plan

We have adopted the 2004 Incentive Award Plan of American Campus Communities, Inc. which provides for the grant to the employees, directors and consultants of our Company, our Services Company and our Operating Partnership (and their respective subsidiaries) of stock options, PIUs, RSUs, restricted stock and other incentive awards. Upon consummation of this Offering, we intend to issue RSUs to our non-employee directors representing 6,250 shares of our common stock and 156,061 PIUs (representing a 1.3% limited partnership interest in our Operating Partnership) to officers, directors and key employees, and have reserved an additional 1,047,689 shares of our common stock for issuance under the plan.

We anticipate that we will file a registration statement with respect to the shares of our common stock issuable under the 2004 Incentive Award Plan following the consummation of this Offering. Shares of our common stock covered by this registration statement, including shares of our common stock issuable upon the exercise of options or restricted shares of our common stock, will be eligible for transfer or resale without restriction under the Securities Act unless held by affiliates.

Registration Rights

For a discussion of the registration rights that may be granted to certain holders of PIUs, see “Management—2004 Incentive Award Plan.”

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Lock-up Agreements and Other Contractual Restrictions on Resale

In addition to the limits placed on the sale of shares of our common stock by operation of Rule 144 and other provisions of the Securities Act, (i) Mr. Bayless and our executive officers and certain directors have agreed, subject to certain exceptions (including a bona fide gift or a transfer to a trust for the benefit of an immediate family member) not to sell or otherwise transfer or encumber any shares of our common stock or securities convertible into common stock (including PIUs and Units) owned by them at the completion of this Offering or thereafter acquired by them for a period of 14 months after the completion of this Offering without the consent of Citigroup Global Markets Inc. and Deutsche Bank Securities Inc., and (ii) we have agreed that we will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the SEC a registration statement under the Securities Act relating to, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, including, without limitation, Units, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, without the prior written consent of Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. for a period of 9 months after the date of this prospectus, subject to certain limited exceptions set forth in “Underwriting.” In the event that either (x) during the last 17 days of the 9- and 14-month periods referred to above, we issue an earnings release or a press release announcing a significant event or (y) prior to the expiration of such 9- and 14-month periods, we announce that we will release earnings or issue a press release announcing a significant event during the 17-day period beginning on the last day of such 9- and 14-month periods, the restrictions described above shall continue to apply until the expiration of the 17-day period beginning on the date of the earnings or the press release. At the conclusion of the 14-month period referenced in clause (i) above, common stock issued upon the exchange of PIUs or Units may be sold by Mr. Bayless and our other senior officers and directors in the public market upon registration under the Securities Act and, in the case of holders of PIUs, pursuant to registration rights that may be granted to them as described above. Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. may, in their sole discretion and at any time or from time to time, without notice, release all or any portion of the shares of common stock or other securities subject to the lock-up agreements referred to above.

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FEDERAL INCOME TAX CONSIDERATIONS

The following discussion summarizes our taxation and the material Federal income tax consequences to stockholders of their ownership of common stock. The tax treatment of stockholders will vary depending upon the stockholder’s particular situation, and this discussion addresses only stockholders that hold common stock as a capital asset and does not deal with all aspects of taxation that may be relevant to particular stockholders in light of their personal investment or tax circumstances. This section also does not deal with all aspects of taxation that may be relevant to certain types of stockholders to which special provisions of the Federal income tax laws apply, including:

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dealers in securities or currencies;

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traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

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banks and other financial institutions;

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tax-exempt organizations (except to the limited extent discussed in “—Taxation of Tax-Exempt Shareholders”);

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certain insurance companies;

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persons liable for the alternative minimum tax;

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persons that hold common stock as a hedge against interest rate or currency risks or as part of a straddle or conversion transaction;

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non-U.S. individuals and foreign corporations (except to the limited extent discussed in “—Taxation of Non-U.S. Shareholders”); and

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stockholders whose functional currency is not the U.S. dollar.

The statements in this section are based on the Code, its legislative history, current and proposed regulations under the Code, published rulings and court decisions. This summary describes the provisions of these sources of law only as they are currently in effect. All of these sources of law may change at any time, and any change in the law may apply retroactively. We cannot assure you that new laws, interpretations of law or court decisions, any of which may take effect retroactively, will not cause any statement in this section to be inaccurate.

This section is not a substitute for careful tax planning. We urge you to consult your tax advisor regarding the specific tax consequences to you of ownership of our common shares and of our election to be taxed as a REIT. Specifically, you should consult your tax advisor regarding the federal, state, local, foreign, and other tax consequences to you regarding the purchase, ownership and sale of common shares. You should also consult with your tax advisor regarding the impact of potential changes in the applicable tax laws.

Taxation of Our Company

We intend to elect to be taxed as a REIT under Sections 856 through 860 of Code, commencing with our taxable year ending December 31, 2004.

Willkie Farr & Gallagher LLP, has provided us an opinion that commencing with our taxable year ending December 31, 2004, we will have been organized in conformity with the requirements for qualification and taxation as a REIT under the Code, and our proposed method of operation will enable us to continue to meet the requirements for qualification and taxation as a REIT under the Code. You should be aware, however, that opinions of counsel are not binding upon the Internal Revenue Service or any court. In providing its opinion, Willkie Farr & Gallagher LLP is relying, as to certain factual matters, upon the statements and representations contained in certificates provided to Willkie Farr & Gallagher LLP by us.

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Our qualification as a REIT will depend upon our continuing satisfaction of the requirements of the Code relating to qualification for REIT status. Some of these requirements depend upon actual operating results, distribution levels, diversity of stock ownership, asset composition, source of income and record keeping. Accordingly, while we intend to continue to qualify to be taxed as a REIT, the actual results of our operations for any particular year might not satisfy these requirements. Willkie Farr & Gallagher LLP will not monitor our compliance with the requirements for REIT qualification on an ongoing basis. Accordingly, no assurance can be given that the actual results of our operation for any particular taxable year will satisfy such requirements. For a discussion of the tax consequences of our failure to qualify as a REIT. See “—Taxable REIT Subsidiaries—Failure to Qualify as a REIT” below.

The sections of the Code relating to qualification and operation as a REIT, and the federal income taxation of a REIT and its shareholders, are highly technical and complex. The following discussion sets forth only the material aspects of those sections. This summary is qualified in its entirety by the applicable Code provisions and the related rules and regulations.

We intend to seek a ruling from the IRS relating to (i) certain arrangements between the Services Company and Operating Partnership or other entities for the provision of services (most notably, food service and cleaning service at Callaway House) and (ii) compensation and employment arrangements for various employees performing services for the Operating Partnership and/or Services Company.

As a REIT, we generally are not subject to federal income tax on the taxable income that we distribute to our shareholders. The benefit of that tax treatment is that it avoids the “double taxation,” or taxation at both the corporate and shareholder levels, that generally results from owning shares in a corporation. Our distributions, however, will generally not be eligible for (i) the lower rate of tax applicable to dividends received by an individual or (ii) the corporate dividends received deduction. Further, we will be subject to federal tax in the following circumstances:

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First, we will have to pay tax at regular corporate rates on any undistributed real estate investment trust taxable income, including undistributed net capital gains.

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Second, under certain circumstances, we may have to pay the alternative minimum tax on its items of tax preference.

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Third, if we have (a) net income from the sale or other disposition of “foreclosure property,” as defined in the Code, which is held primarily for sale to customers in the ordinary course of business or (b) other non-qualifying income from foreclosure property, we will have to pay tax at the highest corporate rate on that income.

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Fourth, if we have net income from “prohibited transactions,” as defined in the Code, we will have to pay a 100% tax on that income. Prohibited transactions are, in general, certain sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. We do not currently intend to dispose of any of our properties and do not intend to engage in prohibited transactions. We cannot assure you, however, that we will only make sales that satisfy the requirements of the safe harbors or that the IRS will not successfully assert that one or more of such sales are prohibited transactions.

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Fifth, if we should fail to satisfy the 75% gross income test or the 95% gross income test, as discussed below under “—Requirements for Qualification,” but we have nonetheless maintained our qualification as a REIT because we have satisfied other requirements necessary to maintain REIT qualification, we will have to pay a 100% tax on an amount equal to (a) the gross income attributable to the greater of (i) 75% of our gross income over the amount of gross income that is qualifying income for purposes of the 75% test, and (ii) 90% of our gross income over the amount of gross income that is qualifying income for purposes of the 95% test, multiplied by (b) a fraction intended to reflect our profitability.

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Sixth, if we should fail to distribute during each calendar year at least the sum of (1) 85% of our real estate investment trust ordinary income for that year, (2) 95% of our real estate investment trust capital gain net income for that year and (3) any undistributed taxable income from prior periods, we would have to pay a 4% excise tax on the excess of that required dividend over the amounts actually distributed.

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Seventh, if we acquire any appreciated asset from a C corporation in certain transactions in which we must adopt the basis of the asset or any other property in the hands of the C corporation as our basis of the asset in our hands, and we recognize gain on the disposition of that asset during the 10-year period beginning on the date on which we acquired that asset, then we will have to pay tax on the built-in gain at the highest regular corporate rate. In general, a C corporation means a corporation that has to pay full corporate-level tax.

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Eighth, if we receive non-arm’s length income from one of our taxable REIT subsidiaries (as defined under “—Requirements for Qualification”), we will be subject to a 100% tax on the amount of our non-arm’s-length income.

Requirements for Qualification

To qualify as a REIT, we must elect to be treated as a REIT, and we must meet various (a) organizational requirements, (b) gross income tests, (c) asset tests, and (d) annual dividend requirements.

Organizational Requirements

The Code defines a REIT as a corporation, trust or association:

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that is managed by one or more trustees or directors;

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the beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest;

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that would otherwise be taxable as a domestic corporation, but for Sections 856 through 859 of the Code;

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that is neither a financial institution nor an insurance company to which certain provisions of the Code apply;

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the beneficial ownership of which is held by 100 or more persons;

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during the last half of each taxable year, not more than 50% in value of the outstanding stock of which is owned, directly or constructively, by five or fewer individuals, as defined in the Code to also include certain entities; and

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which meets certain other tests, described below, regarding the nature of its income and assets.

The Code provides that the conditions described in the first through fourth bullet points above must be met during the entire taxable year and that the condition described in the fifth bullet point above must be met during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months.

We expect that we will satisfy the conditions described in the first through fifth bullet points of the preceding paragraph and believe that we will also satisfy the condition described in the sixth bullet point of the preceding paragraph. In addition, our Charter provides for restrictions regarding the ownership and transfer of our common stock. These restrictions are intended to assist us in continuing to satisfy the share ownership requirements described in the fifth and sixth bullet points of the preceding paragraph. The ownership and transfer restrictions pertaining to the common stock are described earlier in this prospectus under the heading “Description of Securities—Restrictions on Transfer.”

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For purposes of determining share ownership under the sixth bullet point, an “individual” generally includes a supplemental unemployment compensation benefits plan, a private foundation, or a portion of a trust permanently set aside or used exclusively for charitable purposes. An “individual,” however, generally does not include a trust that is a qualified employee pension or profit sharing trust under the federal income tax laws, and beneficiaries of such a trust will be treated as holding our shares in proportion to their actuarial interests in the trust for purposes of the sixth bullet point.

A corporation that is a “qualified REIT subsidiary,” or QRS, is not treated as a corporation separate from its parent REIT. All assets, liabilities, and items of income, deduction, and credit of a “qualified REIT subsidiary” are treated as assets, liabilities, and items of income, deduction, and credit of the REIT. A “qualified REIT subsidiary” is a corporation, all of the capital stock of which is owned by the REIT. Thus, in applying the requirements described herein, any “qualified REIT subsidiary” that we own will be ignored, and all assets, liabilities, and items of income, deduction, and credit of such subsidiary will be treated as our assets, liabilities, and items of income, deduction, and credit.

An unincorporated domestic entity, such as a limited liability company, that has a single owner, generally is not treated as an entity separate from its owner for federal income tax purposes. An unincorporated domestic entity with two or more owners is generally treated as a partnership for federal income tax purposes. In the case of a REIT that is a partner in a partnership, the REIT is treated as owning its proportionate share of the assets of the partnership and as earning its allocable share of the gross income of the partnership for purposes of the applicable REIT qualification tests.

If, as in our case, a REIT is a partner in a partnership, Treasury Regulations provide that the REIT will be deemed to own its proportionate capital share of the assets of the partnership and will be deemed to be entitled to the income of the partnership attributable to that capital share. In addition, the character of the assets and gross income of the partnership will retain the same character in the hands of the REIT for purposes of Section 856 of the Code, including satisfying the gross income tests and the asset tests. Thus, our proportionate share of the assets, liabilities and items of income of our Operating Partnership, which will be our principal asset, will be treated as our assets, liabilities and items of income for purposes of applying the requirements described in this section. In addition, actions taken by our Operating Partnership or any other entity that is either a disregarded entity (including a qualified REIT subsidiary) or partnership in which we own an interest, either directly or through one or more tiers of disregarded entities (including qualified REIT subsidiaries) or partnerships such as our Operating Partnership, can affect our ability to satisfy the REIT income and assets tests and the determination of whether we have net income from prohibited transactions. Accordingly, for purposes of this discussion, when we discuss our actions, income or assets we intend that to include the actions, income or assets of our Operating Partnership or any entity that is either a disregarded entity (including a qualified REIT subsidiary) or partnership for U.S. Federal income tax purposes in which we maintain an interest through multiple tiers of disregarded entities (including qualified REIT subsidiaries) or partnerships.

Taxable REIT Subsidiaries

A taxable REIT subsidiary (“TRS”) is any corporation in which a REIT directly or indirectly owns stock, provided that the REIT and that corporation make a joint election to treat that corporation as a TRS. The election can be revoked at any time as long as the REIT and the TRS revoke such election jointly. In addition, if a TRS holds directly or indirectly, more than 35% of the securities of any other corporation (by vote or by value), then that other corporation is also treated as a TRS. A corporation can be a TRS with respect to more than one REIT. We intend to make a TRS election for our Services Company.

A TRS is subject to Federal income tax at regular corporate rates (maximum rate of 35%), and may also be subject to state and local taxation. Any dividends paid or deemed paid by any one of our TRSs will also be subject to tax, either (i) to us if we do not pay the dividends received to our stockholders as dividends, or (ii) to our stockholders if we do pay out the dividends received to our stockholders. Further, the rules impose a 100% excise tax on transactions between a TRS and its parent REIT or the REIT’s tenants that are not conducted on an

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arm’s-length basis. We may hold more than 10% of the stock of a TRS without jeopardizing our qualification as a REIT notwithstanding the rule described below under “—Asset Tests” that generally precludes ownership of more than 10% (by vote or value) of any issuer’s securities. However, as noted below, in order for us to qualify as a REIT, the securities of all of the TRSs in which we have invested either directly or indirectly may not represent more than 20% of the total value of our assets. We expect that the aggregate value of all of our interests in TRSs will represent less than 20% of the total value of our assets, and will, to the extent necessary, limit the activities of the Services Company or take other actions necessary to satisfy the 20% value limit. We cannot, however, assure that we will always satisfy the 20% value limit or that the IRS will agree with the value we assign to the Services Company and any other TRS in which we own an interest.

A TRS is not permitted to directly or indirectly operate or manage a “lodging facility.” A “lodging facility” is defined as a “hotel, motel or other establishment more than one-half of the dwelling units in which are used on a transient basis.” We have been advised by counsel that our Services Company will not be considered to operate or manage a lodging facility. Although the Services Company is expected to lease certain of our student housing properties on a short term basis during the summer months and occasionally during other times of the year, we have been advised that such limited short term leasing will not cause the Services Company to be considered to directly or indirectly operate or manage a lodging facility. Counsel’s opinion is based in part on Treasury Regulations interpreting similar language applicable to other provisions of the Code. Treasury Regulations or other guidance specifically adopted for purposes of the TRS provisions might take a different approach, and, even absent such guidance, the IRS might take a view contrary to that of counsel. In such an event, we might be forced to change our method of operating the Services Company, which could adversely affect us, or could cause the Services Company to fail to qualify as a TRS, in which event we could fail to qualify as a REIT.

We may engage in activities indirectly though a TRS as necessary or convenient to avoid receiving the benefit of income or services that would jeopardize our REIT status if we engaged in the activities directly. In particular, we would likely engage in activities through a TRS for providing services that are non-customary and services to unrelated parties (such as our third party development and management services) that might produce income that does not qualify under the gross income tests described below. We might also hold certain properties in the Services Company, such as our interest in certain of the leasehold properties if we determine that the ownership structure of such properties may produce income that would not qualify for purposes of the REIT income tests described below.

Gross Income Tests. We must satisfy two gross income tests annually to maintain our qualification as a REIT.

First, at least 75% of our gross income for each taxable year must consist of defined types of income that we derive, directly or indirectly, from investments relating to real property or mortgages on real property or qualified temporary investment income. Qualifying income for purposes of that 75% gross income test generally includes:

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rents from real property;

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interest on debt secured by mortgages on real property, or on interests in real property;

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dividends or other distributions on, and gain from the sale of, shares in other REITs;

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gain from the sale of real estate assets; and

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income derived from the temporary investment of new capital that is attributable to the issuance of our shares of beneficial interest or a public offering of our debt with a maturity date of at least five years and that we receive during the one year period beginning on the date on which we received such new capital.

Second, in general, at least 95% of our gross income for each taxable year must consist of income that is qualifying income for purposes of the 75% gross income test, other types of interest and dividends, gain from the sale or disposition of stock or securities, income from certain hedging instruments or any combination of these.

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Gross income from our sale of property that we hold primarily for sale to customers in the ordinary course of business is excluded from both the numerator and the denominator in both income tests. The following paragraphs discuss the specific application of the gross income tests to us.

Rents from Real Property. Rent that we receive from our real property will qualify as “rents from real property,” which is qualifying income for purposes of the 75% and 95% gross income tests, only if the following conditions are met:

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First, the rent must not be based in whole or in part on the income or profits of any person. Participating rent, however, will qualify as “rents from real property” if it is based on percentages of receipts or sales and the percentages: (a) are fixed at the time the leases are entered into, (b) are not renegotiated during the term of the leases in a manner that has the effect of basing rent on income or profits, and (c) conform with normal business practice.

More generally, the rent will not qualify as “rents from real property” if, considering the relevant lease and all of the surrounding circumstances, the arrangement does not conform with normal business practice, but is in reality used as a means of basing the rent on income or profits. We intend to set and accept rents which are fixed dollar amounts, and not to any extent by reference to any person’s income or profits, in compliance with the rules above.

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Second, we must not own, actually or constructively, 10% or more of the stock or the assets or net profits of any lessee, referred to as a related party tenant, other than a TRS. The constructive ownership rules generally provide that, if 10% or more in value of our shares is owned, directly or indirectly, by or for any person, we are considered as owning the stock owned, directly or indirectly, by or for such person.

We do not own any stock or any assets or net profits of any lessee directly, except that we may lease office or other space to our Services Company or another TRS. We believe that each of the leases will conform with normal business practice, contain arm’s-length terms and that the rent payable under those leases will be treated as rents from real property for purposes of the 75% and 95% gross income tests. However, there can be no assurance that the IRS will not successfully assert a contrary position or that a change in circumstances will not cause a portion of the rent payable under the leases to fail to qualify as “rents from real property.” If such failures were in sufficient amounts, we might not be able to satisfy either of the 75% or 95% gross income tests and could lose our REIT status. In addition, if the IRS successfully reapportions or reallocates items of income, deduction, and credit among and between us and our TRS under the leases or any intercompany transaction because it determines that doing so is necessary to prevent the evasion of taxes or to clearly reflect income, we could be subject to a 100% excise tax on those amounts. As described above, we may own one or more TRSs. Under an exception to the related-party tenant rule described in the preceding paragraph, rent that we receive from a TRS will qualify as “rents from real property” as long as (1) at least 90% of the leased space in the property is leased to persons other than TRSs and related party tenants, and (2) the amount paid by the TRS to rent space at the property is substantially comparable to rents paid by other tenants of the property for comparable space. If we receive rent from a TRS, we will seek to comply with this exception.

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Third, the rent attributable to the personal property leased in connection with a lease of real property must not be greater than 15% of the total rent received under the lease.

The rent attributable to personal property under a lease is the amount that bears the same ratio to total rent under the lease for the taxable year as the average of the fair market values of the leased personal property at the beginning and at the end of the taxable year bears to the average of the aggregate fair market values of both the real and personal property covered by the lease at the beginning and at the end of such taxable year (the “personal property ratio”). With respect to each of our leases, we believe that the personal property ratio

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generally is less than 15%. Where that is not, or may in the future not be, the case, we believe that any income attributable to personal property will not jeopardize our ability to qualify as a REIT.

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Fourth, we cannot furnish or render noncustomary services to the tenants of our properties, or manage or operate our properties, other than through an independent contractor who is adequately compensated and from whom we do not derive or receive any income. However, we need not provide services through an “independent contractor,” but instead may provide services directly to our tenants, if the services are “usually or customarily rendered” in connection with the rental of space for occupancy only and are not considered to be provided for the tenants’ convenience. In addition, we may provide a minimal amount of “noncustomary” services to the tenants of a property, other than through an independent contractor, as long as our income from the services does not exceed 1% of our income from the related property. Finally, we may own up to 100% of the stock of one or more TRSs, which may provide noncustomary services to our tenants without tainting our rents from the related properties.

We do not intend to perform any services other than customary ones for our lessees, other than services provided through independent contractors or TRSs. If a portion of the rent we receive from a property does not qualify as “rents from real property” because the rent attributable to personal property exceeds 15% of the total rent for a taxable year, the portion of the rent attributable to personal property will not be qualifying income for purposes of either the 75% or 95% gross income test. If rent attributable to personal property, plus any other income that is nonqualifying income for purposes of the 95% gross income test, during a taxable year exceeds 5% of our gross income during the year, we would lose our REIT status. By contrast, in the following circumstances, none of the rent from a lease of property would qualify as “rents from real property”: (1) the rent is considered based on the income or profits of the lessee; (2) the lessee is a related party tenant or fails to qualify for the exception to the related-party tenant rule for qualifying TRSs; or (3) we furnish noncustomary services to the tenants of the property, or manage or operate the property, other than through a qualifying independent contractor or a TRS and our income from the services exceeds 1% of our income from the related property.

Tenants may be required to pay, besides base rent, reimbursements for certain amounts we are obligated to pay to third parties (such as utility and telephone companies), penalties for nonpayment or late payment of rent, lease application or administrative fees. These and other similar payments should qualify as “rents from real property.”

Interest. The term “interest” generally does not include any amount received or accrued, directly or indirectly, if the determination of the amount depends in whole or in part on the income or profits of any person. However, an amount received or accrued generally will not be excluded from the term “interest” solely because it is based on a fixed percentage or percentages of receipts or sales. Furthermore, in the case of a shared appreciation mortgage, any additional interest received on a sale of the secured property will be treated as gain from the sale of the secured property.

Prohibited Transactions. A REIT will incur a 100% tax on the net income derived from any sale or other disposition of property, other than foreclosure property, that the REIT holds primarily for sale to customers in the ordinary course of a trade or business. We do not have any current intention to sell any of our properties; however, California State University has the option to purchase The University Village at San Bernardino from us, which is currently under construction, which option expires 150 days after notice of completion of construction has been given to the University. Even if we do sell any of our properties, we believe that none of our assets will be held primarily for sale to customers and that a sale of any of our assets will not be in the ordinary course of our business. Whether a REIT holds an asset “primarily for sale to customers in the ordinary course of a trade or business” depends, however, on the facts and circumstances in effect from time to time, including those related to a particular asset. Nevertheless, we will attempt to comply with the terms of safe- harbor provisions in the federal income tax laws prescribing when an asset sale will not be characterized as a prohibited transaction.

Foreclosure Property. We will be subject to tax at the maximum corporate rate on certain income from foreclosure property. We do not own any foreclosure properties and do not expect to own any foreclosure

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properties in the future. This would only change in the future if we were to make loans to third parties secured by real property.

Hedging Transactions. From time to time, we may enter into hedging transactions with respect to one or more of our assets or liabilities. Our hedging activities may include entering into interest rate swaps, caps, and floors, options to purchase such items, and futures and forward contracts. Any periodic income or gain from the disposition of any financial instrument for these or similar transactions to hedge indebtedness we incur to acquire or carry “real estate assets” should be qualifying income for purposes of the 95% gross income test, but not the 75% gross income test. Since the financial markets continually introduce new and innovative instruments related to risk-sharing or trading, it is not entirely clear which such instruments will generate income which will be considered qualifying income for purposes of the gross income tests. We intend to structure any hedging or similar transactions so as not to jeopardize our status as a REIT.

Failure to Satisfy Gross Income Tests. If we fail to satisfy one or both of the gross income tests for any taxable year, we nevertheless may qualify as a REIT for that year if we qualify for relief under certain provisions of the federal income tax laws. Those relief provisions generally will be available if:

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our failure to meet the income tests was due to reasonable cause and not due to willful neglect;

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we attach a schedule of the sources of our income to our tax return; and

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any incorrect information on the schedule is not due to fraud with intent to evade tax.

We cannot with certainty predict whether any failure to meet these tests will qualify for the relief provisions. As discussed above in “—Taxation of Our Company,” even if the relief provisions apply, we would incur a 100% tax on the gross income attributable to the greater of the amounts by which we fail the 75% and 95% gross income tests, multiplied by a fraction intended to reflect our profitability.

Asset Tests. To maintain our qualification as a REIT, we also must satisfy the following asset tests at the end of each quarter of each taxable year:

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First, at least 75% of the value of our total assets must consist of: (a) cash or cash items, including certain receivables, (b) government securities, (c) interests in real property, including leaseholds and options to acquire real property and leaseholds, (d) interests in mortgages on real property, (e) stock in other REITs, and (f) investments in stock or debt instruments during the one year period following our receipt of new capital that we raise through equity offerings or offerings of debt with at least a five year term;

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Second, of our investments not included in the 75% asset class, the value of our interest in any one issuer’s securities may not exceed 5% of the value of our total assets;

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Third, we may not own more than 10% of the voting power or value of any one issuer’s outstanding securities;

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Fourth, no more than 20% of the value of our total assets may consist of the securities of one or more TRSs; and

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Fifth, no more than 25% of the value of our total assets may consist of the securities of TRSs and other non-TRS taxable subsidiaries and other assets that are not qualifying assets for purposes of the 75% asset test.

For purposes of the second and third asset tests, the term “securities” does not include stock in another REIT, equity or debt securities of a qualified REIT subsidiary or TRS, mortgage loans that constitute real estate assets, or equity interests in a partnership. The term “securities,” however, generally includes debt securities issued by a partnership or another REIT, except that certain “straight debt” securities are not treated as “securities” for purposes of the 10% value test (for example, qualifying debt securities of a corporation if such securities are the

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only interests we or any TRS of ours owns in that corporation, or qualifying debt securities of a partnership if we own at least a 20% profits interest in the partnership).

We will monitor the status of our assets for purposes of the various asset tests and will manage our portfolio in order to comply at all times with such tests. If we fail to satisfy the asset tests at the end of a calendar quarter, we will not lose our REIT status if:

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we satisfied the asset tests at the end of the preceding calendar quarter; and

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the discrepancy between the value of our assets and the asset test requirements arose from changes in the market values of our assets and was not wholly or partly caused by the acquisition of one or more non-qualifying assets.

If we did not satisfy the condition described in the second item, above, we still could avoid disqualification by eliminating any discrepancy within 30 days after the close of the calendar quarter in which it arose.

Distribution Requirements. Each taxable year, we must distribute dividends, other than capital gain dividends and deemed distributions of retained capital gains, to our shareholders in an aggregate amount not less than: the sum of (a) 90% of our “REIT taxable income,” computed without regard to the dividends-paid deduction or our net capital gain or loss, and (b) 90% of our after-tax net income, if any, from foreclosure property, minus the sum of certain items of non-cash income.

We must pay such dividends in the taxable year to which they relate, or in the following taxable year if we declare the dividend before we timely file our federal income tax return for the year and pay the dividend on or before the first regular dividend payment date after such declaration.

To the extent that we do not distribute all of our net capital gains or distribute at least 90%, but less than 100%, of our real estate investment trust taxable income, as adjusted, we will have to pay tax on those amounts at regular ordinary and capital gains corporate tax rates. Furthermore, if we fail to distribute during each calendar year at least the sum of (a) 85% of our ordinary income for that year, (b) 95% of our capital gain net income for that year, and (c) any undistributed taxable income from prior periods, we would have to pay a 4% nondeductible excise tax on the excess of the required dividend over the amounts actually distributed.

We may elect to retain and pay income tax on the net long-term capital gains we receive in a taxable year. See “—Taxation of Taxable U.S. Shareholders.” If we so elect, we will be treated as having distributed any such retained amount for purposes of the 4% excise tax described above. We intend to make timely dividends sufficient to satisfy the annual dividend requirements and to avoid corporate income tax and the 4% excise tax.

It is possible that, from time to time, we may experience timing differences between the actual receipt of income and actual payment of deductible expenses and the inclusion of that income and deduction of such expenses in arriving at our REIT taxable income. For example, we may not deduct recognized capital losses from our “REIT taxable income.” Further, it is possible that, from time to time, we may be allocated a share of net capital gains attributable to the sale of depreciated property that exceeds our allocable share of cash attributable to that sale. As a result of the foregoing, we may have less cash than is necessary to distribute all of our taxable income and thereby avoid corporate income tax and the excise tax imposed on certain undistributed income. In such a situation, we may need to borrow funds or issue additional common or preferred shares or pay dividends in the form of taxable stock dividends.

Under certain circumstances, we may be able to correct a failure to meet the distribution requirements for a year by paying “deficiency dividends” to our shareholders in a later year. We may include such deficiency dividends in our deduction for dividends paid for the earlier year. Although we may be able to avoid income tax on amounts distributed as deficiency dividends, we will be required to pay interest based upon the amount of any deduction we take for deficiency dividends.

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Recordkeeping Requirements. We must maintain certain records in order to qualify as a REIT. In addition, to avoid paying a penalty, we must request on an annual basis information from our shareholders designed to disclose the actual ownership of the outstanding common shares. We have complied and intend to continue to comply with these requirements.

Accounting Period. In order to elect to be taxed as a REIT, we must use a calendar year accounting period. We intend to and will use the calendar year as our accounting period for federal income tax purposes for each and every year we intend to operate as a REIT.

Failure to Qualify as a REIT. If we failed to qualify as a REIT in any taxable year and no relief provision applied, we would have the following consequences. We would be subject to federal income tax and any applicable alternative minimum tax at rates applicable to regular C corporations on our taxable income, determined without reduction for amounts distributed to shareholders. We would not be required to make any distributions to shareholders, and any dividends to shareholders would be taxable as ordinary income to the extent of our current and accumulated earnings and profits (which may be subject to tax at preferential rates to individual shareholders). Corporate shareholders could be eligible for a dividends-received deduction if certain conditions are satisfied. Unless we qualified for relief under specific statutory provisions, we would not be permitted to elect taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. We might not be entitled to the statutory relief described in this paragraph in all circumstances.

Taxation of Taxable U.S. Shareholders

As used in this section, the term “U.S. shareholder” means a holder of common stock who, for United States Federal income tax purposes, is:

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a citizen or resident of the United States;

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a domestic corporation;

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an estate whose income is subject to United States Federal income taxation regardless of its source; or

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a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons have authority to control all substantial decisions of the trust.

As long as we qualify as a REIT, distributions made by us out of our current or accumulated earnings and profits, and not designated as capital gain dividends, will constitute dividends taxable to our taxable U.S. shareholders as ordinary income. Under recently enacted law, individuals receiving “qualified dividends,” dividends from domestic and certain qualifying foreign subchapter C corporations, may be entitled to the new lower rates on dividends (at rates applicable to long-term capital gains, currently at a maximum rate of 15%) provided certain holding period requirements are met. However, individuals receiving dividend distributions from us, a REIT, will generally not be eligible for the new lower rates on dividends except with respect to the portion of any distribution which (a) represents dividends being passed through to us from a corporation in which we own shares (but only if such dividends would be eligible for the new lower rates on dividends if paid by the corporation to its individual shareholders), including dividends from our TRS, (b) which is equal to our REIT taxable income (taking into account the dividends paid deduction available to us) less any taxes paid by us on these items during our previous taxable year, or (c) are attributable to built-in gains realized and recognized by us from disposition of properties acquired by us in non-recognition transaction, less any taxes paid by us on these items during our previous taxable year. Individual taxable U.S. shareholders should consult their own tax advisors to determine the impact of this new legislation. Dividends of this kind will not be eligible for the dividends received deduction in the case of taxable U.S. shareholders that are corporations. Dividends made by us that we properly designate as capital gain dividends will be taxable to taxable U.S. shareholders as gain from the sale of a capital asset held for more than one year, to the extent that they do not exceed our actual net capital gain for the taxable year, without regard to the period for which a taxable U.S. shareholder has held his common stock. Thus, with certain limitations, capital gain dividends received by an individual taxable U.S. shareholder

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may be eligible for preferential rates of taxation. Taxable U.S. shareholders that are corporations may, however, be required to treat up to 20% of certain capital gain dividends as ordinary income.

To the extent that we pay dividends, not designated as capital gain dividends, in excess of our current and accumulated earnings and profits, these dividends will be treated first as a tax-free return of capital to each taxable U.S. shareholder. We expect that approximately 72.2% of our estimated initial annual distribution will represent a return of capital for federal income tax purposes. Thus, these dividends will reduce the adjusted basis which the taxable U.S. shareholder has in our common stock for tax purposes by the amount of the dividend, but not below zero. Dividends in excess of a taxable U.S. shareholder’s adjusted basis in his common stock will be taxable as capital gains, provided that the common stock have been held as a capital asset.

Dividends authorized by us in October, November, or December of any year and payable to a shareholder of record on a specified date in any of these months will be treated as both paid by us and received by the shareholder on December 31 of that year, provided that we actually pay the dividend in January of the following calendar year. Shareholders may not include in their own income tax returns any of our net operating losses or capital losses.

We may elect to retain, rather than distribute, all or a portion of our net long-term capital gains and pay the tax on such gains. If we make such an election, we will designate amounts as undistributed capital gains in respect of your shares or beneficial interests by written notice to you which we will mail out to you with our annual report or at any time within 60 days after December 31 of any year. When we make such an election, taxable U.S. shareholders holding common stock at the close of our taxable year will be required to include, in computing their long-term capital gains for the taxable year in which the last day of our taxable year falls, the amount that we designate in a written notice mailed to our shareholders. We may not designate amounts in excess of our undistributed net capital gain for the taxable year. Each taxable U.S. shareholder required to include the designated amount in determining the shareholder’s long-term capital gains will be deemed to have paid, in the taxable year of the inclusion, the tax paid by us in respect of the undistributed net capital gains. Taxable U.S. shareholders to whom these rules apply will be allowed a credit or a refund, as the case may be, for the tax they are deemed to have paid. Taxable U.S. shareholders will increase their basis in their common stock by the difference between the amount of the includible gains and the tax deemed paid by the shareholder in respect of these gains.

Dividends made by us and gain arising from a taxable U.S. shareholder’s sale or exchange of our common stock will not be treated as passive activity income. As a result, taxable U.S. shareholders generally will not be able to apply any passive losses against that income or gain.

When a taxable U.S. shareholder sells or otherwise disposes of our common stock, the shareholder will recognize gain or loss for Federal income tax purposes in an amount equal to the difference between (a) the amount of cash and the fair market value of any property received on the sale or other disposition, and (b) the holder’s adjusted basis in the common stock for tax purposes. This gain or loss will be capital gain or loss if the U.S. shareholder has held the common stock as a capital asset. The gain or loss will be long-term gain or loss if the U.S. shareholder has held the common stock for more than one year. Long-term capital gains of an individual taxable U.S. shareholder is generally taxed at preferential rates. The highest marginal individual income tax rate is currently 35%. The maximum tax rate on long-term capital gains applicable to individuals is 15% for sales and exchanges of assets held for more than one year and occurring after May 6, 2003 through December 31, 2008. The maximum tax rate on long-term capital gains from the sale or exchange of “section 1250 property” (i.e., generally, depreciable real property) is 25% to the extent the gain would have been treated as ordinary income if the property were “section 1245 property” (i.e., generally, depreciable personal property). We generally may designate whether a distribution we designate as capital gain dividends (and any retained capital gain that we are deemed to distribute) is taxable to non-corporate shareholders at a 15% or 25% rate. The characterization of income as capital gain or ordinary income may affect the deductibility of capital losses. A non-corporate taxpayer may deduct capital losses not offset by capital gains against its ordinary income only up to a maximum of $3,000 annually. A non-corporate taxpayer may carry unused capital losses forward indefinitely. A corporate

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taxpayer must pay tax on its net capital gains at corporate ordinary-income rates. A corporate taxpayer may deduct capital losses only to the extent of capital gains, with unused losses carried back three years and forward five years. In general, any loss recognized by a taxable U.S. shareholder when the shareholder sells or otherwise disposes of our common stock that the shareholder has held for six months or less, after applying certain holding period rules, will be treated as a long-term capital loss, to the extent of dividends received by the shareholder from us which were required to be treated as long-term capital gains.

Information Reporting Requirements and Backup Withholding. We will report to our shareholders and to the Internal Revenue Service the amount of dividends we pay during each calendar year and the amount of tax we withhold, if any. A shareholder may be subject to backup withholding at a rate of 28% with respect to dividends unless the holder:

•

is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact; or

•

provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules.

A shareholder who does not provide us with its correct taxpayer identification number also may be subject to penalties imposed by the Internal Revenue Service. Any amount paid as backup withholding will be creditable against the shareholder’s income tax liability. In addition, we may be required to withhold a portion of capital gain dividends to any shareholders who fail to certify their non-foreign status to us. For a discussion of the backup withholding rules as applied to non-U.S. shareholders, see “—Taxation of Non-U.S. Shareholders.”

Taxation of Tax-Exempt Shareholders. Amounts distributed as dividends by a REIT generally do not constitute unrelated business taxable income when received by a tax-exempt entity. Provided that a tax-exempt shareholder is not one of the types of entity described in the next paragraph and has not held its common stock as “debt financed property” within the meaning of the Code, and the common stock are not otherwise used in a trade or business, the dividend income from the common stock will not be unrelated business taxable income to a tax-exempt shareholder. Similarly, income from the sale of common stock will not constitute unrelated business taxable income unless the tax-exempt shareholder has held the common stock as “debt financed property” within the meaning of the Code or has used the common stock in a trade or business.

Income from an investment in our common stock will constitute unrelated business taxable income for tax-exempt shareholders that are social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans exempt from Federal income taxation under the applicable subsections of Section 501(c) of the Code, unless the organization is able to properly deduct amounts set aside or placed in reserve for certain purposes so as to offset the income generated by its common stock. Prospective investors of the types described in the preceding sentence should consult their own tax advisors concerning these “set aside” and reserve requirements.

Notwithstanding the foregoing, however, a portion of the dividends paid by a “pension-held REIT” will be treated as unrelated business taxable income to any trust which:

•

is described in Section 401(a) of the Code;

•

is tax-exempt under Section 501(a) of the Code; and

•

holds more than 10% (by value) of the equity interests in the REIT.

Tax-exempt pension, profit-sharing and stock bonus funds that are described in Section 401(a) of the Code are referred to below as “qualified trusts.” A REIT is a “pension-held REIT” if:

•

it would not have qualified as a REIT but for the fact that Section 856(h)(3) of the Code provides that stock owned by qualified trusts will be treated, for purposes of the “not closely held” requirement, as owned by the beneficiaries of the trust (rather than by the trust itself); and

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•

either (a) at least one qualified trust holds more than 25% by value of the interests in the REIT or (b) one or more qualified trusts, each of which owns more than 10% by value of the interests in the REIT, hold in the aggregate more than 50% by value of the interests in the REIT.

The percentage of any REIT dividend treated as unrelated business taxable income to a qualifying trust is equal to the ratio of (a) the gross income of the REIT from unrelated trades or businesses, determined as though the REIT were a qualified trust, less direct expenses related to this gross income, to (b) the total gross income of the REIT, less direct expenses related to the total gross income. A de minimis exception applies where this percentage is less than 5% for any year. We do not expect to be classified as a pension-held REIT, but this cannot be guaranteed.

The rules described above in “—Taxation of Taxable U.S. Shareholders” concerning the inclusion of our designated undistributed net capital gains in the income of our shareholders will apply to tax-exempt entities. Thus, tax-exempt entities will be allowed a credit or refund of the tax deemed paid by these entities in respect of the includible gains.

Taxation of Non-U.S. Shareholders. The rules governing U.S. Federal income taxation of nonresident alien individuals, foreign corporations, foreign partnerships, and other foreign shareholders are complex. This section is only a summary of such rules. We urge non-U.S. shareholders to consult their own tax advisors to determine the impact of federal, state, and local income tax laws on ownership of common shares, including any reporting requirements.

Ordinary Dividends. Dividends, other than dividends that are treated as attributable to gain from sales or exchanges by us of U.S. real property interests, as discussed below, and other than dividends designated by us as capital gain dividends, will be treated as ordinary income to the extent that they are made out of our current or accumulated earnings and profits. A withholding tax equal to 30% of the gross amount of the dividend will ordinarily apply to dividends of this kind to non-U.S. shareholders, unless an applicable tax treaty reduces that tax. However, if income from the investment in the common stock is treated as effectively connected with the non-U.S. shareholder’s conduct of a U.S. trade or business or is attributable to a permanent establishment that the non-U.S. shareholder maintains in the United States if that is required by an applicable income tax treaty as a condition for subjecting the non-U.S. shareholder to U.S. taxation on a net income basis, tax at graduated rates will generally apply to the non-U.S. shareholder in the same manner as U.S. shareholders are taxed with respect to dividends, and the 30% branch profits tax may also apply if the shareholder is a foreign corporation. We expect to withhold U.S. tax at the rate of 30% on the gross amount of any dividends, other than dividends treated as attributable to gain from sales or exchanges of U.S. real property interests and capital gain dividends, paid to a non-U.S. shareholder, unless (a) a lower treaty rate applies and the required form evidencing eligibility for that reduced rate (ordinarily, IRS Form W-8 BEN) is filed with us or the appropriate withholding agent or (b) the non-U.S. shareholder files an IRS Form W-8 ECI or a successor form with us or the appropriate withholding agent claiming that the dividends are effectively connected with the non-U.S. shareholder’s conduct of a U.S. trade or business.

Dividends to a non-U.S. shareholder that are designated by us at the time of dividend as capital gain dividends which are not attributable to or treated as attributable to the disposition by us of a U.S. real property interest generally will not be subject to U.S. Federal income taxation, except as described below.

Return of Capital. Distributions in excess of our current and accumulated earnings and profits, which are not treated as attributable to the gain from our disposition of a U.S. real property interest, will not be taxable to a non-U.S. shareholder to the extent that they do not exceed the adjusted basis of the non-U.S. shareholder’s common stock. Distributions of this kind will instead reduce the adjusted basis of the common stock. To the extent that distributions of this kind exceed the adjusted basis of a non-U.S. shareholder’s common stock, they will give rise to tax liability if the non-U.S. shareholder otherwise would have to pay tax on any gain from the sale or disposition of its common stock, as described below. If it cannot be determined at the time a distribution

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is made whether the distribution will be in excess of current and accumulated earnings and profits, withholding will apply to the distribution at the rate applicable to dividends. However, the non-U.S. shareholder may seek a refund of these amounts from the IRS if it is subsequently determined that the distribution was, in fact, in excess of our current accumulated earnings and profits.

Capital Gain Dividends. For any year in which we qualify as a REIT, dividends that are attributable to gain from sales or exchanges by us of U.S. real property interests will be taxed to a non-U.S. shareholder under the provisions of the Foreign Investment in Real Property Tax Act of 1980, as amended. Under this statute, these dividends are taxed to a non-U.S. shareholder as if the gain were effectively connected with a U.S. business. Thus, non-U.S. shareholders will be taxed on the dividends at the normal capital gain rates applicable to U.S. shareholders, subject to any applicable alternative minimum tax and special alternative minimum tax in the case of non-U.S. shareholders that are individuals. We are required by applicable Treasury regulations under this statute to withhold 35% of any distribution that we could designate as a capital gains dividend. However, if we designate as a capital gain dividend a distribution made before the day we actually effect the designation, then although the distribution may be taxable to a non-U.S. shareholder, withholding does not apply to the distribution under this statute. Rather, we must effect the 35% withholding from distributions made on and after the date of the designation, until the distributions so withheld equal the amount of the prior distribution designated as a capital gain dividend. The non-U.S. shareholder may credit the amount withheld against its U.S. tax liability.

Sale of Common Stock. Gain recognized by a non-U.S. shareholder upon a sale or exchange of our common stock generally will not be taxed under the Foreign Investment in Real Property Tax Act if we are a “domestically controlled REIT,” defined generally as a REIT, less than 50% in value of whose stock is and was held directly or indirectly by foreign persons at all times during a specified testing period. We believe that we will be a domestically controlled REIT, and, therefore, that taxation under this statute generally will not apply to the sale of our common stock, however, because our stock is publicly traded, no assurance can be given that the we will qualify as a domestically controlled REIT at any time in the future. Gain to which this statute does not apply will be taxable to a non-U.S. shareholder if investment in the common stock is treated as effectively connected with the non-U.S. shareholder’s U.S. trade or business or is attributable to a permanent establishment that the non-U.S. shareholder maintains in the United States if that is required by an applicable income tax treaty as a condition for subjecting the non-U.S. shareholder to U.S. taxation on a net income basis. In this case, the same treatment will apply to the non-U.S. shareholder as to U.S. shareholders with respect to the gain. In addition, gain to which the Foreign Investment in Real Property Tax Act does not apply will be taxable to a non-U.S. shareholder if the non-U.S. shareholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year to which the gain is attributable. In this case, a 30% tax will apply to the nonresident alien individual’s capital gains. A similar rule will apply to capital gain dividends to which this statute does not apply.

If we were not a domestically controlled REIT, tax under the Foreign Investment in Real Property Tax Act would apply to a non-U.S. shareholder’s sale of common stock only if the selling non-U.S. shareholder owned more than 5% of the class of common stock sold at any time during a specified period. This period is generally the shorter of the period that the non-U.S. shareholder owned the common stock sold or the five-year period ending on the date when the shareholder disposed of the common stock. If tax under this statute applies to the gain on the sale of common stock, the same treatment would apply to the non-U.S. shareholder as to U.S. shareholders with respect to the gain, subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals.

Backup Withholding and Information Reporting. If you are a non-U.S. shareholder, you are generally exempt from backup withholding and information reporting requirements with respect to:

•

dividend payments;

•

the payment of the proceeds from the sale of common stock effected at a United States office of a broker, as long as the income associated with these payments is otherwise exempt from United States Federal income tax; and

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•

the payor or broker does not have actual knowledge or reason to know that you are a United States person and you have furnished to the payor or broker: (a) a valid Internal Revenue Service Form W-8BEN or an acceptable substitute form upon which you certify, under penalties of perjury, that you are a non-United States person, or (b) other documentation upon which it may rely to treat the payments as made to a non-United States person in accordance with U.S. Treasury Regulations, or (c) you otherwise establish an exemption.

Payment of the proceeds from the sale of common stock effected at a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, a sale of common stock that is effected at a foreign office of a broker will be subject to information reporting and backup withholding if:

•

the proceeds are transferred to an account maintained by you in the United States;

•

the payment of proceeds or the confirmation of the sale is mailed to you at a United States address; or

•

the sale has some other specified connection with the United States as provided in U.S. Treasury regulations,

In addition, a sale of common stock will be subject to information reporting if it is effected at a foreign office of a broker that is:

•

a United States person;

•

a controlled foreign corporation for United States tax purposes;

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a foreign person 50% or more of whose gross income is effectively connected with the conduct of a United States trade or business for a specified three-year period; or

•

a foreign partnership, if at any time during its tax year: (a) one or more of its partners are “U.S. persons,” as defined in U.S. Treasury Regulations, who in the aggregate hold more than 50% of the income or capital interest in the partnership, or (b) such foreign partnership is engaged in the conduct of a United States trade or business,

unless the broker does not have actual knowledge or reason to know that you are a United States person and the documentation requirements described above are met or you otherwise establish an exemption. Backup withholding will apply if the sale is subject to information reporting and the broker has actual knowledge that you are a United States person. You generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed your income tax liability by filing a refund claim with the Internal Revenue Service.

Tax Aspects of Our Investments in Our Operating Partnership. The following discussion summarizes certain federal income tax considerations applicable to our direct or indirect investment in our Operating Partnership and any subsidiary partnerships or limited liability companies we form or acquire, each individually referred to as a Partnership and, collectively, as Partnerships. The following discussion does not cover state or local tax laws or any federal tax laws other than income tax laws.

Classification as Partnerships. We are entitled to include in our income our distributive share of each Partnership’s income and to deduct our distributive share of each Partnership’s losses only if such Partnership is classified for federal income tax purposes as a partnership, rather than as a corporation or an association taxable as a corporation. An organization with at least two owners or partners will be classified as a partnership, rather than as a corporation, for federal income tax purposes if it:

•

is treated as a partnership under the Treasury Regulations relating to entity classification (the “check-the-box regulations”); and

•

is not a “publicly traded” partnership.

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Under the check-the-box regulations, an unincorporated entity with at least two owners or partners may elect to be classified either as an association taxable as a corporation or as a partnership. If such an entity does not make an election, it generally will be treated as a partnership for federal income tax purposes.

We intend that each partnership we own an interest in will be classified as a partnership for federal income tax purposes (or else a disregarded entity where there are not at least two separate beneficial owners).

A publicly traded partnership is a partnership whose interests are traded on an established securities market or are readily tradable on a secondary market (or a substantial equivalent). A publicly traded partnership is generally treated as a corporation for federal income tax purposes, but will not be so treated for any taxable year for which at least 90% of the partnership’s gross income consists of specified passive income, including real property rents, gains from the sale or other disposition of real property, interest, and dividends (the “90% passive income exception”). Treasury regulations provide limited safe harbors from treatment as a publicly traded partnership. Pursuant to one of those safe harbors, or private placement exclusion, interests in a partnership will not be treated as readily tradable on a secondary market or the substantial equivalent thereof if (1) all interests in the partnership were issued in a transaction or transactions that were not required to be registered under the Securities Act, and (2) the partnership does not have more than 100 partners at any time during the partnership’s taxable year. For the determination of the number of partners in a partnership, a person owning an interest in a partnership, grantor trust, or S corporation that owns an interest in the partnership is treated as a partner in the partnership only if (1) substantially all of the value of the owner’s interest in the entity is attributable to the entity’s direct or indirect interest in the partnership, and (2) a principal purpose of the use of the entity is to permit the partnership to satisfy the 100-partner limitation.

We expect that each partnership we own an interest in will qualify for the private placement exclusion, one of the other safe harbors from treatment as a publicly traded partnership, and/or will satisfy the 90% passive income exception.

Income Taxation of the Partnerships and Their Partners

We own 98.7% of the interests in our Operating Partnership and certain subsidiary partnerships. Entities that we own 100% of the interests in (directly or through other disregarded entities) will be treated as disregarded entities. In addition we may hold interests in partnership or LLCs that are not disregarded entities (the “Partnership” or “Partnerships”).

Partners, Not the Partnerships, Subject to Tax. A Partnership is not a taxable entity for federal income tax purposes. We will therefore take into account our allocable share of each Partnership’s income, gains, losses, deductions, and credits for each taxable year of the Partnership ending with or within our taxable year, even if we receive no distribution from the Partnership for that year or a distribution less than our share of taxable income. Similarly, even if we receive a distribution, it may not be taxable if the distribution does not exceed our adjusted tax basis in our interest in the Partnership.

Partnership Allocations. Although a partnership agreement generally will determine the allocation of income and losses among partners, allocations will be disregarded for tax purposes if they do not comply with the provisions of the federal income tax laws governing partnership allocations. If an allocation is not recognized for federal income tax purposes, the item subject to the allocation will be reallocated in accordance with the partners’ interests in the Partnership, which will be determined by taking into account all of the facts and circumstances relating to the economic arrangement of the partners with respect to such item. Each Partnership’s allocations of taxable income, gain, and loss are intended to comply with the requirements of the federal income tax laws governing partnership allocations.

Sale of a Partnership’s Property. Generally, any gain realized by a Partnership on the sale of property held for more than one year will be long-term capital gain, except for any portion of the gain treated as depreciation or cost recovery recapture. Conversely, our share of any Partnership gain from the sale of inventory

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or other property held primarily for sale to customers in the ordinary course of the Partnership’s trade or business will be treated as income from a prohibited transaction subject to a 100% tax. Income from a prohibited transaction may have an adverse effect on our ability to satisfy the gross income tests for REIT status. See “—Requirements for Qualification.” We do not presently intend to acquire or hold, or to allow any Partnership to acquire or hold, any property that is likely to be treated as inventory or property held primarily for sale to customers in the ordinary course of our, or the Partnership’s, trade or business.

State and Local Taxes. We and/or our shareholders may be subject to taxation by various states and localities, including those in which we or a shareholder transacts business, owns property or resides. The state and local tax treatment may differ from the federal income tax treatment described above. Consequently, shareholders should consult their own tax advisors regarding the effect of state and local tax laws upon an investment in the common shares.

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ERISA CONSIDERATIONS

General

The following is a summary of certain material considerations arising under the Employee Retirement Income Securities Act of 1974, as amended, or ERISA, and the prohibited transaction provisions of Section 4975 of the Code that may be relevant to a prospective purchaser. The following summary may also be relevant to a prospective purchaser that is not an employee benefit plan which is subject to ERISA, but is a tax-qualified retirement plan or an individual retirement account, individual retirement annuity, medical savings account or education individual retirement account, which we refer to collectively as an “IRA.” This discussion does not address all aspects of ERISA or Section 4975 of the Code or, to the extent not preempted, state law that may be relevant to particular employee benefit plan stockholders in light of their particular circumstances, including plans subject to Title I of ERISA, other employee benefit plans and IRAs subject to the prohibited transaction provisions of Section 4975 of the Code, and governmental, church, foreign and other plans that are exempt from ERISA and Section 4975 of the Code but that may be subject to other federal, state, local or foreign law requirements.

A fiduciary making the decision to invest in shares of our common stock on behalf of a prospective purchaser which is an ERISA plan, a tax qualified retirement plan, an IRA or other employee benefit plan is advised to consult its legal advisor regarding the specific considerations arising under ERISA, Section 4975 of the Code, and, to the extent not preempted, state law with respect to the purchase, ownership or sale of shares of our common stock by the plan or IRA.

Plans should also consider the entire discussion under the heading “Federal Income Tax Considerations,” as material contained in that section is relevant to any decision by an employee benefit plan, tax-qualified retirement plan or IRA to purchase our common stock.

Employee Benefit Plans, Tax-Qualified Retirement Plans and IRAs

Each fiduciary of an “ERISA plan,” which is an employee benefit plan subject to Title I of ERISA, should carefully consider whether an investment in shares of our common stock is consistent with its fiduciary responsibilities under ERISA. In particular, the fiduciary requirements of Part 4 of Title I of ERISA require that:

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an ERISA plan make investments that are prudent and in the best interests of the ERISA plan, its participants and beneficiaries;

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an ERISA plan make investments that are diversified in order to reduce the risk of large losses, unless it is clearly prudent for the ERISA plan not to do so;

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an ERISA plan’s investments are authorized under ERISA and the terms of the governing documents of the ERISA plan; and

•

the fiduciary not cause the ERISA plan to enter into transactions prohibited under Section 406 of ERISA (and certain corresponding provisions of the Code).

In determining whether an investment in shares of our common stock is prudent for ERISA purposes, the appropriate fiduciary of an ERISA plan should consider all of the facts and circumstances, including whether the investment is reasonably designed, as a part of the ERISA plan’s portfolio for which the fiduciary has investment responsibility, to meet the objectives of the ERISA plan, taking into consideration the risk of loss and opportunity for gain or other return from the investment, the diversification, cash flow and funding requirements of the ERISA plan, and the liquidity and current return of the ERISA plan’s portfolio. A fiduciary should also take into account the nature of our business, the length of our operating history and other matters described in the section entitled “Risk Factors.”

The fiduciary of an IRA or an employee benefit plan not subject to Title I of ERISA because it is a governmental or church plan, if no election has been made under Section 410(d) of the Code, or because it does not cover

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common law employees should consider that it may only make investments that are either authorized or not prohibited by the appropriate governing documents, not prohibited under Section 4975 of the Code and permitted under applicable state law.

Our Status Under ERISA

In some circumstances where an ERISA plan holds an interest in an entity, the assets of the entity are deemed to be ERISA plan assets. This is known as the “look-through rule.” Under those circumstances, the obligations and other responsibilities of plan sponsors, plan fiduciaries and plan administrators, and of parties in interest and disqualified persons, under Parts 1 and 4 of Subtitle B of Title I of ERISA and Section 4975 of the Code, as applicable, may be expanded, and there may be an increase in their liability under these and other provisions of ERISA and the Code (except to the extent (if any) that a favorable statutory or administrative exemption or exception applies). For example, a prohibited transaction may occur if our assets are deemed to be assets of investing ERISA plans and persons who have certain specified relationships to an ERISA plan (“parties in interest” within the meaning of ERISA, and “disqualified persons” within the meaning of the Code) deal with these assets. Further, if our assets are deemed to be assets of investing ERISA plans, any person that exercises authority or control with respect to the management or disposition of the assets is an ERISA plan fiduciary.

ERISA plan assets are not defined in ERISA or the Code, but the United States Department of Labor has issued regulations that outline the circumstances under which an ERISA plan’s interest in an entity will be subject to the look-through rule. The Department of Labor regulations apply to the purchase by an ERISA plan of an “equity interest” in an entity, such as stock of a REIT. However, the Department of Labor regulations provide an exception to the look-through rule for equity interests that are “publicly offered securities.”

Under the Department of Labor regulations, a “publicly offered security” is a security that is:

•

freely transferable;

•

part of a class of securities that is widely held; and

•

either part of a class of securities that is registered under section 12(b) or 12(g) of the Exchange Act or sold to an ERISA plan as part of an offering of securities to the public pursuant to an effective registration statement under the Securities Act, and the class of securities of which this security is a part is registered under the Exchange Act within 120 days, or longer if allowed by the SEC, after the end of the fiscal year of the issuer during which this Offering of these securities to the public occurred.

Whether a security is considered “freely transferable” depends on the facts and circumstances of each case. Under the Department of Labor regulations, if the security is part of an offering in which the minimum investment is $10,000 or less, then any restriction on or prohibition against any transfer or assignment of the security for the purposes of preventing a termination or reclassification of the entity for federal or state tax purposes will not ordinarily prevent the security from being considered freely transferable. Additionally, limitations or restrictions on the transfer or assignment of a security which are created or imposed by persons other than the issuer of the security or persons acting for or on behalf of the issuer will ordinarily not prevent the security from being considered freely transferable.

A class of securities is considered “widely held” if it is a class of securities that is owned by 100 or more investors independent of the issuer and of one another. A security will not fail to be “widely held” because the number of independent investors falls below 100 subsequent to the initial public offering as a result of events beyond the issuer’s control.

The shares of our common stock offered in this prospectus may meet the criteria of the publicly offered securities exception to the look-through rule. First, the common stock could be considered to be freely transferable, as the minimum investment will be less than $10,000 and the only restrictions upon its transfer are those generally permitted under the Department of Labor regulations, those required under federal tax laws to maintain our status as a REIT, resale restrictions under applicable federal securities laws with respect to securities not purchased

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pursuant to this prospectus and those owned by our officers, directors and other affiliates, and voluntary restrictions agreed to by the selling stockholder regarding volume limitations.

Second, we expect (although we cannot confirm) that our common stock will be held by 100 or more investors, and we expect that at least 100 or more of these investors will be independent of us and of one another.

Third, the shares of our common stock will be part of an offering of securities to the public pursuant to an effective registration statement under the Securities Act and the common stock is registered under the Exchange Act.

In addition, the Department of Labor regulations provide exceptions to the look-through rule for equity interests in some types of entities, including any entity which qualifies as either a “real estate operating company” or a “venture capital operating company.”

Under the Department of Labor regulations, a “real estate operating company” is defined as an entity which on testing dates has at least 50% of its assets, other than short-term investments pending long-term commitment or dividend to investors, valued at cost:

•

invested in real estate which is managed or developed and with respect to which the entity has the right to substantially participate directly in the management or development activities; and

•

which, in the ordinary course of its business, is engaged directly in real estate management or development activities.

According to those same regulations, a “venture capital operating company” is defined as an entity which on testing dates has at least 50% of its assets, other than short-term investments pending long-term commitment or dividend to investors, valued at cost:

•

invested in one or more operating companies with respect to which the entity has management rights; and

•

which, in the ordinary course of its business, actually exercises its management rights with respect to one or more of the operating companies in which it invests.

We have not endeavored to determine whether we will satisfy the “real estate operating company” or “venture capital operating company” exception.

Prior to making an investment in the shares offered in this prospectus, prospective employee benefit plan investors (whether or not subject to ERISA or section 4975 of the Code) should consult with their legal and other advisors concerning the impact of ERISA and the Code (and, particularly in the case of non-ERISA plans and arrangements, any additional state, local and foreign law considerations), as applicable, and the potential consequences in their specific circumstances of an investment in such shares.

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UNDERWRITING

Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. are acting as joint book-running managers and, together with J.P. Morgan Securities Inc., UBS Securities LLC, ING Financial Markets LLC, KeyBanc Capital Markets, a division of McDonald Investments Inc., and Wells Fargo Securities, LLC, are acting as representatives of the underwriters named below. Under the terms and subject to the conditions contained in an underwriting agreement dated , 2004, we have agreed to sell to the underwriters named below the following respective numbers of shares of our common stock:


Underwriter		Number of Shares
Citigroup Global Markets Inc.
Deutsche Bank Securities Inc.
J.P. Morgan Securities Inc.
UBS Securities LLC
ING Financial Markets LLC
KeyBanc Capital Markets, a division of McDonald Investments Inc.
Wells Fargo Securities, LLC





Total		12,100,000

The underwriting agreement provides that the underwriters are obligated to purchase all of the shares of our common stock in this Offering if any are purchased, other than those shares covered by the overallotment option described below. The underwriting agreement also provides that, if an underwriter defaults, the purchase commitments of non-defaulting underwriters may be increased or this Offering may be terminated. The underwriting agreement provides that the obligations of the underwriters to purchase the shares included in this Offering are subject to the approval of legal matters by counsel and to other conditions.

The underwriters propose to offer some of the shares directly to the public at the Offering price set forth on the cover page of this prospectus and some of the shares to dealers at the Offering price less a concession not to exceed $ per share. The underwriters may allow, and dealers may reallow, a concession not to exceed $ per share on sales to other dealers. If all of the shares are not sold to the public at the Offering price, the representatives may change the Offering price and the other selling terms. The representatives have advised us that the underwriters do not intend sales to discretionary accounts to exceed 5% of the total number of shares of our common stock offered by them.

We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to 1,815,000 additional shares of common stock at the Offering price less the underwriting discount. The underwriters may exercise the option solely for the purpose of covering overallotments, if any, in connection with our Offering. To the extent the option is exercised, each underwriter must purchase a number of additional shares approximately proportionate to that underwriter’s initial purchase commitment.

201

The following table summarizes the underwriting discounts and commissions and estimated expenses we are to pay to the underwriters in connection with this Offering. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares of common stock:

Per Share

Total

No
Exercise

Full
Exercise

No
Exercise

Full
Exercise

Underwriting discounts and
commissions paid by us

Expenses payable by us

We estimate that our out-of-pocket expenses for this Offering will be approximately $5.1 million. In addition, Citigroup and Deutsche Bank Securities will receive, in the aggregate, financial advisory fees of $1.5 million.

For a period of 9 months after the date of this prospectus, we have agreed that we will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the SEC a registration statement (except a registration statement on Form S-8 relating to the 2004 Incentive Award Plan or a registration statement on Form S-4 relating to our acquisition of another entity) under the Securities Act relating to, any additional shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, including, without limitation, Units, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, without the prior written consent of Citigroup and Deutsche Bank Securities other than:

•

grants of stock options, PIUs, RSUs or restricted stock to employees, consultants or directors pursuant to the terms of the 2004 Incentive Award Plan in effect as of the date of this prospectus;

•

issuances of our common stock pursuant to a dividend reinvestment plan (if any); or

•

issuances of our common stock, Units or securities convertible into or exchangeable or exercisable for shares of our common stock in connection with other acquisitions of interests in real property or real property companies or entities owning interests in real property.

Our officers and directors have agreed, subject to certain exceptions (including a bona fide gift or a transfer for the benefit of an immediate family member), that they will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, including, without limitation, Units, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, whether any of these transactions are to be settled by delivery of our common stock or other securities, in cash or otherwise, or publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of Citigroup and Deutsche Bank Securities for a period of 14 months after the date of this prospectus. In addition, our officers and directors have agreed not to make any demand for, or exercise any right with respect to, the registration of our common stock or any securities convertible into or exercisable or exchangeable for our common stock without the prior written consent of Citigroup and Deutsche Bank Securities.

Citigroup and Deutsche Bank Securities in their joint discretion may release any of the securities subject to lock-up agreements at any time without notice. In the event that either (x) during the last 17 days of the 9- and 14-month periods referred to above, we issue an earnings release or a press release announcing a significant event or (y) prior to the expiration of such 9- and 14-month periods, we announce that we will release earnings or issue a press release announcing a significant event during the 17-day period beginning on the last day of such 9- and 14-month periods, the restrictions described above shall continue to apply until the expiration of the 17-day period beginning on the date of the earnings or the press release.

At our request, the underwriters have reserved up to 5% of the shares of common stock offered hereby for sale at the Offering price to our employees, directors and officers, others who are associated with us and certain of their friends and family. Individuals who purchase these shares will be subject to a 30-day lock-up period, except our directors and officers who are otherwise subject to the 14-month lock-up described above. The number of shares

202

available for sale to the general public will be reduced by the number of reserved shares sold to these persons. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same basis as all other shares offered in by this prospectus. We have agreed to indemnify the underwriters against certain liabilities and expenses, including liabilities under the Securities Act, in connection with the sales of the direct shares.

Our common stock has been approved for listing on the NYSE, subject to official notice of issuance, under the symbol “ACC.” In connection with the listing of our common stock on the NYSE, the underwriters have undertaken to sell the shares of common stock to ensure that the NYSE distribution standards are met.

Prior to this Offering, there has been no public market for our common stock. Consequently, the Offering price for the shares will be determined by negotiations between us and the representatives. Among the factors to be considered in determining the Offering price were:

•

our record of operations;

•

our management;

•

our estimated net income;

•

our estimated funds from operations;

•

our estimated cash available for distribution;

•

our anticipated dividend yield;

•

our growth prospects;

•

the current market valuations, financial performance and dividend yields of publicly traded companies considered by us and the underwriters to be comparable to us; and

•

the current state of the commercial real estate industry, the student housing industry and the economy as a whole.

We cannot assure you, however, that the prices at which our shares will sell in the public market after this Offering will not be lower than the Offering price or that an active trading market in our common stock will develop and continue after this Offering.

In connection with this Offering, the underwriters may engage in stabilizing transactions, overallotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act.

•

Stabilizing transactions permit bids to purchase or the purchase of the underlying security while this distribution of the common stock offered pursuant to this prospectus is in progress so long as the stabilizing bids do not exceed a specified maximum.

•

Overallotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the overallotment option. The underwriters may close out any covered short position by either exercising their overallotment option and/or purchasing shares in the open market.

•

Syndicate covering transactions involve purchases of our common stock in the open market after the distribution of such stock has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may

203

purchase shares through the overallotment option. If the underwriters sell more shares than could be covered by the overallotment option, a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in this Offering.

The underwriters also may impose a penalty bid. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the representatives repurchase shares originally sold by that syndicate member in order to cover syndicate short positions or make stabilizing purchases.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the NYSE or otherwise and, if commenced, may be discontinued at any time.

A prospectus in electronic format may be made available on the websites maintained by one or more of the underwriters, or selling group members, if any, participating in this Offering. The representatives may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make Internet distributions on the same basis as other allocations. The representatives may agree to allocate a number of shares to underwriters for sale to their online brokerage account holders.

We have obtained commitments for a $75 million senior secured revolving credit facility from affiliates of Citigroup Global Markets Inc. and Deutsche Bank Securities Inc., as joint lead arrangers, which we intend to enter into concurrently with this Offering to, among other things, fund future property acquisitions and working capital needs. We may increase the size of the revolving credit facility by up to an additional $25 million. Closing of this revolving credit facility is expected to be subject to several conditions, including consummation of this Offering, the absence of any material adverse change and satisfactory completion of the lenders’ legal and financial due diligence. The facility is expected to have a maximum term of 36 months. The facility is expected to bear interest at a variable rate, at our option, based upon a base rate or one-, two-, three- or six-month LIBOR plus, in each case, a spread based on our total leverage. The revolving credit facility is expected to include customary affirmative, negative covenants, and financial covenants, including EBITDA, net worth and leverage tests. Our revolving credit facility is also expected to contain covenants that restrict our ability to pay dividends or other amounts to our stockholders unless certain tests are satisfied.

In May 2004, we obtained a $3.0 million line of credit with affiliates of Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. As of June 30, 2004, approximately $1.7 million of borrowings are outstanding under this facility and bear interest at the prime rate, which at June 30, 2004 was 4.25%. We will retire the facility upon repayment of all outstanding borrowings under our existing line of credit with funds from our revolving credit facility.

We have obtained a total of approximately $72.5 million in construction loans from affiliates of KeyBanc Capital Markets, one of the underwriters. As of June 30, 2004, approximately $52.1 million of borrowings are outstanding under the loans which bear interest at a weighted average rate of 5.2%. We will repay all amounts outstanding under the construction loans with the proceeds from the Offering.

204

To the extent proceeds are used to repay senior or secured indebtedness, proceeds from future asset sales by Frontline may be available for distribution to BT Holdings (NY), Inc. and the other unsecured creditors. Deutsche Bank Securities Inc. may therefore have an interest in the successful completion of this Offering beyond the underwriting discounts and financial advisory fees that it will receive.

We and our Operating Partnership have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make because of any of those liabilities. The underwriters may also be entitled to indemnification under the Contribution Agreement.

LEGAL MATTERS

The validity of our shares of common stock has been passed upon for us by Shaw Pittman LLP. Willkie Farr & Gallagher LLP is providing an opinion relating to tax consequences. Sidley Austin Brown & Wood LLP will act as counsel to the underwriters. As to certain matters of Maryland law, Willkie Farr & Gallagher LLP and Sidley Austin Brown & Wood LLP may rely upon the opinion of Shaw Pittman LLP.

EXPERTS

The combined financial statements of American Campus Communities Entities at December 31, 2003 and 2002, and for each of the three years in the period ended December 31, 2003, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young, LLP, independent auditors, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such report given upon the authority of such firm as experts in accounting and auditing.

Factual information with respect to the student housing market has been included herein and in the registration statement in reliance upon the report of the Rosen Consulting Group and statistics used therein provided by Peterson’s, a part of the Thomson Corporation, and upon the authority of said firms as experts in the national student housing market.

205

GLOSSARY

Unless the context otherwise requires, the following capitalized terms shall have the meanings set forth below for purposes of this prospectus:

“ACBM” means asbestos-containing building materials.

“American Campus-Titan Properties” means the properties owned by our American Campus-Titan joint venture prior to the Formation Transactions.

“Formation Transactions” means the transactions designed to consolidate the ownership interests in the Properties in the Company, to facilitate this Offering and to enable the Company to qualify as a REIT for federal income tax purposes commencing with its taxable year ending December 31, 2004.

“LAMS” means our lease administration and marketing software for the student housing industry.

“NAREIT” means the National Association of Real Estate Investment Trusts.

“NCES” means the U.S. Department of Education’s National Center for Educational Statistics.

“Predecessor Entities” or “Predecessor” means the general and limited partnerships and the limited liability companies that owned the Properties prior to the Formation Transactions.

“PRPs” means potentially responsible parties.

“REIT” means a real estate investment trust as defined under the Code.

“Restricted Stock Units” or “RSUs” are a security that entitles the holder to receive restricted stock in the Company at a future date specified therein.

“Rosen” or “RCG” means Rosen Consulting Group, LLC.

“rsf” means rentable square foot.

“Titan” means Titan Investments II, LLC, a third party developer of off-campus properties.

206

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration statement on Form S-11, including exhibits, schedules and amendments filed with this registration statement, under the Securities Act with respect to the shares of our common stock to be sold in this Offering. This prospectus does not contain all of the information set forth in the registration statement and exhibits and schedules to the registration statement. For further information with respect to our Company and the shares of our common stock to be sold in this Offering, reference is made to the registration statement, including the exhibits to the registration statement. Statements contained in this prospectus as to the contents of any contract or other document referred to in this prospectus are not necessarily complete. Copies of the registration statement, including the exhibits and schedules to the registration statement, may be examined without charge at the public reference room of the Securities and Exchange Commission, 450 Fifth Street, N.W., Room 1024, Washington, DC 20549. Information about the operation of the public reference room may be obtained by calling the Securities and Exchange Commission at 1-800-SEC-0300. Copies of all or a portion of the registration statement can be obtained from the public reference room of the Securities and Exchange Commission upon payment of prescribed fees. Our Securities and Exchange Commission filings, including our registration statement, are also available to you on the Securities and Exchange Commission’s Web site, www.sec.gov.

AS A RESULT OF THIS OFFERING, WE WILL BECOME SUBJECT TO THE INFORMATION AND REPORTING REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND WILL FILE ANNUAL, QUARTERLY AND OTHER PERIODIC REPORTS AND PROXY STATEMENTS AND WILL MAKE AVAILABLE TO OUR STOCKHOLDERS QUARTERLY REPORTS FOR THE FIRST THREE QUARTERS OF EACH FISCAL YEAR CONTAINING UNAUDITED INTERIM FINANCIAL INFORMATION.

207

I NDEX TO FINANCIAL STATEMENTS


American Campus Communities, Inc.

Unaudited Pro Forma Condensed Consolidated Financial Statements

Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2004 (Unaudited)		F-3
Pro Forma Condensed Consolidated Statement of Operations for the Six Months Ended June 30, 2004 (unaudited)		F-4
Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2003 (unaudited)		F-5
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)		F-6

American Campus Communities Predecessor

Combined Financial Statements

Report of Independent Registered Public Accounting Firm		F-12
Combined Balance Sheets at June 30, 2004 (unaudited) and December 31, 2003 and 2002		F-13
Combined Statements of Operations for the Six Months Ended June 30, 2004 and 2003 (unaudited) and the Years Ended December 31, 2003, 2002, and 2001		F-14
Combined Statements of Changes in Owners’ Equity for the Six Months Ended June 30, 2004 (unaudited) and the Years Ended December 31, 2003, 2002, and 2001		F-15
Combined Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2003 (unaudited) and the Years Ended December 31, 2003, 2002, and 2001		F-16
Notes to Combined Financial Statements		F-17

F-1

AMERICAN CAMPUS COMMUNITIES INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The unaudited pro forma condensed consolidated financial statements as of June 30, 2004, and for the six months ended June 30, 2004 and for the year ended December 31, 2003, are presented as if this Offering, the formation transactions and the debt repayment transactions all had occurred on June 30, 2004 for the pro forma condensed consolidated balance sheet and on the first day of the period presented for the pro forma condensed consolidated statements of operations.

The pro forma adjustments include the repayment of certain debt, acquisition of minority ownership of certain assets, and a provision for income tax related to the establishment of a taxable REIT subsidiary.

The pro forma condensed consolidated financial statements should be read in conjunction with the combined historical financial statements of American Campus Communities Predecessor (the “Predecessor”), including the notes thereto, included elsewhere in the Prospectus. The pro forma condensed consolidated financial statements do not purport to represent the financial position or the results of operations that would actually have occurred assuming that the completion of this Offering, the formation transactions and the debt repayment transactions all had occurred on June 30, 2004 or on the first day of the periods presented, respectively; nor do they purport to project the financial position or results of operations of American Campus Communities Inc. as of any future date nor for any future period.

F-2

AMERICAN CAMPUS COMMUNITIES INC.

UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED BALANCE SHEET

JUNE 30, 2004

(In Thousands)


	American Campus Predecessor Historical		American Campus Communities, Inc.		Distribution of Properties			Acquisition of Minority Interests			Repayment of Debt			Distribution to Predecessor Owners			Grant of Profits Interest Units			Other Pro Forma Adjustments			Company Pro Forma Prior to The Offering			This Offering			Company Pro Forma
	(A)		(B)		(C)			(D)			(F)			(G)			(I)			(J)						(E)
Assets:
Student housing properties, net	$	330,379	$	—	$	(13,512	)	$	5,726		$	—		$	—		$	—		$	—		$	322,593		$	—		$	322,593
Other assets, net		30,089		—		(419	)		—			(109,880	)		—			—			3,583						—
									844	[H]		(20	)		—			—			(2,113	)					222,060
												(349	)		(1,500	)		—			—			(79,765	)		(100,646	)		41,649

Total assets	$	360,468	$	—	$	(13,931	)	$	6,570		$	(110,249	)	$	(1,500	)	$	—		$	1,470		$	242,828		$	121,414		$	364,242

Liabilities and equity:
Construction debt and construction accounts payable	$	61,828	$	—	$	—		$	—		$	(61,828	)	$	—		$	—		$	—		$	—		$	—		$	—
Long-term financing		249,837		—		(11,397	)		5,726			(45,991	)		—			—			—			—			—
				—		—			844	[H]		—			—			—			—			199,019			—			199,019
Other liabilities		21,253		—		(335	)		—			(1,553	)		100,646			—			—						—
		—		—		—			—			(20	)		—			—			—			119,991			(100,646	)		19,345

Total liabilities		332,918		—		(11,732	)		6,570			(109,392	)		100,646			—			—			319,010			(100,646	)		218,364

Minority interests		194		—		—			(194	)		—			—			1,857			—			1,857			—			1,857

Common Stock		—		—		—			—			—			—			—			—			—			121			121
Additional paid in capital		27,356		—		(2,199	)		194			(857	)		(102,146	)		(1,857	)		1,470			(78,039	)		221,939			143,900

Total owners’ equity		27,356		—		(2,199	)		194			(857	)		(102,146	)		(1,857	)		1,470			(78,039	)		222,060			144,021

Total liabilities and owners’ equity	$	360,468	$	—	$	(13,931	)	$	6,570		$	(110,249	)	$	(1,500	)	$	—		$	1,470		$	242,828		$	121,414		$	364,242

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

F-3

AMERICAN CAMPUS COMMUNITIES INC.

UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2004

(In Thousands, Except for Share and Per Share Information)


	American Campus Predecessor Historical			American Campus Communities Inc.		Distribution Of Properties			Acquisition Of Minority Interests			Repayment Of Debt		Other Pro Forma Adjustments			Grant of Profit Interest Units			Company Pro Forma Prior to The Offering			This Offering		Company Pro Forma
	(AA)			(BB)		[CC]			[DD]			[FF]					[EE]						[EE]
Revenues:
Rental revenue	$	25,529		$	—	$	(1,000	)	$	—		$	—	$	—		$	—		$	24,529		$	—	$	24,529
Third party development and management services		4,974			—		24			—			—		—			—			4,998			—		4,998
Other income		—			—		(8	)		—			—		—			—			(8	)		—		(8	)

Total revenues		30,503			—		(984	)		—			—		—			—			29,519			—		29,519

Operating expenses:
Facility operating expenses		11,753			—		(589	)		—			—		—			—			11,164			—		11,164
Third party development and management services		2,791			—		—			—			—		—			—			2,791			—		2,791
General and administrative		1,045			—		—			—			—		750	[GG]		—			1,795			—		1,795
Depreciation		4,706			—		(175	)		96			—		—			—			4,627			—		4,627
Ground lease expense		396			—		—			—			—		—			—			396			—		396

Total operating expenses		20,691			—		(764	)		96			—		750			—			20,773			—		20,773

Operating income		9,812			—		(220	)		(96	)		—		(750	)		—			8,746			—		8,746

Nonoperating income and (expenses):
Interest income		25			—		—			—			—		—			—			25			—		25
Interest expense		(9,070	)		—		425			(213	)		1,559		—			—			(7,299	)		—		(7,299	)
Amortization – deferred financing costs		(340	)		—		1			—			115		—			—			(224	)		—		(224	)
Other nonoperating income		58			—		—			—			—		—			—			58			—		58

Total nonoperating expenses, net		(9,327	)		—		426			(213	)		1,674		—			—			(7,440	)		—		(7,440	)
Income (loss) before taxes and minority interests		485			—		206			(309	)		1,674		(750	)		—			1,306			—		1,306
Provision for income taxes		—			—		—			—			—		(836	)[HH]		—			(836	)		—		(836	)

Income (loss) before minority interests		485			—		206			(309	)		1,674		(1,586	)		—			470			—		470
Minority interest		44			—		—			(44	)		—		—			(6	)		(6	)		—		(6	)

Net income (loss)	$	529		$	—	$	206		$	(353	)	$	1,674	$	(1,586	)	$	(6	)	$	464		$	—	$	464

Pro forma basic earnings per share (unaudited)(1)																									$	0.04
Pro forma diluted earnings per share (unaudited)(2)																									$	0.04
Pro forma weighted average common shares outstanding – basic (unaudited)																										12,100,000
Pro forma weighted average common shares outstanding – diluted (unaudited)																										12,256,061

F-4

AMERICAN CAMPUS COMMUNITIES INC.

UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2003

(In Thousands, Except for Share and Per Share Information)


	American Campus Predecessor Historical			American Campus Communities Inc.		Distribution Of Properties			Acquisition Of Minority Interests			Repayment Of Debt		Other Pro Forma Adjustments			Grant of Profits Interest Units		Subtotal Of Preoffering Adjustments			This Offering		Company Pro Forma
	(AA)			(BB)		[CC]			[DD]			[FF]					[EE]					[EE]
Revenues:
Rental revenue	$	50,765		$	—	$	(2,202	)	$	—		$	—	$	—		$	—	$	48,563		$	—	$	48,563
Third party development and management services		9,128			—		53			—			—		—			—		9,181			—		9,181
Other income		28			—		(63	)		—			—		—			—		(35	)		—		(35	)

Total revenues		59,921			—		(2,212	)		—			—		—			—		57,709			—		57,709
Operating expenses:
Facility operating expenses		24,503			—		(1,253	)		—			—		—			—		23,250			—		23,250
Third party development and management services		5,389			—		—			—			—		—			—		5,389			—		5,389
General and administrative		2,778			—		—			—			—		1,500	[GG]		—		4,278			—		4,278
Depreciation		9,214			—		(347	)		191			—		—			—		9,058			—		9,058
Ground lease expense		584			—		—			—			—		—			—		584			—		584

Total operating expenses		42,468			—		(1,600	)		191			—		1,500			—		42,559			—		42,559

Operating income (loss)		17,453			—		(612	)		(191	)		—		(1,500	)		—		15,150			—		15,150
Nonoperating income and (expenses):
Interest income		84			—		(13	)		—			—		—			—		71			—		71
Interest expense		(17,911	)		—		858			(426	)		3,117		—			—		(14,362	)		—		(14,362	)
Amortization – deferred financing costs		(586	)		—		2			—			231		—			—		(353	)		—		(353	)

Total nonoperating expenses, net		(18,413	)		—		847			(426	)		3,348		—			—		(14,644	)		—		(14,644	)

Income (loss) before taxes and minority interests		(960	)		—		235			(617	)		3,348		(1,500	)		—		506			—		506
Provision for income taxes		—			—		—			—			—		(702	)[HH]		—		(702	)		—		(702	)

Income (loss) before minority interests		(960	)		—		235			(617	)		3,348		(2,202	)		—		(196	)		—		(196	)
Minority interest		16			—		—			(16	)		—		—			3		3			—		3

Net income (loss)	$	(944	)	$	—	$	235		$	(633	)	$	3,348	$	(2,202	)	$	3	$	(193	)	$	—	$	(193	)

Pro forma basic earnings per share (unaudited)(1)																								$	(0.02	)
Pro forma diluted earnings per share (unaudited)(2)																								$	(0.02	)
Pro forma weighted average common shares outstanding – basic (unaudited)																									12,100,000
Pro forma weighted average common shares outstanding – diluted (unaudited)																									12,256,061

(1)

(2)

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

F-5

AMERICAN CAMPUS COMMUNITIES, INC.

NOTES TO PRO FORMA

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In Thousands except share and per share information)

1. Adjustments to the Pro Forma Condensed Consolidated Balance Sheet.

[A] Reflects the unaudited historical combined condensed balance sheet of American Campus Communities Predecessor (“Predecessor”) as of June 30, 2004. Predecessor reflects the combination of RAP Student Housing Properties, LLC (RAPSH) and subsidiaries, which includes majority ownership in nine student housing properties, a 95% equity and 68% profit ownership interest in American Campus–Titan, LLC (“Titan”), RFG Capital Management Partners, LP, (“RFG”), its majority ownership interest in American Campus Communities, L.L.C. (“ACCL”) and its various wholly owned subsidiaries who serve as general partners to certain entities owned by RAPSH. RSVP-ACT, LLC (“ACT”) and a 95% equity and a 68% profit ownership interest in American Campus–Titan II, LLC and subsidiaries (“Titan II”). RAPSH, RFG and ACT are majority owned through subsidiaries by Reckson Strategic Venture Partners, LLC (“RSVP”).

[B] American Campus Communities, Inc. (the “Company”) was formed on March 9, 2004 for the purpose of continuing and expanding the business activities of the Predecessor. Prior to this offering, this entity had no assets, liabilities, equity, or operations.

Pursuant to the Formation Transactions among the owners of the Predecessor, RSVP will contribute to Reckson Assets Partners, LLC (“RAP”) its interest in ACCL, its interest in Titan II and certain of its off-campus properties. RAP will then contribute these interests to RAPSH. Consequently, RAPSH will own indirectly all the interests in ACCL. ACCL will be converted to American Campus Communities Services, Inc. and will serve as a taxable REIT subsidiary.

In connection with this Offering, the Operating Partnership will contribute a substantial portion of the net offering proceeds to RAPSH to redeem the interests owned by RAP in RAPSH, resulting in the Operating Partnership owning all of the interests in RAPSH.

We intend to be taxed as a REIT under Sections 856 through 860 of the Code, commencing with our taxable year ending December 31, 2004. We believe that our organization and proposed method of operation will enable us to meet the requirements for qualification and taxation as a REIT for federal income tax purposes. To maintain REIT status, we must meet a number of organization and operations requirements, including a requirement that we annually distribute at least 90% of our REIT taxable income to our stockholders. As a REIT, we generally will not be subject to federal income tax on REIT taxable income we currently distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax at regular corporate rates. Even if we qualify for taxation as a REIT, we may be subject to some federal, state and local taxes on our income or property, and the income of our taxable REIT subsidiary will be subject to taxation at normal corporate rates.

Upon completion of the transaction, we will conduct substantially all our activities through our Operating Partnership and our taxable REIT subsidiary, American Campus Communities Services, Inc. (“Services Company”).

Upon consummation of this offering and the formation transactions, the Company, as general partner, will own 99% of the Operating Partnership and will have control over major decisions of the Operating Partnership, including decisions related to the sale or refinancing of the properties.

F-6

AMERICAN CAMPUS COMMUNITIES, INC.

NOTES TO PRO FORMA

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Adjustments to the Pro Forma Condensed Consolidated Balance Sheet – (Continued)

Accordingly, the Company will consolidate the assets and liabilities of the Operating Partnership in accordance with AICPA Statement of Position 78-9, Accounting for Investments in Real Estate Ventures (SOP 78-9).

[C]

Pro Forma distribution of three properties to Predecessor owners as reflected in the following table presented as of June 30, 2004:


	Village at Riverside		Village at Boulder Creek		San Bernardino Land		Total
Assets:
Student housing properties, net	$	12,895	$	163	$	454	$	13,512
Other assets, net		419		—		—		419

Total assets	$	13,314	$	163	$	454	$	13,931

Liabilities and Equity:
Long-term financing	$	11,397	$	—	$	—	$	11,397
Other liabilities		327		8		—		335

Total liabilities		11,724		8		—		11,732
Total owners’ equity		1,590		155		454		2,199

Total liabilities and owners’ equity	$	13,314	$	163	$	454	$	13,931

[D]

The minority ownership interest in American Campus–Titan, LLC and American Campus–Titan II, LLC will be acquired simultaneous with the completion of the Offering, an adjustment has been made to eliminate the minority interest included in the historic Predecessor financial statements. The exchange of these minority ownership interests will be accounted for as an acquisition of minority interests and, in accordance with FASB Technical Bulletin 85-5, Issues Relating to Accounting for Business Combinations, these acquisitions will be recorded at fair value and will be financed through an advance on the senior revolving credit facility.

[E]

Offering is expected to include the issuance of 12,100,000 shares of American Campus Communities, Inc. at $.01 par with an assumed offering price of $20 per share.


Proceeds from this offering	$	242,000
Less costs associated with this offering ($16,940 of underwriter’s discount and commissions and $3,000 of other costs)		(19,940	)

Net cash proceeds from offering	$	222,060

Common stock 12,100,000 shares at $0.01 par	$	121
Additional paid in capital		221,939

Total increase in equity	$	222,060

F-7

AMERICAN CAMPUS COMMUNITIES, INC.

NOTES TO PRO FORMA

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Adjustments to the Pro Forma Condensed Consolidated Balance Sheet – (Continued)

[F]

Proceeds from the Offering will be used to repay certain obligations as set forth in the following schedule presented as of June 30, 2004:


Property	Principal		Construction Accounts Payable		Accrued Interest		Prepayment (1) Penalty		Total To Be Paid From Proceeds		Write-Off of Unamortized Deferred Financing Costs (2)
University Village at Fresno(3)	$	11,461	$	1,386	$	91	$	—	$	12,938	$	24
University Village at San Bernardino		14,734		3,323		39		—		18,096		99
University Village at TU–Construction		19,314		5,724		—		—		25,038		—
University Village at TU–Mezzanine		6,550		—		504		—		7,054		90
The Village at Science Drive		19,500		—		79		195		19,774		67
The Village on University		26,491		—		176		313		26,980		69

Total	$	98,050	$	10,433	$	889	$	508	$	109,880	$	349

(1)

Contractual prepayment penalty at June 30, 2004, will vary with rate in place at time of prepayment.

(2)

Balance of unamortized deferred finance costs will be written off upon repayment of related debt.

(3)

Excludes activity related to the fire reconstruction.

[G]

Distribution of cash to RAP as described in Note 1.[B] and final working capital distribution from cash on hand.

[H]

Payment of $844 for financing costs to originate the senior revolving line of credit.

[I]

Reflects the issuance of profit interest units equal to 1.3% of issued common stock to certain members of management at closing of the offering.

[J]

The American Campus Predecessor was not subject to federal income tax and no deferred income taxes have been recorded in prior periods. Upon the Services Company becoming a taxable REIT subsidiary (and thus subject to federal and state income taxes), deferred income taxes are recorded.

The prepaid offering costs as of June 30, 2004 have been reclassified to equity.

Adjustments to the Pro Forma Condensed Consolidated Statement of Operations

(AA)

Reflects the Predecessor historical condensed combined statements of operations for the six months ended June 30, 2004 (unaudited) and for the year ended December 31, 2003 as discussed in greater detail Note 1.[A].

(BB)

See Note 1.[B].

(CC)

Reflects the reduction in historic revenues and expenses for the six months ended June 30, 2004 and for the year ended December 31, 2003 related to The Village at Riverside distributed in conjunction with this Offering.

F-8

AMERICAN CAMPUS COMMUNITIES, INC.

NOTES TO PRO FORMA

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Adjustments to the Pro Forma Condensed Consolidated Statement of Operations – (Continued)


	Six months ended June 30, 2004
	Village at Riverside			Village at Boulder Creek			San Bernardino Land		Total
Revenues:
Rental Revenue	$	1,000		$	—		$	—	$	1,000
Third party development and management services		(24	)		—			—		(24	)
Other income		8			—			—		8

Total revenues		984			—			—		984

Operating Expenses:
Facility operating expenses		589			—			—		589
Depreciation		173			2			—		175

Total operating expenses		762			2			—		764


Operating Income		222			(2	)		—		220

Nonoperating expenses:
Interest income		—			—			—		—
Interest expense		(425	)		—			—		(425	)

Amortization-deferred financing costs		(1	)		—			—		(1	)


Total nonoperating expenses, net		(426	)		—			—		(426	)


Income/(Loss) before taxes and minority interests		(204	)		(2	)		—		(206	)
Provision for income taxes		—			—			—		—

Income/(Loss) before minority interests		(204	)		(2	)		—		(206	)
Minority interests		—			—			—		—

Net income (loss)	$	(204	)	$	(2	)	$	—	$	(206	)


	Year Ended December 31, 2003
	Village at Riverside			Village at Boulder Creek			San Bernardino Land		Total
Revenues:
Rental Revenue	$	2,202		$	—		$	—	$	2,202
Third party development and management services		(53	)		—			—		(53	)
Other income		47			16			—		63

Total revenues		2,196			16			—		2,212

Operating Expenses:
Facility operating expenses		1,253			—			—		1,253
Depreciation		342			5			—		347

Total operating expenses		1,595			5			—		1,600


Operating Income		601			11			—		612

Nonoperating expenses:
Interest income		1			12			—		13
Interest expense		(858	)		—			—		(858	)
Amortization—deferred financing costs		(2	)		—			—		(2	)


Total nonoperating expenses, net		(859	)		12			—		(847	)


Income/(Loss) before taxes and minority interests		(258	)		23			—		(235	)
Provision for income taxes		—			—			—		—

Income/(Loss) before minority interests		(258	)		23			—		(235	)
Minority interests		—			—			—		—

Net income (loss)	$	(258	)	$	23		$	—	$	(235	)

F-9

AMERICAN CAMPUS COMMUNITIES, INC.

NOTES TO PRO FORMA

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Adjustments to the Pro Forma Condensed Consolidated Statement of Operations – (Continued)

(DD)

Acquisition of minority ownership interest in Titan [See Note (D)] resulting in the elimination of the minority interest earnings of $(44) for the six months ending June 30, 2004 and $(16) for the year ended December 31, 2003 and an increase in pro forma interest expense of $213 and $426 for the six months ended June 30, 2004 and the year ended December 31, 2003, respectively as the acquisition will be financed through the Company’s revolving credit facility. Additionally there will be an increase in depreciation expense resulting from increase in basis of related properties.

(EE)

In connection with the Offering, certain members of senior management will be granted a special class of partnership interest in the Operating Partnership referred to as Profit Interest Units (PIU). The fair market value of the PIUs will be charged to expense at the date of grant. The estimated fair market value of $3,121 has not been reflected in the unaudited pro forma consolidated statement of operations because it is non-recurring and indirectly related to the Offering. An adjustment has been made to reflect the 1.3% minority interest in earnings for the six months ending June 30, 2004 and the year ending December 31, 2003.

(FF)

As described at Note [F], certain debt was repaid with proceeds from the Offering. For the purpose of the pro forma statement of operations for the six months ended June 30, 2004, and for the year ending December 31, 2003, these loans were assumed to be repaid on the first day of the period, and the following pro forma reductions in expense were made:


	Six Months Ended June 30, 2004				Year Ended December 31, 2003
	Interest Expense		Deferred Financial Cost Amortization		Interest Expense		Deferred Financial Cost Amortization
University Village at Fresno(1)	$	—	$	—	$	—	$	—
University Village at San Bernardino(1)		—		—		—		—
University Village at TU(1)		—		—		—		—
The Village at Science Drive		494		91		968		181
The Village on University		1,065		24		2,149		50

	$	1,559	$	115	$	3,117	$	231

(1)

Interest expense and amortization of deferred finance cost is capitalized during the period of construction.

(GG)

Certain pro forma adjustments have been made to reflect the increased costs associated with operating as a public company as reflected in the following table:


	Six Months Ended June 30, 2004		Year Ended December 31, 2003
Compensation and staffing	$	106	$	212
Directors and officers liability insurance premiums		268		535
Independent Board of Directors		204		407
Legal expense		172		346

Total	$	750	$	1,500

(HH)

The Services Company has elected, together with us, to be treated as our taxable REIT subsidiary. A taxable REIT subsidiary is a corporation other than a REIT in which we directly or indirectly hold stock, and that has made a joint election with us to be treated as a taxable REIT subsidiary.

F-10

AMERICAN CAMPUS COMMUNITIES, INC.

NOTES TO PRO FORMA

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Adjustments to the Pro Forma Condensed Consolidated Statement of Operations – (Continued)

A taxable REIT subsidiary also includes any corporation other than a REIT with respect to which a taxable REIT subsidiary in which we own an interest owns securities possessing more than 35% of the total voting power or value of the outstanding securities of such corporation. Other than some activities relating to lodging and health care facilities, a taxable REIT subsidiary may generally engage in any business, including the provision of customary or non-customary services to tenants of its parent REIT. A taxable REIT subsidiary is subject to regular federal income tax, and state and local income tax where applicable, as a regular C corporation. In addition, a taxable REIT subsidiary may be prevented from deducting interest on debt funded directly or indirectly by our company if certain tests regarding the taxable REIT subsidiary’s debt to equity ratio and interest expense are not satisfied. An adjustment has been made for the estimated tax provision related to the Services Company for the periods presented.

F-11

Report of Independent Registered Public Accounting Firm

The Owners

American Campus Communities Predecessor

We have audited the accompanying combined balance sheets of American Campus Communities Predecessor (the “Predecessor”), as defined in Note 1, as of December 31, 2003 and 2002, and the related combined statements of operations, changes in owners’ equity and cash flows for each of the three years in the period ended December 31, 2003. These combined financial statements are the responsibility of the Predecessor’s management. Our responsibility is to express an opinion on these combined financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of American Campus Communities Predecessor at December 31, 2003 and 2002, and the combined results of their operations and their cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States.

Austin, Texas

March 26, 2004

/s/ Ernst & Young LLP

F-12

American Campus Communities Predecessor

Combined Balance Sheets


	June 30		December 31,
	2004		2003			2002
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	5,034,748	$	5,227,191		$	10,566,116
Restricted cash and short-term investments		10,691,076		9,503,243			7,466,795
Student contracts receivable, net		1,638,646		2,354,519			1,976,318
Student housing facility subject to lease-held for sale		—		7,975,713			—
Other current assets		4,819,284		7,471,103			3,455,758

Total current assets		22,183,754		32,531,769			23,464,987
Student housing facilities subject to leases, net		68,190,132		69,713,352			69,196,328
Student housing properties, net		262,188,529		222,906,568			210,231,594
Furniture, fixtures and equipment, net		1,119,676		1,009,321			972,551
Deferred financing costs and other assets, net		6,786,051		4,405,449			3,792,903

Total assets	$	360,468,142	$	330,566,459		$	307,658,363

Liabilities and Owners’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	6,609,679	$	6,268,373		$	6,537,658
Accrued interest payable		2,714,038		2,179,711			1,933,730
Security deposits		2,399,342		1,885,760			1,857,982
Deferred rental income		6,211,121		6,590,771			5,625,091
Deferred development and construction revenue		—		727,640			2,106,442
Note payable secured by leasehold held for sale		—		8,079,705			—
Short-term loans and current portion of long-term debt		5,022,421		3,323,687			3,817,065
Amounts payable to related parties		23,012		21,257			—

Total current liabilities		22,979,613		29,076,904			21,877,968
Noncurrent liabilities:
Long-term debt, net of current portion		296,873,640		264,193,582			245,888,689
Construction accounts payable		9,769,331		5,277,614			1,334,654
Deferred development and construction revenue – student housing facilities subject to leases		2,489,116		2,956,739			2,316,267
Other noncurrent liabilities		806,770		1,151,449			430,350

Total noncurrent liabilities		309,938,857		273,579,384			249,969,960

Total liabilities		332,918,470		302,656,288			271,847,928
Minority interests		194,142		252,317			284,369
Owners’ equity:
Accumulated other comprehensive income (loss)		174,972		(197,595	)		(46,311	)
Owners’ equity		27,180,558		27,855,449			35,572,377

Total Owners’ equity		27,355,530		27,657,854			35,526,066

Total liabilities and owners’ equity	$	360,468,142	$	330,566,459		$	307,658,363

See accompanying notes.

F-13

American Campus Communities Predecessor

Combined Statements of Operations


	Six Months Ended June 30,						Years ended December 31,
	2004			2003			2003			2002			2001
	(Unaudited)			(Unaudited)
Revenues:
Student housing rental and ancillary revenue	$	16,722,909		$	17,478,150		$	33,763,147		$	32,314,493		$	26,235,258
Student housing facilities subject to leases-rental and ancillary revenue		8,806,636			8,011,318			17,002,249			16,669,992			13,671,959
Third party development services		3,718,482			3,573,981			7,830,340			3,998,046			1,971,867
Third party development services – student housing facilities subject to leases		483,185			56,469			108,456			1,076,374			906,542
Third party facility management services – affiliates		159,123			188,303			335,333			507,003			708,207
Third party management services		612,932			393,452			853,961			437,664			323,328
Other income		—			27,987			27,987			353,818			87,277

Total revenues		30,503,267			29,729,660			59,921,473			55,357,390			43,904,438

Operating expenses:
Student housing		7,768,236			7,889,140			16,471,830			15,970,522			12,257,881
Student housing facilities subject to leases		3,984,378			3,548,938			8,031,112			8,250,103			6,469,170
Development and management services		2,791,090			2,539,783			5,388,823			4,440,889			3,373,093
General and administrative		1,044,942			840,308			2,778,170			2,000,797			1,658,648
Depreciation		4,706,201			4,591,111			9,213,996			8,411,431			6,950,826
Ground lease		395,725			258,578			584,153			664,228			631,710

Total operating expenses		20,690,572			19,667,858			42,468,084			39,737,970			31,341,328

Operating income		9,812,695			10,061,802			17,453,389			15,619,420			12,563,110

Nonoperating income and (expenses):
Interest income		24,779			47,641			84,215			167,334			350,392
Interest expense		(9,070,599	)		(8,833,030	)		(17,911,127	)		(17,392,223	)		(15,556,501	)
Amortization of deferred financing costs		(339,711	)		(278,485	)		(586,515	)		(564,167	)		(405,927	)
Other nonoperating income		58,267			—			—			—			—

Total nonoperating expenses		(9,327,264	)		(9,063,874	)		(18,413,427	)		(17,789,056	)		15,612,036

Income (loss) before a minority interest		485,431			997,928			(960,038	)		(2,169,636	)		(3,048,926	)
Minority interest		43,675			(21,129	)		15,550			30,189			109,711

Net income (loss)	$	529,106		$	976,799		$	(944,488	)	$	(2,139,447	)	$	(2,939,215	)

See accompanying notes.

F-14

American Campus Communities Predecessor

Combined Statements of Changes in Owners’ Equity

For the Six Months Ended June 30, 2004 (Unaudited)

and the Years ended December 31, 2003, 2002, and 2001


	Owners’ Equity			Accumulated Other Comprehensive Income (Loss)			Total
Owners’ Equity, December 31, 2000	$	25,606,771		$	—		$	25,606,771
Contributions		29,788,016			—			29,788,016
Distributions		(11,913,292	)		—			(11,913,292	)
Comprehensive loss:
Change in fair value of interest rate swap		—			(28,805	)		(28,805	)
Change in fair value of interest rate cap		—			58,086			58,086
Net loss		(2,939,215	)		—			(2,939,215	)

Total comprehensive loss								(2,909,934	)

Owners’ Equity, December 31, 2001		40,542,280			29,281			40,571,561
Contributions		5,363,354			—			5,363,354
Distributions		(8,193,810	)		—			(8,193,810	)
Comprehensive loss:
Expiration of interest rate swap		—			28,805			28,805
Change in fair value of interest rate cap		—			(104,397	)		(104,397	)
Net loss		(2,139,447	)		—			(2,139,447	)

Total comprehensive loss								(2,215,039	)

Owners’ Equity, December 31, 2002		35,572,377			(46,311	)		35,526,066
Contributions		3,538,134			—			3,538,134
Distributions		(10,310,574	)		—			(10,310,574	)
Comprehensive loss:
Change in fair value of interest rate swap		—			(152,956	)		(152,956	)
Change in fair value of interest rate cap		—			1,672			1,672
Net loss		(944,488	)		—			(944,488	)

Total comprehensive loss								(1,095,772	)

Owners’ Equity, December 31, 2003		27,855,449			(197,595	)		27,657,854
Contributions		800,000			—			800,000
Distributions		(2,003,997	)		—			(2,003,997	)
Comprehensive income:
Change in fair value of interest rate swap		—			356,443			356,443
Change in fair value of interest rate cap		—			16,124			16,124
Net income		529,106			—			529,106

Total comprehensive income								901,673

Owners’ Equity at June 30, 2004 (Unaudited)	$	27,180,558		$	174,972		$	27,355,530

See accompanying notes.

F-15

American Campus Communities Predecessor

Combined Statements of Cash Flows


	Six Months Ended June 30,						Years Ended December 31,
	2004			2003			2003			2002			2001
	(Unaudited)			(Unaudited)
Operating activities
Net income (loss)	$	529,106		$	976,799		$	(944,488	)	$	(2,139,447	)	$	(2,939,215	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation		4,706,202			4,591,111			9,213,996			8,411,431			6,950,826
Amortization of deferred financing costs		339,711			278,485			586,515			564,167			405,927
Changes in operating assets and liabilities:
Restricted cash		(1,187,833	)		(353,178	)		(2,036,448	)		(139,969	)		(3,205,475	)
Student contracts receivable, net		715,873			658,209			(378,201	)		354,888			(154,100	)
Other current assets		2,651,819			(1,496,037	)		(265,345	)		(1,269,240	)		(271,482	)
Accounts payable and accrued expenses		237,314			(2,044,691	)		(420,569	)		1,334,713			2,255,979
Accrued interest payable		534,327			48,705			245,981			154,880			372,416
Security deposits		513,582			337,702			27,778			(112,600	)		152,095
Deferred rental income		(379,650	)		(1,349,329	)		965,680			(239,042	)		1,189,964
Deferred income – cancellation fee from affiliate		—			(392,728	)		—			(150,832	)		(258,576	)
Deferred development and construction revenue		(727,640	)		—			(1,378,802	)		1,311,512			711,519
Amounts payable to related parties		1,755			—			1,257			(25,900	)		(320,219	)
Deferred development and construction revenue – student housing facilities subject to leases		(467,623	)		376,491			640,472			(96,056	)		448,639

Net cash provided by (used in) operating activities		7,466,943			1,631,539			6,257,826			7,958,505			5,338,298

Investing activities
Investments in student housing facilities subject to leases		(187,069	)		(154,147	)		(3,787,575	)		(395,766	)		(14,535,056	)
Student housing facilities subject to lease held for sale		—			—			(7,975,713	)		—			—
Investments in student housing properties		(42,225,444	)		(12,964,277	)		(21,776,822	)		(20,901,208	)		(53,951,917	)
Purchase of furniture, fixtures and equipment		(133,598	)		(85,151	)		(197,277	)		(381,074	)		(53,127	)

Net cash used in investing activities		(42,546,111	)		(13,203,575	)		(33,737,387	)		(21,678,048	)		(68,540,100	)

Financing activities
Repayment of short-term loans		—			—			(2,358,191	)		(577,686	)		—
Proceeds from short-term loans		1,795,685			578,344			1,641,594			1,367,843			—
Repayment of long-term debt		(1,108,567	)		(816,902	)		(2,997,211	)		(33,501,935	)		(21,823,155	)
Repayment of notes payable – related parties		—			—			(1,000,000	)		(1,096,493	)		(164,675	)
Proceeds from long-term debt		33,691,674			8,360,563			29,605,027			47,968,591			77,994,778
Proceeds from notes payable – related parties		—			—			1,020,000			606,818			—
Purchase of interest rate cap		—			—			—			—			(52,000	)
Change in construction accounts payable		4,491,717			2,540,463			3,942,960			2,809			303,719
Change in other noncurrent liabilities		(344,679	)		58,475			604,297			(311,569	)		301,064
Debt issuance and offering costs		(2,376,933	)		(11,297	)		(1,513,348	)		(446,919	)		(1,710,721	)
Contributions		800,000			360,000			3,538,134			5,363,356			29,788,016
Distributions		(2,003,997	)		(2,766,520	)		(10,310,574	)		(8,193,810	)		(11,913,292	)
Minority interests		(58,175	)		7,628			(32,052	)		153,672			108,032

Net cash provided by financing activities		34,886,725			8,310,754			22,140,636			11,334,677			72,831,766

Net (decrease) increase in cash and cash equivalents		(192,443	)		(3,261,282	)		(5,338,925	)		(2,384,866	)		9,629,964
Cash and cash equivalents at beginning of period		5,227,191			10,566,116			10,566,116			12,950,982			3,321,018

Cash and cash equivalents at end of period	$	5,034,748		$	7,304,834		$	5,227,191		$	10,566,116		$	12,950,982

Supplemental disclosure of noncash investing and financing activities
Liabilities assumed in acquisition of student housing properties	$	—		$	—		$	—		$	—		$	2,092,653

Reduction of investment in student housing due to fire	$	—		$	8,297,721		$	(3,750,000	)	$	—		$	—

Financing of equipment through capital lease obligations	$	—		$	95,200		$	116,802		$	277,659		$	169,001

Change in fair value of derivative instruments, net	$	372,567		$	(4,703	)	$	(151,284	)	$	(75,592	)	$	29,281

Sale of leasehold asset	$	7,975,713		$	—		$	—		$	—		$	—

Repayment of note payable on leasehold asset held for sale	$	(8,079,705	)	$	—		$	—		$	—		$	—

Write off of miscellaneous assets & liabilities in connection with sale of leasehold asset	$	45,725		$	—		$	—		$	—		$	—

Supplemental disclosure of cash flow information
Interest paid	$	8,536,272		$	8,784,325		$	17,665,146		$	17,237,343		$	15,186,974

See accompanying notes.

F-16

American Campus Communities Predecessor

Notes to Combined Financial Statements

December 31, 2003

1. Ownership and Operation of the Predecessor

American Campus Communities Predecessor (the “Predecessor”) is engaged in the business of owning, managing, leasing, acquiring and developing student housing and providing development and management services to third parties on a national basis. Predecessor is not a legal entity, but rather a combination of certain real estate entities and operations based on their common ownership and voting control.

The Predecessor reflects the combination of the following entities. Reckson Strategic Venture Partners, LLC controls, through subsidiaries, at least 50% of the voting control of each of these entities:

•

RAP Student Housing Properties, LLC (“RAPSH”) and its majority owned subsidiaries, including American Campus–Titan, LLC, and certain limited liability companies and limited partnerships (“Affiliated Student Housing Properties”);

•

RSVP-ACT, LLC (“ACT”) and its majority owned subsidiary, American Campus–Titan II, LLC; and

•

RFG Capital Management Partners, LP and its wholly owned subsidiaries, which represent a 1% general partner or member interest in the Affiliated Student Housing Properties, and its majority interest in American Campus Communities, L.L.C. (“ACC”) and its wholly owned subsidiaries.

Concurrent with the consummation of an initial public offering (the “Offering”) of the common stock of American Campus Communities, Inc. (the “REIT”), which is expected to be completed in 2004, the REIT and a newly formed majority-owned limited partnership, American Campus Communities Operating Partnership LP (the “Operating Partnership”) and its taxable REIT subsidiary, American Campus Communities Services, Inc., together with the partners and members of the affiliated partnerships and limited liability companies (as described more fully below) of the Predecessor (collectively, the “Participants”), will engage in certain formation transactions (the “Formation Transactions”). The Formation Transactions are designed to (i) continue the operations of the Predecessor, (ii) enable the REIT to raise the necessary capital to repay mortgage and construction debt, complete development projects currently in progress, and pursue additional development and acquisition opportunities, (iii) fund costs, capital expenditures and working capital, (iv) provide a vehicle for future acquisitions, (v) enable the REIT to comply with requirements under the federal income tax laws and regulations relating to real estate investment trusts and (vi) preserve tax advantages for certain Participants.

The operations of the REIT will be carried on primarily through the Operating Partnership. It is the intent of the REIT to elect the status of and qualify as a REIT under Section 856 through 860 of the Internal Revenue Code of 1986, as amended. The REIT will be the sole general partner of and will have control over the activities of the Operating Partnership. The Operating Partnership will receive a contribution of interests in the real estate properties, as well as the property management, leasing, and real estate development operations of American Campus Communities, L.L.C., in exchange for units of limited partnership interest in the Operating Partnership and/or cash. The REIT will be fully integrated, self-administered and self-managed.

Certain key executives of ACC have, through a separate entity, a promoted ownership interest in RAP and ACC. This promoted interest will cease upon consummation of the offering.

The Predecessor consists of limited liability companies and limited partnerships, each with a single class of ownership interest. Under the terms of the various limited liability company and limited partnership agreements, the members’ or partners’ liability is limited to their contributed capital.

F-17

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

Ownership and Operation of the Predecessor – (Continued)

American Campus Communities, L.L.C.

American Campus Communities, L.L.C., (“ACC”) a Delaware limited liability company, was formed on October 8, 1993. ACC is the nation’s premier provider to colleges, universities, and investors of assistance in acquiring, developing, constructing, refurbishing, financing, and managing on-campus and off-campus student housing. ACC is owned by RFG Capital Management Partners, L.P. and RSVP Student Housing, L.L.C., (RSH) an affiliated entity.

American Campus–Titan, LLC and American Campus–Titan II, LLC

American Campus–Titan, LLC (AC-T), a limited liability company, was formed on April 1, 2000 as a joint venture of SHP-ACT, LLC (SHP-ACT) (a subsidiary of RAP), and Titan Investments II (TI II). American Campus–Titan II, LLC (AC-T II), a limited liability company, was formed on October 1, 2003 by RSVP-ACT, LLC (RSVP-ACT) (a subsidiary of RSH), and TI II. AC-T and AC-T II were formed for the purpose of developing student housing properties in close proximity to college and university campuses throughout the United States. SHP-ACT is managing member of AC-T and RSVP-ACT is managing member of AC-T II.

Under the terms of the limited liability agreements, initial capital contributions were provided 5% by TII and 95% by SHP-ACT (RSVP-ACT for American Campus–Titan II). Net income and losses are allocated and cash is distributed in accordance with the limited liability agreements.

Summary of Significant Accounting Policies

Interim Financial Information

The financial information as of June 30, 2004 and for the six months ended June 30, 2004 and 2003 is unaudited, but includes all adjustments, consisting only of normal recurring adjustments, that in the opinion of management are necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows for such periods. Operating results for the six months ended June 30, 2004 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year of 2004 or any future period.

Basis of Presentation and Accounting.

The accompanying combined financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States (“GAAP”). Revenues are recognized when earned and expenses and costs are recognized when incurred. All significant intercompany transactions have been eliminated.

Recent Accounting Pronouncements

Financial Accounting Standards Board (“FASB”) Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB 51”

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an interpretation of ARB 51” (“FIN 46”). The primary objectives of FIN 46 are to provide guidance on the identification of entities for which control is achieved through means other than through voting rights (“VIEs”) and how to determine when and which business enterprise should consolidate the VIE. This new criteria for consolidation applies to an entity in which either (1) the equity investors (if any) do not have a controlling financial interest or (2) the equity investment at risk is insufficient to finance that entity’s activities without receiving additional subordinated financial support from other parties.

F-18

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

Summary of Significant Accounting Policies – (Continued)

If an entity qualifies as a VIE, then the party absorbing more than 50% of the expected losses, as defined, or receiving more than 50% of the expected residual returns, as defined, is required to consolidate the VIE. The Predecessor has implemented FIN 46 and determined that there was no impact on the financial statements.

Balance Sheet Classification

Assets to be realized and obligations to be paid in the twelve months following the respective balance sheet date are classified as current.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of financial statement presentation, the Predecessor considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Restricted cash and investments are excluded from cash for the purpose of preparing the combined statements of cash flows.

The Predecessor maintains cash balances in various banks. At times the amounts of cash may exceed the $100,000 amount FDIC insures. As the Predecessor only uses money centered financial institutions, the Predecessor does not believe it is exposed to any significant credit risk on cash and cash equivalents.

Restricted Cash and Short-Term Investments

Restricted cash and short-term investments consists of funds held in trust and invested in low risk investments, generally consisting of government backed securities, as permitted by the indentures of trusts, which were established in connection with three bond issues. Additionally, restricted cash and short-term investments include escrow accounts held by lenders and resident security deposits, as required by law in certain states. Certain funds held by a trustee in a required escrow account are being invested under a forward delivery agreement in government backed securities that have a remaining maturity when purchased of six months. Realized and unrealized gains and losses are not material for the periods presented.

Internal-Use Software

The Predecessor capitalizes direct costs incurred during the application, development stage and the implementation stage for developing, purchasing or otherwise acquiring software for internal use. These costs are included in furniture, fixtures and equipment and are amortized over the estimated useful lives of the software, generally three to five years. All costs incurred during the preliminary project stage, including project scoping, identification and testing of alternatives, are expensed as incurred.

Fixed Assets and Depreciation

Land, buildings and improvements, student housing facilities subject to leases, and furniture, fixtures and equipment, are recorded at historical cost. Buildings and improvements are depreciated over 40 years. Student housing facilities subject to leases are depreciated over useful lives ranging from 23 to 29 years. Furniture, fixtures, equipment, and software for internal use are depreciated over estimated useful lives ranging from 3 to 7 years.

F-19

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

Summary of Significant Accounting Policies – (Continued)

Depreciation is computed using the straight-line method for financial reporting purposes. Accumulated depreciation on furniture, fixtures and equipment, and software for internal use at June 30, 2004 (unaudited), December 31, 2003 and 2002, respectively, approximated $874,000 (unaudited), $851,000 and $573,000, respectively.

Student Housing Construction and Development in Progress

Costs, including construction period interest and amortization of deferred financing costs, associated with projects either under construction or those that are under development, and any construction contract awards are capitalized and included in “Student housing properties, net” in the accompanying combined balance sheets. Upon completion of the project, costs are transferred into the applicable asset category and depreciation commences. Costs associated with projects that are terminated are expensed at the time of termination. The amount of interest capitalized approximated $437,000, $437,000, and $564,000 for the years ended December 31, 2003, 2002, and 2001, respectively, and $1,171,000 and $116,000 for the six months ended June 30, 2004 and 2003, respectively (unaudited). Amortization of deferred financing costs totaling approximately $106,000, $174,000, and $0 was capitalized in the years ended December 31, 2003, 2002, and 2001, respectively, and $207,000 and $9,000, for the six months ended June 30, 2004 and 2003, respectively (unaudited).

Student Housing Facilities Subject to Leases

The Predecessor enters into ground and facility leases (“Leases”) with university systems and colleges (“Lessor”) to finance, construct, and manage student housing facilities. Under the terms of the leases, the Lessor has title to the land and any improvements placed thereon. The Lease terminates upon final repayment of the construction related financing, the amortization period of which is contractually stipulated. Pursuant to Emerging Issues Task Force (EITF) No. 97-10: The Effect of Lessee Involvement in Asset Construction, the Predecessor’s involvement in construction requires the Lessor’s post construction ownership of the improvements to be treated as a sale with a subsequent leaseback by the Predecessor. The sale-leaseback transaction has been accounted for as a financing, and as a result, any fee earned during construction is deferred and recognized over the term of the lease. The resulting financing obligation is reflected at the terms of the underlying financing, i.e., interest is accrued at the contractual rates and principal reduces in accordance with the contractual principal repayment schedules.

The Predecessor reflects these assets subject to facility leases at historic cost, less depreciation. Costs are amortized, and deferred fee revenues in excess of the cost of providing the service are recognized, over the lease term.

Repairs, Maintenance, and Major Improvements

The costs of ordinary repairs and maintenance are charged to operations when incurred. Major improvements that extend the life of an asset are capitalized and depreciated over the remaining useful life of the asset. Planned major repair, maintenance and improvement projects are capitalized when performed.

Long-Lived Assets–Impairment

Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment and Disposal of Long-Lived Assets” requires that long-lived assets to be held and used be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As of December 31, 2003, management determined that no indicators of impairment existed.

F-20

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

Summary of Significant Accounting Policies – (Continued)

On a periodic basis, management is required to make subjective assesses whether there are any indicators that the value of the real estate properties may be impaired. A property’s value is considered impaired if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property are less than the carrying value of the property.

Long-Lived Assets–Held for Sale

Long-lived assets to be disposed of are classified as held for sale in the period in which all of the following criteria are met:

Management, having the authority to approve the action, commits to a plan to sell the asset

The asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets.

An active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated.

The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year.

The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value.

Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Concurrent with classification, the asset is recorded at the lower of cost or fair value, and depreciation ceases.

Discontinued Operations

Deferred Financing Costs

The Predecessor defers financing costs and amortizes the costs over the terms of the related debt using the effective yield method. Upon repayment of or in conjunction with a material change in the terms of the underlying debt agreement, any unamortized costs are charged to earnings.

Amortization expense, net of amounts capitalized, approximated $587,000, $564,000, and $406,000 for the years ended December 31, 2003, 2002, and 2001, respectively, and $340,000 and $278,000 for the six months ended June 30, 2004 and 2003, respectively (unaudited). Accumulated amortization at December 31, 2003 and 2002 approximated $1,777,000 and $1,084,000, respectively.

Rental Revenues and Related Receivables

Students are required to execute lease contracts with payment schedules that vary from single to monthly payments. Receivables are recorded when billed, revenues and related lease incentives are recognized on a straight-line basis over the term of the contracts, and balances are considered past due when payment is not received on the contractual due date. The Company has no contingent rental contracts.

F-21

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

Summary of Significant Accounting Policies – (Continued)

Generally, the Predecessor requires each executed contract to be accompanied by a refundable security deposit and a signed parental guarantee. Security deposits are refundable, net of any outstanding charges, upon expiration of the underlying contract.

Allowances for doubtful accounts are established when management determines that collection of specific receivables are doubtful. When management has determined a receivable to be uncollectible, the receivable is removed as an asset with a corresponding reduction in the allowance for doubtful accounts.

The allowance for doubtful accounts is summarized as follows:


	Balance, Beginning of Period		Charged to Expense		Write-Offs			Balance, End of Period
Year ended December 31, 2001	$	503,000	$	391,200	$	—		$	894,200
Year ended December 31, 2002		894,200		737,653		(55,653	)		1,576,200
Year ended December 31, 2003		1,576,200		583,643		(102,943	)		2,056,900
Six months ended June 30, 2004 (unaudited)		2,056,900		328,931		(36,581	)		2,349,250

Development Services Revenue and Cost Recognition–Third Party Projects

Costs associated with the pursuit of development and construction management contracts are expensed as incurred, until such time that management has been notified of a contract award or otherwise believes it is probable the contract will be awarded. At such time, the reimbursable portion of such costs are recorded as receivables. Internal costs are then deferred and recognized in relation to the revenues earned on executed contracts. Development and construction revenues and related costs are recognized in income by the Predecessor over the course of the construction phases of the projects relative to the percentage of completion of the respective projects, as determined by construction costs incurred relative to total estimated construction costs. Incentive fees are recognized when performance has been verified by an independent third party.

Facility Management Revenues

Management fees are recognized when earned in accordance with each management contract. Incentive management fees are recognized when the incentive criteria have been met.

Operating Lease Expense and Contingent Lease Expense

Operating lease expense is recognized on a straight line basis over the term of the lease. Differences between payments and the straight line recognition deferral are accrued and adjusted in the appropriate period.

Lease payments required under the Company’s facility lease agreements (Note 4) which represent 50% of defined net cash flows on an annual basis are accrued and expensed relative to the net income generated by the applicable facility.

Advertising Expense

Advertising expenses are charged to income during the period incurred. The Predecessor uses no direct response advertising. Advertising expenses charged to income approximated $931,000, $556,000, and $512,000 in 2003, 2002, and 2001, respectively, and $413,000 and $519,000 for the six months ended June 30, 2004 and 2003, respectively (unaudited).

F-22

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

Summary of Significant Accounting Policies – (Continued)

Leasehold Facility Contingent Payments

Under the terms of the Leases, should the leasehold facilities not achieve Financial Break Even (defined as revenues less operating expense, excluding management fees, less debt service) the Lessor would be required to make a rental payment, also known as a Contingent Payment sufficient to achieve Financial Break Even. The Contingent Payment is recorded as a liability and all future net cash flows (as defined) of the leasehold facility are applied to repayment of the Contingent Payment.

Federal Income Taxes

No provision for income taxes has been recorded in the combined financial statements, as the owners are required to report their share of the Predecessor’s earnings in their respective income tax returns.

Derivative Instruments and Hedging Activities

Derivative financial instruments are reported on the balance sheet at fair value. Changes in fair value are recognized either in earnings or as other comprehensive income in the owners’ equity section, depending on the nature of the exposure being hedged.

The Predecessor uses interest rate swaps and caps designated as cash flow hedges to effectively convert a portion of its floating rate debt to fixed rate, thus reducing the impact of rising interest rates on interest payments. The interest differential to be paid or received is accrued as interest expense. The Predecessor’s counter-parties are major financial institutions.

Comprehensive Income (Loss)

Comprehensive income (loss) includes net loss and other comprehensive income (loss) and is presented in the combined statements of changes in owners’ equity. Accumulated other comprehensive income is displayed as a separate component of owners’ equity and consists of unrealized gains (losses) on derivative instruments.

Financial Instruments

The Predecessor does not hold or issue financial instruments for trading purposes. The fair value of financial instruments was estimated based on the following methods and assumptions:

Cash and Cash Equivalents, Restricted Cash and Short-Term Investment, Student Contracts Receivable, Accounts Payable and Accrued Expenses, Accrued Interest Payable, Security Deposits and Deferred Income: the carrying amount approximates fair value, due to the short maturity of these instruments.

Bonds Payable: the fair value of bonds payable is based on market quotes for bonds outstanding.

Mortgage Notes Payable: the fair value of mortgage notes payable is estimated as the present value of the cash flows at current rates through maturity.

Construction and Short-Term Notes Payable: the fair value of construction notes payable approximates carrying value due to the variable interest-rate feature of these instruments.

Derivative Instruments: the estimated fair value of derivative instruments are based on calculations provided by independent, third party financial institutions and represent the discounted future cash flows expected, based on the projected future interest rate curves over the life of the instrument.

F-23

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

Summary of Significant Accounting Policies – (Continued)

The carrying amount and estimated fair value of financial assets and liabilities at December 31, 2003 are as follows:


	Fair Value		Carrying Amounts
Financial Assets:
Cash and cash equivalents	$	5,227,191	$	5,227,191
Restricted cash and short-term investments		9,503,243		9,503,243
Student contracts receivable, net		2,354,519		2,354,519
Financial Liabilities:
Accounts payable and accrued expenses	$	6,268,373	$	6,268,373
Accrued interest payable		2,179,711		2,179,711
Security deposits		1,885,760		1,885,760
Deferred income		7,318,411		7,318,411
Line of credit		73,560		73,560
Bonds payable		74,477,681		61,010,000
Mortgage notes payable		212,841,979		188,066,800
Construction notes payable		26,446,614		26,446,614
Derivative instruments		152,956		152,956

Reclassifications

Certain prior-year amounts have been reclassified to conform to current-year presentation.

Investments in Affiliated Student Housing Properties

Student housing properties consist of the following:


	Six Months Ended June 30, 2004			Years Ended December 31,
	Six Months Ended June 30, 2004			2003			2002
Student housing properties:
Land	$	35,433,720		$	35,433,720		$	35,885,240
Building and improvements		175,715,599			175,436,207			174,719,348
Furniture, fixtures and equipment		6,997,104			6,672,482			6,507,358
Construction in progress		64,611,377			22,960,761			5,050,115

		282,757,800			240,503,170			222,162,061
Less accumulated depreciation		(20,569,271	)		(17,596,602	)		(11,930,467	)

Student housing properties, net	$	262,188,529		$	222,906,568		$	210,231,594

The Predecessor acquired Callaway House for $25,476,718 and Science Drive for $24,618,096. The acquisition of both properties was accounted for using the purchase method of accounting and the results of operations for both entities are included in the results of operations from the date of acquisition. The following table presents the allocation of the purchase price, which includes approximately $119,000 and $67,000 in acquisition costs for Callaway House and Science Drive, respectively.


	Callaway House		Science Drive
Land	$	4,725,890	$	4,673,489
Building		18,903,560		18,693,953
Furniture, fixtures and equipment		1,299,458		326,400
Net fair value of tangible assets acquired and liabilities assumed		547,810		924,254

	$	25,476,718	$	24,618,096

F-24

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

Investments in Affiliated Student Housing Properties – (Continued)

Additional selected information includes:

Property

Location

University

Square
Footage

Units

Beds

Date Acquired

Callaway House

College Station,
Texas

Texas A&M University

145,068

173

504

March 30, 2001

Village at Science Drive

Orlando, Florida

University of Central Florida

288,288

192

732

November 15, 2001

On a pro forma (unaudited) basis, if these two properties had been acquired on January 1, 2001, the statement of operations for the year-ended December 31, 2001 would have included approximately $4,794,000 of additional revenues, $2,437,000 of additional operating expenses, $781,000 of additional depreciation and amortization, $1,169,000 of additional interest expense, and would have resulted in an increase in net loss of approximately $407,000.

In May 2003, an arson fire destroyed a student housing facility under construction. The construction project was insured at limits in excess of the cost to rebuild and the related lost income. Reconstruction commenced in June 2003 and the Predecessor has received insurance proceeds totaling $4,000,000 as of December 31, 2003, and additional $1,000,000 in January 2004, $1,000,000 in March 2004, and $1,750,000 in April 2004. While the ultimate outcome of the settlement of this claim is not determinable at this time, management believes the remaining costs will be fully reimbursed under the insurance contract and anticipates no material loss or gain on the claim. A receivable of $3,750,000 from the insurance company is included in other current assets at December 31, 2003.

Student Housing Facilities Subject to Leases

The Predecessor has entered into facility and ground lease agreements (“Leases”) with certain state university systems and colleges (the “Lessor”) for the purpose of developing, constructing, and operating student housing facilities on university campuses. Under the terms of the leases, title to the constructed facilities is held by the Lessor and the Lessor receives a de minimus base rent paid at inception and 50% of defined net cash flows on an annual basis through the term of the lease.

Pursuant to the Leases, in the event the leasehold estates do not achieve Financial Break Even, (defined as revenues less operating expenses, excluding management fees, less debt service) the Lessor would be required to make a rental payment, also known as the Contingent Payment, sufficient to achieve Financial Break Even until the facilities received investment grade ratings. Future net cash flow distributions would be first applied to repay such Contingent Payments. Beginning November 1999 and December 2002, The Texas A&M University System is no longer required to make Contingent Payments under the Prairie View A&M University Phase I, II, III (University Village) and Phase IV (University College) leases, respectively, as the facilities received investment grade ratings.

In the event the Company seeks to sell its leasehold interest, the Leases provide the Lessors the right of first refusal of a bona fide purchase offer and an option to purchase the lessee’s rights under the lease.

In conjunction with the execution of each ground lease, ACC has entered into a separate five-year agreement to manage the facilities for 5% of defined gross receipts. The five-year term of the management agreement is not contingent upon the continuation of the facility lease. Upon expiration of the respective 5 year management agreements, the agreements continue on a month-to-month basis.

F-25

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

Student Housing Facilities Subject to Leases – (Continued)

The Predecessor’s student housing facilities subject to facility leases at December 31 are as follows:


Lessor/University	Commencement/ Expiration	Historical Cost
Lessor/University	Commencement/ Expiration	2003			2002
Texas A&M University System/Prairie View A&M University	October 6, 1999/ August 31, 2038	$	37,368,145		$	37,133,325
Texas A&M University System/Texas A&M International	October 6, 1999/ August 31, 2038		5,889,125			5,880,036
Texas A&M University System/Prairie View A&M University	October 1, 1999/ August 31, 2039		23,366,292			19,852,580
University of Houston System/University of Houston	September 27, 2000/ August 31, 2041		17,863,469			17,833,515

			84,487,031			80,699,456
Less accumulated depreciation			(14,773,679	)		(11,503,128	)

Student housing facilities subject to leases, net		$	69,713,352		$	69,196,328

Student Housing Facilities Subject to Leases–Sold and Held for Sale

The Predecessor entered into facility lease agreements with the Texas State University System in 2000 and 2001, obtained the construction financing and constructed two phases of student housing on the campus of Lamar University, at a cost of approximately $10,439,000 and $12,567,000, respectively.

Shortly after the completion of construction and fall openings in 2001 and 2002, the facility leases were sold to a foundation affiliated with the university and the related construction debt was repaid. Gain on these sales was not material. As these leaseholds were held for sale from inception, no depreciation was recorded on them. Simultaneous with the sale of the leases, the Predecessor entered into facility management agreements with the owners.

During 2003, the Predecessor entered into a ground lease with Weatherford College, obtained construction financing and constructed a student housing facility which opened in Fall 2003. It is anticipated that this leasehold will be sold to Weatherford College and the related debt repaid in early 2004. The leasehold is reflected as Student housing facility subject to lease–held for sale and the related construction loan is reflected as Note payable secured by leasehold held for sale in the December 31, 2003 balance sheet and is included in the student housing rentals segment (Note 7). No depreciation has been recorded on this facility.

Debt

The Predecessor’s debt is as follows as of:


	June 30, 2004			December 31,
	June 30, 2004			2003			2002
Short-term notes payable	$	1,695,021		$	73,560		$	790,157
Construction notes payable		52,058,583			26,446,614			1,166,586
Mortgage notes payable		187,132,457			188,066,800			189,884,187
Bonds payable		61,010,000			61,010,000			57,864,824

Total debt		301,896,061			275,596,974			249,705,754
Less short-term debt and current portion of long-term debt		(5,022,421	)		(11,403,392	)		(3,817,065	)

Total long-term debt, net of current portion	$	296,873,640		$	264,193,582		$	245,888,689

F-26

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

Debt – (Continued)

Short-Term Notes Payable

On May 1, 2002, Predecessor entered into a line of credit facility maturing April 29, 2004 bearing interest at prime plus 1.00% (5.00% at December 31, 2003). The line of credit is limited to 66.7% of forecasted annual cash flow with a maximum of $1,000,000. The facility is secured by reimbursable development and acquisition costs and leasehold distributions. At December 31, 2003, $73,560 ($421,660 at December 31, 2002) was drawn and $876,854 was available under the line of credit. In May 2004, Predecessor replaced the facility with a new line of credit facility maturing at the earlier of an initial public offering or December 31, 2004 and bears interest at the bank’s prime rate or the Fed Fund rate plus ¹/2%. The new facility is secured by reimbursable development and acquisitions costs, leasehold distribution and development services contracts. As of June 30, 2004, $1,695,021 was outstanding on the new facility (unaudited).

On December 16, 2002, the Predecessor executed a note payable in the amount of $368,500 bearing interest at higher of LIBOR or 5.00% (5.00% at December 31, 2002) maturing on December 1, 2003, to finance the acquisition of land to be used for future development with a university system. On August 19, 2003, the university acquired the land and the loan was repaid.

Construction Notes Payable

The Predecessor has the following five advancing construction notes payable secured by student housing properties constructed or being constructed by the Predecessor. The construction notes payable require interest only payments through maturity.


Property	Balance at June 30, 2004 (unaudited)		Balance at December 31, 2003		Maximum Loan Amount		Stated Interest Rate	Interest Rate at December 31, 2003		Maturity Date
University Village at TU	$	19,313,708	$	—	$	33,200,000	LIBOR +2.25%	3.43	%	10/29/05
University Village at TU (mezzanine)		6,550,000		5,196,949		6,550,000	18.00%	18.00	%	10/29/05
University Village at Fresno State		11,461,340		8,279,762		12,925,000	LIBOR +2.25%	3.43	%	9/30/05
University Village at San Bernardino		14,733,535		4,890,198		19,800,000	LIBOR +2.25%	3.40	%	7/31/05
Coyote Village(a)(b)		—		8,079,705		8,332,921	LIBOR +2.30%	4.00	%	9/5/04

Total/weighted average rate	$	52,058,583	$	26,446,614	$	80,807,921		6.46	%

(a)

Loan is secured by a facility lease with Weatherford College. Under the terms of the facility lease, Weatherford College is purchasing the facility lease and this note will be repaid with closing proceeds, which is expected to occur in early 2004. (See Note 4)

(b)

Rate is subject to a floor of 4.00%.

F-27

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

Debt – (Continued)

Mortgage Notes Payable

Mortgage notes payable consists of 12 notes secured by operating properties or leaseholds consisting of:


Property	Principal Outstanding at 6/30/04 (unaudited)		Principal Outstanding at 12/31/03		Stated Interest Rate	Interest Rate at December 31, 2003		Maturity Date	Amortization
Cullen Oaks(a)	$	17,167,648	$	17,286,918	LIBOR +1.90%	3.05	%	11/17/08	30 years
Village at Boulder Creek		16,647,950		16,758,163	5.71%	5.71	%	11/1/12	30 years
River Club Apartments		18,632,071		18,703,602	8.18%	8.18	%	8/1/10	30 years
River Walk Townhomes		7,722,592		7,763,690	8.00%	8.00	%	9/1/09	30 years
Village at Alafaya Club		20,569,865		20,661,945	8.16%	8.16	%	8/1/10	30 years
Village at Science Drive(b)(c)		19,500,000		19,500,000	LIBOR +2.50%	4.85	%	12/10/04	Interest only
Village at Blacksburg		21,460,335		21,573,785	7.50%	7.50	%	1/1/11	30 years
Commons on Apache		7,712,528		7,749,306	7.66%	7.66	%	6/1/09	30 years
Village on University		4,799,503		4,826,056	8.32%	8.32	%	12/1/05	30 years
Village on University		21,691,001		21,832,188	7.95%	7.95	%	12/1/05	30 years
Village at Riverside		11,397,351		11,468,130	7.35%	7.35	%	1/1/11	30 years
Callaway House		19,831,613		19,943,017	7.10%	7.10	%	4/1/11	30 years

Total/weighted average rate	$	187,132,457	$	188,066,800		6.85	%

(a)

Floating rate was swapped to a fixed rate of 5.54%.

(b)

Note has two one-year extensions, which management expects to exercise. Consequently, this debt is classified as noncurrent in the accompanying balance sheet.

(c)

Rate is subject to a floor of 4.85%.

Bonds Payable

Bonds payable consists of three issues secured by student housing ground/facility leases, with interest and principal paid semi-annually and annually, respectively, through maturity. Covenants include, among others, budgeted and actual debt service coverage ratios. The bonds are nonrecourse to ACC. Payment of regularly scheduled principal payments is guaranteed by MBIA Insurance Corporation. Bonds payable at December 31, 2003 are as follows:


Series	Mortgaged Facilities Subject to Leases	Principal				Weighted Average Rate		Maturity Through	Required Monthly Debt Service
Series	Mortgaged Facilities Subject to Leases	Original		December 31, 2003		Weighted Average Rate		Maturity Through	Required Monthly Debt Service
1999	University Village – PVAMU/TAMIU	$	39,270,000	$	36,415,000	7.71	%	September 2023	$	302,000
2001	University College – PVAMU		20,995,000		20,270,000	7.49	%	August 2025		158,000
2003	University College – PVAMU		4,325,000		4,325,000	6.05	%	August 2028		28,000

	Total/weighted average rate	$	64,590,000	$	61,010,000	7.51	%		$	488,000

F-28

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

Debt – (Continued)

Schedule of Debt Maturities

Scheduled maturities (reflecting automatic extensions where applicable) of debt, for each of the five years subsequent to December 31, 2003, are as follows:


	Scheduled Principal		Due at Maturity		Total
2004	$	3,250,127	$	73,560	$	3,323,687
2005		3,473,820		31,174,163		34,647,983
2006		3,360,905		27,579,705		30,940,610
2007		3,596,289		13,169,960		16,766,249
2008		3,784,122		15,971,618		19,755,740
Thereafter		73,428,712		96,733,993		170,162,705

	$	90,893,975	$	184,702,999	$	275,596,974

Payment of principal and interest were current at December 31, 2003. Mortgage notes (except for Village at Science Drive) and bonds payable are subject to prepayment penalties.

Certain Other Information

The following table reconciles the carrying amount of long-term debt for January 1, 2001 to June 30, 2004:


	Six months ended June 30, 2004			Years Ended December 31,
	Six months ended June 30, 2004			2003			2002			2001
Balance, beginning of period	$	275,523,414		$	248,915,597		$	234,448,941		$	178,277,318
Additions:
New mortgage loans		—			—			17,000,000			76,787,421
New bond issues		—			4,325,000			—			—
Draws under advancing construction loans		33,691,674			25,280,027			30,968,591			1,207,357
Deductions:
Repayment of construction financings		—			—			(31,009,362	)		(20,153,121	)
Scheduled repayments of principal		(9,014,048	)		(2,997,210	)		(2,492,573	)		(1,670,034	)

	$	300,201,040		$	275,523,414		$	248,915,597		$	234,448,941

Interest Rate Hedges

In connection with construction of a student housing facility, the Predecessor entered into an interest rate swap on September 26, 2001 (effective November 26, 2001 through August 25, 2002) that was designated to hedge its exposure to fluctuations in interest payments attributed to changes in interest rates associated with payments on its advancing construction note payable. Under the terms of the interest rate swap agreement, the Predecessor paid a fixed rate of 2.82% and received a floating rate of 30 day LIBOR during the construction period of the loan. This swap contractually expired on August 25, 2002.

In connection with the 2001 acquisition of a student housing facility the Predecessor purchased an interest rate cap effective November 16, 2001 through December 10, 2004, for $52,000. The rate cap pays interest above LIBOR of 7.5% and has been designated to hedge the Predecessor’s exposure to increases in cash outflows for

interest payments on a variable rate loan in the amount of $19,500,000. The rate cap is reflected at fair value of $0 in the accompanying combined balance sheet at December 31, 2003 and June 30, 2004.

F-29

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

Interest Rate Hedges – (Continued)

In connection with the December 2003 extension of a construction note payable, the Predecessor entered into an interest rate swap on November 19, 2003 (effective December 15, 2003 through November 15, 2008) that was designated to hedge its exposure to fluctuations on interest payments attributed to changes in interest rates associated with payments on its advancing construction note payable. Under the terms of the interest rate swap agreement, the Predecessor pays a fixed rate of 5.54% and receives a floating rate of LIBOR plus 1.9%. The interest rate swap had a fair value of approximately $(153,000) and $203,000 (unaudited) at December 31, 2003 and June 30, 2004, respectively.

The Predecessor does not expect to reclassify a material amount of net gains on derivative instruments from accumulated other comprehensive income to earnings in 2004. Ineffectiveness resulting from the Predecessor’s hedges is not material.

F-30

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

Segments

The Predecessor defines business segments by their distinct customer base and service provided. The Predecessor has identified three reportable segments: Student Housing Rentals, from student housing properties and student housing facilities subject to leases, Facility Development Services, and Facility Management Services. Management evaluates each segment’s performance based on operating income before depreciation, amortization, minority interest in losses and allocation of corporate overhead. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Intercompany fees are reflected at the contractually stipulated amounts.


	Years ended December 31,
	2003		2002		2001
Student Housing Rentals
Rental revenues	$	50,765,396	$	48,984,486	$	39,907,217
Interest and other income		40,964		114,207		213,911

Total revenues from external customers		50,806,360		49,098,693		40,121,128
Operating expenses before depreciation and ground lease		23,329,370		22,286,527		17,511,297
Ground lease		584,153		664,228		631,710
Interest expense		17,851,913		17,231,965		15,449,611

Operating income before depreciation, amortization, minority interest in losses and allocation of corporate overhead	$	9,040,924	$	8,915,973	$	6,528,510

Depreciation and amortization	$	9,502,331	$	8,771,602	$	7,163,304

Total segment assets at December 31	$	291,178,043	$	286,159,876	$	277,599,130

Construction Management and Facility Development Services
Development and construction management fees	$	7,938,796	$	5,074,420	$	2,878,409
Interest and other income		25,118		337,317		77,993

Total revenues from external customers		7,963,914		5,411,737		2,956,402
Operating expenses		3,794,850		3,774,390		3,321,901
Interest expense		59,214		160,258		106,890

Operating income (loss) before depreciation, amortization, minority interest in losses and allocation of corporate overhead	$	4,109,850	$	1,477,089	$	(472,389	)

Total segment assets at December 31	$	34,639,318	$	13,807,052	$	7,766,648

Facility Management Services
Facility management fees from external customers	$	1,189,294	$	793,835	$	772,959
Interest and other income		—		150,832		258,576

Total revenues from external customers		1,189,294		944,667		1,031,535
Intersegment revenues		982,880		929,972		728,463

Total revenues		2,172,174		1,874,639		1,759,998
Operating expenses		1,522,674		1,674,894		1,062,808
Interest expense		—		—		—

Operating income before depreciation, amortization, minority interest in losses and allocation of corporate overhead	$	649,500	$	199,745	$	697,190

Total segment assets at December 31	$	614,750	$	261,200	$	326,313

F-31

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

Segments – (Continued)


	Years ended December 31,
	2003			2002			2001
Reconciliations
Total segment revenues	$	60,942,448		$	56,385,069		$	44,837,528
Elimination of intersegment revenues		(982,880	)		(929,972	)		(728,463	)
Unallocated corporate other income		46,120			69,627			145,765

Total consolidated revenues	$	60,005,688		$	55,524,724		$	44,254,830

Segment operating income before depreciation, amortization, minority interest in losses and allocation of corporate overhead	$	13,800,274		$	10,592,807		$	6,753,311
Depreciation and amortization		9,800,511			8,975,598			7,356,753
Net unallocated expenses relating to corporate overhead		4,959,801			3,786,845			2,445,484
Minority interest in losses		15,550			30,189			109,711

Net loss	$	(944,488	)	$	(2,139,447	)	$	(2,939,215	)

Total segment assets	$	326,432,111		$	300,228,128		$	285,692,091
Unallocated corporate assets		4,134,348			7,430,235			9,945,381

Total assets	$	330,566,459		$	307,658,363		$	295,637,472

Related Party Transactions

The Predecessor borrows funds from certain of its owners to fund short-term working capital needs. These notes are unsecured and accrue interest at 16% compounded monthly. Borrowings under these arrangements totaled $1,020,000 and $606,800 for 2003 and 2002, respectively. There were no balances outstanding at December 31, 2003 and 2002. Interest expense on related party notes payable for 2003, 2002, and 2001 totaled $35,286, $72,221, and $99,445, respectively.

Pursuant to an employment agreement with a former key employee of the Predecessor, the Predecessor is required to make periodic payments and provide certain other benefits through the earlier of 2005, or if and when certain future capital events occur. The present value of future payments of approximately $1,023,000 has been expensed during the year ended December 31, 2003, and is included in accounts payable and accrued expenses in the accompanying combined balance sheet.

An affiliate of Predecessor has an ownership interest in Dobie Center Properties, Ltd. which owns Dobie Center, a student housing facility. Pursuant to a management agreement with the Dobie Center, the Predecessor receives facility management fees representing 3% of gross receipts and 6% of qualifying capital projects, and commercial leasing fees of 4% of commercial leases. Such fees totaled approximately $335,000, $356,000, and $385,000 for the years ended December 31, 2003, 2002, and 2001, respectively, and $159,000 and $188,000 for the six months ended June 30, 2004 and 2003, respectively (unaudited). The management agreement began operating on a month-to-month basis upon expiration in May 2002.

Lease Commitments

ACC entered into a sublease for corporate office space beginning August 15, 2002, and expiring December 31, 2010. The terms of the sublease provide for a period of free rent and scheduled rental rate increases and common area maintenance charges upon expiration of the free rent period. Concurrent with the sublease of the new office, the Predecessor sublet its existing office space through the expiration of the lease in October 2003.

F-32

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

Lease Commitments – (Continued)

The Predecessor entered into a ground lease agreement on October 2, 2003 for the purpose of constructing a student housing facility near the campus of Temple University in Philadelphia, Pennsylvania. The agreement terminates June 30, 2079 and has four six year extensions available; however, the university unilaterally may elect not to extend. Under the terms of the ground lease, the lessor receives annual minimum rents of $100,000 and contingent rental payments based on a defined formula.

The Predecessor also has various operating and capital leases for furniture, office and technology equipment, which expire through 2008. Rental expense under the operating lease agreements approximated $550,000, $470,000, and $370,000 in 2003, 2002, and 2001, respectively, (net of sublease income of approximately $89,000, $28,000, and $0) and $330,000 and $180,000 net of sublease income of approximately $0 and $66,000 for the six months ended June 30, 2004 and 2003, respectively (unaudited).

Investments in leasehold estates at December 31, 2003 include approximately $103,000 (net of $66,000 accumulated amortization) related to a capital lease of technology. Furniture, fixtures and equipment at December 31, 2003 include approximately $410,000 (net of $154,000 of accumulated amortization) related to assets under capital leases.

Future minimum commitments over the life of all leases subsequent to December 31, 2003, are as follows:


	Operating		Capital
2004	$	568,697	$	160,584
2005		573,156		150,667
2006		492,262		101,177
2007		465,198		57,399
2008		471,308		20,825
Thereafter		7,911,140		—

Total minimum lease payments		10,481,761		490,652
Amount representing interest		—		80,572

Balance of minimum lease payments	$	10,481,761	$	410,080

The capital lease obligations are reflected in other current and noncurrent liabilities in the accompanying combined balance sheets. Amortization of assets recorded under capital leases for the years ended December 31, 2003, 2002, and 2001 was immaterial.

10.

Concentration of Risks

The Predecessor has a significant student housing facility presence on a single university campus, which represents approximately 21%, 22%, and 24% of the Predecessor’s combined revenues for 2003, 2002, and 2001, respectively, and approximately 60% of student accounts receivable at December 31, 2003. The unlikely event of significantly diminished enrollment at this university could have a negative impact on the Predecessor’s ability to achieve its forecasted revenues and profit levels.

11.

Commitments and Contingencies

In the normal course of business, the Predecessor is subject to claims, lawsuits, and legal proceedings. While it is not possible to ascertain the ultimate outcome of such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on the consolidated financial position or results of operations of the Predecessor.

F-33

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

11.

Commitments and Contingencies – (Continued)

Guarantees

Pursuant to certain third party development agreements, ACC provides guarantees of alternate housing for students if the project is not completed on time for reasons other than force majeure. These guarantees are limited to the related development fees (approximately $4.5 million) and are offset by general contractor liquidated damages and budgeted operating expenses not incurred due to the facility not being open.

ACC also provides project cost guarantees, subject to force majeure. These guarantees are also limited to the amount of the aforementioned related development fees. The development budget consists primarily of costs included in the general contractors’ guaranteed maximum price contract (“GMP”). The GMP obligates the general contractor, subject to force majeure and approved change orders, to cover cost overruns. In addition, the GMP is secured with payment and performance bonds.

In 2002, on a project not included above, ACC provided a guarantee of all performance obligations of the developer, limited to $4 million. This project was completed in 2003. On another project, in addition to the

alternate housing and budget guarantees listed above, ACC has guaranteed losses up to $3 million in excess of the development fee if loss is due to any failure of ACC to maintain, or cause its professionals to maintain, required insurance for a period of five years beyond completion of the project (August 2009).

Except for the $3 million guarantee related to required insurance, these guarantees expire upon completion of certain developer obligations of the related projects, which are satisfied approximately one year after completion.

At December 31, 2003, all projects were on schedule and within budget. The Company has estimated the fair value of guarantees entered into or modified after December 31, 2002, the effective date of FASB Interpretation No. 45 Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, to be immaterial.

Letter of Credit

Performance under the sublease of office space (Note 9) is supported by a letter of credit in the original amount of $291,600 ($97,200 at December 31, 2003), which may be drawn in the event of the Predecessor’s noncured default. The letter of credit reduces monthly by $48,600 beginning September 1, 2003 through February 1, 2004. No amounts have been drawn to date on the letter of credit.

F-34

American Campus Communities Predecessor

Notes to Combined Financial Statements—(Continued)

12.

Investments in Real Estate

Following is certain information related to the Predecessor’s investment in real estate as of December 31, 2003:


Property	Encumbrances		Initial Cost		Cost Capitalized Subsequently			Total Costs		Accumulated Depreciation			Date of Construction/ Acquisition
FACILITIES SUBJECT TO LEASES
University Village, Prairie View, TX	$	31,584,000	$	36,505,582	$	862,563		$	37,368,145	$	(9,092,154	)	1996-1997
University College, Prairie View, TX		24,595,000		22,649,755		716,537			23,366,292		(2,732,688	)	2000, 2003
University Village, Laredo, TX		4,831,000		5,843,771		45,354			5,889,125		(1,444,510	)	1997
Cullen Oaks, Houston, TX		17,286,918		17,641,633		221,836			17,863,469		(1,504,327	)	2001
Coyote Village, Weatherford, TX (Held for sale at December 31, 2003)		8,079,705		7,975,713		—			7,975,713		—		2003

STUDENT HOUSING PROPERTIES
University Village at Boulder Creek, Boulder, CO		16,758,162		15,826,096		348,402			16,174,498		(673,526	)	2002
Village at Boulder Creek, Boulder, CO		—		181,390		8,652			190,042		(16,470	)	2002
River Club Apartments, Athens, GA		18,703,602		23,132,817		531,250			23,664,067		(2,516,143	)	1999
River Walk Townhomes, Athens, GA		7,763,690		9,636,185		225,985			9,862,170		(1,053,327	)	1999
Village at Alafaya, Orlando, FL		20,661,945		25,638,510		366,920			26,005,430		(2,139,471	)	2000
Village at Science Drive, Orlando, FL		19,500,000		23,693,844		(1,497	)		23,692,347		(1,100,952	)	2001
Village at Blacksburg, Blacksburg, VA		21,573,785		25,981,359		953,327			26,934,686		(2,023,741	)	2000
Commons on Apache, Tempe, AZ		7,749,306		9,535,581		776,512			10,312,093		(1,477,627	)	1999
Village on University, Tempe, AZ		26,658,245		36,772,068		871,089			37,643,157		(3,709,549	)	1999
Village at Riverside, Austin, TX		11,468,130		13,822,063		115,021			13,937,084		(999,555	)	2000
Callaway House, College Station, TX		19,943,017		24,928,907		355,285			25,284,192		(1,859,773	)	2001
Callaway Land, College Station, TX		—		650,634		2,007			652,641		(26,468	)	2002

STUDENT HOUSING PROPERTIES UNDER CONSTRUCTION AT DECEMBER 31, 2003
University Village at TU, Philadelphia, PA		5,196,949		8,875,745		—			8,875,745		—		—
University Village at Fresno State, Fresno, CA		8,279,762		7,737,628		—			7,737,628		—		—
Village at San Bernardino, San Bernardino, CA		4,890,198		9,537,390		—			9,537,390		—		—

Total	$	275,523,414	$	326,566,671	$	6,399,243		$	332,965,914	$	(32,370,281	)

The following table reconciles the historical cost of the Predecessor’s investment in student housing properties from January 1, 2001 to December 31, 2003:


	Year Ended December 31,
	2003			2002		2001
Balance, beginning of the year	$	222,162,061		$	200,885,736	$	145,588,031
Additions		19,265,850			21,276,325		55,297,705
Deductions		(924,741	)		—		—

Balance, end of the year	$	240,503,170		$	222,162,061	$	200,885,736

F-35

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

12.

Investments in Real Estate – (Continued)

The following table reconciles the historical cost of the Predecessor’s investment in student housing properties subject to leases from January 1, 2001 to December 31, 2003:


	Year Ended December 31,
	2003		2002			2001
Balances, beginning of year	$	80,699,456	$	80,303,689		$	65,678,405
Additions		3,787,575		436,793			14,625,284
Deductions		—		(41,026	)		—

Balance, end of year	$	84,487,031	$	80,699,456		$	80,303,689

Depreciation on student housing properties is computed using a forty-year life. Depreciation on student housing properties subject to leases is computed over the contractual term of the leases. Depreciable lives for furniture, fixtures and equipment range from five to seven years.

The following table reconciles the accumulated depreciation of the Predecessor’s investment in student housing properties from January 1, 2001 to December 31, 2003:


	Year Ended December 31,
	2003			2002			2001
Balance, beginning of the year	$	(11,930,467	)	$	(6,848,857	)	$	(2,724,403	)
Additions		(5,666,135	)		(5,081,610	)		(4,124,454	)
Deductions		—			—			—

Balance, end of the year	$	(17,596,602	)	$	(11,930,467	)	$	(6,848,857	)

The following table reconciles the accumulated depreciation of the Predecessor’s investment in student housing properties subject to leases from January 1, 2001 to December 31, 2003:


	Year Ended December 31,
	2003			2002			2001
Balances, beginning of year	$	(11,503,128	)	$	(8,351,269	)	$	(5,667,774	)
Additions		(3,270,551	)		(3,151,859	)		(2,683,495	)
Deductions		—			—			—

Balance, end of year	$	(14,773,679	)	$	(11,503,128	)	$	(8,351,269	)

F-36

American Campus Communities Predecessor

Notes to Combined Financial Statements – (Continued)

13.

Quarterly Financial Information – Unaudited


	2003
	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter			Total
Total revenues	$	15,646,842		$	14,082,818		$	14,026,403		$	16,165,410		$	59,921,473
Operating expenses		(9,779,919	)		(9,887,939	)		(10,966,174	)		(11,834,052	)		(42,468,084	)
Nonoperating expenses		(4,507,684	)		(4,556,190	)		(4,599,682	)		(4,749,871	)		(18,413,427	)
Minority interest in (earnings) losses		(11,832	)		(9,297	)		(3,862	)		40,541			15,550

Net income (loss)	$	1,347,407		$	(370,608	)	$	(1,543,315	)	$	(377,972	)	$	(944,488	)


	2002
	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter			Total
Total revenues	$	14,447,291		$	12,651,948		$	12,389,518		$	15,868,633		$	55,357,390
Operating expenses		(8,455,615	)		(9,410,748	)		(10,521,215	)		(11,350,392	)		(39,737,970	)
Nonoperating expenses		(4,285,647	)		(4,321,955	)		(4,694,534	)		(4,486,920	)		(17,789,056	)
Minority interest in (earnings) losses		22,204			23,667			(10,912	)		(4,770	)		30,189

Net income (loss)	$	1,728,233		$	(1,057,088	)	$	(2,837,143	)	$	26,551		$	(2,139,447	)

F-37

[Inside Back Cover]

[Picture of students]

Our mission is to be the premier provider of quality student housing communities and services through a unique understanding of and an unrelenting commitment to students, parents, educational institutions and investors. Our people are our strength, achieving success through a dedication to excellence and integrity.

American Campus Communities

The Student Housing Company

www.studenthousing.com

805 Las Cimas Parkway, Suite 400

Austin, TX 78746

512 732-1000

512 732-2450

12,100,000 Shares

Common Stock

LOGO

PROSPECTUS

, 2004

Joint Book – Running Managers

Citigroup

Deutsche Bank Securities

JPMorgan

UBS Investment Bank

ING Financial Markets

KeyBanc Capital Markets

Wells Fargo Securities, LLC

Dealer Prospectus Delivery Requirement

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 31. Other Expenses of Issuance and Distribution.

The following table itemizes the expenses incurred by us in connection with the issuance and registration of the securities being registered hereunder. All amounts shown are estimates except the Securities and Exchange Commission registration fee.


SEC Registration Fee	$	35,261
NYSE Listing Fee		150,000
Printing and Engraving Expenses
Legal Fees and Expenses (other than Blue Sky)
Accounting Fees and Expenses
Blue Sky Fees and Expenses
Federal and State Taxes
Title Insurance
Property Research and Consulting Fees
Media Consulting Fees
Miscellaneous Consulting Fees

Total	$	5,100,000

We will pay all of the costs identified above.

Item 32. Sales to Special Parties.

During the past three years, we have issued and sold the following securities without registration under the Securities Act:

On July 8, 2004, we sold the share of our Common Stock set forth below to the entity, on the date and for the price set forth below in reliance on Section 4(2) of the Securities Act.


Date	Name	Number of shares	Aggregate price
July 8, 2004	Reckson Strategic Venture Partners, LLC	1	$	100

We did not engage underwriters to assist us with the foregoing sale.

Item 33. Recent Sales of Unregistered Securities.

During the past three years, we have issued and sold the following securities without registration under the Securities Act:

On July 8, 2004, we sold the share of our Common Stock set forth below to the entity, on the date and for the price set forth below in reliance on Section 4(2) of the Securities Act.


Date	Name	Number of shares	Aggregate price
July 8, 2004	Reckson Strategic Venture Partners, LLC	1	$	100

We did not engage underwriters to assist us with the foregoing sale.

Item 34. Indemnification of Directors and Officers.

Our Charter contains a provision permitted under Maryland law requiring us to eliminate each director’s and officer’s personal liability for monetary damages to the maximum extent permitted under Maryland law. Under

II-1

current Maryland law, the directors and officers are liable to us or our stockholders for monetary damages only for liability resulting either from acts of active and deliberate dishonesty established by final judgment as material to the cause of action or from the actual receipt of an improper benefit or profit in money, property or services. In addition, to the maximum extent permitted under Maryland law, our Charter and bylaws require us to indemnify our directors and officers and pay or reimburse reasonable expenses in advance of final disposition of a proceeding if such director or officer is made a party to the proceeding by reason of his or her service in that capacity. These rights are contract rights fully enforceable by each beneficiary of those rights, and are in addition to, and not exclusive of, any other right to indemnification. Furthermore, our officers and directors are indemnified against specified liabilities by the underwriters, and the underwriters are indemnified against certain liabilities by us, under the purchase agreements relating to this Offering. See “Underwriting.”

We have entered into indemnification agreements with each of our executive officers and directors whereby we indemnify such executive officers and directors to the fullest extent permitted by Maryland Law against all expenses and liabilities, subject to limited exceptions. These indemnification agreements also provide that upon an application for indemnity by an executive officer or director to a court of appropriate jurisdiction, such court may order us to indemnify such executive officer or director.

In addition, our directors and officers are indemnified for specified liabilities and expenses pursuant to the partnership agreement of American Campus Communities Operating Partnership LP.

Item 35. Treatment of Proceeds from Stock Being Registered.

None

Item 36. Financial Statements and Exhibits.

(A) Financial Statements. See Index to Consolidated Financial Statements and the related notes thereto.

(B) Exhibits. The following exhibits are filed as part of, or incorporated by reference into, this registration statement on Form S-11:


Exhibit Number		Description of Document

1.1*		Form of Underwriting Agreement among American Campus Communities, Inc., American Campus Communities Operating Partnership LP and the underwriters named therein.

3.1**		Form of Articles of Amendment and Restatement of American Campus Communities, Inc.

3.2**		Form of Bylaws of American Campus Communities, Inc.

4.1**		Form of Certificate for Common Stock of American Campus Communities, Inc.

5.1*		Opinion of Shaw Pittman LLP with respect to Maryland law.

8.1*		Opinion of Willkie Farr & Gallagher LLP with respect to tax matters.

10.1*		Form of Amended and Restated Partnership Agreement of American Campus Communities Operating Partnership LP.

10.2**		Form of 2004 Incentive Award Plan.

10.3**		Form of 2004 Outperformance Bonus Plan.

10.4*		Form of PIU Grant Notice (including Registration Rights).

10.5*		Form of Indemnification Agreement between American Campus Communities, Inc. and certain of its directors and officers.

II-2


Exhibit Number		Description of Document

10.6**		Form of Employment Agreement by and between American Campus Communities, Inc. and William C. Bayless, Jr.

10.7**		Form of Employment Agreement by and between American Campus Communities, Inc. and Brian B. Nickel.

10.8**		Form of Employment Agreement by and between American Campus Communities, Inc. and Mark J. Hager.

10.9**		Form of Non-competition Agreement.

10.10‡		First Amended and Restated Management Agreement between Dobie Center Properties, Ltd. and Texas Campus Lifestyles Management (Dobie Center), L.C., dated as of August 1, 1998.

10.11**		Amendment to First Amended and Restated Management Agreement and Exclusive Leasing Agreement between Dobie Center Properties, Ltd. and Texas Campus Lifestyles Management (Dobie Center), L.C., dated as of February 1, 2004.

10.12‡		Property Management Agreement between SHP-The Village at Riverside LP and American Campus Management (Texas), Ltd., dated as of December 2000.

10.13*		Form of Revolving Credit Facility.

10.14*		Contribution Agreement among American Campus Communities, Inc., American Campus Communities Operating Partnership LP, RAP–ACP, LLC and Reckson Strategic Venture Partners, LLC, dated as of · , 2004.

10.15*		Purchase and Sale Agreement among Titan Investments I, LLC, Anthony J. Patinella, Jr. and RAP Student Housing Properties, LLC, dated as of · , 2004.

10.16*		Option Agreement for the Dobie Center, by and between American Campus Communities, Inc. and RSVP Student Housing, LLC, dated as of · , 2004.

10.17*		Option Agreement for The Village at Riverside, by and among American Campus Communities, Inc., RSVP Student Housing, LLC and RAP–ACP, LLC, dated as of · , 2004.

10.18*		Letter of Intent between American Campus Communities, Inc. and Titan Investments I, LLC dated July , 2004.

21.1**		List of Subsidiaries of the Registrant.

23.1*		Consent of Willkie Farr & Gallagher LLP (included in Exhibit 8.1).

23.2**		Consent of Ernst & Young LLP.

23.3*		Consent of Shaw Pittman LLP (included in Exhibit 5.1).

23.4‡		Consent of Rosen Consulting Group.

23.5‡		Consent of Peterson’s.

24.1‡		Power of Attorney.

99.1†		Report of Rosen Consulting Group.

99.2‡		Consent of Scott H. Rechler to be named as a proposed director.

99.3‡		Consent of R.D. Burck to be named as a proposed director and Chairman.

II-3


Exhibit Number		Description of Document

99.4‡		Consent of Cydney Donnell to be named as a proposed director.

99.5‡		Consent of G. Steven Dawson to be named as a proposed director.

99.6‡		Consent of Winston W. Walker to be named as a proposed director.

99.7‡		Consent of Edward Lowenthal to be named as a proposed director.

99.8*		Resignation of Mark J. Hager from the Board of Directors (effective as of the consummation date).

To be filed by amendment.

Filed herewith.

‡

Previously filed.

Item 37. Undertakings.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance under Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and this Offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

The undersigned registrant hereby further undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

Insofar as indemnification of liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that the registrant meets all of the requirements for filing on Form S-11 and has duly caused this Amendment No. 3 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Austin, State of Texas, on this 27th day of July, 2004.


AMERICAN CAMPUS COMMUNITIES, INC.

By:		/S/ WILLIAM C. BAYLESS, JR.
		William C. Bayless, Jr.
		President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 3 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.


Signature	Title	Date
/S/ WILLIAM C. BAYLESS, JR. William C. Bayless, Jr.	President, Chief Executive Officer and Director (Principal Executive Officer)	July 27, 2004

/S/ MARK J. HAGER Mark J. Hager	Executive Vice President, Chief Financial Officer, Treasurer and Director (Principal Financial Officer and Principal Accounting Officer)	July 27, 2004

/S/ BRIAN B. NICKEL Brian B. Nickel	Executive Vice President, Chief Investment Officer and Director	July 27, 2004

II-5

EXHIBIT INDEX


Exhibit Number		Description of Document

1.1*		Form of Underwriting Agreement among American Campus Communities, Inc., American Campus Communities Operating Partnership LP and the underwriters named therein.

3.1**		Form of Articles of Amendment and Restatement of American Campus Communities, Inc.

3.2**		Form of Bylaws of American Campus Communities, Inc.

4.1**		Form of Certificate for Common Stock of American Campus Communities, Inc.

5.1*		Opinion of Shaw Pittman LLP with respect to Maryland law.

8.1*		Opinion of Willkie Farr & Gallagher LLP with respect to tax matters.

10.1*		Form of Amended and Restated Partnership Agreement of American Campus Communities Operating Partnership LP.

10.2**		Form of 2004 Incentive Award Plan.

10.3**		Form of 2004 Outperformance Bonus Plan.

10.4*		Form of PIU Grant Notice (including Registration Rights).

10.5*		Form of Indemnification Agreement between American Campus Communities, Inc. and certain of its directors and officers.

10.6**		Form of Employment Agreement by and between American Campus Communities, Inc. and William C. Bayless, Jr.

10.7**		Form of Employment Agreement by and between American Campus Communities, Inc. and Brian B. Nickel.

10.8**		Form of Employment Agreement by and between American Campus Communities, Inc. and Mark J. Hager.

10.9**		Form of Non-competition Agreement.

10.10‡		First Amended and Restated Management Agreement between Dobie Center Properties, Ltd. and Texas Campus Lifestyles Management (Dobie Center), L.C., dated as of August 1, 1998.

10.11**		Amendment to First Amended and Restated Management Agreement and Exclusive Leasing Agreement between Dobie Center Properties, Ltd. and Texas Campus Lifestyles Management (Dobie Center), L.C., dated as of February 1, 2004.

10.12‡		Property Management Agreement between SHP—The Village at Riverside LP and American Campus Management (Texas), Ltd., dated as of December 2000.

10.13*		Form of Revolving Credit Facility.

10.14*		Contribution Agreement among American Campus Communities, Inc., American Campus Communities Operating Partnership LP, RAP–ACP, LLC and Reckson Strategic Venture Partners, dated as of · , 2004.

10.15*		Purchase and Sale Agreement among Titan Investments I, LLC, Anthony J. Patinella, Jr. and RAP Student Housing Properties, LLC, dated as of · , 2004.

10.16*		Option Agreement for the Dobie Center, by and between American Campus Communities, Inc. and RSVP Student Housing, LLC, dated as of · , 2004.

10.17*		Option Agreement for The Village at Riverside, by and among American Campus Communities, Inc., RSVP Student Housing, LLC and RAP–ACP, LLC, dated as of · , 2004.

10.18*		Letter of Intent between American Campus Communities, Inc. and Titan Investments I, LLC dated July , 2004.

21.1**		List of Subsidiaries of the Registrant.


Exhibit Number		Description of Document

23.1*		Consent of Willkie Farr & Gallagher LLP (included in Exhibit 8.1).

23.2**		Consent of Ernst & Young LLP.

23.3*		Consent of Shaw Pittman LLP (included in Exhibit 5.1).

23.4‡		Consent of Rosen Consulting Group.

23.5‡		Consent of Peterson’s.

24.1‡		Power of Attorney.

99.1‡		Report of Rosen Consulting Group.

99.2‡		Consent of Scott H. Rechler to be named as a proposed director.

99.3‡		Consent of R.D. Burck to be named as a proposed director and Chairman.

99.4‡		Consent of Cydney Donnell to be named as a proposed director.

99.5‡		Consent of G. Steven Dawson to be named as a proposed director.

99.6‡		Consent of Winston W. Walker to be named as a proposed director.

99.7‡		Consent of Edward Lowenthal to be named as a proposed director.

99.8*		Resignation of Mark J. Hager from the Board of Directors (effective as of the consummation date).

To be filed by amendment.

Filed herewith.

‡

Previously filed.