American Campus Communities Breaks Ground at Princeton

By Gail Kalinoski, Contributing Editor

American Campus Communities, Inc., has begun construction on a 325-unit faculty and staff housing project at Princeton University, its second development at the New Jersey school but the REIT’s first that’s not for students.

The Merwick-Stanworth project, located on two contiguous university-owned sites just north of the main campus along Route 206/Bayard Lane, will be built in phases with completion expected in three years. The first 127 units are slated for delivery by summer 2014 with the remaining 198 units to be ready between late 2015 and summer 2016. They will consist of one-, two- and three bedroom apartment and townhome units and are expected to receive LEED Silver certification.

The dollar amount of the development was not released by ACC or by Princeton University. ACC, an Austin, Texas, based REIT, will develop, own and manage the Merwick-Stanforth housing units through a 70-year ground lease. The deal is being done under ACC’s American Campus Equity (ACE) program, in which ACC serves as the college or university’s sole partner and doesn’t charge them fees up front. ACC gets financial returns through long-term cash flow and benefits of ownership. The REIT has used ACE on other developments including Portland State University, University of New Mexico, Arizona State University and Northern Arizona University, according to an ACC spokesperson. ACE was used on a student housing project at Drexel University, due to open this fall, she said.

“Many factors are taken into account when a university and ACC decide to do a tax-exempt structure or an ACE transaction,” the ACC spokesperson told Commercial Property Executive. “Lately, we’ve seen a pretty even split between the two models.”

While this is ACC’s first faculty and student housing project in the United States, it is the firm’s second development at Princeton University. The REIT is also building the Lakeside Graduate Student Housing project south of Faculty Road. Scheduled for completion in summer 2014, Lakeside replaces the Hibben and Magie apartments and will have capacity for 715 residents in 329 units.

Both developments are part of the University’s Housing Master Plan, which began in 2005 to upgrade campus housing facilities.

“We are honored to help deliver premier housing for Princeton faculty and staff,” Bill Bayless, American Campus CEO, said in a news release. “By providing an affordable housing option with updated amenities and located in a vibrant neighborhood convenient to campus, this community will be a wonderful place to live.”

As part of the municipality of Princeton’s 20 percent affordable housing requirement for new residential projects, apartments for low-and moderate-income families will be included in the Merwick-Stanworth buildings. Those units are available to the general public.

In recent months, ACC, the largest owner, manager and developer of student housing in the U.S., has also made news for purchasing a large portfolio. The REIT picked up a 19-property, 12,049-bed student housing portfolio for about $863 million from Kayne Anderson Advisors, L.P. affiliates. It comprises properties at 14 universities including Michigan State University, Louisiana State University, University of Kentucky, University of Southern California and Virginia Commonwealth University.