Please ensure Javascript is enabled for purposes of website accessibility

1 Big Reason American Campus Communities Is Worth a Closer Look

By Matthew Frankel, CFP® – Aug 27, 2021 at 6:48AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The student housing REIT could be a big winner as the school year gets underway.

American Campus Communities (ACC) is seeing its business rebound quite strongly compared with last year, but believe it or not, the company's college housing properties might not even be the most exciting part of the business. In this Fool Live video clip, recorded on Aug. 17, Millionacres real estate investment trust analyst Matt Frankel, CFP, and editor Deidre Woollard discuss a massive project American Campus Communities is currently building and why it's such a big deal.

10 stocks we like better than American Campus Communities
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and American Campus Communities wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of August 9, 2021

 

Matthew Frankel: I drove by their Disney (DIS -0.01%) project last week. That is impressive. I know you saw the numbers on that.

Deidre Woollard: Yes. This is something I really want to talk about because I think this is a fascinating project.

Frankel: Yeah. When we first heard that they were building the housing for Disney's internship program. I mean, I'm as guilty of this as anybody. I was like, "Oh, that's another property. It's like a dorm." No, this is a huge project. That, when it's completed is going to be over 10% of their available beds I believe. I drove by and they've only completed four out of 10 phases.

Woollard: Yeah.

Frankel: Of the project. I didn't know what it was at first, we drove by what looked like an apartment complex except it went on forever. I said "what is that?" We were right next to Disney World at the time. I said that has to be the apartment and it was. The Flamingo Crossings Village is what it's called and it's going to have almost 5,000 beds with four out of 10 phases complete. This is a massive community. I mean, 4,000 beds is like a small college.

Woollard: Yeah.

Frankel: Like the student population. They are anticipating 85% occupancy. I know I had a lot of friends in college who did the Disney internship program. It's a big program and it's tougher to think of a tenant that's more safe paying their bills than Disney.

Woollard: Go ahead.

Frankel: No. I mean, college students are great, but rent collection is not 100%. You have people running through financial trouble throughout the year. The Disney internship program's a pretty reliable tenant in my opinion.

Woollard: Yeah. They were talking about it on the earnings call. Talking about how they're making the building itself really Disney-fied and getting that community aspect of it. On the earnings call, they were very bullish about it and I mean, there's just so much potential for that because there's also the whole Disney Leadership Institute and all of that. If this goes well, there's massive opportunities for expansion and I know you just bought in Orlando. I think that's a city that is really interesting. I talked to the head of the Realtor Association last week because Orlando, I think people just think of it as just Disney, but that is a city with a lot of growth potential.

Frankel: Yeah. People think it's built out. No, it's not. I mean, Disney has enough land, they could build another theme park or two if they wanted do. That's where we saw the housing, we were heading home from our Orlando house. It's got a lot of potential and right now it's packed in Orlando. One of their biggest sources of business, international tourism, hasn't really come back yet.

Woollard: Right.

Frankel: It feels busy now compared to pre pandemic levels, it's really not and it's a lot of potential for American Campus to use that to leverage other relationships over time. I mean, Disney is not the only one that has a big internship program that needs housing in the country. It's an outside-the-box way to really grow the business.

Woollard: Well, and I thought that as a test case, too, because you can't, like you said, you can't really have a more prestige client if that works out really well, that is a great way for them to show this and to really get into an area that is sort of like their core business, but also just adjacent enough to potentially have a different type of income. I think that's really interesting because I think sometimes when you have a company that is a pure play on one thing, there is always that risk if there's something that occurs. It's nice to see just a little bit of something else that they can focus on that's slightly different.

Matthew Frankel, CFP owns shares of American Campus Communities and Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool recommends American Campus Communities. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

American Campus Communities Stock Quote
American Campus Communities
ACC
Walt Disney Stock Quote
Walt Disney
DIS
$98.87 (-0.01%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.