American Campus Communities

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Photo Credit: Sarah Montgomery | Daily Texan Staff

Major real estate developer American Campus Communities has dominated management of several West Campus apartment complexes and will be likely expanding in the future, realtors say.

With the establishment of The Callaway House this summer in West Campus, American Campus Communities, which manages and owns the new property, pursued and gained ownership over The Castilian, 26 West, The Block, The Penthouse at Callaway and The Texan as well as Vintage West Campus. 

Joe Yager, real estate agent for Uptown Realty LLC and founder of Active Property Management & MR+D, said that the expansion of American Campus Communities should be something for potential buyers to look out for in West Campus.

“I think their overall play is to acquire more assets,” Yager said. “Although, I am not sure of any specific properties they are currently targeting in the West Campus market.”

According to Yager, there is a significant aspect of danger in the prospect of American Campus Communities acquiring so many properties in such a condensed area of real estate.

“I think they want to dominate the market, if you will,” Yager said. “This would allow them to control the prices of real estate.”

Bill Bayless, CEO of American Campus Communities, said in the fall 2013 leasing update that despite adding so many properties and taking ownership of two additional portfolios, the company still has room for improvement in the upcoming 2014-15 year.

“We are generally pleased with the overall 2013 leasing progress on the heels of integrating $2.2 billion in assets into our portfolio,” Bayless said. “Our leasing results put us near the mid-point of our FFOM guidance range of $2.20 to $2.26 per share and offer opportunity for improvement in the 2014–2015 academic year.”

Gina Cowart, vice president of marketing and investor relations at American Campus Communities, said that as of right now, expansion is not the company’s focus.

“We have no immediate plans to expand our footprint in West Campus, but we are focused on delivering the best living experience to our current residents,” Cowart said. “We are so thrilled to have a presence in our hometown and be actively engaged in the community.”

Although American Campus Communities may decide to hold off on expansion because of their current large number of assets, the large portion of apartment complexes under their ownership in West Campus already gives the company some control over prices in the neighborhood, said Richie Gill, real estate broker and principal of Longhorn Central Realty.

“The properties owned by American Campus Communities are Class A properties, which means that they get leased very easily giving the company current pricing control,” Gill said. “West Campus has a high barrier to breach with new properties, so ACC’s ownership cuts out the little guys.”

As The Daily Texan reported Friday, a former UT System chancellor, R.D. Burck, serves on the Executive Committee of the University of Texas Chancellor’s Council, an advising board to the current chancellor, Francisco Cigarroa. Cigarroa serves on the board of directors for the University of Texas Investment Management Company, an independent company that manages the investments of both the UT and Texas A&M systems. Among UTIMCO’s many investments is a $1.5 million stake in American Campus Communities, a student-housing company, of which the chairman of the board of directors is none other than
R.D. Burck.  

Absent any new information, it seems that the relationship isn’t entrenched enough to cross the bounds of legality. Burck isn’t actually an employee of ACC, although, as the chief representative of its shareholders, he would have considerable influence over the company. And the investment was made in 2008, three years after Burck left the UTIMCO board of directors, although admittedly, his time on the boards of ACC and UTIMCO overlapped for a period of a year.

UTIMCO spokeswoman Christy Wallace told the Texan that the company maintains a restricted list of businesses that are off-limits for investment, and that no money would have been invested in ACC while Burck served on both boards.

“[American Campus Communities’] public equity securities were on the restricted list when Mr. Burck was on the UTIMCO board, so none of UTIMCO’s investment managers held any of their securities at that time,” Wallace said. “As Mr. Burck is no longer chancellor or on the UTIMCO board, [American Campus Communities] securities are no longer on the restricted list.”

It’s also worth noting that UTIMCO has seen a good rate of return on the money; ACC’s stock has risen by approximately 75 percent in the five years since the investment. And $1.5 million isn’t even a drop in the $21.7 billion bucket that is the UT System’s endowment.

On the other hand, this isn’t the first time UTIMCO investments have been linked to high-profile members of the System leadership. In 2011, the company invested $200 million in a different private investment firm, Post Oak Energy Capital, which in turn invested $60 million in an oil and gas company tied to UT System regent Alex Cranberg that drills on land owned by the University.

It’s impossible to tell whether the investment in ACC happened because of Burck’s involvement. But his and Cranberg’s multi-faceted relationships with UTIMCO are a predictable phenomenon. With such large quantities of money invested in such a large number of businesses, it’s unsurprising that some of it ends up going near the System’s leaders — many of whom are prominent businessmen in their own right.

Photo Credit: Daily Texan Staff

Behind the fresh, glamorous exteriors of the newly built private off-campus dorm, The Callaway House, is American Campus Communities, a private student housing developer that the UT System has invested more than a million dollars in. And sitting at the top of American Campus Communities is R.D. Burck, the chairman of the board of directors for American Campus Communities — and a former UT System chancellor.

The University of Texas Investment Management Company, an external investment company that manages investments for the UT and The Texas A&M University systems, invested in American Campus Communities in 2008. Currently, UTIMCO owns stock in American Campus Communities valued at more than $1.5 million, according to the company’s latest audit reports from 2012. The investment was made with the Permanent University Fund, a state endowment that funds a part of the systems’ budgets. 

As chancellor, Burck served on UTIMCO’s board of directors beginning in 2000. While Burck stepped down as chancellor in 2002, he continued to serve on the board until 2005. Burck became a chairman of the board of directors of American Campus Communities in 2004. 

UTIMCO spokeswoman Christy Wallace said the investment company does not purchase stock directly but instead hires investment managers. These managers cannot invest in companies on a restricted list, which includes companies associated with members of UTIMCO’s board of directors. 

“[American Campus Communities] public equity securities were on the restricted list when Mr. Burck was on the UTIMCO board, so none of UTIMCO’s investment managers held any of their securities at that time,” Wallace said. “As Mr. Burck is no longer chancellor or on the UTIMCO board, [American Campus Communities] securities are no longer on the restricted list.”

Burck is not employed by American Campus Communities and instead represents the company’s shareholders as an independent chairman, according to American Campus Communities spokeswoman Gina Cowart. UTIMCO is one of the shareholders Burck now represents.

“What an independent board member means is there is no affiliation with the company and no employment,” Cowart said. “That’s an important distinction.”

Burck is currently a member of the Executive Committee of the University of Texas Chancellor’s Council, which advises the current chancellor, Francisco Cigarroa. Cigarroa and several other regents sit on UTIMCO’s board of directors.

UT System spokeswoman Jenny LaCoste-Caputo declined to comment and instead deferred questions regarding investments and a possible conflict of interest to UTIMCO. 

This year, American Campus Communities opened a private off-campus dorm, The Callaway House, in West Campus and now owns six other apartment complexes in the area. The company, which owns complexes across the United States, also recently became the “Official Student Housing Sponsor of UT Athletics,” which allows the properties to use the University’s Longhorn logo.

“Our properties have no formal relationship with the University of Texas other than our sincere desire to be a good neighbor,” Cowart said.

While UTIMCO has invested in American Campus Communities, Burck has been openly critical of the UT regents. The former chancellor wrote an editorial during the height of the recent conflict between the regents and the University in February. In the editorial, Burck said some of the regents have not fulfilled their duties.

“Some of the most recent regents selected by the governor have worked to dilute, undermine and even attack the mission that they swore to protect,” Burck said in his editorial that ran in the Austin American-Statesman. “We need regents who respect the diversity of those interests and support the institutions in their quest to achieve their missions.”