Filed pursuant to Rule 424(b)(5)

Registration No. 333-129131

PROSPECTUS SUPPLEMENT

(To prospectus dated October 27, 2005)

 

4,950,000 Shares

 

American Campus Communities, Inc.

 

Common Stock

 

 

 

 

We are selling 4,950,000 shares of our common stock, par value $0.01 per share.

 

Our common stock is listed on the New York Stock Exchange under the symbol “ACC.” On September 12, 2006, the last reported sale price of our common stock as reported on the New York Stock Exchange was $24.68 per share.

 

Investing in the common stock involves risks. See the “Risk Factors” section beginning on page 1 of the accompanying prospectus and the “Risk Factors” incorporated by reference from our Annual Report on Form 10-K for the year ended December 31, 2005.

 

 

 

 

 

 

The underwriters may also purchase up to 742,500 additional shares of our common stock from us at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus supplement to cover overallotments.

 

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

 

 

 

 

 

 

 

 

KeyBanc Capital Markets

 

 

 

 

The date of this prospectus supplement is September 12, 2006.

 

TABLE OF CONTENTS

 

 

 

You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different or additional information. If anyone provides you with different or additional information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed since those dates.

 

We are a public company and file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC’s public reference room at 100 F Street, NE, Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference room. Our SEC filings are also available to the public at the SEC’s web site at http://www.sec.gov. In addition, you may read and copy our SEC filings at the office of the New York Stock Exchange at 20 Broad Street, New York, New York 10005. Our website address is www.student-housing.com or www.americancampuscommunities.com. However, information on our website will not be considered a part of this prospectus supplement or the accompanying prospectus.

 

The SEC allows us to “incorporate by reference” the information we file with it, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus supplement and the accompanying prospectus and the information we file later with the SEC prior to the completion of this offering will automatically update and supersede this information.

 

We incorporate by reference the documents listed below and any future filings made with the SEC (File No. 1-12110) under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until this offering is completed:

 

 

You may request a copy of these filings at no cost by writing or telephoning Investor Relations at the following address and telephone number:

 

American Campus Communities, Inc.

805 Las Cimas Parkway, Suite 400

Austin, Texas 78746

(512) 732-1000

 

SUMMARY

	•	Student housing is our core business.  We have expertise in the unique and specialized aspects of the student housing industry and focus on student housing as our core business. We are a fully integrated organization, which 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. Since our inception in 1993, we have been one of the most active companies in the sector as we have been involved in the development, acquisition, ownership and/or management of more than 85 student housing properties containing more than 50,000 beds.
	•	One of the industry’s most experienced teams.  Collectively throughout their individual careers, our management team has been involved in the development, acquisition or management of approximately 138 student housing properties containing more than 85,000 beds at 87 colleges and universities. Our corporate team of student housing professionals have participated in every functional aspect of the ownership, acquisition, development and management of student housing. Seven corporate employees at the level of Vice President or above, including our CEO, began their careers in student housing as resident assistants while in college, providing us with a comprehensive understanding of the operational aspects of the student housing business. We believe that this history of experience provides a base of knowledge that has facilitated building a company with substantial operating and development expertise in the student housing industry.
	•	High quality student housing properties.  As of June 30, 2006, our properties had an average age of only 5.8 years. Our properties are located in close proximity to, and in the case of our on-campus participating properties on the grounds of, major colleges and universities. Our typical units include private bedrooms, private or semi-private bathrooms, living rooms 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, in an academically oriented environment that parents appreciate. Each of our properties is managed and cared for by our trained on-site staff — managers, maintenance and business personnel and resident assistants.
	•	Extensive network of university and college relationships.  This network provides us with acquisition, development and management opportunities. Our clients have included some the nation’s most prominent systems of higher education, including 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, the University of Colorado System, the West Virginia University System, the University of Hawaii System and the Arizona State University System.

	•	Industry innovators.  With approximately $1.1 billion of development completed or in progress and in excess of $500 million of properties acquired over the last decade, we have led the industry in evolving student housing in the areas of product design concepts, site planning, unit plans and amenity offerings. We have also developed and implemented specialized student housing investment and operating systems and have created a proprietary lease administration and marketing software customized for student housing that enables us to quickly identify and respond to market changes and trends.

	•	developing and acquiring owned off-campus student housing communities that meet our focused investment criteria;
	•	developing, investing equity in, and owning on-campus student housing communities;
	•	maximizing the profitability of our owned and third-party managed properties through proactive marketing, management and asset preservation strategies; and
	•	continuing to grow our third-party development and management services businesses to generate cash flow and build our national reputation among colleges and universities.

	•	properties that are located in close proximity to major colleges and universities, offering pedestrian, bicycle or university bus service access to their respective campuses;
	•	high quality, modern student housing properties that feature a differentiated product offering; and
	•	locations in student housing submarkets with barriers to entry.

	•	establishing internal controls and procedures for cost control consistently throughout our communities;
	•	appropriately staffing our properties at the site-level, minimizing multiple layers of management and increasing effectiveness;
	•	negotiating utility and service-level pricing arrangements with national and regional vendors and requiring corporate-level approval of service agreements for each community; and

	•	conducting analysis of the costs and effectiveness of each of our marketing programs via our proprietary LAMS system.

	•	a fully integrated prospect tracking and follow-up system;
	•	a built-in marketing effectiveness program to measure the success of our marketing efforts on a real time basis;
	•	a real-time monitor of lease closings and leasing terms;
	•	an automated lease generation system;
	•	the generation of future period rent rolls to aid in budgeting and forecasting; and
	•	a customized report writer.

		Year
		Acquired/
Property		Developed		Location		Primary University Served		Units				Beds
Owned off-campus properties:
1. Villas on Apache(1)		1999		Tempe, AZ		Arizona State University Main Campus			111				444
2. The Village at Blacksburg		2000		Blacksburg, VA		Virginia Polytechnic Institute and State University			288				1,056
3. The Village on University(2)		1999		Tempe, AZ		Arizona State University Main Campus			288				918
4. River Club Apartments		1999		Athens, GA		The University of Georgia — Athens			266				794
5. River Walk Townhomes		1999		Athens, GA		The University of Georgia — Athens			100				340
6. The Callaway House		2001		College Station, TX		Texas A&M University			173				538
7. The Village at Alafaya Club		2000		Orlando, FL		The University of Central Florida			228				840
8. The Village at Science Drive		2001		Orlando, FL		The University of Central Florida			192				732
9. University Village at Boulder Creek		2002		Boulder, CO		The University of Colorado at Boulder			82				309
10. University Village at Fresno		2004		Fresno, CA		California State University, Fresno			105				406
11. University Village at TU		2004		Philadelphia, PA		Temple University			220				749
12. University Club Tallahassee		2005		Tallahassee, FL		Florida State University			152				608
13. The Grove at University Club		2005		Tallahassee, FL		Florida State University			64				128
14. College Club Tallahassee		2005		Tallahassee, FL		Florida A&M University			96				384
15. The Greens at College Club		2005		Tallahassee, FL		Florida A&M University			40				160
16. University Club Gainesville		2005		Gainesville, FL		University of Florida			94				376
17. City Parc at Fry Street		2005		Denton, TX		University of North Texas			136				418
18. The Estates		2005		Gainesville, FL		University of Florida			396				1,044
19. University Village at Sweet Home		2005		Amherst, NY		State University of New York — Buffalo			269				828
20. Entrada Real		2006		Tucson, AZ		University of Arizona			98				363
21. Royal Oaks		2006		Tallahassee, FL		Florida State University			82				224
22. Royal Pavilion		2006		Tallahassee, FL		Florida State University			60				204
23. Royal Village Tallahassee		2006		Tallahassee, FL		Florida State University			75				288
24. Royal Village Gainesville		2006		Gainesville, FL		University of Florida			118				448
25. Northgate Lakes		2006		Orlando, FL		The University of Central Florida			194				710
26. Royal Lexington		2006		Lexington, KY		University of Kentucky			94				364
27. The Woods at Greenland		2006		Murfreesboro, TN		Middle Tennessee State University			78				276
28. Raiders Crossing		2006		Murfreesboro, TN		Middle Tennessee State University			96				276
29. Raiders Pass		2006		Lubbock, TX		Texas Tech University			264				828
30. Aggie Station		2006		College Station, TX		Texas A&M University			156				450
31. The Outpost San Marcos		2006		San Marcos, TX		Texas State University — San Marcos			162				486
32. The Outpost San Antonio		2006		San Antonio, TX		University of Texas — San Antonio			276				828
33. Callaway Villas		2006		College Station, TX		Texas A&M University			236				704
34. Village at Newark(3)		2007		Newark, NJ		Rutgers University, NJIT, Essex CCC			234				838
Total owned off-campus properties									5,523				18,359

Year

Acquired/

Property

Developed

Location

Primary University Served

Units

Beds

On-campus participating properties:

35. University Village — PVAMU

1996 / 97 / 98

Prairie View, TX

Prairie View A&M University

612

1,920

36. University College — PVAMU

2000 / 2003

Prairie View, TX

Prairie View A&M University

756

1,470

37. University Village — TAMIU

1997

Laredo, TX

Texas A&M International University

84

252

38. Cullen Oaks — Phase I and II

2001 / 2005

Houston, TX

The University of Houston

411

879

Total on-campus participating properties

1,863

4,521

Total-all properties

7,386

22,880

(1)		Historically, this property (formerly known as Commons on Apache) was marketed and leased as double bedroom accommodations on a 10-month lease. This property has been refurbished for Fall 2006 and now includes 156 private bedroom accommodations and 132 double bedroom accommodations primarily leased on a 12-month basis. This has changed the design beds from 444 to 288.
(2)		We have entered into an agreement to sell this property. See “— Recent Activities — Strategic Disposition.”
(3)		Currently under development — scheduled to complete construction in Summer 2007 and open for occupancy in Fall 2007.

						% of
		Executed				Rentable				Executed
		Leases as of				Beds as of				Leases as of				Variance												Total
		September 1,				September 1,				September 2,				to Prior Year								Rentable				Design
Leases		2006(1)				2006				2005(1)				Beds				%				Beds(2)				Beds
Same Store Owned Off-Campus Portfolio
University Village at Boulder Creek			295				99	%			275				20				7	%			299				309
University Village at Sweethome			811				100				813				(2	)			0				813				828
The Village at Blacksburg			1,041				99				1,038				3				0				1,048				1,056
University Club Gainesville			372				99				360				12				3				376				376
The Village at Science Drive			720				100				726				(6	)			(1	)			723				732
The Callaway House			547				104				547				—				0				527				538
The Village at Alafaya Club			821				99				825				(4	)			0				829				840
City Parc at Fry Street			407				99				409				(2	)			0				412				418
University Club Tallahassee(3)			730				99				732				(2	)			0				736				736
The Estates			1,031				99				1,031				—				0				1,037				1,044
River Walk Townhomes			327				98				328				(1	)			0				333				340
University Village at TU			733				100				723				10				1				731				749
River Club Apartments			769				99				774				(5	)			(1	)			775				794
The Village on University			900				99				899				1				0				908				918
College Club Tallahassee(4)			501				93				530				(29	)			(5	)			540				544
University Village at Fresno			376				95				390				(14	)			(4	)			396				406
Total			10,381				99	%			10,400				(19	)			0	%			10,483				10,628
New Developments/Re-Positioned Properties
Callaway Villas			691				100	%			n/a				n/a				n/a				691				704
Villas on Apache(5)			285				100				444				(159	)			(36	)%			285				288
Total			976				100	%			n/a				n/a				n/a				976				992
New Acquisitions
The Outpost San Antonio			825				100	%			n/a				n/a				n/a				828				828
Northgate Lakes			706				100				n/a				n/a				n/a				706				710
Royal Village Gainesville			433				100				n/a				n/a				n/a				433				448
Entrada Real			362				100				n/a				n/a				n/a				363				363
Royal Tallahassee(6)			709				100				n/a				n/a				n/a				712				716
The Outpost San Marcos			484				100				n/a				n/a				n/a				486				486
Aggie Station			444				100				n/a				n/a				n/a				444				450
Royal Lexington			333				96				n/a				n/a				n/a				348				364
Raiders Crossing			270				100				n/a				n/a				n/a				271				276
The Woods at Greenland			272				100				n/a				n/a				n/a				272				276
Raiders Pass			571				69				n/a				n/a				n/a				828				828
Total			5,409				95	%			n/a				n/a				n/a				5,691				5,745
Total			16,766				98	%			n/a				n/a				n/a				17,150				17,365

(1)		Executed leases may include students who have not yet moved into the property.
(2)		Rentable beds exclude beds needed for on-site staff and/or model units.

(3)		For lease administration purposes, University Club Tallahassee and The Grove at University Club are reported combined.
(4)		For lease administration purposes, College Club Tallahassee and The Greens at College Club are reported combined.
(5)		Historically, this property (formerly known as Commons on Apache) was marketed and leased as double bedroom accommodations on a 10-month lease. This property has been refurbished for Fall 2006 and now includes 156 private bedroom accommodations and 132 double bedroom accommodations primarily leased on a 12-month basis. This has changed the design beds from 444 to 288.
(6)		For lease administration purposes, the three properties acquired in Tallahassee, Royal Oaks, Royal Pavilion and Royal Village, are reported combined.

The Offering

 

 

 

 

 

 

We estimate we will receive gross proceeds from this offering of $121.8 million and approximately $140.0 million if the underwriters’ over allotment option is exercised in full. After deducting the underwriting discount and estimated expenses of this offering and giving effect to an expense reimbursement to be provided by the underwriters, we expect net proceeds from this offering of approximately $115.5 million and approximately $132.9 million if the underwriters’ overallotment option is exercised in full.

 

We intend to use the net proceeds from this offering to fund our development pipeline and potential acquisitions of student housing properties. In the interim, we intend to use $89.9 million to repay the outstanding balance of our revolving credit facility, $19.2 million to repay the outstanding balance on our Callaway Villas construction loan and the remaining $6.4 million for working capital and general corporate purposes. See “Underwriting — Other Relationships.”

 

Our revolving credit facility bears interest at a variable rate, at our option, based upon a base rate of (i) one-, two-, three- or six-month LIBOR or (ii) the higher of the lenders’ prime rate and the federal funds rate plus 0.5%, plus, in each case, a spread based upon our total leverage. As of June 30, 2006, the balance outstanding on our revolving credit facility bore interest at a weighted average rate of 6.83% per annum. This facility will mature in August 2009.

 

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 maintain our qualification 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 sets forth the high and low sale prices per share of common stock for the periods indicated as reported on the NYSE and the dividends paid by us with respect to each period shown below.

 

 

Our revolving credit facility contains customary affirmative and negative covenants and also contains financial covenants that, among other things, require us to maintain a certain minimum ratio of “EBITDA” (earnings before interest, taxes, depreciation and amortization) to fixed charges. We may pay dividends or other distributions to our stockholders so long as we are not in default under the credit facility and the aggregate of the dividends and distributions do not exceed 100% of our funds from operations for any four consecutive quarters. The financial covenants also include consolidated net worth and leverage ratio tests. As of June 30, 2006, we were in compliance with all such covenants.

 

We are required to distribute 90% of our REIT taxable income, excluding capital gains, on an annual basis to qualify as a REIT for federal income tax purposes. Accordingly, we intend to make, but are not contractually bound to make, regular quarterly distributions to common stockholders. All such distributions are

at the discretion of our board of directors. We may be required to use borrowings under our credit facility, if necessary and to the extent permitted thereunder, to meet REIT distribution requirements and qualify as a REIT and otherwise fund the remaining amounts of any distributions. The board of directors considers market factors and our performance in addition to REIT requirements in determining distribution levels.

 

On August 9, 2006, we declared a second quarter dividend of $0.3375 per share of common stock, which was paid on August 31, 2006 to all stockholders of record as of August 21, 2006.

 

The following table sets forth our capitalization as of June 30, 2006 on an actual basis and on a pro forma basis to give effect to this offering and the use of the net proceeds from this offering as set forth in “Use of Proceeds.” You should read this table in conjunction with “Use of Proceeds” and with our unaudited consolidated financial statements and related notes included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, which is incorporated by reference in this prospectus supplement and the accompanying prospectus.

 

 

 

The following unaudited pro forma financial information gives effect to our acquisition of 20 properties during 2005 and 2006, our July 2005 equity offering and the anticipated disposition of The Village on University. The historical financial information for the year ended December 31, 2005 and the six months ended June 30, 2006 has been derived from our financial statements incorporated by reference in this prospectus supplement and the accompanying prospectus. The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2005 and the six months ended June 30, 2006 are presented as if our acquisition of 20 properties during 2005 and 2006, our July 2005 equity offering and the anticipated disposition of The Village on University had occurred on January 1, 2005.

 

The only adjustment required to our historical consolidated balance sheet as of June 30, 2006 for pro forma purposes is to reclassify $32.1 million from “Owned off-campus properties, net” to “Owned off-campus properties — held for sale,” reflecting the net book value of The Village on University.

 

The unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what our results of operations would actually have been if the transactions had in fact occurred on the earlier date discussed above. It also does not project or forecast our consolidated results of operations for any future date or period.

American Campus Communities, Inc. and Subsidiaries

Unaudited Pro Forma Condensed Consolidated Statements of Operations
For the Six Months Ended June 30, 2006
(unaudited, dollars in thousands, except share and per share data)

 

American Campus Communities, Inc. and Subsidiaries

Unaudited Pro Forma Condensed Consolidated Statements of Operations
For the Year Ended December 31, 2005
(unaudited, dollars in thousands, except share and per share data)

 

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

 

 

(a) Reflects the historical operations of a portfolio of 13 properties (the “2006 Acquisitions”) acquired on March 1, 2006.

 

(b) Reflects the anticipated disposition of The Village on University, which was reclassified to “Owned off-campus properties — held for sale” in August 2006 and is reflected as discontinued operations in accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

 

(c) Deducts the historical amortization of intangible lease assets recognized in connection with the 2006 Acquisitions, as the properties are assumed to be acquired on January 1, 2005 and such assets are assumed to be fully amortized during the year ended December 31, 2005. Also reflects depreciation expense on the tangible fixed assets acquired in connection with the 2006 Acquisitions recorded at fair value.

 

(d) Reflects interest expense associated with the debt we assumed in connection with the 2006 Acquisitions valued at fair market value.

 

(e) Reflects the amortization of financing costs incurred in connection with the debt we assumed for the 2006 Acquisitions.

 

(f) Reflects an increase in interest expense incurred under our revolving credit facility for $67 million in borrowings made to complete the 2006 Acquisitions at an annual interest rate of 6.3%.

 

(g) Represents additional minority interests share of income from continuing operations associated with common and preferred units of limited partnership interest in American Campus Communities Operating Partnership (the “Operating Partnership”) issued as partial consideration for the 2006 Acquisitions, assuming such units were issued on January 1, 2005.

 

(h) Represents the approximate 11% share of discontinued operations allocable to holders of common and preferred units of limited partnership interest in the Operating Partnership.

 

(i) Assumes that common and preferred units of limited partnership interest in the Operating Partnership issued as partial consideration for the 2006 Acquisitions were issued on January 1, 2005.

 

 

(a) Reflects the historical operations for the following properties acquired in 2005 (the “2005 Acquisitions”), prior to our ownership:

 

 

(b) Reflects the historical operations of the 2006 Acquisitions acquired on March 1, 2006.

 

(c) Reflects the anticipated disposition of The Village on University, which was reclassified to “Owned off-campus properties — held for sale” in August 2006 and is reflected as discontinued operations.

 

(d) Reflects the following: (i) depreciation expense on the tangible fixed assets acquired in connection with the 2005 Acquisitions and the 2006 Acquisitions recorded at fair value, and (ii) the amortization of intangible lease assets recognized in connection with the 2005 Acquisitions and the 2006 Acquisitions.

(e) Reflects interest expense associated with the debt we assumed in connection with the 2005 Acquisitions and the 2006 Acquisitions valued at fair market value.

 

(f) Reflects the amortization of financing costs incurred in connection with the debt we assumed for the 2005 Acquisitions and the 2006 Acquisitions.

 

(g) Reflects an increase in interest expense incurred under our revolving credit facility for borrowings made to complete the 2005 Acquisitions and the 2006 Acquisitions at rates ranging from 4.0% to 6.3%, representing the actual interest rates incurred for such borrowings.

 

(h) Represents additional minority interests share of loss from continuing operations associated with common and preferred units of limited partnership interest in the Operating Partnership issued as partial consideration for the 2006 Acquisitions, assuming such units were issued on January 1, 2005.

 

(i) Represents the approximate 11% share of discontinued operations allocable to holders of common and preferred units of limited partnership interest in the Operating Partnership.

 

(j) Assumes that common shares issued in connection with our July 2005 equity offering were issued on January 1, 2005.

 

(k) Assumes that common shares issued in connection with our July 2005 equity offering and common and preferred units of limited partnership interest in the Operating Partnership issued as partial consideration for the 2006 Acquisitions were issued on January 1, 2005. Excludes certain unvested restricted stock awards that would be anti-dilutive due to a pro forma loss from continuing operations for the period.

 

The following discussion supplements the discussion contained under the heading “Federal Income Tax Considerations and Consequences of Your Investment” in the accompanying prospectus and supersedes that discussion to the extent inconsistent with that discussion.

 

Because the following discussion is a summary that, in conjunction with the discussion contained under the heading “Federal Income Tax Considerations and Consequences of Your Investment” in the accompanying prospectus, is intended to address only material federal income tax consequences relating to the ownership and disposition of our common stock that will apply to all holders, it may not contain all the information that may be important to you. As you review this discussion, you should keep in mind that:

 

 

You are urged both to review the following discussion and to consult with your own tax advisor to determine the effect of ownership and disposition of common stock on your tax situation, including any state, local or non-U.S. tax consequences.

 

The information in this section is based on the current Internal Revenue Code, current, temporary and proposed Treasury regulations, the legislative history of the Internal Revenue Code, current administrative interpretations and practices of the Internal Revenue Service, including its practices and policies as endorsed in private letter rulings, which are not binding on the Internal Revenue Service except with respect to the taxpayer to which they are addressed, and existing court decisions. Future legislation, regulations, administrative interpretations and court decisions could change current law or adversely affect existing interpretations of current law. Any change could apply retroactively. We have not requested and do not plan to request any rulings from the Internal Revenue Service concerning the matters discussed in the following discussion. It is possible that the Internal Revenue Service could challenge the statements in this discussion, which do not bind the Internal Revenue Service or the courts, and that a court could agree with the Internal Revenue Service.

 

2006 Tax Legislation

 

The 15% reduced maximum tax rate on “qualified dividends” and certain long-term capital gains, as described in the accompanying prospectus under the heading “Federal Income Tax Considerations and Consequences of Your Investment,” was provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003 and generally is effective for taxable years ending on or after May 6, 2003 through December 31, 2008. On May 17, 2006, President Bush signed the Tax Relief Extension Reconciliation Act of 2005, which extended this reduction until December 31, 2010. Without future legislative changes, the maximum long-term capital gains and dividend rate discussed above will increase in 2011. This recent legislation could cause stock in non-REIT corporations to be a more attractive investment to individual investors than stock in REITs and could have an adverse effect on the market price of our equity securities.

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc. are acting as representatives of each of the underwriters named below. Subject to the terms and conditions set forth in a purchase agreement among us and the underwriters, we have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not jointly, to purchase from us, the number of shares of common stock listed opposite its name below.

 

 

Subject to the terms and conditions set forth in the purchase agreement, the underwriters have agreed, severally and not jointly, to purchase all of the shares sold under the purchase agreements if any of these shares are purchased. If an underwriter defaults, the purchase agreement provided that the purchase commitments of the nondefaulting underwriters may be increased or the purchase agreement may be terminated.

 

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, or to contribute to payments the underwriters may be required to make in respect of those liabilities.

 

The underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the shares, and other conditions contained in the purchase agreement, such as the receipt by the underwriters of officer’s certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

 

Commissions and Discounts

 

The representatives have advised us that the underwriters propose initially to offer the shares to the public at the public offering price set forth on the cover page of this prospectus supplement and to dealers at that price less a concession not in excess of $0.70 per share. The underwriters may allow, and the dealers may reallow, a discount not in excess of $0.10 per share to other dealers. After the public offering, the public offering price, concession and discount may be changed.

 

The following table shows the public offering price, underwriting discount and proceeds before expenses to us. The information assumes either no exercise or full exercise by the underwriters of their overallotment options.

 

 

The expenses of the offering, not including the underwriting discount, are estimated at $800,000 and are payable by us. The underwriters have agreed to reimburse $305,000 of our out-of-pocket expenses.

 

Overallotment Option

 

We have granted an option to the underwriters to purchase up to 742,500 additional shares of common stock at the public offering price less the underwriting discount. The underwriters may exercise this option for 30 days from the date of this prospectus supplement solely to cover any overallotments. If the

underwriters exercise this option, each underwriter will be obligated, subject to conditions contained in the purchase agreement, to purchase a number of additional shares proportionate to that underwriter’s initial amount reflected in the above table.

 

No Sales of Similar Securities

 

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 Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc. for the period from the date of this prospectus supplement through and including the 90th day thereafter. 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 Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc.

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc. 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 lock-up period referred to above, we issue an earnings release or a press release announcing a significant event or (y) prior to the expiration of such lock-up period, 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 lock-up period, the restrictions described above shall continue to apply until the expiration of the 17-day period beginning with the first day following the date of the earnings or the press release.

 

Notice to Prospective Investors in the European Economic Area

 

In relation to each member state of the European Economic Area that has implemented the Prospectus Directive (each, a relevant member state), with effect from and including the date on which the Prospectus Directive is implemented in that relevant member state (the relevant implementation date), an offer of shares of common stock described in this prospectus supplement may not be made to the public in that relevant member state prior to the publication of a prospectus in relation to the shares of common stock that has been approved by the competent authority in that relevant member state or, where appropriate, approved in another relevant member state and notified to the competent authority in that relevant member state, all in accordance with the Prospectus Directive, except that, with effect from and including the relevant implementation date, an offer of securities may be offered to the public in that relevant member state at any time:

 

 

Each purchaser of the shares of common stock described in this prospectus supplement located within a relevant member state will be deemed to have represented, acknowledged and agreed that it is a “qualified investor” within the meaning of Article 2(1)(e) of the Prospectus Directive.

For purposes of this provision, the expression an “offer to the public” in any relevant member state means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe the securities, as the expression may be varied in that member state by any measure implementing the Prospectus Directive in that member state, and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each relevant member state.

 

The sellers of the shares of common stock have not authorized and do not authorize the making of any offer of shares of common stock through any financial intermediary on their behalf, other than offers made by the underwriters with a view to the final placement of the shares of common stock as contemplated in this prospectus supplement. Accordingly, no purchaser of shares of common stock, other than the underwriters, is authorized to make any further offer of the shares of common stock on behalf of the sellers or the underwriters.

 

Notice to Prospective Investors in the United Kingdom

 

This prospectus supplement and the accompanying prospectus is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive (“Qualified Investors”) that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). This prospectus supplement and the accompanying prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant persons should not act or rely on this document or any of its contents.

 

Notice to Prospective Investors in France

 

Neither this prospectus supplement (including the accompanying prospectus) nor any other offering material relating to the shares of common stock described in this prospectus supplement has been submitted to the clearance procedures of the Autorité des Marchés Financiers or by the competent authority of another member state of the European Economic Area and notified to the Autorité des Marchés Financiers. The shares of common stock have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France. Neither this prospectus supplement (including the accompanying prospectus) nor any other offering material relating to the shares of common stock has been or will be

 

 

Such offers, sales and distributions will be made in France only

 

 

The shares may be resold directly or indirectly, only in compliance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code monétaire et financier.

New York Stock Exchange Listing

 

The shares are listed on the New York Stock Exchange under the symbol “ACC.”

 

Price Stabilization and Short Positions

 

Until the distribution of the shares is completed, SEC rules may limit underwriters and selling group members from bidding for and purchasing our common stock. However, the representatives may engage in transactions that stabilize the price of the common stock, such as bids or purchases to peg, fix or maintain that price.

 

In connection with this offering, the underwriters may purchase and sell our common stock in the open market. These transactions may include short sales, purchases on the open market to cover positions created by short sales and stabilizing transactions. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in this offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ overallotment option to purchase additional shares in this offering. The underwriters may close out any covered short position by either exercising their overallotment option or purchasing shares in the open market. In determining the source of shares to close out the covered 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 purchase shares through the underwriters’ overallotment option. “Naked” short sales are sales in excess of their overallotment option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common stock in the open market after pricing that could adversely affect investors who purchase in this offering. Stabilizing transaction consist of various bids for or purchase of shares of common stock made by the underwriters in the open market prior to the completion of this offering.

 

Neither we nor any of the underwriters makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common stock. In addition, neither we nor any of the underwriters makes any representation that the representatives will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

 

Other Relationships

 

Affiliates of Citigroup Global Markets Inc. and KeyBanc Capital Markets, a division of McDonald Investments Inc., two of our underwriters, are lenders under our revolving credit facility. KeyBank National Association (an affiliate of KeyBanc Capital Markets, a division of McDonald Investments Inc., which is an underwriter in this offering) is the administrative agent under the facility. Citicorp North America, Inc. (an affiliate of Citigroup Global Markets Inc., which is an underwriter in this offering) is a co-syndication agent under the facility. As of September 12, 2006, approximately $89.9 million of borrowings were outstanding under this facility. We intend to repay all of the outstanding borrowings under our revolving credit facility with a portion of the net proceeds of this offering and, upon application of the net proceeds from this offering, each lender will receive its proportionate share of the amount repaid. The aggregate amount to be repaid to lenders that are affiliates of the underwriters is expected to exceed 10% of the net proceeds of this offering.

 

Some of the underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us. They have received customary fees and commissions for these transactions.

 

Electronic Prospectus; Online Brokerage Accounts

 

This prospectus supplement and accompanying prospectus may be made available in electronic format 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.

 

Certain legal matters will be passed upon for us by Locke Liddell & Sapp LLP, Dallas, Texas, as our securities and tax counsel. Sidley Austin LLP, New York, New York, will act as counsel to the underwriters.

 

The consolidated and combined financial statements of American Campus Communities, Inc. and its subsidiaries and its predecessors at December 31, 2005 and 2004, and for each of the three years in the period ended December 31, 2005, appearing in this prospectus supplement and accompanying prospectus by reference from American Campus Communities, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2005 and American Campus Communities, Inc.’s management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2005 included in its Annual Report on Form 10-K, have been audited by Ernst & Young, LLP, independent registered public accounting firm, as set forth in their reports incorporated herein by reference, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

PROSPECTUS

 

 

American Campus Communities, Inc.

 

 

By this prospectus, we may offer up to $500,000,000 of our debt securities, shares of common stock, shares of preferred stock and/or warrants. We will provide the specific terms of these securities in supplements to this prospectus. You should read this prospectus and the supplements carefully before you invest.

 

You should carefully consider the risks set forth under “Risk Factors” starting on page 1 of this prospectus.

 

These securities have not been approved or disapproved by the SEC or any state securities commission. None of those authorities has determined that this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

 

We may offer the securities directly or through underwriters, agents or dealers. The supplement will describe the terms of that plan of distribution. The section entitled “Plan of Distribution” on page 27 of this prospectus also provides more information on this topic.

 

The date of this prospectus is October 27, 2005.

TABLE OF CONTENTS

 

 

The following sets forth the most significant factors that make an investment in our securities speculative or risky. You should carefully consider the following information in conjunction with the other information contained or incorporated by reference in this prospectus or any prospectus supplement before making a decision to invest in our securities.

 

Risks Related to Our Properties and Our Business

 

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. In addition, we are subject to increased leasing risk on our properties under construction and future acquired properties based on our lack of experience leasing those properties and unfamiliarity with their leasing cycles. Student housing properties are also typically leased during a limited leasing season that usually begins in January and ends in August of each year. We are therefore highly dependent on the effectiveness of our marketing and leasing efforts and personnel during this season.

 

Changes in university admission policies could adversely affect us. For example, if a university reduces the number of student admissions or requires that a certain class of students, such as freshman, live in a university owned facility, the demand for beds at our properties may be reduced and our occupancy rates may decline. While we may engage in marketing efforts to compensate for such change in admission policy, we may not be able to 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, as discussed below. Any failure to maintain good relationships with these colleges and universities could therefore have a material adverse effect on us. If colleges and universities refuse to make their lists of prospective student-tenants and their parents available to us or increase the costs of these lists, there could be a material adverse effect on us.

 

Federal and state laws require colleges to publish and distribute reports of on-campus crime statistics, which may result in negative publicity and media coverage associated with crimes occurring on or in the vicinity of our on-campus participating properties. Reports of crime or other negative publicity regarding the safety of the students residing on, or near, our properties may have an adverse effect on both our on-campus and off-campus business.

 

We face significant competition from university-owned on-campus student housing, from other off-campus student housing properties and from traditional multifamily housing located within close proximity to universities.

 

On-campus student housing has certain inherent advantages over off-campus student housing in terms of physical proximity to the university campus and integration of on-campus facilities into the academic community. Colleges and universities can generally avoid real estate taxes and borrow funds at lower interest rates than us and other private sector operators. We also compete with national and regional owner-operators of off-campus student housing in a number of markets as well as with smaller local owner-operators.

 

Currently, the industry is fragmented with no participant holding a significant market share. There are a number of student housing complexes that are located near or in the same general vicinity of many of our owned properties and that compete directly with us. Such competing student housing complexes may be newer

than our properties, located closer to campus, charge less rent, possess more attractive amenities or offer more services or shorter term or more flexible leases.

 

Rental income at a particular property could also be affected by a number of other factors, including the construction of new on-campus and off-campus residences, increases or decreases in the general levels of rents for housing in competing communities, increases or decreases in the number of students enrolled at one or more of the colleges or universities in the market of the property and other general economic conditions.

 

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. These activities may also include any of the following risks:

 

 

Our newly developed properties will be subject to risks associated with managing new properties, including lease-up and integration risks. In addition, new development activities, regardless of whether or not they are ultimately successful, typically will require a substantial portion of the time and attention of our development and management personnel. Newly developed properties may not perform as expected.

 

We anticipate that we will, from time to time, elect not to proceed with ongoing development projects. If we elect not to proceed with a development project, the development costs associated therewith will ordinarily be charged against income for the then-current period. Any such charge could have a material adverse effect on our results of operations in the period in which the charge is taken.

 

We may in the future develop properties nationally, internationally or in geographic regions other than those in which we currently operate. We do not possess the same level of familiarity with development in these new markets, which could adversely affect our ability to develop such properties successfully or at all or to achieve expected performance. Future development opportunities may not be available to us on terms that meet our investment criteria or we may be unsuccessful in capitalizing on such opportunities. Our ability to capitalize on such opportunities will be largely dependent upon external sources of capital that may not be available to us on favorable terms or at all.

We typically provide guarantees of timely completion of projects that we develop for third parties. In certain cases, our contingent liability under these guarantees may exceed our development fee from the project. Although we seek to mitigate this risk by, among other things, obtaining similar guarantees from the project contractor, we could sustain significant losses if development of a project were to be delayed or stopped and we were unable to cover our guarantee exposure with the guarantee received from the project contractor.

 

We may be unable to successfully acquire properties on favorable terms.

 

Our future growth will be 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 developed and recently acquired properties may not perform as expected and may have characteristics or deficiencies unknown to us at the time of acquisition. Future acquisition opportunities may not be available to us on terms that meet our investment criteria or we may be unsuccessful in capitalizing on such opportunities. Our ability to capitalize on such opportunities will be largely dependent upon external sources of capital that may not be available to us on favorable terms or at all.

 

Our ability to acquire properties on favorable terms and successfully operate them involve the following significant risks:

 

 

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.

 

As of June 30, 2005, our total consolidated indebtedness was approximately $332.6 million (excluding unamortized debt premiums). Our debt service obligations expose us to the risk of default and reduce or eliminate cash resources that are available to operate our business or pay distributions that are necessary to maintain our qualification as a real estate investment trust or REIT. There is no limit on the amount of indebtedness that we may incur except as provided by the covenants in our revolving credit facility. We expect to incur additional indebtedness under our revolving credit facility to fund future property development and acquisitions and other working capital needs, which may include the payment of distributions to our stockholders. The amount available to us and our ability to borrow from time to time under our revolving credit facility is 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 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 does not ultimately approve our selection and the terms of the pending development contract, we may not be able to recoup these costs from the institution and the resulting losses could be material.

 

Our awarded projects may not be successfully structured or financed and may delay our recognition of revenues.

 

The recognition and timing of revenues from our awarded development services projects will, among other things, be contingent upon successfully structuring and closing project financing as well as the timing of construction. The development projects that we have been awarded have at times been delayed beyond the originally scheduled construction commencement date. If such delays were to occur with our current awarded projects, our recognition of expected revenues and receipt of expected fees from these projects would be delayed.

 

We may encounter delays in completion or experience cost overruns with respect to our properties that are under construction.

 

As of June 30, 2005, we were in the process of constructing one owned off-campus property and were in pre-development on two additional owned off-campus properties. We were also in the process of constructing one on-campus participating property. These properties are subject to the various risks relating to properties that are under construction referred to elsewhere in these risk factors, including the risks that we may encounter delays in completion and that these projects may experience cost overruns. These properties may not be completed on time. Additionally, if we do not complete the construction of certain of our properties on schedule, we may be required to provide alternative housing to the students with whom we have signed leases. We generally do not make any arrangements for such alternative housing for these properties and we would likely incur significant expenses in the event we provide such housing. If construction is not completed on schedule, students may attempt to break their leases and our occupancy at such properties for that academic year may suffer.

Our guarantees could result in liabilities in excess of our development fees.

 

In third party developments, we typically provide guarantees of the obligations of the developer, including development budgets and timely project completion. These guarantees include, among other things, the cost of providing alternate housing for students in the event we do not timely complete a development project. These guarantees typically exclude delays resulting from force majeure and also, in third party transactions, are typically limited in amount to the amount of our development fees from the project. In certain cases, however, our contingent liability under these guarantees has exceeded our development fee from the project and we may agree to such arrangements in the future. Our obligations under alternative housing guarantees typically expire five days after construction is complete. Project cost guarantees are normally satisfied within one year after completion of the project.

 

Universities have the right to terminate our participating ground leases.

 

The ground leases through which we own our on-campus participating properties provide that the university lessor may purchase our interest in and assume the management of the facility, with the purchase price calculated at the discounted present cash value of our leasehold interest. The exercise of any such buyout would result in a significant reduction in our portfolio.

 

Risks Related to the Real Estate Industry

 

Our performance and value are subject to risks associated with real estate assets and with the real estate industry.

 

Our ability to satisfy our financial obligations and make expected distributions to our stockholders depends on our ability to generate cash revenues in excess of expenses and capital expenditure requirements. Events and conditions generally applicable to owners and operators of real property that are beyond our control may decrease cash available for distribution and the value of our properties. These events include: