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American Campus meeting with institutional investors on a large portfolio sale, execs say

is talking to leading foreign and domestic institutional capital sources about up to $600 million in properties,with an aim toward directing the proceeds into new property developments, companyexecutives said in an April 26 earnings conference call.

The companyhas engaged intermediaries and is meeting with groups about a large portfolio transaction,President and CEO Bill Bayless Jr. said. American Campus hopes to complete sucha sale at a capitalization rate in the 6% to 6.25% range and is offering to remainas property manager for the assets after a transaction, executives added.

Baylesssaid there is high interest in student housing from domestic and global institutionalfunds that are seeking to invest in the sector in scale. As a result, he said, "earlyindications are very positive" that the company will be able to complete alarge transaction. If such a deal works out, it will likely be completed in 2016,whereas selling assets in several smaller transactions could delay some sales until2017, he said.

Thoughthe company will not have indications for another 30 to 45 days whether a largeportfolio sale can happen, "our initial perspective is that it is very achievable,and the environment is very right," Bayless said.

Stayinginvolved with sold properties as manager could help the valuation on a deal forAmerican Campus, while diminishing integration risk for the buyer, Bayless said,adding, "Given the level of institutional capital, both domestically and global,we see coming into the space, we do also see it as a qualitative strategic opportunityto form a relationship with what could be a source of equity for us down the roadif we ever needed it."

The companyis focused "almost exclusively" on using sale proceeds for new construction,Bayless said, calling new development, both on and off campus, "the most accretivevalue-creating opportunity we could possibly undertake for our shareholders."

Evenafter completing its current round of sales, he said, American Campus plans to be"a strategic recycler" of its lowest-performing properties.

The companyhas firm plans to develop properties with roughly 13,000 beds, on and off campus,in owned properties through 2019, at a cost of roughly $1.2 billion, executivessaid. Most of the properties are expected to yield from 6.5% to 7%.