Activist Land & Buildings to seek seat on American Campus Communities board

[December 13, 2021]  By Svea Herbst-Bayliss

BOSTON (Reuters) - Activist investment firm Land & Buildings Investment Management is seeking a seat on the board of American Campus Communities (ACC), according to people familiar with the matter, and believes the company needs to aggressively sell assets and buy back stock.

Land & Buildings, which generally pushes for changes at real-estate companies, previously held discussions with the Austin, Texas headquartered owner and operator of student housing about strategy and capital allocation. In January it reached an agreement where ACC overhauled its board of directors.

But Jonathan Litt, Land & Building's founder and chief investment officer, feels the changes that were made earlier this year did not go far enough to correct persistent problems, the people said. ACC added three new directors, appointed a new chair and formed a capital allocation committee.

To push for changes more forcefully, Litt felt it was imperative to add an investor, or stakeholder, to the company's board, the people said. It was not known if Litt planned to nominate himself as a director candidate.

A representative for ACC was not immediately available for comment.

While the company's stock price has gained 27% this year, it has underperformed its peers by 13% since the cooperation agreement was signed in January.

Land & Buildings owned a 1.03% stake in ACC at the end of the third quarter, according to regulatory filings. The company is valued at $7.6 billion.

Litt feels the board needs to show investors that it is moving more aggressively to bring ACC's stock price, which closed at $54.43 on Friday, towards 'fair value' closer to $70 a share, the people said.

More aggressive sales should be a first step and could be very lucrative at a time when more students are returning to study full time and prices for these types of properties are going up. Share buybacks, which the company has historically avoided, would also be helpful.

Additionally, the company should cut costs, with general and administrative expenses having more than doubled since 2013. The board should also review all strategic alternatives to help boost the share price, the sources said.

Although Litt is not pushing for an immediate sale of the company, he believed boards need to always look at all options to increase value, including a possible sale, the people added.

Earlier this month, the hedge fund nominated two candidates, including Litt, for election at Lexington Realty Trust.

Industry analysts say the pace of investors returning to a company where they recently reached a settlement or where another activist is already on the board is picking up.

(Reporting by Svea Herbst-Bayliss; editing by Richard Pullin)

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