Bayless has been restoring order at dorms since he was a resident advisor while studying business at West Virginia University in 1984. He co-founded ACC in 1993. "In the mid-80s you started to see the evolution of students wanting more consumer-based housing products," said Bayless, who describes himself as the "son of a poor steelworker."
"That was when I first saw the opportunity from a product evolution perspective," he added.
The product evolution Bayless saw was the rising demand for high-frills student housing to replace the barracks-style quarters that housed the baby boomers in their college years.
ACC has built, bought and operated, sometimes on-campus and sometimes off-, student housing complexes that include amenities few students will be able to afford post-college. High-end fitness centers are the company's trademark, but some of its properties also include tanning beds, theaters, basketball courts and coffee bars.
During the housing bust, ACC was one of a handful of REITs that reported same-store sales growth in occupancy, rental rates and net operating income, and few housing stocks outperformed ACC shares during those years.
This year, however, it's a different story. In July, the company reported just its second quarterly decline in same-store net operating income since its 2004 IPO. Higher-than-expected marketing costs outpaced higher-than-expected revenues, and the company announced that it expected its fall semester same-store occupancy would be between 95.5 percent and 98.5 percent—possibly lower than the 96.8 percent the company achieved in fall 2012.
(Read more: Picking real estate winners: Citi exec)
A recent Wall Street Journal piece pointed to possible problems for the company and the industry at large. Where student housing was once a niche largely ignored by major real estate developers. More than 50,000 off-campus apartments have been built so far in 2013—a record high at a time when for the first time in decades, college enrollment is slowing as the peak of the echo boom generation is now out of college.
Wounded by the housing bust, real estate developers looked for safe havens—and recession-resistant student housing, with its stable demand and parents to co-sign leases, was one of the places they poured money.
Most analysts agree that ACC is still the best operator in student housing—but the niche isn't as niche as it was. Many developers, Bayless said, have built too many units at too high price points; "We build for the masses, not the classes," he said.
ACC is "facing well-below average growth," in comparison to its past, said Dave Bragg, a managing director with Green Street Advisors, a commercial real estate firm. "Investors are adjusting their expectations."
In a recent client note, Baird Equity Research contended that "the downward spiral YTD in the student housing stocks is overdone, in our view, having been driven not by facts but by misperception that fundamentals are deteriorating."
The near-term outlook for the industry, however, seems less bright than it did a few years ago: College enrollment fell 2 percent for the 2012-13 school year, but nearly all of that decline came at community colleges and for-profit colleges, where a stronger job market lured away would-be adult students.
Bragg also said that, long term, growth in online learning could hurt demand for off-campus housing—although that hasn't happened yet. Tales about declining enrollment are beginning to make news in the higher education press but, perhaps surprisingly, the demographic shift isn't even on Bayless' radar.
"It really has not been a driver for us," he said. "At your large tier-1 public universities, there's still so much demand." Any downward shift in enrollment, he said, will likely hit expensive private colleges as price-conscious, debt-averse consumers seek lowest-cost public universities.
During the recession, he said, that trade-down helped ACC as some families talked their kids into attending affordable in-state universities while sweetening the pot with the offer of posh housing. In markets that have seen construction growing faster than enrollment, Bayless said, the occupancy hits have usually been taken by the small-time slumlords.
"The University of Texas at Austin has historically been right around 50,000 students," he said. "Enrollment has been steady; it hasn't been going up, it hasn't been going down. Over the last 12 to 15 years, 15,000 beds have been developed, but it's all been absorbed. Who has gotten pushed out of the markets? The landlords that didn't offer good service and product and value."
