Campus Crest Communities, Inc. (NYSE: CCG) (the “Company”), a
leading developer, builder, owner and manager of high-quality
student housing properties, today announced results for the three
months ended March 31, 2014.
Highlights
First Quarter 2014
- Increased Funds From Operations
Adjusted (“FFOA”) 29.1% compared to the first quarter of 2013, from
$8.4 million to $10.8 million, resulting in $0.17 per diluted share
for the first quarter of 2014
- Delivered same store net operating
income (“NOI”) of $11.5 million at 90.5% occupancy and a 55.0%
margin
- Achieved leasing results ahead of prior
year as of April 27, 2014. Leasing for all 69 operating properties
was 69.4% versus 67.9%, an increase of 150 bps from the prior year
and breaks down as follows:
- Leasing for the Company’s 41 Grove
operating properties was 64.9% compared to 59.1% the prior year –
580 basis points ahead
- Leasing for the Company’s 32
wholly-owned Grove assets was 68.2% versus 62.5% the prior year, an
increase of 570 basis points over the prior year
- Leasing for the Company’s 9 joint
venture Grove assets was 53.8% versus 47.7%, an increase of 610
basis points over the prior year.
- Leasing for the Company’s Copper Beech
Brand portfolio of 28 operating properties was 77.0% versus 82.8%,
a decrease from the prior year of 580 basis points.
- Driven mainly by three markets that are
absorbing more slowly than prior years
- Continued progress on eight development
and two redevelopment projects expected to be delivered for the
2014/2015 academic year, containing 7,455 beds with median distance
to campus of 0.3 miles
Financial Results for the Three Months Ended March 31,
2014
For the three months ended March 31, 2014, Funds From Operations
(“FFO”) and FFOA are shown in the table below.
FFO/FFOA Three Months Ended March 31,
($mm, except per share)
2014
Per share - diluted
2013
Per share - diluted
FFO $12.0 $0.18 $8.1 $0.17 FFOA1 $10.8 $0.17 $8.4 $0.18
1 Includes eliminations
for the write-off of transaction costs and the fair value
adjustments of Copper Beech debt as reflected in the Q1 2014
Supplemental Analyst Package.
A reconciliation of net income attributable to common
stockholders to FFO and to FFOA can be found at the end of this
release.
For the three months ended March 31, 2014, the Company reported
total revenues of $32.0 million and net income (loss) attributable
to common stockholders of ($2.0) million, compared to $33.0 million
and $1.0 million, respectively, in the same period in 2013.
Operating Results
For the three months ended March 31, 2014, results for
wholly-owned same store properties were as follows:
Same Store Results Three Months Ended March
31, ($mm)
2014 2013 Change
Number of Assets 28 28 Number of Beds 14,920 14,920 Occupancy 90.5%
93.4% (290) bps Total Revenues $21.0 $21.5 (2.4%) NOI $11.5 $11.9
(2.8%) NOI Margin 55.0% 55.3% (30) bps
NOI for the wholly-owned same store pool was impacted by a 290
basis point decrease in occupancy as a result of the Company's
receivable policy. This was partially offset by strict expense
management from the Company's operating teams who brought expenses
down by 1.8%, or $177,000, over the prior year. As a result of this
focus on expenses, the decrease in NOI was limited to 2.8%, which
was contemplated in guidance.
NOI margin is calculated by dividing NOI for the period by total
student housing rental and services revenues for the period. A
reconciliation of net income attributable to common stockholders to
NOI can be found at the end of this release. In addition, details
regarding same store NOI and calculations thereof may be found in
the Supplemental Analyst Package located at
http://investors.campuscrest.com/.
Portfolio Information
As of March 31, 2014, the Company owned interests in 79
properties totaling approximately 43,256 beds across North America.
A summary of the leasing for the 2014/2015 academic year
follows:
2014/2015 Academic Year Leasing
Summary
2014-2015 2013-2014 Rental Rate
Property Properties Unit
Beds Signed(1) %
Signed(1) % Change
Change Operating Wholly-Owned 32 6,400
17,476 11,917 68.2 %
10,920
62.5
%
5.7
%
n/a HSRE Joint venture 9 1,870 5,148 2,770
53.8 %
2,458
47.7 % 6.1 % n/a
Total Operating
41 8,270 22,624 14,687 64.9
%
13,378
59.1 % 5.8 % 1.0 % - 2.0%
Copper Beech Portfolio 28 5,047
13,177 10,142 77.0 %
10,913
82.8 % (5.8 %) 0.0 % -
1.0%
Total Operating Portfolio
69
13,317 35,801 24,829
69.4 %
24,291
67.9
%
1.5
% n/a
Total 2014 Deliveries
10 3,128 7,455
2,145 28.8 % n/a
n/a n/a n/a
Note: The redevelopment of the 100% owned property in
Toledo, OH is excluded. 1 As of April 27, 2014 and April 27, 2013,
respectively.
Investment Activity
Development
The Company expects to deliver eight new development projects,
totaling 5,213 beds, for the 2014/2015 academic year, at a total
cost of approximately $384.9 million, of which $214.5 million is
the Company’s share of total development cost. As of March 31,
2014, a majority of the Company's required contribution had been
funded. The assets are located a median of 0.3 miles from campuses
of primary non-flagship and flagship universities.
Redevelopment
The Company expects to deliver two redevelopment projects in its
Canadian joint venture, totaling 2,242 beds, for the 2014/2015
academic year, at a total cost of approximately $166.4 million, of
which $58.2 million is the Company’s share of total development
cost. As of March 31, 2014, all of the Company's required
contribution had been funded. The two assets are located in
downtown Montréal, Québec and serve over 120,000 students in the
market.
Acquisitions
In January 2014, the Company acquired from Harrison Street Real
Estate Capital the remaining 80% equity interest in The Grove at
Denton, Texas, for approximately $7.7 million.
Balance Sheet and Capital Markets
The Company proactively manages its balance sheet and looks to
opportunistically access capital to fund growth and maintain a
conservative capital structure.
As of March 31, 2014, the Company had $14.3 million of cash and
$20.8 million of restricted cash, with $15.6 million coming from
the December 2013 sale of four wholly-owned Grove-branded student
housing properties that were structured as a 1031 exchange.
Additionally, the Company had net availability under its revolving
credit facility of $103.5 million as of March 31, 2014.
As of March 31, 2014, the Company had not sold any shares under
its $100.0 million At-the-Market common equity offering
program.
Dividends
On April 22, 2014, the Company announced that its Board of
Directors declared its second quarter of 2014 common stock dividend
of $0.165 per share. Based on a closing price of $8.61 on April 21,
2014, the annualized dividend yield is 7.7%. The dividend is
payable on July 9, 2014 to stockholders of record as of June 25,
2014.
The Board of Directors also declared a cash dividend of $0.50
per Series A Cumulative Redeemable Preferred Share for the second
quarter of 2014. The preferred share dividend is payable on July
15, 2014 to stockholders of record as of June 25, 2014.
2014 Earnings Guidance and Outlook
Based on management’s current estimates of market conditions and
future operating results, the Company reaffirms its previous
guidance for fiscal year 2014 FFOA per fully diluted share of $0.72
to $0.74. As previously disclosed, this assumes that the Company
does not elect to exercise purchase option one for the Copper Beech
portfolio.
The Company's FFOA guidance excludes non-recurring and non-cash
items, such as the write-off of deferred financing costs as a
result of early payoff of financings, potential impairments,
transaction costs associated with the Copper Beech investment and
other acquisitions and the mark-to-market adjustment of the Copper
Beech debt. Additionally, it excludes the potential impact of any
asset dispositions or capital raises.
Conference Call Details
The Company will host a conference call on Wednesday, April 30,
2014, at 9:00 a.m. (EST) to discuss the financial results.
The call can be accessed live over the phone by dialing
877-407-0789, or for international callers, 201-689-8562. A replay
will be available shortly after the call and can be accessed by
dialing 877-870-5176, or for international callers, 858-384-5517.
The pin number for the replay is 13580178. The replay will be
available until May 7, 2014.
Interested parties may also listen to a simultaneous webcast of
the conference call by logging onto the Company's website at
http://investors.campuscrest.com/. A recording of the call will
also be available on the Company's website following the call.
Supplemental Schedules
The Company has published a Supplemental Analyst Package in
order to provide additional disclosure and financial information
for the benefit of the Company’s stakeholders. These can be found
under the “Earnings Center” tab in the Investors section of the
Company’s web site at http://www.campuscrest.com/.
About Campus Crest Communities, Inc.
Campus Crest Communities, Inc. is a leading developer, builder,
owner and manager of high-quality student housing properties
located close to college campuses in targeted markets. Pro forma
for the Copper Beech restructure, the Company has ownership
interests in 80 student housing properties and over 43,000 beds
across North America, of which 70 are operating and 10 are
development or redevelopment properties. The Company is an equity
REIT that differentiates itself through its vertical integration
and consistent branding across the portfolio through three unique
brands targeting different segments of the college student
population. The Grove® brand offers more traditional apartment
floor plans and focuses on customer service, privacy, on-site
amenities and a proprietary residence life program. The Copper
Beech brand and townhome product offers more residential-type
living to students looking for a larger floor plan with a front
door and back porch. The evo brand provides urban students with a
luxury student housing option with all the conveniences of city
living. Additional information can be found on the Company's
website at http://www.campuscrest.com/.
Forward-Looking Statements
This press release, together with other statements and
information publicly disseminated by the Company, contains certain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company intends
such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 and includes this
statement for purposes of complying with these safe harbor
provisions. Forward-looking statements relate to expectations,
beliefs, projections, future plans and strategies, anticipated
events or trends and similar expressions concerning matters that
are not historical facts. In some cases, you can identify
forward-looking statements by the use of forward-looking
terminology such as “may,” “will,” “should,” “expects,” “intends,”
“plans,” “anticipates,” “believes,” “estimates,” “predicts” or
“potential” or the negative of these words and phrases or similar
words or phrases which are predictions of or indicate future events
or trends and which do not relate solely to historical matters.
Forward-looking statements in this press release include, among
others, the performance of properties in occupancy and yield
targets, outlook and guidance for full-year 2014 FFOA and the
related underlying assumptions, growth and development
opportunities, leasing activities, financing strategies, and
development and construction projects. You should not rely on
forward-looking statements since they involve known and unknown
risks, uncertainties, assumptions and contingencies, many of which
are beyond the Company’s control that may cause actual results to
differ significantly from those expressed in any forward-looking
statement. All forward-looking statements reflect the Company’s
good faith beliefs, assumptions and expectations, but they are not
guarantees of future performance. Furthermore, except as otherwise
required by federal securities laws, the Company disclaims any
obligation to publicly update or revise any forward-looking
statement to reflect changes in underlying assumptions or factors,
new information, data or methods, future events or other changes.
For a further discussion of these and other factors that could
cause the Company’s future results to differ materially from any
forward-looking statements, see the risk factors discussed in the
Company’s most recent Annual Report on Form 10-K, as updated in the
Company’s Quarterly Reports on Form 10-Q.
CAMPUS CREST COMMUNITIES
CONDENSED CONSOLIDATED
BALANCE SHEETS (unaudited) (in $000s)
March 31, December 31,
2014 2013 Assets
Investment in real estate, net: Student housing properties $750,936
$716,285 Accumulated depreciation (108,214 ) (102,356 ) Development
in process 121,353 91,184 Investment in real estate,
net 764,075 705,113 Investment in unconsolidated entities1 359,301
324,838 Cash and cash equivalents 14,332 32,054 Restricted cash 2
20,768 32,636 Student receivables, net 2,655 2,825 Cost and
earnings in excess of construction billings 40,641 42,803 Other
assets, net 49,128 42,410
Total assets
$1,250,900 $1,182,679
Liabilities and equity Liabilities: Mortgage and
construction loans $223,746 $205,531 Line of credit and other debt
265,300 207,952 Accounts payable and accrued expenses 65,394 62,448
Construction billings in excess of cost and earnings 168 600 Other
liabilities 14,342 11,167 Total liabilities 568,950
487,698 Equity: Preferred stock $61 $61 Common stock
645 645 Additional common and preferred paid-in capital 774,573
773,896 Accumulated deficit and distributions
(96,772
) (84,143 ) Accumulated other comprehensive loss
(1,070
) (71 ) Total stockholders' equity
677,437
690,388 Noncontrolling interests
4,513
4,593 Total equity
681,950
694,981
Total liabilities and equity
$1,250,900 $1,182,679
1 As of March 31, 2014 and
Decmeber 31, 2013, includes the Company’s investment in Copper
Beech equating to a 67.0% effective ownership interest in 30
properties, of which 28 are operating and 2 are non-operating
properties. 2 As of March 31, 2014 and December 31, 2013,
includes approximately $15,600 and $28,200, respectively, of cash
held in escrow from the sale of the four wholly-owned Grove-branded
student housing properties on December 27, 2013.
CAMPUS CREST COMMUNITIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in $000s, except per share data)
Three Months Ended March 31,
2014 2013 $ Change
Revenues: Student housing rental $23,635 $20,748 $2,887
Student housing services 973 824 149 Development, construction and
management services 7,436 11,427 (3,991 )
Total
revenues 32,044 32,999 (955 )
Operating expenses:
Student housing operations 10,613 9,690 923 Development,
construction and management services 6,394 10,658 (4,264 ) General
and administrative 3,506 2,651 855 Transaction costs1 585 385 200
Ground leases 117 54 63 Depreciation and amortization 6,980
5,678 1,302
Total operating expenses 28,195
29,116 (921 ) Equity in earnings (loss) of unconsolidated
entities2, 3 319 410 (91 )
Operating income
4,168 4,293 (125 )
Nonoperating income
(expense): Interest expense, net (3,376 ) (2,884 ) (492 ) Other
income4 66 36 30
Total nonoperating
expense, net (3,310 ) (2,848 ) (462 )
Net income before
income tax benefit (expense) 858 1,445 (587 ) Income tax
benefit 190 452 (262 )
Income from continuing
operations 1,048 1,897 (849 ) Income (loss) from discontinued
operations - 270 (270 )
Net income 1,048 2,167
(1,119 )
Dividends on preferred stock
3,050
1,150
1,900
Net income (loss) attributable to noncontrolling interests (15 ) 11
(26 )
Net income (loss) attributable to
common stockholders
($1,987
)
$1,006
($2,993
)
Net income (loss) per share attributable to common
stockholders - Basic and Diluted: ($0.03 ) $0.02
Weighted average common shares outstanding: Basic
64,495 46,156
Diluted 64,929 46,591
1 For the three months
ended March 31, 2014, includes $585 of transaction costs related to
Copper Beech and the two assets in Montreal. Additionally, for the
three months ended March 31, 2013, includes $385 of transaction
costs related to Copper Beech. 2 For the three months ended March
31, 2014 and the period March 18, 2013 to March 31, 2013, includes
results from the Company’s investment in Copper Beech. The Company
made its initial investment on March 18, 2013 and subsequently made
additional investments. On September 30, 2013, the Company entered
into an amendment to the purchase and sale agreement that, subject
to receipt of required third-party lender consents, enabled the
Company to acquire a 67% ownership interest in 30 properties, while
deferring ownership in 7 properties until the Company exercises
future purchase options. As of March 31, 2014, the Company held a
67% effective interest in 28 operating and 2 non-operating
properties. 3 For the three months ended March 31, 2014 and 2013,
includes $1,754 and $112, respectively, of fair value adjustment
related to Copper Beech's debt. 4 For the three months ended March
31, 2013, includes interest income from the 8.5%, $31,700 loan made
to existing investors in Copper Beech on March 18, 2013. In
conjunction with the September 30, 2013 amendment to the purchase
and sale agreement, the $31,700 loan was repaid by Copper Beech.
CAMPUS CREST COMMUNITIES
RECONCILIATION OF NET INCOME (LOSS)
ATTRIBUTABLE TO COMMON STOCKHOLDERS TO FUNDS FROM OPERATIONS
("FFO"), FUNDS FROM OPERATIONS ADJUSTED ("FFOA") & NET
OPERATING INCOME ("NOI") (unaudited) (in $000s, except per
share data) Three Months Ended March
31, 2014 2013 $
Change Net income (loss) attributable to common
stockholders ($1,987 ) $1,006 ($2,993 ) Net income (loss)
attributable to noncontrolling interests (15 ) 11 (26 ) Real estate
related depreciation and amortization 6,677 6,296 381 Real estate
related depreciation and amortization - unconsolidated entities
7,333 807 6,526
FFO available to common
shares and OP units1, 2, 3
12,008 8,120
3,888 Elimination of transactions costs 585 385 200
Elimination of FV adjustment of CB debt (1,754 ) (112 ) (1,642 )
Funds from operations adjusted (FFOA) available to common
shares and OP units $10,839 $8,393
$2,446 FFO per share - diluted1, 2, 3
$0.18 $0.17 $0.01 FFOA per share - diluted $0.17 $0.18 ($0.01 )
Weighted average common shares and OP units outstanding - diluted
64,929 46,591
Three Months Ended March 31, 2014(1 )
2013(1 ) Net income (Loss) attributable
to common stockholders ($1,987 ) $1,006 Net income (Loss)
attributable to noncontrolling interests (15 ) 11 Preferred stock
dividends 3,050 1,150 Income tax benefit (expense) (190 ) (452 )
Other income (expense) (66 ) (36 ) (Income) loss on discontinued
operations - (270 ) Interest expense 3,376 2,884 Equity in earnings
of unconsolidated entities (319 ) (410 ) Depreciation and
amortization 6,980 5,678 Ground lease expense 117 54 General and
administrative expense 3,506 2,651 Transaction costs 585 385
Development, construction and management services expenses 6,394
10,658 Development, construction and management services revenues
(7,436 ) (11,427 )
Total NOI $13,995
$11,882 Same store properties NOI4 $11,544 $11,878
New properties NOI4 $1,692 $0 The Grove at Pullman & Toledo
NOI5 $759 $4
1 For the three months ended March 31, 2014, and the period
March 18, 2013 to March 31, 2013, includes results from the
Company’s investment in Copper Beech. The Company made its initial
investment on March 18, 2013 and subsequently made additional
investments. On September 30, 2013, the Company entered into an
amendment to the purchase and sale agreement that, subject to
receipt of required third-party lender consents, enabled the
Company to acquire a 67% ownership interest in 30 properties, while
deferring ownership in 7 properties until the Company exercises
future purchase options. As of March 31, 2014, the Company held a
67% effective interest in 28 operating and 2 non-operating
properties. 2 For the three months ended March 31, 2014, includes
$585 of transaction costs related to Copper Beech and the two
assets in Montreal. Additionally, for the three months ended March
31, 2013, includes $385 of transaction costs related to Copper
Beech. 3 For the three months ended March 31, 2014 and 2013,
includes $1,754 and $112, respectively, of fair value adjustment
related to Copper Beech's debt. 4 "Same store" properties are our
wholly-owned operating properties acquired or placed in-service
prior to the beginning of the earliest period presented and owned
by us and remaining in service through the end of the latest period
presented or period being analyzed. "New properties" are our
wholly-owned operating properties that we acquired or placed in
service after the beginning of the earliest period presented or
period being analyzed. 5 For the three months ended March 31, 2014,
includes NOI contribution from the operations of The Grove at
Pullman and the Toledo, OH redevelopment, as well as business
interruption insurance proceeds from The Grove at Pullman.
Non-GAAP Financial Measures
FFO and FFOA
FFO is a non-GAAP financial measure. We
calculate FFO in accordance with the definition that was adopted by
the Board of Governors of NAREIT. FFO, as defined by NAREIT,
represents net income (loss) determined in accordance with U.S.
GAAP, excluding extraordinary items as defined under GAAP and gains
or losses from sales of previously depreciated operating real
estate assets, plus specified non-cash items, such as real estate
asset depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. In addition, in
October 2011, NAREIT communicated to its members that the exclusion
of impairment write-downs of depreciable real estate is consistent
with the definition of FFO.
We use FFO as a supplemental performance
measure because, in excluding real estate-related depreciation and
amortization and gains and losses from property dispositions, it
provides a performance measure that, when compared year over year,
captures trends in occupancy rates, rental rates and operating
expenses. We also believe that, as a widely recognized measure of
the performance of equity REITs, FFO will be used by investors as a
basis to compare our operating performance with that of other
REITs. However, because FFO excludes depreciation and amortization
and captures neither the changes in the value of our properties
that result from use or market conditions nor the level of capital
expenditures necessary to maintain the operating performance of our
properties, all of which have real economic effects and could
materially and adversely impact our results of operations, the
utility of FFO as a measure of our performance is limited.
While FFO is a relevant and widely used
measure of operating performance of equity REITs, other equity
REITs may use different methodologies for calculating FFO and,
accordingly, FFO as disclosed by such other REITs may not be
comparable to FFO published herein. Therefore, we believe that in
order to facilitate a clear understanding of our historical
operating results, FFO should be examined in conjunction with net
income (loss) (computed in accordance with U.S. GAAP) as presented
in the consolidated financial statements included elsewhere in this
document. FFO should not be considered as an alternative to net
income (loss) (computed in accordance with U.S. GAAP) as an
indicator of our properties’ financial performance or to cash flow
from operating activities (computed in accordance with U.S. GAAP)
as an indicator of our liquidity, nor is it indicative of funds
available to fund our cash needs, including our ability to pay
dividends or make distributions.
FFOA is a non-GAAP financial measure. In
addition to FFO, we believe it is also a meaningful measure of our
performance to adjust FFO to exclude the write-off of unamortized
deferred financing fees, transaction costs, the write-off of
development cost and fair value debt adjustments on equity method
investments. Excluding the write-off of unamortized deferred
financing fees, transaction costs and fair value debt adjustments
on equity method investments adjusts FFO to be more reflective of
operating results prior to capital replacement or expansion, debt
service obligations or other commitments and contingencies.
NOI
NOI is a non-GAAP financial measure. We
calculate NOI by adding back (or subtracting from) to net income
(loss) attributable to common stockholders the following expenses
or charges: income tax expense, interest expense, equity in loss of
unconsolidated entities, preferred stock dividends, depreciation
and amortization, transaction costs, ground lease expense, general
and administrative expense and development, construction and
management services expense. The following income or gains are then
deducted from net income (loss) attributable to common
stockholders, adjusted for add backs of expenses or charges: equity
in earnings of unconsolidated entities, income tax benefit, other
income, and development, construction and management services
revenue. We believe these adjustments help provide a performance
measure, when compared year over year, that illustrates the
operating results of our wholly-owned properties and captures
trends in student housing rental and services income and student
housing operating expenses.
NOI excludes multiple components of net
income (loss) (computed in accordance with U.S. GAAP) and captures
neither the changes in the value of our properties that result from
use or market conditions nor the level of capital expenditures
necessary to maintain the operating performance of our properties,
all of which have real economic effects and could materially and
adversely impact our results of operations. Therefore, the utility
of NOI as a measure of our performance is limited. Additionally,
other companies, including other equity REITs, may use different
methodologies for calculating NOI and, accordingly, NOI as
disclosed by such other companies may not be comparable to NOI
published herein. Therefore, we believe that in order to facilitate
a clear understanding of our historical operating results, NOI
should be examined in conjunction with net income (loss) (computed
in accordance with U.S. GAAP) as presented in the consolidated
financial statements included elsewhere in this document. NOI
should not be considered as an alternative to net income (loss)
(computed in accordance with U.S. GAAP) as an indicator of our
properties’ financial performance or to cash flow from operating
activities (computed in accordance with U.S. GAAP) as an indicator
of our liquidity, nor is it indicative of funds available to fund
our cash needs, including our ability to pay dividends or make
distributions.
Campus Crest Communities, Inc.Investor Relations,
704-496-2571Investor.Relations@CampusCrest.com
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