American Campus Communities, Inc. (NYSE:ACC) today announced the
following financial results for the quarter ended June 30,
2019.
Highlights
- Reported net income attributable to ACC of $10.4 million or
$0.07 per fully diluted share, versus $46.0 million or $0.33 per
fully diluted share in the second quarter 2018. Excluding a $42.3
million net gain from the disposition of real estate in the prior
year quarter, net income attributable to ACC would have been $3.7
million for the second quarter 2018.
- Increased FFOM per fully diluted share by 7.7 percent to $0.56
or $77.4 million, versus $0.52 per fully diluted share or $72.6
million for the second quarter prior year.
- Grew same store net operating income ("NOI") by 3.5 percent
over the second quarter 2018 with revenues increasing 3.2 percent
and operating expenses increasing 2.9 percent.
- Increased same store average physical occupancy to 90.6 percent
for the second quarter 2019 compared to 88.4 percent for the second
quarter 2018.
- Subsequent to quarter end, commenced construction on a
third-party on-campus development project at the University of
California, Riverside, representing the company’s second phase of
development under the multi-phase award.
- Issued $400 million of 7-year senior unsecured notes at a yield
of 3.347 percent. When including the effect of an interest rate
swap, the effective interest rate on the notes is 3.7 percent.
“We continue to be pleased with our core operating performance
through the second quarter and I want to thank the American Campus
team for their tireless efforts to produce value for our
shareholders,” said Bill Bayless, American Campus Communities CEO.
“Of course, we still have a lot remaining to complete this year,
including the always important final months of the Fall lease-up,
ongoing efforts to control operating expenses through our asset
management initiatives, and closing third-party development
transactions for our university clients. We are also excited to be
opening our 10 new owned, presale and third-party developments this
Fall. These living-learning communities represent the latest in
innovative designs that incorporate sustainability and
affordability while fostering academic and personal success for
students.”
Second Quarter Operating Results
Revenues for the 2019 second quarter totaled $217.4 million
versus $201.1 million in the second quarter 2018, and operating
income for the quarter totaled $37.8 million versus $73.2 million
in the prior year second quarter. The increase in revenue was
primarily due to growth resulting from an increase in average
occupancy and rental rates for the 2018-2019 academic year and
development properties completed in 2018. The decrease in operating
income was primarily due to a $42.3 million gain from the
disposition of real estate in the prior year quarter. Net income
for the 2019 second quarter totaled $10.4 million, or $0.07 per
fully diluted share, compared with $46.0 million, or $0.33 per
fully diluted share for the same quarter in 2018. The decrease in
net income as compared to the prior year quarter is primarily due
to the $42.3 million gain from the disposition of real estate in
the prior year quarter, offset by an increase in revenues, as
described above.
FFO for the 2019 second quarter totaled $76.2 million, or $0.55
per fully diluted share, as compared to $65.7 million, or $0.47 per
fully diluted share for the same quarter in 2018. FFOM for the 2019
second quarter was $77.4 million, or $0.56 per fully diluted share
as compared to $72.6 million, or $0.52 per fully diluted share for
the same quarter in 2018. A reconciliation of FFO and FFOM to net
income is provided in Table 3.
NOI for same store properties was $106.0 million in the quarter,
an increase of 3.5 percent versus $102.5 million in the 2018 second
quarter. Same store property revenues increased by 3.2 percent and
same store property operating expenses increased by 2.9 percent.
NOI for the total owned portfolio increased 8.7 percent to $113.1
million for the quarter from $104.1 million in the comparable
period of 2018. A reconciliation of same store NOI to total NOI is
provided in Table 4.
Portfolio Update
Developments
The company continues to progress on the construction of its
$767.5 million development pipeline and $107.3 million presale
development pipeline that includes expected deliveries in Fall 2019
through 2021. These projects are all core Class A assets located on
campus or pedestrian to campus in their respective markets and
remain on track to meet their targeted stabilized development yield
in the range of 6.25 – 6.8 percent for developments and 5.75 – 6.25
percent for presale developments.
Third-Party Services
Subsequent to quarter end, the company closed on financing and
commenced construction on a third-party on-campus development
project with the University of California, Riverside, which
represents the company’s second phase of development under the
larger multi-phase award. The company expects to earn $6.7 million
in fees throughout the construction period of this phase and
expects to provide management services upon the opening of the
community in Fall 2021.
Dispositions
During the quarter, the company completed the sale of College
Club Townhomes, at Florida A&M University, and subsequent to
quarter end the company completed the disposition of Blanton
Common, at Valdosta State University, which was surrendered to the
lender in satisfaction of the property’s $27.4 million mortgage
loan. These non-core properties, located 0.9 and 1.6 miles from
small regional universities, were included in larger high-quality
portfolio acquisitions in 2005 and 2008, but individually were not
consistent with the company’s investment criteria. Proceeds from
the transactions, including the forgiveness of debt, totaled $36.9
million.
Capital Markets
In June, the company issued $400 million of senior unsecured
notes under its existing shelf registration, which are fully and
unconditionally guaranteed by the company. These 7-year notes were
issued at 99.704 percent of par value with a coupon of 3.300
percent and a yield of 3.347 percent. When including the effect of
an interest rate swap entered into in 2018, the effective interest
rate on the notes is 3.7 percent. The notes will mature on July 15,
2026. Moody’s and S&P rated the notes Baa2 and BBB,
respectively. Net proceeds from the transaction totaled
approximately $394 million, after expenses, and were used to repay
borrowings under the company’s revolving credit facility, to fund
projects in its current development pipeline and potential
acquisitions of student housing properties and for general business
purposes.
At-The-Market (ATM) Share Offering Program
The company did not sell any shares under the ATM during the
quarter.
2019 Outlook
The company is maintaining its previously stated guidance range
for the fiscal year 2019, anticipating that FFO will be in the
range of $2.40 to $2.50 per fully diluted share and FFOM will be in
the range of $2.35 to $2.45 per fully diluted share. For additional
details regarding the company’s 2019 outlook, please see pages S-16
through S-17 of the Supplemental Analyst Package 2Q 2019. All
guidance is based on the current expectations and judgment of the
company’s management team.
A reconciliation of the range provided for projected net income
to projected FFO and FFOM for the fiscal year ending December 31,
2019 is included in Table 5.
Supplemental Information and Earnings Conference Call
Supplemental financial and operating information, as well as
this release, are available in the investor relations section of
the American Campus Communities website, www.americancampus.com. In
addition, the company will host a conference call to discuss second
quarter results and the 2019 outlook on Tuesday, July 23, 2019 at
10:00 a.m. ET (9:00 a.m. CT). The conference call may be accessed
by dialing 888-317-6003 passcode 5132979, or 412-317-6061 for
international participants.
To listen to the live webcast, go to www.americancampus.com at
least 15 minutes prior to the call so that required audio software
can be downloaded. A replay of the conference call will be
available beginning one hour after the end of the call until August
6, 2019 by dialing 877-344-7529 or 412-317-0088 conference number
10132391. Additionally, the replay will be available for one year
at www.americancampus.com.
Non-GAAP Financial Measures
The National Association of Real Estate Investment Trusts
("NAREIT") currently defines Funds from Operations ("FFO") as net
income or loss attributable to common shares computed in accordance
with generally accepted accounting principles ("GAAP"), excluding
gains or losses from depreciable operating property sales,
impairment charges and real estate depreciation and amortization,
and after adjustments for unconsolidated partnerships and joint
ventures. We present FFO because we consider it an important
supplemental measure of our operating performance and believe it is
frequently used by securities analysts, investors and other
interested parties in the evaluation of REITs. We also believe it
is meaningful to present a measure we refer to as FFO-Modified, or
(“FFOM”), which reflects certain adjustments related to the
economic performance of our on-campus participating properties and
excludes property acquisition costs and other non-cash items, as we
determine in good faith. FFO and FFOM should not be considered as
alternatives to net income or loss computed in accordance with GAAP
as an indicator of our financial performance or to cash flow from
operating activities computed in accordance with GAAP as an
indicator of our liquidity, nor are these measures indicative of
funds available to fund our cash needs, including our ability to
pay dividends or make distributions.
The company defines property net operating income (“NOI”) as
property revenues less direct property operating expenses,
excluding depreciation, but including allocated corporate general
and administrative expenses.
About American Campus Communities
American Campus Communities, Inc. is the largest owner, manager
and developer of high-quality student housing communities in the
United States. The company is a fully integrated, self-managed and
self-administered equity real estate investment trust (REIT) with
expertise in the design, finance, development, construction
management and operational management of student housing
properties. As of June 30, 2019, American Campus Communities owned
169 student housing properties containing approximately 108,800
beds. Including its owned and third-party managed properties, ACC's
total managed portfolio consisted of 203 properties with
approximately 133,100 beds. Visit www.americancampus.com.
Forward-Looking Statements
In addition to historical information, this press release
contains forward-looking statements under the applicable federal
securities law. These statements are based on management’s current
expectations and assumptions regarding markets in which American
Campus Communities, Inc. (the “Company”) operates, operational
strategies, anticipated events and trends, the economy, and other
future conditions. Forward-looking statements are not guarantees of
future performance and involve certain risks and uncertainties,
which are difficult to predict. For discussions of some risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied by the forward-looking statements,
please refer to our filings with the Securities and Exchange
Commission, including our Annual Report on Form 10-K for the year
ended December 31, 2018 under the heading “Risk Factors” and under
the heading “Business - Forward-looking Statements” and subsequent
quarterly reports on Form 10-Q. We undertake no obligation to
publicly update any forward-looking statements, including our
expected 2019 operating results, whether as a result of new
information, future events, or otherwise.
Table 1
American Campus Communities,
Inc. and Subsidiaries
Consolidated Balance
Sheets
(dollars in thousands)
June 30, 2019
December 31, 2018
(unaudited)
Assets
Investments in real estate:
Owned properties, net
$
6,676,217
$
6,583,397
On-campus participating properties,
net
77,390
77,637
Investments in real estate, net
6,753,607
6,661,034
Cash and cash equivalents
51,541
71,238
Restricted cash
37,185
35,279
Student contracts receivable
9,446
8,565
Other assets1
531,118
262,730
Total assets
$
7,382,897
$
7,038,846
Liabilities and equity
Liabilities:
Secured mortgage, construction and bond
debt, net
$
872,922
$
853,084
Unsecured notes, net
1,983,895
1,588,446
Unsecured term loans, net
198,945
198,769
Unsecured revolving credit facility
185,600
387,300
Accounts payable and accrued expenses
67,079
88,767
Operating lease liabilities2
285,224
—
Other liabilities2
162,437
191,233
Total liabilities
3,756,102
3,307,599
Redeemable noncontrolling
interests
185,910
184,446
Equity:
American Campus Communities, Inc. and
Subsidiaries
stockholders’ equity:
Common stock
1,372
1,370
Additional paid in capital
4,460,412
4,458,240
Common stock held in rabbi trust
(3,368
)
(3,092
)
Accumulated earnings and dividends
(1,059,633
)
(971,070
)
Accumulated other comprehensive loss
(18,784
)
(4,397
)
Total American Campus Communities, Inc.
and
Subsidiaries stockholders’ equity
3,379,999
3,481,051
Noncontrolling interests – partially owned
properties
60,886
65,750
Total equity
3,440,885
3,546,801
Total liabilities and equity
$
7,382,897
$
7,038,846
- For purposes of calculating net asset value ("NAV") at June 30,
2019, the company excludes other assets of approximately $5.4
million related to net deferred financing costs on its revolving
credit facility and the net value of in-place leases and
approximately $279.3 million of right of use assets associated with
new lease accounting guidance that was adopted by the company on
January 1, 2019.
- For purposes of calculating NAV at June 30, 2019, the company
excludes other liabilities of approximately $48.6 million related
to deferred revenue and fee income, as well as operating lease
liabilities disclosed above associated with new lease accounting
guidance that was adopted by the company on January 1, 2019.
Table 2
American Campus Communities,
Inc. and Subsidiaries
Consolidated Statements of
Comprehensive Income
(dollars in thousands, except
share and per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
(unaudited)
(unaudited)
Revenues
Owned properties1
$
203,156
$
189,488
$
427,575
$
395,020
On-campus participating properties1
6,396
6,182
17,844
16,625
Third-party development services
3,607
2,202
6,778
3,048
Third-party management services
3,465
2,452
5,776
5,183
Resident services
747
735
1,529
1,592
Total revenues
217,371
201,059
459,502
421,468
Operating expenses
Owned properties1 2
90,763
86,136
182,932
174,196
On-campus participating properties1
3,806
3,730
7,763
7,155
Third-party development and management
services
4,513
3,544
8,699
7,742
General and administrative2
8,115
13,173
15,430
19,872
Depreciation and amortization
68,815
63,537
137,570
128,316
Ground/facility leases
3,236
2,733
6,785
5,575
Loss (gain) from disposition of real
estate3
282
(42,314
)
282
(42,314
)
Provision for real estate impairment4
—
—
3,201
—
Other operating income
—
(2,648
)
—
(2,648
)
Total operating expenses
179,530
127,891
362,662
297,894
Operating income
37,841
73,168
96,840
123,574
Nonoperating income (expenses)
Interest income
969
1,243
1,895
2,466
Interest expense
(27,068
)
(23,338
)
(54,129
)
(47,022
)
Amortization of deferred financing
costs
(1,218
)
(2,214
)
(2,350
)
(3,628
)
Loss from early extinguishment of debt
—
(784
)
—
(784
)
Total nonoperating expenses
(27,317
)
(25,093
)
(54,584
)
(48,968
)
Income before income taxes
10,524
48,075
42,256
74,606
Income tax provision2
(314
)
(2,085
)
(678
)
(2,366
)
Net income
10,210
45,990
41,578
72,240
Net loss (income) attributable to
noncontrolling interests
176
19
(1,552
)
(304
)
Net income attributable to ACC, Inc.
and
Subsidiaries common
stockholders
$
10,386
$
46,009
$
40,026
$
71,936
Other comprehensive (loss)
income
Change in fair value of interest rate
swaps and other
(8,593
)
180
(14,387
)
645
Comprehensive income
$
1,793
$
46,189
$
25,639
$
72,581
Net income per share attributable to
ACC, Inc.
and Subsidiaries common
shareholders
Basic and diluted
$
0.07
$
0.33
$
0.28
$
0.52
Weighted-average common shares
outstanding
Basic
137,268,696
136,677,255
137,185,576
136,599,816
Diluted
138,243,388
137,576,366
138,198,134
137,536,368
- The company adopted new lease accounting guidance on January 1,
2019 which required the reclassification of the provision for
uncollectible accounts from operating expenses to revenue. The
reclassification is reflected on a prospective basis starting in
the first quarter 2019. The provision for uncollectible accounts
for owned properties was $1.7 million and $1.8 million for the
three months ended June 30, 2019 and 2018, respectively, and was
$2.8 million and $2.7 million for the six months ended June 30,
2019 and 2018, respectively. The provision for uncollectible
accounts for on-campus participating properties for both the three
months ended June 30, 2019 and 2018 was $0.1 million. The provision
for uncollectible accounts for on-campus participating properties
was a $0.7 million benefit and a $0.2 million expense for the six
months ended June 30, 2019 and 2018, respectively.
- Owned properties operating expenses, general and administrative
expenses, and income tax provision for the three and six months
ended June 30, 2018 include $0.2 million, $5.8 million, and $1.8
million, respectively, of the company's proportionate share of
transaction costs incurred in connection with the closing of the
ACC / Allianz joint venture transaction in May 2018.
- The three and six months ended June 30, 2019 amounts represent
a loss from the disposition of one property in May 2019. The three
and six months ended June 30, 2018 amounts represent a gain from
the disposition of a portfolio of three properties in May
2018.
- Represents an impairment charge recorded for an owned property
classified as held for sale as of March 31, 2019 that was sold in
May 2019.
Table 3
American Campus Communities,
Inc. and Subsidiaries
Consolidated Statements of
Funds from Operations
(unaudited, dollars in
thousands, except share and per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Net income attributable to ACC, Inc. and
Subsidiaries
common stockholders
$
10,386
$
46,009
$
40,026
$
71,936
Noncontrolling interests1
54
453
214
775
Loss (gain) from disposition of real
estate
282
(42,314
)
282
(42,314
)
Elimination of provision for real estate
impairment
—
—
3,201
—
Real estate related depreciation and
amortization2
65,458
61,571
130,834
125,149
Funds from operations (“FFO”)
attributable to common stockholders and OP unitholders
76,180
65,719
174,557
155,546
Elimination of operations of on-campus
participating properties
Net loss (income) from on-campus
participating properties
1,130
1,218
(2,562
)
(2,151
)
Amortization of investment in on-campus
participating properties
(2,016
)
(1,952
)
(4,045
)
(3,894
)
75,294
64,985
167,950
149,501
Modifications to reflect operational
performance of on-campus participating properties
Our share of net cashflow3
828
793
1,710
1,588
Management fees and other
408
279
1,228
756
Contribution from on-campus participating
properties
1,236
1,072
2,938
2,344
Transaction costs4
—
7,818
—
7,818
Elimination of loss from early
extinguishment of debt5
—
784
—
784
Elimination of gain from litigation
settlement6
—
(2,648
)
—
(2,648
)
Elimination of FFO from property in
receivership7
839
606
1,808
1,195
Funds from operations-modified (“FFOM”)
attributable to common stockholders and OP unitholders
$
77,369
$
72,617
$
172,696
$
158,994
FFO per share – diluted
$
0.55
$
0.47
$
1.26
$
1.12
FFOM per share – diluted
$
0.56
$
0.52
$
1.24
$
1.15
Weighted-average common shares
outstanding - diluted
138,873,418
138,592,562
138,842,644
138,561,640
- The difference from the amount presented in the company’s
consolidated statements of comprehensive income represents
consolidated joint venture partners’ share of net income.
- The difference from the amount presented in the company’s
consolidated statements of comprehensive income represents
corporate depreciation and consolidated joint venture partners’
share of depreciation. Corporate depreciation and the joint venture
partners' share of depreciation for the three months ended June 30,
2019 was $1.2 million and $2.2 million, respectively. Corporate
depreciation and the joint venture partners' share of depreciation
for the six months ended June 30, 2019 was $2.4 million and $4.3
million, respectively.
- 50% of the properties’ net cash available for distribution
after payment of operating expenses, debt service (including
repayment of principal) and capital expenditures which is included
in ground/facility leases expense in the consolidated statements of
comprehensive income (refer to table 2).
- Represents transaction costs incurred in connection with the
closing of a real estate joint venture transaction in May 2018,
whereby a 45% noncontrolling interest in seven properties was sold
to a joint venture partner.
- Represents losses associated with the early extinguishment of
mortgage loans due to real estate disposition transactions,
including the sale of partial ownership interests in properties.
Such costs are excluded from gains from disposition of real estate
reported in accordance with GAAP.
- Represents a gain related to cash proceeds received from a
litigation settlement.
- Represents FFO for an owned property that was transferred to
the lender in July 2019 in settlement of the property's $27.4
million mortgage loan.
Table 4
American Campus Communities,
Inc. and Subsidiaries
Owned Properties Results of
Operations1
(unaudited, dollars in
thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
$ Change
% Change
2019
2018
$ Change
% Change
Owned properties revenues
Same store properties
$
190,207
$
184,281
$
5,926
3.2
%
$
395,576
$
383,396
$
12,180
3.2
%
New properties
12,759
136
12,623
31,317
257
31,060
Sold and held for sale properties2
937
3,992
(3,055
)
2,211
10,227
(8,016
)
Total revenues3 4
$
203,903
$
188,409
$
15,494
8.2
%
$
429,104
$
393,880
$
35,224
8.9
%
Owned properties operating
expenses
Same store properties
$
84,175
$
81,791
$
2,384
2.9
%
$
169,012
$
166,173
$
2,839
1.7
%
New properties
5,781
191
5,590
11,896
315
11,581
Other5
26
344
(318
)
135
344
(209
)
Sold and held for sale properties2 6
781
1,996
(1,215
)
1,889
4,632
(2,743
)
Total operating expenses3
$
90,763
$
84,322
$
6,441
7.6
%
$
182,932
$
171,464
$
11,468
6.7
%
Owned properties net operating
income
Same store properties
$
106,032
$
102,490
$
3,542
3.5
%
$
226,564
$
217,223
$
9,341
4.3
%
New properties
6,978
(55
)
7,033
19,421
(58
)
19,479
Other5
(26
)
(344
)
318
(135
)
(344
)
209
Sold and held for sale properties2 6
156
1,996
(1,840
)
322
5,595
(5,273
)
Total net operating income
$
113,140
$
104,087
$
9,053
8.7
%
$
246,172
$
222,416
$
23,756
10.7
%
- The same store grouping above represents properties owned and
operating for both of the entire years ended December 31, 2019 and
2018, which are not conducting or planning to conduct substantial
development, redevelopment, or repositioning activities, and are
not classified as held for sale as of June 30, 2019.
- Includes properties sold in 2018 and 2019, and one property
that was transferred to the lender in July 2019 in settlement of
the property's $27.4 million mortgage loan.
- The company adopted new lease accounting guidance on January 1,
2019 which required the reclassification of the provision for
uncollectible accounts from operating expenses to revenue starting
in the first quarter 2019. To ensure comparability between periods
when calculating same store and new property results of operations,
the reclassification has also been made for the prior year. See
table 2 for the total amounts reclassified from operating expenses
to revenue for all properties for both periods presented.
- Includes revenues that are reflected as Resident Services
Revenue on the accompanying consolidated statements of
comprehensive income.
- Includes recurring professional fees related to the formation
and operation of the ACC / Allianz joint venture that are included
in owned properties operating expenses in the consolidated
statements of comprehensive income (refer to table 2).
- Does not include the allocation of payroll and other
administrative costs related to corporate management and
oversight.
Table 5
American Campus Communities,
Inc. and Subsidiaries
2019 Outlook1
(dollars in thousands, except
share and per share data)
Low
High
Net income2
$
74,600
$
86,700
Noncontrolling interests
900
1,000
Depreciation and amortization
258,200
259,100
Funds from operations (“FFO”)
$
333,700
$
346,800
Elimination of operations from on-campus
participating properties
(14,100
)
(13,700
)
Contribution from on-campus participating
properties
5,500
6,100
Transaction costs3
800
800
Funds from operations - modified
(“FFOM”)
$
325,900
$
340,000
Net income per share - diluted
$
0.54
$
0.62
FFO per share - diluted
$
2.40
$
2.50
FFOM per share - diluted
$
2.35
$
2.45
Weighted-average common shares
outstanding - diluted
138,866,100
138,866,100
1. The company believes that the financial results for the
fiscal year ending December 31, 2019 may be affected by, among
other factors:
- national and regional economic trends and events;
- the success of leasing the company's owned properties for the
2019-2020 academic year;
- the timing of acquisitions, dispositions or joint venture
activity;
- interest rate risk;
- the timing of commencement and completion of construction on
owned development projects;
- the ability of the company to be awarded and the timing of the
commencement of construction on third-party development
projects;
- university enrollment, funding and policy trends;
- the ability of the company to earn third-party management
revenues;
- the amount of income recognized by the taxable REIT
subsidiaries and any corresponding income tax expense;
- the ability of the company to integrate acquired
properties;
- the outcome of legal proceedings arising in the normal course
of business; and
- the finalization of property tax rates and assessed values in
certain jurisdictions.
2. Does not include any potential gain or loss on sale from
anticipated dispositions or the effect of transferring Blanton
Common to the lender, as such will be eliminated for the purposes
of calculating FFOM.
3. Represents transaction costs related to the closing of two
presale development properties.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190722005609/en/
American Campus Communities, Inc., Austin Ryan Dennison,
512-732-1000
American Campus Communit... (NYSE:ACC)
Historical Stock Chart
From Oct 2024 to Nov 2024
American Campus Communit... (NYSE:ACC)
Historical Stock Chart
From Nov 2023 to Nov 2024
