Increases midpoint of annual FFOM per share
guidance; announces final leasing results
American Campus Communities, Inc. (NYSE: ACC), the nation’s
largest owner and manager of high-quality student housing
properties, today provided an update to the company’s 2019 outlook,
increasing the midpoint of FFOM per share guidance by $0.02, and
provided leasing results for the 2019-2020 academic year in
conjunction with the company’s participation in the 2019 National
Multifamily Housing Council (NMHC) Student Housing Conference.
Additionally, the company is providing an update on the anticipated
level of capital recycling activity for the remainder of 2019.
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2019 Outlook
The company is increasing its 2019 outlook primarily to reflect
the completion of the Fall 2019 lease-up, previously released
financial results and anticipated results for the remainder of the
year. Based upon these and other factors, management anticipates
that 2019 FFO will be in the range of $2.61 to $2.63 and FFOM will
be in the range of $2.40 to $2.44 per fully diluted share,
respectively. This revision increases the FFOM guidance midpoint by
$0.02.
A reconciliation of the range provided for projected net income
to projected FFO and FFOM for the fiscal year ended December 31,
2019 is included in Table 2 and additional details regarding the
company’s updated 2019 outlook are included in Table 3.
All guidance is based on the current expectations and judgment
of the company's management team.
Academic Year 2019-2020 Leasing Results
As of September 30, 2019, the company’s 2020 same store
portfolio was 97.4 percent leased, an increase of 40 basis points
as compared to 97.0 percent leased as of September 30, 2018, with
1.4 percent rental rate growth over in-place rents. The results
represent 1.7 percent opening rental revenue growth. This 1.7
percent rental revenue growth includes 100 percent of the
performance of the Austin portfolio, which is owned 55 percent by
the company and 45 percent by a joint venture partner. Adjusted to
include only the company’s 55 percent share of the Austin
portfolio, the effective rental revenue growth which flows through
to FFOM is 2.0 percent. Additionally, when excluding the Austin
portfolio, the company’s remaining 66 same store markets achieved
2.4 percent opening rental revenue growth, in-line with the
midpoint of the financial guidance for those markets.
The company’s new owned properties, which represent 2019
development and presale development properties, were 98.1 percent
leased as of September 30, 2019. Additional details regarding the
company’s 2019-2020 academic year leasing results are included in
Table 1.
“We are pleased to increase the midpoint of our fiscal 2019
guidance, driven by better than anticipated operating performance
to-date, improved occupancy in the spring and summer months
facilitated by advancements in our Next Gen systems and business
intelligence initiatives, and outperformance in our 2018 and 2019
development properties,” said Bill Bayless, American Campus
Communities CEO. “Overall, the Fall 2019 same store lease-up
finished within our expectations. We remain encouraged with the
broad industry fundamentals, as 66 of our 67 same store markets,
which excludes the Austin market, achieved 2.4 percent opening
rental revenue growth in total. We have also generated significant
returns in Austin and expect the market to continue to perform well
over the long-term as it absorbs new supply.”
Capital Recycling Update
The company has executed a letter of intent for the sale of one
asset with anticipated proceeds of $100 million. In addition, the
company is in negotiations for the sale of another property with
proceeds of approximately $150 million. While these transactions
have not been completed, the disposition of these previously
acquired assets is expected to represent a low 4 percent economic
cap rate.
“The student housing transaction environment remains vibrant
with core assets trading in the low 4 percent cap rate range.
Executing on the anticipated dispositions at these levels is
currently our most attractive source of external capital,” said
William Talbot, American Campus Communities CIO. “The continued
value and attractiveness of student housing to institutional real
estate investors provides us with the opportunity to recycle
capital into higher return developments at yields of 6.25 percent
and above. This is exemplified by our 2019 new developments in
Boston, Auburn and Tucson, which are expected to exceed our
targeted yields and generate significant net asset value for our
shareholders.”
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.
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