American Campus Communities, Inc. (NYSE: ACC), the nation’s
largest owner and manager of high-quality student housing
properties, today provided an interim update in connection with the
company’s participation in the 2021 National Multifamily Housing
Council (NMHC) Student Housing Conference. The company announced an
extremely successful completion of the Fall 2021 lease-up,
producing occupancy and rental revenue growth above the high end of
its previously provided guidance range. Based upon this better than
anticipated completion to the leasing season, the company now
expects to deliver FFOM per fully diluted share of $2.04 to $2.12
for the year ended December 31, 2021. This represents an increase
of $0.08, or 4.0 percent, per fully diluted share at the midpoint,
as compared to prior FFOM guidance of $1.93 to $2.07 per fully
diluted share.
Academic Year 2021-2022 Leasing Results
As of September 30, 2021, the company’s 2021 and 2022 same store
portfolios were 95.8 percent leased with 3.3 and 3.8 percent
average rental rate growth over the prior year, respectively. This
compares to the company’s previously provided expectations of 92.0
to 94.0 percent leased with 2.5 to 3.0 and 3.0 to 3.5 percent
average rental rate growth for the 2021 and 2022 same store
portfolios, respectively. Additional details regarding the
company’s 2021-2022 academic year leasing results are included in
Table 1.
“We are very pleased to have driven a strong finish to the
lease-up, with significant activity continuing into August and
September, which produced opening academic year revenue growth of
over 8 percent and allowed us to increase our guidance midpoint by
4 percent,” said Bill Bayless, American Campus Communities CEO.
“Our sector is experiencing substantial tailwinds and appears to
have almost entirely recovered from the impacts of COVID. Nearly
all universities across the country have resumed in-person academic
and social activities. According to RealPage, national student
housing occupancy has returned to pre-pandemic levels and new
supply is projected to continue to trend downward, with Fall 2022
expected to represent the lowest levels of new student housing beds
delivered in more than a decade. These recent trends, including
strong demand and low supply, underpin our confidence in the unique
value of our portfolio as well as our ability to generate near and
long-term shareholder value.”
2021 Outlook
The company is increasing its 2021 outlook primarily to reflect
the completion of the Fall 2021 lease-up and anticipated results
for the remainder of the year. Based upon these and other factors,
management expects that 2021 FFO will be in the range of $2.06 to
$2.14 and FFOM will be in the range of $2.04 to $2.12 per fully
diluted share, respectively.
“After successfully managing through the disruption caused by
the pandemic, we are very excited that the company is positioned to
grow 2021 earnings by as much as 3 to 7 percent over 2020,” said
Daniel Perry, American Campus Communities CFO. “Even more
importantly, with such a successful completion to our Fall 2021
lease-up, we believe net operating income will return to
pre-pandemic levels by the fourth quarter of this year, which
should translate into significant earnings growth in 2022. Based on
our strong recent results and expectations for a favorable
operating environment, we are confident in our ability to fund our
business through continued strategic capital recycling and free
cash flow generation. And finally, we believe FFOM per share growth
in the 12-15 percent range is achievable in 2022, and look forward
to providing formal guidance when we release our fourth quarter and
full year earnings results early next year.”
A reconciliation of the range provided for projected net income
to projected FFO and FFOM for the year ended December 31, 2021 is
included in Table 2. The company has not sold any shares through
its At-The-Market share offering program since its second quarter
earnings call in July.
All guidance is based on the current expectations and judgment
of the company's management team.
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 other items, as we determine in good faith, that do not
reflect our core operations on a comparative basis. 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, 2021, American Campus Communities owned
166 student housing properties containing approximately 111,900
beds. Including its owned and third-party managed properties, ACC's
total managed portfolio consisted of 205 properties with
approximately 141,300 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. These risks and uncertainties that
could cause actual results to differ materially from those
expressed or implied in the forward looking-statements include
those related to the COVID-19 pandemic, about which there are still
many unknowns, including the duration of the pandemic and the
extent of its impact, and those discussed in our filings with the
Securities and Exchange Commission, including our Annual Report on
Form 10-K for the year ended December 31, 2020 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 preleasing activity or expected full year
2021 operating results, whether as a result of new information,
future events, or otherwise. The information contained on our
website is not a part of this release.
Table 1
American Campus Communities,
Inc. and Subsidiaries
Portfolio Overview 1
Rental Revenue per
Leasing Status as of
Fall 2021
Leased Bed for
Property Type
Design
September 30,
Final Rental
Academic Year 2
Beds
2021
2020
Rate Change
2021 / 2022
2020 / 2021
2021 Same Store Owned
Properties
95,351
95.8%
90.3%
3.3%
$812
$786
2022 New Same Store Owned Properties
3
856
93.8%
40.8%
20.0%
$1,467
$1,223
2022 Same Store Owned
Properties
96,207
95.8%
89.9%
3.8%
$818
$788
Academic Year
2021-2022 Seasonality Note:
As noted on recent earnings calls, the
company experienced significantly elevated levels of spring and
summer-term leasing during the first half of 2021, as compared to
pre-pandemic levels. Given the 2021-2022 academic year lease-up
resulted in occupancy approaching pre-pandemic levels, the company
anticipates spring and summer-term leasing will return to
pre-pandemic levels in 2022. As a result, primarily due to the
positive effects the elevated spring and summer leasing had on same
store revenue growth during the first and second quarter 2021
comparable periods, the company anticipates that same store revenue
growth will moderate from approximately 8.0% in the fourth quarter
of 2021 to a range of 6.75-7.75% and 5.0-6.0% for the first and
second quarters of 2022, respectively.
Note: The same store groupings presented
above represent properties owned and operating for two full
calendar year periods, which are not conducting or planning to
conduct substantial development, redevelopment, or repositioning
activities, and are not classified as held for sale as of the
current period-end. The groupings include the full operating
results of properties owned through joint ventures in which the
company has a controlling financial interest and which are
consolidated for financial reporting purposes.
1
Represents leasing results for
the 2021-2022 academic year as of September 30, 2021, as compared
to prior academic year occupancy and rental rates as of September
30, 2020.
2
Represents average rental revenue
per leased bed for the academic years presented. For the 2020-2021
academic year, rental revenue per leased bed includes the effects
of on-campus rent refunds and rent relief under the company’s
Resident Hardship Program.
3
Does not include completed phases
of the Disney College Program project. All phases of the Disney
College Program project will be included in our same store results
as one property beginning in 2025 once all ten phases have been
completed and operating for two full calendar years.
Table 2
American Campus Communities,
Inc. and Subsidiaries
2021 Outlook Summary 1
(dollars in thousands, except
share and per share data)
Prior Guidance
Current Guidance
Low
High
Low
High
Net income
$
10,400
$
29,900
$
25,600
$
36,700
Noncontrolling interests' share of net
loss
(3,300
)
(3,300
)
(2,800
)
(2,800
)
Joint Venture ("JV") partners' share of
FFO
JV partners' share of net loss
3,500
3,500
3,000
3,000
JV partners' share of depreciation and
amortization
(7,700
)
(7,700
)
(7,700
)
(7,700
)
(4,200
)
(4,200
)
(4,700
)
(4,700
)
Total depreciation and amortization
273,600
273,600
273,600
273,600
Corporate depreciation
(3,100
)
(3,100
)
(3,100
)
(3,100
)
FFO
273,400
292,900
288,600
299,700
Elimination of operations from on-campus
participating properties ("OCPP")
(11,000
)
(11,000
)
(11,200
)
(11,200
)
Contribution from OCPPs
3,100
3,100
3,100
3,100
Elimination of litigation settlement
expense 2
2,000
2,000
2,000
2,000
Stockholder engagement and other proxy
advisory costs 3
900
900
900
900
Executive retirement charges 4
2,600
2,600
2,600
2,600
FFOM
$
271,000
$
290,500
$
286,000
$
297,100
Net income per share - diluted
$
0.07
$
0.21
$
0.18
$
0.26
FFO per share - diluted
$
1.95
$
2.09
$
2.06
$
2.14
FFOM per share - diluted
$
1.93
$
2.07
$
2.04
$
2.12
Weighted-average common shares
outstanding - diluted
140,214,200
140,214,200
140,214,200
140,214,200
1.
Refer to Item 7 in the company's Form 10-K
for the year ended December 31, 2020 for detailed definitions of
FFO and FFOM. The company believes that the financial results for
the year ending December 31, 2021 may be affected by a number of
factors. Such factors include:
- national and regional economic trends and events;
- the level of lease terminations, rent refunds, and/or
abatements granted to student and commercial tenants;
- economic hardship experienced by student and commercial tenants
and its ultimate effect on rent collections and thus the provision
for uncollectible accounts;
- the amount of leasing and related fees earned for the 2022-2023
academic year, which is affected by the timing and velocity of the
company’s leasing process;
- canceled or delayed third-party development projects;
- reduced revenues at our third-party managed properties
resulting in reduced third-party management fee income;
- the impact of any stimulus payments that may be received by the
company, our tenants, and/or our University partners under the
Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”)
and any future similar governmental actions;
- any increase in, or reduction to, operating expenses as a
result of COVID-19;
- the timing and amount of any acquisitions, dispositions or
joint venture activity;
- interest rate risk;
- the timing of commencement and completion of construction on
owned development projects;
- university enrollment, funding and policy trends;
- the amount of income recognized by the taxable REIT
subsidiaries and any corresponding income tax expense;
- 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.
Represents expenses associated with the
actual or estimated settlements of litigation matters that are
included in general and administrative expenses in the accompanying
consolidated statements of comprehensive income.
3.
Represents consulting, legal, and other
related costs incurred in relation to stockholder engagement
activities in preparation for the company’s 2021 annual
stockholders' meeting.
4.
Represents accelerated amortization of
unvested restricted stock awards due to the retirement of the
company's President in August 2021.
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