American Campus Communities, Inc. (NYSE: ACC) (“ACC” or the
“Company”) today issued an open letter to shareholders highlighting
the Company’s successful portfolio management, track record of
value creation, market outperformance and continuous Board
refreshment, including:
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20211216005343/en/
Risk Adjusted NOI Growth over Full Real
Estate Cycle (Graphic: Business Wire)
- ACC’s shares are trading near all-time highs, reflecting its
consistent operating performance that has resulted in one of the
highest risk-adjusted net operating income (NOI) growth profiles
over the full real estate cycle, as compared to other publicly
traded REIT sectors1;
- Since the start of the pandemic, ACC has achieved a total
shareholder return (TSR) of 57%, exceeding the 45% TSR generated by
the RMS REIT total return index2; and
- For the third quarter of 2021, total property NOI returned to
pre-pandemic levels a full year earlier than anticipated, with
95.8% opening fall occupancy and 3.8% average rental rate growth
over the prior year for the 2022 same store portfolio, above the
high end of the Company’s prior guidance. Recent operating
performance clearly demonstrates ACC’s resiliency following the
pandemic.
Against the backdrop of ACC’s positive momentum and exceptional
performance, together with the Company’s continued engagement with
Land & Buildings Investment Management (“Land &
Buildings”), ACC is disappointed by Land & Buildings’ recent
actions. Land & Buildings’ Founder and CIO, Jonathan Litt,
privately requested Board representation for himself in November
2021. In the midst of continued discussions with our Board, Land
& Buildings has chosen to launch a distracting and self-serving
public campaign, rather than pursue a path of constructive
engagement. In its letter to shareholders, the Company notes:
- Over the past 14 months, ACC has made every attempt to maintain
an ongoing and constructive dialogue with Land & Buildings, as
the Company does with all of its shareholders, including entering
into a settlement agreement in January 2021.
- With the support of Land & Buildings, earlier this year the
Company appointed three new independent directors, elected a new
Board Chair and formed a Capital Allocation Committee.
- Ongoing refreshment has resulted in a 40% diverse Board with an
average independent director tenure of only 6.6 years.
- The Board’s Capital Allocation Committee consists of four
independent directors, two of whom were appointed to the Board
pursuant to the January 2021 agreement with Land & Buildings,
including the Chair, Craig Leupold.
- Since the January 2021 settlement agreement, ACC’s refreshed
Board has overseen strong TSR of 39%3.
- Land & Buildings has been misleading regarding its ongoing
effort to secure a seat on the ACC Board for Mr. Litt4.
The full text of the Company’s letter follows:
Dear American Campus Communities shareholders,
Our Board of Directors and management team are committed to
creating value for you, our shareholders.
ACC has been a pioneer in the student housing industry since its
founding in 1993. We are now the largest developer, owner and
manager of high-quality student housing communities in the United
States. With an enterprise value of approximately $10.6 billion5,
the Company’s 166 owned properties are in 71 markets. With our
shares trading near all-time highs, our performance and shareholder
value creation have been exceptional:
- Since our IPO in 2004, ACC has produced a total return of 565%
compared to the RMS REIT total return of 379%6.
- Since completing our strategic portfolio refinement in 2018,
ACC has outperformed the RMS REIT total return index by
approximately 880 basis points7.
- Since COVID-19 was declared a global pandemic, ACC has
outperformed the RMS REIT total return index by approximately 1,130
basis points8.
ACC’s refreshed Board and management team have engaged
extensively with our investors and taken meaningful actions to
deliver significant earnings per share growth and shareholder value
creation. We made strategic decisions leading up to the pandemic
that began to produce results as demonstrated by our FFOM per share
growth in 2019. While the progress was temporarily disrupted by the
pandemic, ACC has emerged as a stronger company and our efforts are
yielding tangible results. We are excited about the Company’s
runway for strong earnings and net asset value growth, which we
expect will further drive substantial shareholder returns.
Achieving Strong Financial Results and Building for Long-Term
Success
ACC has successfully enhanced its portfolio and diversified its
sources of capital to drive significant earnings growth and
shareholder value creation, including by:
- Strategically refining the assets in our portfolio with a focus
on owning properties within walking distance to major Power 5
conference and Carnegie R1 universities that we believe are best
positioned to deliver resilient performance over the
long-term;
- Pursuing accretive investment opportunities in high-yielding
developments;
- Funding any near-term capital needs through strategic capital
recycling while maintaining consistent earnings growth for
shareholders; and
- Minimizing the effect of the pandemic on our shareholders and
generating a runway for strong future growth. As a result, ACC’s
earnings trajectory is among the highest of all sectors in the real
estate industry according to current analyst estimates.
Our results throughout 2021 and momentum leading into 2022
demonstrate that our best-in-class property operations team is
capitalizing on historic industry tailwinds:
- Returned total property net operating income (NOI) to
pre-pandemic levels a full year earlier than anticipated,
demonstrating ACC’s resiliency following the COVID-19
pandemic;
- Achieved 95.8% opening fall occupancy and 3.8% average rental
rate growth over the prior year for the 2022 same store portfolio,
above the high end of our prior guidance;
- Delivered phase 5 of the Flamingo Crossings Village project on
time and on budget, despite the national labor shortage and supply
chain constraints, and welcomed over 4,500 residents within the
first five months since the Disney College Program recommenced;
and
- Awarded two new third-party development projects and commenced
a third at Princeton University.
ACC’s consistent operating performance results in one of the
highest risk-adjusted NOI growth profiles over the full real estate
cycle, as measured starting from The Great Recession in 2008 and
ending in 2019 before the impacts of the COVID-19 global
pandemic9.
ACC is poised to benefit from its prior long-term strategic
portfolio refinement, investments in our next-gen operating
platform and the positive fundamentals of the student housing
industry. ACC’s university markets are now experiencing record
setting enrollment levels, including first year student enrollment
growth at the highest levels in over 30 years, combined with new
supply at the lowest levels in over a decade and significant
activity in our on-campus public-private partnership business.
Recent Interactions with Land & Buildings
The Board and management team of ACC have sought to maintain a
constructive dialogue with Land & Buildings since it contacted
the company and became a shareholder last year. Land &
Buildings first approached ACC in October of 2020 when the Company
was battling the negative effects of the pandemic on higher
education, the student housing industry and the Company’s
business.
With Land & Buildings’ support in January 2021, we continued
to refresh our Board and enhance our governance by identifying and
appointing three new independent members, appointing a new Board
Chair – Cydney Donnell, former Principal and Managing Director of
European Investors/EII Realty Securities – and forming a Capital
Allocation Committee. The Board’s new Capital Allocation Committee
consists of four independent directors, two of whom were appointed
to the Board pursuant to the January 2021 agreement with Land &
Buildings, including Craig Leupold, former CEO of Green Street
Advisors – a leading independent research and advisory firm for the
real estate industry known for its analysis regarding corporate
governance and capital allocation – who serves as Committee Chair.
Notably, both Ms. Donnell and Mr. Leupold bring to the ACC Board
significant investment experience and shareholder perspectives from
their prior roles, contrary to Land & Buildings’ assertion that
investor representation is needed.
In connection with our ongoing dialogue and correspondence, on
November 1, 2021, ACC received a letter from Founder and Chief
Investment Officer Jonathan Litt noting his intent to nominate
himself to the ACC Board and work with us privately and
constructively. Our Board’s Nominating and Corporate Governance
Committee subsequently interviewed Mr. Litt as part of its regular
process to evaluate candidates. Following the interview on November
18, Mr. Litt indicated he would provide the Committee follow-up
information regarding topics he discussed, but to date, has yet to
do so.
It is disappointing that Land & Buildings chose to publicly
disclose its intent to nominate a candidate while still in its
process with the Board. It is also unfortunate that Land &
Buildings decided against continuing to work constructively with
ACC as it had previously.
Well Positioned to Deliver Enhanced Value into the
Future
Our Board and management have built a best-in-class,
sector-leading operating platform that has delivered one of the
most resilient NOI growth profiles amongst all REITs since the
Company’s IPO over 17 years ago. ACC has successfully navigated
through the catastrophic event of the COVID-19 global pandemic
while both trying to mitigate the impact to shareholder value and
being sensitive to the needs of residents, employees and university
partners. We are highly optimistic that the fundamentals of the
student housing operating environment provide investors with a
unique opportunity for recession-resilient, robust organic growth,
meaningful earnings growth, and substantial net asset value
creation in the years ahead.
We look forward to our continuing dialogue with ACC shareholders
and will keep you apprised of our progress.
Sincerely, Cydney C. Donnell Chair of the Board
The ACC Board intends to review any validly submitted proposed
director nominees in accordance with the Company’s articles,
by-laws and corporate governance guidelines. The Board intends to
present its recommendation regarding any director nominees in ACC’s
definitive proxy statement and other materials, to be filed with
the U.S. Securities and Exchange Commission and mailed in due
course. The 2022 Annual Meeting has not yet been scheduled and no
shareholder action is required at this time.
BofA Securities is serving as financial advisor and Dentons US
LLP is serving as legal counsel to the Company.
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 September 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 202
properties with approximately 140,700 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, whether as a result of new information, future events,
or otherwise. The information contained on our website is not a
part of this release.
Important Additional Information and Where to Find It
In the event that Lands & Buildings files a consent
solicitation statement or a proxy statement with the SEC in
connection with a solicitation to, among other things, possibly
nominate any person for election to the board of directors of the
Company (the “Solicitation”), the Company plans to file a proxy
statement or a consent revocation statement, as applicable (each, a
“Solicitation Statement”), with the SEC, together with a WHITE
proxy card or consent revocation card, as applicable. SHAREHOLDERS
ARE URGED TO READ THE APPLICABLE SOLICITATION STATEMENT (INCLUDING
ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT
DOCUMENTS THAT THE COMPANY WILL FILE WITH THE SEC CAREFULLY AND IN
THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Shareholders will be able to obtain, free of
charge, copies of the Solicitation Statement, any amendments or
supplements thereto and any other documents (including the WHITE
proxy card or consent revocation card, as applicable) when filed by
the Company with the SEC in connection with the Solicitation at the
SEC’s website (http://www.sec.gov) or at the Company’s website at
www.americancampus.com within the investor relations section.
Certain Information and Where to Find It
The Company, its directors and certain of its executive officers
and other employees may be deemed to be participants in the
solicitation of proxies from shareholders in connection with the
Solicitation. Additional information regarding the identity of
these potential participants, none of whom owns in excess of one
percent (1%) of the Company’s shares, and their direct or indirect
interests, by security holdings or otherwise, will be set forth in
the applicable Solicitation Statement and other materials to be
filed with the SEC in connection with the Solicitation. Information
relating to the foregoing can also be found in the Company’s
definitive proxy statement for its 2021 annual meeting of
shareholders (the “2021 Proxy Statement”), filed with the SEC on
March 17, 2021. To the extent holdings of the Company’s securities
by such potential participants (or the identity of such
participants) have changed since the information printed in the
2021 Proxy Statement, such information has been or will be
reflected on Statements of Change in Ownership on Forms 3 and 4
filed with the SEC. You may obtain free copies of these documents
using the sources indicated above.
1 Green Street Advisors Same-Store NOI
Growth by Sector 2008-2019. Risk Adjusted NOI Growth & Average
Annual NOI growth divided by the Standard Deviation of Annual NOI
Growth
2 Total return from March 11, 2020, when
the WHO declared COVID-19 a pandemic to December 14, 2021
3 Total return from January 27, 2021, to
December 14, 2021
4 Full text of Land & Buildings
letters to ACC dated November 1, 2021 and November 9, 2021, and ACC
response letter dated November 5, 2021, can be found in the
Company’s 8-K filing with the SEC
5 Based on share price as of September 30,
2021
6 Total return from August 11, 2004, to
December 14, 2021
7 Total return from December 31, 2017, to
December 14, 2021
8 Total return from March 11, 2020, when
the WHO declared COVID-19 a pandemic to December 14, 2021
9 Green Street Advisors Same-Store NOI
Growth by Sector 2008-2019. Risk Adjusted NOI Growth & Average
Annual NOI growth divided by the Standard Deviation of Annual NOI
Growth
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American Campus Communities, Inc., Austin Ryan Dennison,
512-732-1000
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Brimmer Katcher (212) 355-4449
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