Achieves record levels in total revenue, NOI
and FFOM per share with 15 consecutive years of growth in same
store rental rate, rental revenue and NOI, and launches ESG
Initiative
American Campus Communities, Inc. (NYSE:ACC) today announced the
following financial results for the quarter and year ended December
31, 2019.
Highlights
Fourth Quarter 2019
- Reported net income attributable to ACC of $24.7 million or
$0.18 per fully diluted share, versus $47.5 million or $0.34 per
fully diluted share in the fourth quarter 2018.
- Reported FFOM of $99.4 million or $0.72 per fully diluted
share, versus $100.2 million or $0.72 in the fourth quarter prior
year.
- Grew same store net operating income (NOI) by 1.3 percent over
the fourth quarter prior year with revenues increasing 2.1 percent
and operating expenses increasing 3.4 percent.
- Increased same store average physical occupancy to 97.5 percent
for the fourth quarter 2019 compared to 97.3 percent for the fourth
quarter 2018.
- Selected as the strategic housing master plan partner for West
Virginia University. The comprehensive award is anticipated to
include multiple phases of on-campus housing including various
renovation and redevelopment projects.
- Completed the disposition of Landmark, a 606-bed property
located in Ann Arbor, Michigan with proceeds of $100.0 million
representing an economic cap rate of 4.1 percent.
- Subsequent to year end, took advantage of the low interest rate
environment by issuing $400.0 million of 10-year senior unsecured
notes at a yield of 2.872 percent, representing a record low credit
spread and yield for a mid-BBB rated REIT and one of the lowest
credit spreads and yields of any 10-year REIT benchmark offering in
history.
- Launched a long-term partnership with the Hi, How Are You
Project as the non-profit’s Hero partner with the mission to
support mental health among college students. The partnership
provides company staff with peer-to-peer support training,
communication resources and events, including the internationally
broadcast Hi, How Are You Day benefit concert.
- Recognized as an honoree of Texan by Nature 20 (TxN20), an
official ranking of the top 20 companies in Texas for its
leadership and commitment to conservation and sustainability by
Texan by Nature, a Texas-led conservation non-profit founded by
former First Lady Laura Bush.
Full Year 2019
- Reported net income attributable to ACC of $85.0 million or
$0.60 per fully diluted share, versus $117.1 million or $0.84 per
fully diluted share for the full year 2018. Excluding a $42.3
million net gain from the disposition of real estate in the prior
year, net income attributable to ACC would have been $74.8 million
for the full year 2018.
- Grew FFOM to a record $336.2 million and $2.42 per fully
diluted share, compared to $319.8 million or $2.31 for the full
year 2018.
- Increased same store NOI by 2.7 percent over the year ended
December 31, 2018, with revenues increasing 2.7 percent and
operating expenses increasing 2.7 percent, achieving the company’s
15th consecutive year of growth in same store NOI.
- Delivered five new owned development and presale development
projects into service. Totaling $407.3 million, the communities
were 98.1 percent occupied as of September 30 and are located an
average of one-tenth of a mile from their respective campuses.
- Awarded five new on-campus development projects including an
American Campus Equity (ACE)® development, two third-party projects
and two multi-phase master plan development partner awards which
include the potential for both ACE and third-party transaction
structures. Total development value for these projects is expected
to be approximately $2.5 billion and over 12,000 beds upon
completion.
- Continued construction on owned development projects totaling
approximately 11,300 beds and $785.8 million with deliveries
scheduled to occur in 2020 through 2023.
- In May, increased the common dividend to $1.88 per share on an
annualized basis, an increase of 39 percent since 2012.
- Completed Environmental, Social, Governance (ESG) assessment
and published a Letter of Commitment to ESG Initiatives.
“2019 was a successful year for American Campus in many areas—we
raised our earnings guidance and performed at the high end of our
NOI expectations, set company records in revenue and FFOM per
share, and produced our 15th consecutive year of growth in same
store rental rate, rental revenue and NOI,” said Bill Bayless,
American Campus Communities CEO. “As we enter 2020, we are excited
about the opportunities before us including a healthy fundamental
environment with new supply levels in our markets near the lowest
levels in a decade and the opening of three ACE developments
including our pioneering project at Walt Disney World® Resort for
the Disney College Program.”
Fourth Quarter Operating Results
Revenue for the 2019 fourth quarter totaled $255.8 million, an
increase of 4.1 percent from $245.9 million in the fourth quarter
2018, and operating income for the quarter totaled $55.7 million
versus $67.5 million in the prior year fourth quarter. The increase
in revenue was primarily due to increased occupancy, rental rates
and growth associated with recently completed development and
presale development projects. Net income for the 2019 fourth
quarter totaled $24.7 million, or $0.18 per fully diluted share,
compared with net income of $47.5 million, or $0.34 per fully
diluted share, for the same quarter in 2018. FFO for the 2019
fourth quarter totaled $89.8 million, or $0.65 per fully diluted
share, compared to $113.3 million, or $0.82 per fully diluted share
for the same quarter in 2018. The decrease in operating income, net
income and FFO was primarily due to a $14.0 million non-cash
impairment charge for an intangible asset related to a property tax
incentive arrangement that was recorded upon the acquisition of one
owned property in 2015. In addition, net income and FFO in the
fourth quarter of 2018 benefited from an $8.7 million gain from the
extinguishment of debt. FFOM for the 2019 fourth quarter was $99.4
million, or $0.72 per fully diluted share, as compared to $100.2
million, or $0.72 per fully diluted share for the same quarter in
2018. A reconciliation of FFO and FFOM to net income is provided in
Table 3.
Same store NOI was $123.7 million in the quarter, up 1.3 percent
from $122.1 million in the 2018 fourth quarter. Same store revenues
increased by 2.1 percent over the 2018 fourth quarter due to an
increase in average occupancy and rental rates for the 2019-2020
academic year. Same store operating expenses increased by 3.4
percent over the prior year quarter. NOI for the total owned
portfolio increased 4.5 percent to $143.9 million for the quarter
from $137.7 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 continued construction on its $785.8 million
development pipeline that includes expected deliveries in Fall 2020
through 2023. These projects are all core Class A assets located on
campus in their respective markets and remain on track to meet
their targeted stabilized development yields in the range of 6.25 –
6.8 percent.
Third-Party Services
The company was selected as the strategic housing master plan
partner for West Virginia University following a competitive
procurement process. The comprehensive award is anticipated to
include multiple phases of on-campus housing including various
renovation and redevelopment projects although the full scope,
transaction structure, feasibility, fees, and timing have not yet
been determined and will be evaluated during the due diligence
process.
Capital Recycling Update
During the quarter, the company completed the sale of Landmark,
a 606-bed property serving students attending the University of
Michigan in Ann Arbor. The property was sold for $100.0 million
which represents an economic cap rate of 4.1 percent based on
in-place rental revenue, escalated trailing-12 operating expenses
and historical average capital expenditures.
The company is in the final stages of the sale of one asset
serving students attending the University of Maryland in College
Park. The disposition of the previously acquired asset is expected
to close in the first quarter of 2020 with anticipated proceeds of
approximately $148.0 million representing a 4.1 percent economic
cap rate.
Capital Markets
On January 30, 2020, the company issued $400.0 million of
10-year unsecured notes at a coupon rate of 2.85 percent and a
yield of 2.872 percent. The issuance represented a record low
credit spread and yield for a mid-BBB rated REIT and one of the
lowest credit spreads and yields of any 10-year REIT benchmark
offering in history. The company used the proceeds to prepay $400.0
million of 3.350% unsecured notes that were previously due to
mature October 1, 2020. The prepayment resulted in approximately
$4.8 million in debt extinguishment costs during the first quarter
of 2020, which will be excluded from the company’s FFOM. The
issuance and redemption reduced the company’s weighted average
interest rate on debt and lengthened the average maturity by 1.1
years to 5.6 years.
At-The-Market (ATM) Share Offering Program
The company did not sell any shares under the ATM during the
quarter.
Corporate Responsibility Update
Since its formation, the company has aspired to high standards
of ethics, transparency, governance, labor practices, resident
engagement, developing and operating efficient and sustainable
communities, and being a good business partner. Formalizing its
long-term initiative, in 2018 and continuing in 2019, the company
created an ESG Committee sponsored by the company’s president and
engaged a third-party ESG consultant to assist in the assessment of
priorities and communication strategies.
During 2019, the committee and consultant completed an ESG
evaluation of the company’s existing strengths, weaknesses,
opportunities and threats, executed an entity-level ESG analysis,
benchmarked existing practices versus those publicly disclosed from
a selection of peers and published a Letter of Commitment to ESG
found on the company’s website. In addition, a selection of recent
ESG highlights include:
- Improved the company’s market-leading governance
characteristics by enhancing the board of directors’ diversity of
thought and professional expertise and achieved female
representation totaling 3 of 8 independent members.
- Developed in partnership with the University of California,
Irvine, what will be the company’s first net-zero energy community,
where annual energy used is matched by renewable energy generated
on-site, achieving carbon neutral status. Plaza Verde is targeted
to achieve LEED-Platinum rating from the U.S. Green Building
Council, along with the company’s ACE project with Northeastern
University in Boston, LightView, bringing ACC’s total number of
LEED developments to 37.
- Retrofitted many acquired and older communities with
sustainability best practices established in newer developments.
For example, since 2015 the company has completed nearly 100 LED
lighting retrofit projects, reducing annual energy usage by an
estimated 27 million kilowatt hours, the equivalent of the annual
energy output of more than 2,400 homes.
- Formed a long-term partnership with the Hi, How Are You Project
aimed at tackling issues of mental health among college students as
part of the company’s mission to support the wellbeing of its
residents. A guiding tenet for the American Campus Residence Life
program, this awareness initiative includes staff training on
peer-to-peer support that launched at more than 200 properties
across the country, resident social events to build connection and
community, and information on health and wellness.
- Since its inception, the American Campus Charity Foundation has
given nearly $4 million to charitable organizations focused on
supporting youth in need and education in the Austin community as
well as in the local communities where the company operates.
“Corporate responsibility is fundamental to our mission to
consistently provide every resident and team member with an
environment conducive to healthy living, personal growth, academic
achievement and professional success,” said Jim Hopke, American
Campus Communities President. “This mission drives the company’s
ESG vision to create healthy, sustainable environments with a sense
of community and connection by giving back, investing in our
employees and driving long-term value for all stakeholders. Our ESG
team and the entire organization are pleased with the 2019
advancements and are excited to further not only the ESG program
but an overall business strategy that serves our full set of
stakeholders – including our investors, residents, employees,
university clients, supply chain and vendor partners and
communities.”
2020 Outlook
The company believes that the financial results for the fiscal
year ending December 31, 2020 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
2020-2021 academic year;
- 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;
- 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 any 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.
Based upon these factors, management anticipates that fiscal
year 2020 FFO will be in the range of $2.44 to $2.54 per fully
diluted share and FFOM will be in the range of $2.41 to $2.51 per
fully diluted share. Additionally, management anticipates that
first quarter 2020 FFO will be in the range of $0.67 to $0.68 per
fully diluted share and FFOM will be in the range of $0.67 to $0.69
per fully diluted share. For additional details regarding the
company’s 2020 outlook, please see pages S-18 and S-19 of the
Supplemental Analyst Package 4Q 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 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 fourth
quarter and full year 2019 results and the 2020 outlook on
Wednesday, February 19, 2020 at 10:00 a.m. ET (9:00 a.m. CT). The
conference call may be accessed by dialing 888-317-6003 passcode
1199756, 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 March
4, 2020 by dialing 877-344-7529 or 412-317-0088 conference number
10138120. 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 December 31, 2019, American Campus Communities
owned 167 student housing properties containing approximately
112,800 beds. Including its owned and third-party managed
properties, ACC's total managed portfolio consisted of 203
properties with approximately 139,300 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. 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 2020 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)
December 31, 2019
December 31, 2018
(unaudited)
Assets
Investments in real estate:
Owned properties, net
$
6,694,715
$
6,583,397
On-campus participating properties,
net
75,188
77,637
Investments in real estate, net
6,769,903
6,661,034
Cash and cash equivalents
54,650
71,238
Restricted cash
26,698
35,279
Student contracts receivable, net
13,470
8,565
Operating lease right of use assets 1
460,857
—
Other assets 1
234,176
262,730
Total assets
$
7,559,754
$
7,038,846
Liabilities and equity
Liabilities:
Secured mortgage, construction and bond
debt, net
$
787,426
$
853,084
Unsecured notes, net
1,985,603
1,588,446
Unsecured term loans, net
199,121
198,769
Unsecured revolving credit facility
425,700
387,300
Accounts payable and accrued expenses
88,411
88,767
Operating lease liabilities 2
473,070
—
Other liabilities 2
157,368
191,233
Total liabilities
4,116,699
3,307,599
Redeemable noncontrolling
interests
104,381
184,446
Equity:
American Campus Communities, Inc. and
Subsidiaries
stockholders’ equity:
Common stock
1,373
1,370
Additional paid in capital
4,458,456
4,458,240
Common stock held in rabbi trust
(3,486
)
(3,092
)
Accumulated earnings and dividends
(1,144,721
)
(971,070
)
Accumulated other comprehensive loss
(16,946
)
(4,397
)
Total American Campus Communities, Inc.
and
Subsidiaries stockholders’ equity
3,294,676
3,481,051
Noncontrolling interests – partially owned
properties
43,998
65,750
Total equity
3,338,674
3,546,801
Total liabilities and equity
$
7,559,754
$
7,038,846
1.
For purposes of calculating net asset
value ("NAV") at December 31, 2019, the company excludes other
assets of approximately $4.4 million related to net deferred
financing costs on its revolving credit facility and the net value
of in-place leases and operating lease right of use assets
disclosed above associated with new lease accounting guidance that
was adopted by the company on January 1, 2019.
2.
For purposes of calculating NAV at
December 31, 2019, the company excludes other liabilities of
approximately $46.3 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 December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
(unaudited)
(unaudited)
Revenues
Owned properties 1
$
238,908
$
228,105
$
877,565
$
825,959
On-campus participating properties 1
11,558
10,991
36,346
34,596
Third-party development services
662
3,398
13,051
7,281
Third-party management services
3,818
2,503
12,936
9,814
Resident services
889
876
3,144
3,160
Total revenues
255,835
245,873
943,042
880,810
Operating expenses
Owned properties 1
95,896
91,328
390,664
373,521
On-campus participating properties 1
3,443
3,572
15,028
14,602
Third-party development and management
services
5,786
3,886
19,915
15,459
General and administrative 2
8,486
7,482
31,081
34,537
Depreciation and amortization
68,546
68,756
275,046
263,203
Ground/facility leases
4,151
3,329
14,151
11,855
(Gain) loss from disposition of real
estate, net
(229
)
—
53
(42,314
)
Provision for impairment 3
14,013
—
17,214
—
Other operating income
—
—
—
(2,648
)
Total operating expenses
200,092
178,353
763,152
668,215
Operating income
55,743
67,520
179,890
212,595
Nonoperating income (expenses)
Interest income
831
1,094
3,686
4,834
Interest expense
(28,855
)
(27,021
)
(111,287
)
(99,228
)
Amortization of deferred financing
costs
(1,347
)
(1,072
)
(5,012
)
(5,816
)
Gain from extinguishment of debt, net
4
—
8,651
20,992
7,867
Other nonoperating income
—
731
—
1,301
Total nonoperating expenses
(29,371
)
(17,617
)
(91,621
)
(91,042
)
Income before income taxes
26,372
49,903
88,269
121,553
Income tax provision 5
(524
)
(282
)
(1,507
)
(2,429
)
Net income
25,848
49,621
86,762
119,124
Net income attributable to noncontrolling
interests
(1,128
)
(2,117
)
(1,793
)
(2,029
)
Net income (loss) attributable to ACC,
Inc. and
Subsidiaries common
stockholders
$
24,720
$
47,504
$
84,969
$
117,095
Other comprehensive income
(loss)
Change in fair value of interest rate
swaps and other
1,983
(2,422
)
(12,549
)
(1,696
)
Comprehensive income
$
26,703
$
45,082
$
72,420
$
115,399
Net income (loss) per share
attributable to ACC, Inc.
and Subsidiaries common
shareholders
Basic
$
0.18
$
0.34
$
0.61
$
0.84
Diluted
$
0.18
$
0.34
$
0.60
$
0.84
Weighted-average common shares
outstanding
Basic
137,404,752
137,031,547
137,295,837
136,815,051
Diluted
138,372,433
137,903,783
138,286,778
137,722,049
1.
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, but the prior year amounts have
not been reclassified. The provision for uncollectible accounts for
owned properties was $1.2 million and $1.5 million for the three
months ended December 31, 2019 and 2018, respectively, and was $7.3
million and $7.1 million for the twelve months ended December 31,
2019 and 2018, respectively. The provision for uncollectible
accounts for on-campus participating properties was $0.1 million
for both the three months ended December 31, 2019 and 2018, and was
a $0.5 million benefit and a $0.3 million expense for the twelve
months ended December 31, 2019 and 2018, respectively.
2.
The twelve months ended December 31, 2018
amount includes $5.8 million of transaction costs incurred in
connection with the closing of the ACC / Allianz joint venture
transaction in May 2018.
3.
The three and twelve months ended December
31, 2019 amount represents a non-cash impairment charge for an
intangible asset related to a property tax incentive arrangement at
one owned property. The twelve months ended December 31, 2019 also
include an impairment charge recorded in March 2019 concurrent with
the classification of one owned property as held for sale.
4.
The twelve months ended December 31, 2019
amounts represent the gain on the extinguishment of debt associated
with a property that was transferred to the lender in settlement of
the property's mortgage loan in July 2019.
5.
Income tax provision / benefit for the
twelve months ended December 31, 2018 includes a $1.3 million
provision related to an estimated taxable gain resulting from the
ACC / Allianz joint venture transaction which closed in May
2018.
Table 3
American Campus Communities,
Inc. and Subsidiaries
Consolidated Statements of
Funds from Operations (“FFO”)
(unaudited, dollars in
thousands, except share and per share data)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Net income attributable to ACC, Inc. and
Subsidiaries
common stockholders
$
24,720
$
47,504
$
84,969
$
117,095
Noncontrolling interests' share of net
income
1,128
2,117
1,793
2,029
JV ("Joint Venture") partners' share of
net income
(1,030
)
(1,757
)
(1,398
)
(773
)
JV partners' share of depreciation and
amortization
(2,156
)
(2,051
)
(8,644
)
(5,135
)
JV partners' share of FFO
(3,186
)
(3,808
)
(10,042
)
(5,908
)
(Gain) loss from disposition of real
estate
(229
)
—
53
(42,314
)
Elimination of provision for real estate
impairment
—
—
3,201
—
Total depreciation and amortization
68,546
68,756
275,046
263,203
Corporate depreciation 1
(1,200
)
(1,249
)
(4,728
)
(4,669
)
FFO attributable to common stockholders
and OP unitholders
89,779
113,320
350,292
329,436
Elimination of operations of on-campus
participating properties ("OCPPs")
Net income from OCPPs
(4,449
)
(3,801
)
(6,587
)
(5,516
)
Amortization of investment in OCPPs
(2,046
)
(1,963
)
(8,380
)
(7,819
)
83,284
107,556
335,325
316,101
Modifications to reflect operational
performance of on-campus participating properties
Our share of net cashflow 2
1,004
696
3,067
2,928
Management fees and other
652
506
2,249
1,564
Contribution from on-campus participating
properties
1,656
1,202
5,316
4,492
Transaction costs 3
451
—
598
7,586
Elimination of gain from extinguishment of
debt 4
—
(8,651
)
(20,992
)
(7,867
)
Elimination of provision for impairment of
intangible asset 5
14,013
—
14,013
—
Elimination of gain from litigation
settlement 6
—
(675
)
—
(3,323
)
Elimination of FFO from property in
receivership 7
—
811
1,912
2,848
Funds from operations-modified (“FFOM”)
attributable to common stockholders and OP unitholders
$
99,404
$
100,243
$
336,172
$
319,837
FFO per share – diluted
$
0.65
$
0.82
$
2.52
$
2.38
FFOM per share – diluted
$
0.72
$
0.72
$
2.42
$
2.31
Weighted-average common shares
outstanding - diluted
138,876,150
138,576,084
138,860,311
138,571,270
1.
Represents depreciation on corporate
assets not added back for purposes of calculating FFO.
2.
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).
3.
The three months and year ended December
31, 2019 amounts represent transaction costs incurred in connection
with the closing of presale development transactions. The year
ended December 31, 2018 amount represents transaction costs
incurred in connection with the closing of a presale transaction
and transaction costs incurred in connection with the closing of
the ACC / Allianz real estate joint venture transaction in May
2018, net of an adjustment to estimated state income tax related to
a tax gain resulting from the ACC / Allianz joint venture
transaction.
4.
The year ended December 31, 2019 amount
represents gains associated with the extinguishment of a mortgage
loan due to the transfer of an owned property to the lender in
satisfaction of the property's mortgage loan. The three months
ended December 31, 2018 amount represents a gain related to the
planned extinguishment of debt resulting from the unwinding of a
New Market Tax Credit ("NMTC") structure at one of the company's
owned properties. The year ended December 31, 2018 amount
represents the gain discussed previously, offset by 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 dispositions of real estate reported in accordance with
GAAP.
5.
Represents a non-cash impairment charge
for an intangible asset related to a property tax incentive
arrangement at one owned property.
6.
Represents a gain related to cash proceeds
received from a litigation settlement.
7.
Represents FFO for an owned property that
was transferred to the lender in July 2019 in settlement of the
property's mortgage loan.
Table 4
American Campus Communities,
Inc. and Subsidiaries
Owned Properties Results of
Operations1
(unaudited, dollars in
thousands)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
$ Change
% Change
2019
2018
$ Change
% Change
Owned properties revenues
Same store properties
$
209,011
$
204,651
$
4,360
2.1
%
$
791,480
$
770,510
$
20,970
2.7
%
New properties
29,174
18,766
10,408
78,290
28,360
49,930
Sold and held for sale properties 2
1,612
3,998
(2,386
)
10,939
23,100
(12,161
)
Total revenues 3 4
$
239,797
$
227,415
$
12,382
5.4
%
$
880,709
$
821,970
$
58,739
7.1
%
Owned properties operating
expenses
Same store properties
$
85,308
$
82,517
$
2,791
3.4
%
$
353,944
$
344,509
$
9,435
2.7
%
New properties
9,755
5,112
4,643
30,557
10,250
20,307
Other 5
128
158
(30
)
338
719
(381
)
Sold and held for sale properties 2 6
705
1,975
(1,270
)
5,825
10,894
(5,069
)
Total operating expenses 3
$
95,896
$
89,762
$
6,134
6.8
%
$
390,664
$
366,372
$
24,292
6.6
%
Owned properties net operating
income
Same store properties
$
123,703
$
122,134
$
1,569
1.3
%
$
437,536
$
426,001
$
11,535
2.7
%
New properties
19,419
13,654
5,765
47,733
18,110
29,623
Other 5
(128
)
(158
)
30
(338
)
(719
)
381
Sold and held for sale properties 2 6
907
2,023
(1,116
)
5,114
12,206
(7,092
)
Total net operating income
$
143,901
$
137,653
$
6,248
4.5
%
$
490,045
$
455,598
$
34,447
7.6
%
1.
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 December
31, 2019. Includes 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.
2.
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 mortgage loan.
3.
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.
4.
Includes revenues that are reflected as
Resident Services Revenue on the accompanying consolidated
statements of comprehensive income.
5.
Includes transaction costs and 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).
6.
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
2020 and Q1 2020
Outlook1
(dollars in thousands, except
share and per share data)
2020 Guidance
Q1 2020 Guidance
Low
High
Low
High
Net income2
$
82,800
$
96,300
$
29,500
$
31,500
Noncontrolling interests' share of net
income
—
—
500
500
Joint Venture ("JV") partners' share of
net loss (income)
400
400
(400
)
(400
)
JV partners' share of depreciation and
amortization
(7,600
)
(7,600
)
(1,900
)
(1,900
)
JV partners' share of funds from
operations
(7,200
)
(7,200
)
(2,300
)
(2,300
)
Total depreciation and amortization
268,300
268,300
66,400
66,400
Corporate depreciation
(3,900
)
(3,900
)
(1,000
)
(1,000
)
FFO
$
340,000
$
353,500
$
93,100
$
95,100
Elimination of operations from on-campus
participating properties ("OCPP")
(15,000
)
(14,600
)
(5,600
)
(5,500
)
Contribution from OCPPs
5,300
5,900
1,400
1,600
Elimination of loss from early
extinguishment of debt3
4,800
4,800
4,800
4,800
Funds from operations - modified
("FFOM")
$
335,100
$
349,600
$
93,700
$
96,000
Net income per share - diluted
$
0.59
$
0.69
$
0.21
$
0.23
FFO per share - diluted
$
2.44
$
2.54
$
0.67
$
0.68
FFOM per share - diluted
$
2.41
$
2.51
$
0.67
$
0.69
Weighted-average common shares
outstanding - diluted
139,228,200
139,228,200
139,086,700
139,086,700
1.
The company believes that the financial
results for the fiscal year ending December 31, 2020 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 2020-2021 academic year;
• 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;
• 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
any 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, as such will be
eliminated for the purposes of calculating FFOM.
3.
Represents costs related to the prepayment
of the company's $400 million 3.350% unsecured notes that were
previously due to mature in October 2020 using proceeds from the
company's $400 million 10-year unsecured notes issued in January
2020.
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