UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
ý☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the quarterly period ended September 30, 2017.   March 31, 2020.
 
o☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period From ______________________ to _________________________
  
Commission file number 001-32265 (American Campus Communities, Inc.)
Commission file number 333-181102-01 (American Campus Communities Operating Partnership L.P.)LP)
 
AMERICAN CAMPUS COMMUNITIES, INC.
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP L.P.LP
(Exact name of registrant as specified in its charter)
 
 Maryland (American Campus Communities, Inc.)
Maryland76-0753089
Maryland (American(American Campus Communities Operating
Partnership L.P.)LP)
Maryland56-2473181
 
 76-0753089 (American Campus Communities, Inc.)
56-2473181 (American Campus Communities Operating
Partnership, L.P.)
 (State(State or Other Jurisdiction of
Incorporation or Organization)
(IRS Employer Identification No.)
12700 Hill Country Blvd.,Suite T-200
78738
Austin,TX
(Zip Code)
(Address of Principal Executive Offices) 
78738
(Zip Code)
 
(512) (512) 732-1000
Registrant'sRegistrant’s telephone number, including area code
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
American Campus Communities, Inc.
Yesx
☒Noo☐
American Campus Communities Operating Partnership L.P.LP
Yesx
☒Noo☐
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
American Campus Communities, Inc.
Yesx
☒Noo☐
American Campus Communities Operating Partnership L.P.LP
Yesx
☒Noo☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 

American Campus Communities, Inc.                                                                                                                                    
Large accelerated filerx
☒
Accelerated Filer o

Non-accelerated filer   o     (Do not check if a smaller reporting company) 
Smaller reporting company o☐
Non-accelerated filer   ☐Smaller reporting company☐
 
Emerging growth companyo
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐


American Campus Communities Operating Partnership L.P.LP
Large accelerated filero
☐
Accelerated Filero☐
Non-accelerated filerx
☒     (Do not check if a smaller reporting company) 
Smaller reporting companyo
☐
 
Emerging growth companyo
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
American Campus Communities, Inc.
Yeso
☐Nox☒
American Campus Communities Operating Partnership L.PLP
Yeso
☐Nox☒

Securities registered pursuant to Section 12(b) of the Act:                                                                                   
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, par value $.01 per shareACCNew York Stock Exchange

There were 136,426,506137,604,447 shares of the American Campus Communities, Inc.’s common stock with a par value of $0.01 per share outstanding as of the close of business on October 27, 2017.April 24, 2020.
 



EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the quarterly period ended September 30, 2017March 31, 2020 of American Campus Communities, Inc. and American Campus Communities Operating Partnership L.P.LP. Unless stated otherwise or the context otherwise requires, references to “ACC” mean American Campus Communities, Inc., a Maryland corporation that has elected to be treated as a real estate investment trust (“REIT”) under the Internal Revenue Code, and references to “ACCOP” mean American Campus Communities Operating Partnership L.P.,LP, a Maryland limited partnership. References to the “Company,” “we,” “us” or “our” mean collectively ACC, ACCOP and those entities/subsidiaries owned or controlled by ACC and/or ACCOP. References to the “Operating Partnership” mean collectively ACCOP and those entities/subsidiaries owned or controlled by ACCOP. The following chart illustrates the Company’s and the Operating Partnership’s corporate structure:
companyflowchart3312017a04.jpg 
a12companyflowchart93019a12.jpg

The general partner of ACCOP is American Campus Communities Holdings, LLC (“ACC Holdings”), an entity that is wholly-owned by ACC. As of September 30, 2017,March 31, 2020, ACC Holdings held an ownership interest in ACCOP of less than 1%. The limited partners of ACCOP are ACC and other limited partners consisting of current and former members of management and nonaffiliated third parties. As of September 30, 2017,March 31, 2020, ACC owned an approximate 99.2%99.6% limited partnership interest in ACCOP. As the sole member of the general partner of ACCOP, ACC has exclusive control of ACCOP’s day-to-day management. Management operates the Company and the Operating Partnership as one business. The management of ACC consists of the same members as the management of ACCOP. The Company is structured as an umbrella partnership REIT (“UPREIT”) and ACC contributes all net proceeds from its various equity offerings to the Operating Partnership. In return for those contributions, ACC receives a number of units of the Operating Partnership (“OP Units,” see definition below) equal to the number of common shares it has issued in the equity offering. Contributions of properties to the Company can be structured as tax-deferred transactions through the issuance of OP Units in the Operating Partnership. Based on the terms of ACCOP’s partnership agreement, OP Units can be exchanged for ACC’s common shares on a one-for-one basis. The Company maintains a one-for-one relationship between the OP Units of the Operating Partnership issued to ACC and ACC Holdings and the common shares issued to the public. The Company believes that combining the reports on Form 10-Q of ACC and ACCOP into this single report provides the following benefits:

(1)enhances investors’ understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
(2)eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and
(3)creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.



ACC consolidates ACCOP for financial reporting purposes, and ACC essentially has no assets or liabilities other than its investment in ACCOP. Therefore, the assets and liabilities of the Company and the Operating Partnership are the same on their respective financial statements. However, the Company believes it is important to understand the few differences between the Company and the Operating Partnership in the context of how the entities operate as a consolidated company. All of the Company’s property

ownership, development and related business operations are conducted through the Operating Partnership. ACC also issues public equity from time to time and guarantees certain debt of ACCOP, as disclosed in this report. ACC does not have any indebtedness, as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from ACC’s equity offerings, which are contributed to the capital of ACCOP in exchange for OP Units on a one-for-one common share per OP Unit basis, the Operating Partnership generates all remaining capital required by the Company’s business. These sources include, but are not limited to, the Operating Partnership’s working capital, net cash provided by operating activities, borrowings under its credit facility, the issuance of unsecured notes, and proceeds received from the disposition of certain properties. Noncontrolling interests, stockholders’ equity, and partners’ capital are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The noncontrolling interests in the Operating Partnership’s financial statements consist of the interests of unaffiliated partners in various consolidated joint ventures. The noncontrolling interests in the Company’s financial statements include the same noncontrolling interests at the Operating Partnership level and OP Unit holders of the Operating Partnership. The differences between stockholders’ equity and partners’ capital result from differences in the equity issued at the Company and Operating Partnership levels.


To help investors understand the significant differences between the Company and the Operating Partnership, this report provides separate consolidated financial statements for the Company and the Operating Partnership. A single set of consolidated notes to such financial statements is presented that includes separate discussions for the Company and the Operating Partnership when applicable (for example, noncontrolling interests, stockholders’ equity or partners’ capital, earnings per share or unit, etc.). A combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section is also included that presents discrete information related to each entity, as applicable. This report also includes separate Part I, Item 4 Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of the Company and the Operating Partnership in order to establish that the requisite certifications have been made and that the Company and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.

In order to highlight the differences between the Company and the Operating Partnership, the separate sections in this report for the Company and the Operating Partnership specifically refer to the Company and the Operating Partnership. In the sections that combine disclosure of the Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the Company operates its business through the Operating Partnership. The separate discussions of the Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.



FORM 10-Q
FOR THE QUARTER ENDED September 30, 2017March 31, 2020
TABLE OF CONTENTS
 
 PAGE NO.
  
PART I. 
   
Item 1.Consolidated Financial Statements of American Campus Communities, Inc. and Subsidiaries: 
   
 Consolidated Balance Sheets as of September 30, 2017March 31, 2020 (unaudited) and December 31, 20162019
1
   
 Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017March 31, 2020 and 20162019 (all unaudited)
2
   
 Consolidated StatementStatements of Changes in Equity for the ninethree months ended September 30, 2017 (unaudited)March 31, 2020 and 2019 (all unaudited)
3
   
 Consolidated Statements of Cash Flows for the ninethree months ended September 30, 2017March 31, 2020 and 20162019 (all unaudited)
4
   
 Consolidated Financial Statements of American Campus Communities Operating Partnership L.P.LP and Subsidiaries: 
   
 Consolidated Balance Sheets as of September 30, 2017March 31, 2020 (unaudited) and December 31, 20162019
5
   
 Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017March 31, 2020 and 20162019 (all unaudited)
6
   
 Consolidated StatementStatements of Changes in Capital for the ninethree months ended September 30, 2017 (unaudited)March 31, 2020 and 2019 (all unaudited)
7
   
 Consolidated Statements of Cash Flows for the ninethree months ended September 30, 2017March 31, 2020 and 20162019 (all unaudited)
8
   
 Notes to Consolidated Financial Statements of American Campus Communities, Inc. and Subsidiaries and American Campus Communities Operating Partnership L.P.LP and Subsidiaries (unaudited)
9
   
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
3225
   
Item 3.Quantitative and Qualitative Disclosure about Market Risk
4837
   
Item 4.Controls and Procedures
4837
  
PART II. 
   
Item 1.Legal Proceedings
4938
   
Item 1A.Risk Factors
4938
   
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
4939
   
Item 3.Defaults Upon Senior Securities
4939
   
Item 4.Mine Safety Disclosures
4939
   
Item 5.Other Information
4939
   
Item 6.Exhibits
5040
  
SIGNATURES
5141


AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)






 September 30, 2017 December 31, 2016 March 31, 2020 December 31, 2019
 (Unaudited)   (Unaudited)  
Assets        
        
Investments in real estate:        
Wholly-owned properties, net $6,262,077
 $5,427,014
Wholly-owned properties held for sale —
 25,350
Owned properties, net $6,636,857
 $6,694,715
On-campus participating properties, net 83,095
 85,797
 73,716
 75,188
Investments in real estate, net 6,345,172
 5,538,161
 6,710,573
 6,769,903
        
Cash and cash equivalents 16,341
 22,140
 176,758
 54,650
Restricted cash 25,824
 24,817
 32,130
 26,698
Student contracts receivable, net 15,531
 8,428
 12,287
 13,470
Operating lease right of use assets 459,957
 460,857
Other assets 284,023
 272,367
 228,051
 234,176
        
Total assets $6,686,891
 $5,865,913
 $7,619,756
 $7,559,754
        
Liabilities and equity  
  
  
  
        
Liabilities:  
  
  
  
Secured mortgage, construction and bond debt, net $662,874
 $688,195
 $749,902
 $787,426
Unsecured notes, net 1,190,296
 1,188,737
 1,981,472
 1,985,603
Unsecured term loans, net 646,675
 149,065
 199,209
 199,121
Unsecured revolving credit facility 266,440
 99,300
 609,700
 425,700
Accounts payable and accrued expenses 79,612
 76,614
 53,086
 88,411
Operating lease liabilities 477,779
 473,070
Other liabilities 214,918
 158,437
 178,702
 157,368
Total liabilities 3,060,815
 2,360,348
 4,249,850
 4,116,699
        
Commitments and contingencies (Note 13) 

 

Commitments and contingencies (Note 12) 


 


        
Redeemable noncontrolling interests 112,270
 55,078
 17,768
 104,381
        
Equity:  
  
  
  
American Campus Communities, Inc. and Subsidiaries stockholders' equity:  
  
Common stock, $0.01 par value, 800,000,000 shares authorized, 136,362,728 and 132,225,488 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively 1,364
 1,322
American Campus Communities, Inc. and Subsidiaries stockholders’ equity:  
  
Common stock, $0.01 par value, 800,000,000 shares authorized, 137,523,031 and 137,326,824 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively 1,375
 1,373
Additional paid in capital 4,321,228
 4,118,842
 4,467,906
 4,458,456
Common stock held in rabbi trust, 63,778 and 20,181 shares at September 30, 2017 and December 31, 2016, respectively (2,944) (975)
Common stock held in rabbi trust, 81,416 and 77,928 shares at March 31, 2020 and December 31, 2019, respectively (3,615) (3,486)
Accumulated earnings and dividends (816,360) (670,137) (1,129,108) (1,144,721)
Accumulated other comprehensive loss (3,195) (4,067) (26,747) (16,946)
Total American Campus Communities, Inc. and Subsidiaries stockholders' equity 3,500,093
 3,444,985
Total American Campus Communities, Inc. and Subsidiaries stockholders’ equity 3,309,811
 3,294,676
Noncontrolling interests - partially owned properties 13,713
 5,502
 42,327
 43,998
Total equity 3,513,806
 3,450,487
 3,352,138
 3,338,674
        
Total liabilities and equity $6,686,891
 $5,865,913
 $7,619,756
 $7,559,754

     
Consolidated variable interest entities’ assets and debt included in the above balances:
     
Investments in real estate, net $596,506
 $788,393
Cash, cash equivalents and restricted cash $37,711
 $59,908
Other assets $14,794
 $18,387
Secured mortgage and construction debt, net $417,765
 $418,241
Accounts payable, accrued expenses and other liabilities $34,317
 $56,976


See accompanying notes to consolidated financial statements.


1
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in thousands, except share and per share data)




 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		 Three Months Ended
March 31,
 2017 2016 2017
2016 2020 2019
Revenues:            
Wholly-owned properties $183,569
 $185,694
 $531,556
 $546,078
Owned properties $232,091
 $224,419
On-campus participating properties 6,799
 6,758
 23,128
 23,018
 10,709
 11,448
Third-party development services 3,566
 773
 4,697
 3,929
 2,055
 3,171
Third-party management services 2,291
 2,376
 7,193
 7,039
 3,829
 2,311
Resident services 713
 810
 2,310
 2,325
 720
 782
Total revenues 196,938
 196,411
 568,884
 582,389
 249,404
 242,131
            
Operating expenses:  
  
  
  
Wholly-owned properties 99,423
 100,602
 249,552
 257,175
Operating expenses (income):  
  
Owned properties 92,474
 92,169
On-campus participating properties 3,923
 3,784
 11,080
 10,125
 3,366
 3,957
Third-party development and management services 3,879
 3,340
 11,789
 10,638
 6,207
 4,186
General and administrative 8,684
 5,375
 25,200
 16,810
 10,158
 7,315
Depreciation and amortization 61,125
 52,067
 169,391
 159,486
 66,169
 68,755
Ground/facility leases 2,329
 1,965
 7,151
 6,736
 4,069
 3,549
Provision for real estate impairment —
 —
 15,317
 —
Gain from disposition of real estate (48,525) —
Provision for impairment —
 3,201
Total operating expenses 179,363
 167,133
 489,480
 460,970
 133,918
 183,132
            
Operating income 17,575
 29,278
 79,404
 121,419
 115,486
 58,999
            
Nonoperating income and (expenses):  
  
  
  
Nonoperating income (expenses):  
  
Interest income 1,259
 1,272
 3,723
 4,026
 851
 926
Interest expense (18,654) (19,016) (47,944) (61,762) (27,783) (27,061)
Amortization of deferred financing costs (1,146) (1,344) (3,197) (5,238) (1,287) (1,132)
(Loss) gain from disposition of real estate —
 —
 (632) 17,409
Total nonoperating expense (18,541) (19,088) (48,050) (45,565)
Loss from early extinguishment of debt (4,827) —
Total nonoperating expenses (33,046) (27,267)
            
(Loss) income before income taxes (966) 10,190
 31,354
 75,854
Income before income taxes 82,440
 31,732
Income tax provision (267) (345) (791) (1,035) (379) (364)
Net (loss) income (1,233) 9,845
 30,563
 74,819
Net income 82,061
 31,368
Net income attributable to noncontrolling interests (79) (201) (587) (1,150) (1,206) (1,728)
Net (loss) income attributable to ACC, Inc. and Subsidiaries common stockholders $(1,312) $9,644
 $29,976
 $73,669
Net income attributable to ACC, Inc. and Subsidiaries common stockholders $80,855
 $29,640
            
Other comprehensive income (loss)  
  
  
  
Other comprehensive loss  
  
Change in fair value of interest rate swaps and other 233
 1,271
 872
 (162) (9,801) (5,794)
Comprehensive (loss) income $(1,079) $10,915
 $30,848
 $73,507
Comprehensive income $71,054
 $23,846
            
Net (loss) income per share attributable to ACC, Inc. and Subsidiaries common stockholders  
  
  
  
Net income per share attributable to ACC, Inc. and Subsidiaries common shareholders  
  
Basic and diluted $0.58
 $0.21
    
Weighted-average common shares outstanding:  
  
Basic $(0.01) $0.07
 $0.21
 $0.57
 137,477,169
 137,101,535
Diluted $(0.01) $0.07
 $0.21
 $0.56
 138,587,513
 138,152,378
            
Weighted-average common shares outstanding  
  
  
  
Basic 136,421,198
 130,786,985
 134,708,361
 128,239,294
Diluted 136,421,198
 131,568,371
 135,585,850
 129,034,401
        
Distributions declared per common share $0.44
 $0.42
 $1.30
 $1.24


See accompanying notes to consolidated financial statements.


2
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN EQUITY
(unaudited, in thousands, except share data)





  
Common
Shares
 
Par Value of
Common
Shares
 
Additional Paid
in Capital
 Common Shares Held in Rabbi Trust Common Shares Held in Rabbi Trust at Cost 
Accumulated
Earnings and
Dividends
 
Accumulated
Other
Comprehensive
Loss
 
Noncontrolling
Interests –
Partially Owned
Properties
 Total
Equity, December 31, 2016 132,225,488
 $1,322
 $4,118,842
 20,181
 $(975) $(670,137) $(4,067) $5,502
 $3,450,487
Adjustments to reflect redeemable noncontrolling interests at fair value —
 —
 5,943
 —
 —
 —
 —
 —
 5,943
Amortization of restricted stock awards —
 —
 10,641
 —
 —
 —
 —
 —
 10,641
Vesting of restricted stock awards and restricted stock units 165,884
 2
 (2,193) 43,597
 (1,969) —
 —
 —
 (4,160)
Distributions to common and restricted stockholders —
 —
 —
 —
 —
 (176,199) —
 —
 (176,199)
Distributions to noncontrolling interests - partially owned properties —
 —
 —
 —
 —
 —
 —
 (212) (212)
Conversion of common and preferred operating partnership units to common stock 22,000
 —
 154
 —
 —
 —
 —
 —
 154
Net proceeds from sale of common stock 3,949,356
 40
 187,841
 —
 —
 —
 —
 —
 187,881
Change in fair value of interest rate swaps and other —
 —
 —
 —
 —
 —
 564
 —
 564
Amortization of interest rate swap terminations —
 —
 —
 —
 —
 —
 308
 —
 308
Contributions by noncontrolling interest —
 —
 —
 —
 —
 —
 —
 8,158
 8,158
Net income —
 —
 —
 —
 —
 29,976
 —
 265
 30,241
Equity, September 30, 2017 136,362,728

$1,364

$4,321,228
 63,778
 $(2,944)
$(816,360)
$(3,195)
$13,713

$3,513,806
  
Common
Shares
 
Par Value of
Common
Shares
 
Additional Paid
in Capital
 Common Shares Held in Rabbi Trust Common Shares Held in Rabbi Trust at Cost 
Accumulated
Earnings and
Dividends
 
Accumulated
Other
Comprehensive
Loss
 
Noncontrolling
Interests –
Partially Owned
Properties
 Total
Equity, December 31, 2019 137,326,824
 $1,373
 $4,458,456
 77,928
 $(3,486) $(1,144,721) $(16,946) $43,998
 $3,338,674
Adjustments to reflect redeemable noncontrolling interests at fair value —
 —
 9,490
 —
 —
 —
 —
 —
 9,490
Amortization of restricted stock awards —
 —
 3,988
 —
 —
 —
 —
 —
 3,988
Vesting of restricted stock awards 199,695
 2
 (4,157) —
 —
 —
 —
 —
 (4,155)
Distributions to common and restricted stockholders and other ($0.47 per common share) —
 —
 —
 —
 —
 (65,242) —
 —
 (65,242)
Distributions to noncontrolling interests - partially owned properties —
 —
 —
 —
 —
 —
 —
 (2,566) (2,566)
Change in fair value of interest rate swaps and other —
 —
 —
 —
 —
 —
 (9,801) —
 (9,801)
Deposits to deferred compensation plan, net of withdrawals (3,488) —
 129
 3,488
 (129) —
 —
 —
 —
Net income —
 —
 —
 —
 —
 80,855
 —
 895
 81,750
Equity, March 31, 2020 137,523,031

$1,375

$4,467,906
 81,416
 $(3,615)
$(1,129,108)
$(26,747)
$42,327

$3,352,138




  Common
Shares		 Par Value of
Common
Shares		 Additional Paid
in Capital		 Common Shares Held in Rabbi Trust Common Shares Held in Rabbi Trust at Cost Accumulated
Earnings and
Dividends		 Accumulated
Other
Comprehensive
(Loss) Income		 Noncontrolling
Interests –
Partially Owned
Properties		 Total
Equity, December 31, 2018 136,967,286
 $1,370
 $4,458,240
 69,603
 $(3,092) $(971,070) $(4,397) $65,750
 $3,546,801
Adjustments to reflect redeemable noncontrolling interests at fair value —
 —
 (2,547) —
 —
 —
 —
 —
 (2,547)
Amortization of restricted stock awards —
 —
 3,765
 —
 —
 —
 —
 —
 3,765
Vesting of restricted stock awards 180,961
 —
 (3,831) —
 —
 —
 —
 —
 (3,831)
Distributions to common and restricted stockholders and other ($0.46 per common share) —
 —
 —
 —
 —
 (63,611) —
 —
 (63,611)
Contributions by noncontrolling interests - partially owned properties —
 —
 —
 —
 —
 —
 —
 625
 625
Distributions to noncontrolling interests - partially owned properties —
 —
 —
 —
 —
 —
 —
 (3,661) (3,661)
Conversion of common and preferred operating partnership units to common stock 42,271
 —
 251
 —
 —
 —
 —
 —
 251
Change in fair value of interest rate swaps and other —
 —
 —
 —
 —
 —
 (5,794) —
 (5,794)
Deposits to deferred compensation plan, net of withdrawals (1,829) —
 70
 1,829
 (70) —
 —
 —
 —
Net income —
 —
 —
 —
 —
 29,640
 —
 1,469
 31,109
Equity, March 31, 2019 137,188,689
 $1,370
 $4,455,948
 71,432
 $(3,162) $(1,005,041) $(10,191) $64,183
 $3,503,107

See accompanying notes to consolidated financial statements.


3
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)




  Nine Months Ended September 30,
  2017 2016
Operating activities    
Net income $30,563
 $74,819
Adjustments to reconcile net income to net cash provided by operating activities:  
  
Loss (gain) from disposition of real estate 632
 (17,409)
Provision for real estate impairment 15,317
 —
Depreciation and amortization 169,391
 159,486
Amortization of deferred financing costs and debt premiums/discounts (2,691) (4,053)
Share-based compensation 11,401
 7,820
Income tax provision 791
 1,035
Amortization of interest rate swap terminations and other 308
 309
Changes in operating assets and liabilities:  
  
Restricted cash (566) (734)
Student contracts receivable, net (6,775) 1,750
Other assets (2,536) (5,112)
Accounts payable and accrued expenses (293) 2,769
Other liabilities 29,581
 22,157
Net cash provided by operating activities 245,123
 242,837
     
Investing activities  
  
Proceeds from disposition of properties 24,462
 72,640
Cash paid for acquisition of operating and under development properties (302,318) (96,604)
Cash paid for land acquisitions (8,886) (856)
Capital expenditures for wholly-owned properties (64,464) (45,155)
Investments in wholly-owned properties under development (409,174) (284,777)
Capital expenditures for on-campus participating properties (2,909) (2,510)
Investment in direct financing lease (759) (7,837)
Change in escrow deposits for real estate investments (727) 5,141
Change in restricted cash related to capital reserves (578) (1,099)
Purchase of corporate furniture, fixtures and equipment (4,997) (4,681)
Net cash used in investing activities (770,350) (365,738)
     
Financing activities  
  
Proceeds from sale of common stock 190,912
 803,189
Offering costs (2,374) (32,912)
Pay-off of mortgage and construction loans (99,185) (152,597)
Pay-off of unsecured term loans —
 (400,000)
Proceeds from unsecured term loan 500,000
 150,000
Proceeds from revolving credit facility 974,300
 123,400
Paydowns of revolving credit facility (807,160) (172,300)
Proceeds from construction loans 10,812
 —
Scheduled principal payments on debt (9,718) (11,514)
Debt issuance and assumption costs (7,335) (744)
Contributions by noncontrolling interests 11,526
 —
Taxes paid on net-share settlements (4,920) (2,977)
Distributions to common and restricted stockholders (176,199) (162,866)
Distributions to noncontrolling interests (61,231) (2,044)
Net cash provided by financing activities 519,428
 138,635
     
Net change in cash and cash equivalents (5,799) 15,734
Cash and cash equivalents at beginning of period 22,140
 16,659
Cash and cash equivalents at end of period $16,341
 $32,393
     
Supplemental disclosure of non-cash investing and financing activities  
  
Loans assumed in connection with property acquisitions $(80,296) $(10,012)
Conversion of common and preferred operating partnership units to common stock $154
 $5,441
Non-cash contribution from noncontrolling interest $120,618
 $—
Non-cash consideration exchanged in purchase of land parcel $(3,071) $—
Change in accrued construction in progress $24,753
 $32,941
Change in fair value of derivative instruments, net $564
 $(471)
Change in fair value of redeemable noncontrolling interests $5,943
 $(10,481)
     
Supplemental disclosure of cash flow information  
  
Cash paid for interest, net of amounts capitalized $49,562
 $69,884
  Three Months Ended March 31,
  2020 2019
Operating activities    
   Net income $82,061
 $31,368
   Adjustments to reconcile net income to net cash provided by operating activities:  
  
Gain from disposition of real estate (48,525) —
   Loss from early extinguishment of debt 4,827
 —
   Provision for impairment —
 3,201
   Depreciation and amortization 66,169
 68,755
   Amortization of deferred financing costs and debt premiums/discounts (3) (19)
   Share-based compensation 3,988
 3,765
   Income tax provision 379
 364
   Amortization of interest rate swap terminations and other 428
 102
   Changes in operating assets and liabilities: 

 

   Student contracts receivable, net 1,143
 (5,491)
   Other assets 6,990
 (7,723)
   Accounts payable and accrued expenses (36,172) (30,595)
   Other liabilities 9,499
 16,885
Net cash provided by operating activities 90,784
 80,612
     
Investing activities  
  
   Proceeds from disposition of properties and land parcels 146,144
 —
   Capital expenditures for owned properties (11,852) (10,751)
   Investments in owned properties under development (84,359) (104,768)
   Capital expenditures for on-campus participating properties (565) (230)
   Other investing activities (1,347) (1,123)
Net cash provided by (used in) investing activities 48,021
 (116,872)
     
Financing activities  
  
   Proceeds from unsecured notes 399,240
 —
   Pay-off of mortgage and construction loans (34,219) —
   Costs paid related to early extinguishment of debt (4,156) —
   Pay-off of unsecured notes (400,000) —
   Proceeds from revolving credit facility 1,295,700
 180,600
   Paydowns of revolving credit facility (1,111,700) (110,500)
   Proceeds from construction loans —
 14,174
   Scheduled principal payments on debt (2,040) (2,040)
   Debt issuance costs (4,693) (1,853)
   Increase in ownership of consolidated subsidiary (77,200) —
   Contribution by noncontrolling interests —
 625
   Taxes paid on net-share settlements (4,155) (3,831)
   Distributions paid to common and restricted stockholders (65,242) (63,611)
   Distributions paid to noncontrolling interests (2,800) (3,966)
Net cash (used in) provided by financing activities (11,265) 9,598
     
Net change in cash, cash equivalents, and restricted cash 127,540
 (26,662)
Cash, cash equivalents, and restricted cash at beginning of period 81,348
 106,517
Cash, cash equivalents, and restricted cash at end of period $208,888
 $79,855
     
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets    
Cash and cash equivalents $176,758
 $46,166
Restricted cash 32,130
 33,689
Total cash, cash equivalents, and restricted cash at end of period $208,888
 $79,855
     
Supplemental disclosure of non-cash investing and financing activities  
  
Conversion of common and preferred operating partnership units to common stock $—
 $251
Accrued development costs and capital expenditures $27,056
 $35,545
Change in fair value of derivative instruments, net $(10,229) $(5,896)
Change in fair value of redeemable noncontrolling interest $9,490
 $(2,547)
Initial recognition of operating lease right of use assets $—
 $280,687
Initial recognition of operating lease liabilities $—
 $279,982
     
Supplemental disclosure of cash flow information  
  
Interest paid $31,959
 $20,912
     


See accompanying notes to consolidated financial statements.


4
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP L.P.LP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)





  March 31, 2020 December 31, 2019
  (Unaudited)  
Assets    
     
Investments in real estate:    
Owned properties, net $6,636,857
 $6,694,715
On-campus participating properties, net 73,716
 75,188
Investments in real estate, net 6,710,573
 6,769,903
     
Cash and cash equivalents 176,758
 54,650
Restricted cash 32,130
 26,698
Student contracts receivable, net 12,287
 13,470
Operating lease right of use assets 459,957
 460,857
Other assets 228,051
 234,176
     
Total assets $7,619,756
 $7,559,754
     
Liabilities and capital  
  
     
Liabilities:  
  
Secured mortgage, construction and bond debt, net $749,902
 $787,426
Unsecured notes, net 1,981,472
 1,985,603
Unsecured term loans, net 199,209
 199,121
Unsecured revolving credit facility 609,700
 425,700
Accounts payable and accrued expenses 53,086
 88,411
Operating lease liabilities 477,779
 473,070
Other liabilities 178,702
 157,368
Total liabilities 4,249,850
 4,116,699
     
Commitments and contingencies (Note 12) 


 


     
Redeemable limited partners 17,768
 104,381
     
Capital:  
  
Partners’ capital:  
  
General partner - 12,222 OP units outstanding at both March 31, 2020 and December 31, 2019 41
 40
Limited partner - 137,592,225 and 137,392,530 OP units outstanding at March 31, 2020 and December 31, 2019, respectively 3,336,517
 3,311,582
Accumulated other comprehensive loss (26,747) (16,946)
Total partners’ capital 3,309,811
 3,294,676
Noncontrolling interests - partially owned properties 42,327
 43,998
Total capital 3,352,138
 3,338,674
     
Total liabilities and capital $7,619,756
 $7,559,754
  September 30, 2017 December 31, 2016
  (Unaudited)  
Assets    
     
Investments in real estate:    
Wholly-owned properties, net $6,262,077
 $5,427,014
Wholly-owned properties held for sale —
 25,350
On-campus participating properties, net 83,095
 85,797
Investments in real estate, net 6,345,172
 5,538,161
     
Cash and cash equivalents 16,341
 22,140
Restricted cash 25,824
 24,817
Student contracts receivable, net 15,531
 8,428
Other assets 284,023
 272,367
     
Total assets $6,686,891
 $5,865,913
     
Liabilities and capital  
  
     
Liabilities:  
  
Secured mortgage, construction and bond debt, net $662,874
 $688,195
Unsecured notes, net 1,190,296
 1,188,737
Unsecured term loans, net 646,675
 149,065
Unsecured revolving credit facility 266,440
 99,300
Accounts payable and accrued expenses 79,612
 76,614
Other liabilities 214,918
 158,437
Total liabilities 3,060,815
 2,360,348
     
Commitments and contingencies (Note 13) 

 

     
Redeemable limited partners 112,270
 55,078
     
Capital:  
  
Partners' capital:  
  
General partner - 12,222 OP units outstanding at both September 30, 2017 and December 31, 2016 69
 82
Limited partner - 136,414,284 and 132,233,447 OP units outstanding at September 30, 2017 and December 31, 2016, respectively 3,503,219
 3,448,970
Accumulated other comprehensive loss (3,195) (4,067)
Total partners' capital 3,500,093
 3,444,985
Noncontrolling interests - partially owned properties 13,713
 5,502
Total capital 3,513,806
 3,450,487
     
Total liabilities and capital $6,686,891
 $5,865,913
     
Consolidated variable interest entities’ assets and debt included in the above balances:
     
Investments in real estate, net $596,506
 $788,393
Cash, cash equivalents and restricted cash $37,711
 $59,908
Other assets $14,794
 $18,387
Secured mortgage and construction debt, net $417,765
 $418,241
Accounts payable, accrued expenses and other liabilities $34,317
 $56,976




See accompanying notes to consolidated financial statements.


5
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP L.P.LP AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in thousands, except unit and per unit data)





 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		 Three Months Ended
March 31,
 2017 2016 2017 2016 2020 2019
Revenues:            
Wholly-owned properties $183,569
 $185,694
 $531,556
 $546,078
Owned properties $232,091
 $224,419
On-campus participating properties 6,799
 6,758
 23,128
 23,018
 10,709
 11,448
Third-party development services 3,566
 773
 4,697
 3,929
 2,055
 3,171
Third-party management services 2,291
 2,376
 7,193
 7,039
 3,829
 2,311
Resident services 713
 810
 2,310
 2,325
 720
 782
Total revenues 196,938
 196,411
 568,884
 582,389
 249,404
 242,131
            
Operating expenses:  
  
  
  
Wholly-owned properties 99,423
 100,602
 249,552
 257,175
Operating expenses (income):  
  
Owned properties 92,474
 92,169
On-campus participating properties 3,923
 3,784
 11,080
 10,125
 3,366
 3,957
Third-party development and management services 3,879
 3,340
 11,789
 10,638
 6,207
 4,186
General and administrative 8,684
 5,375
 25,200
 16,810
 10,158
 7,315
Depreciation and amortization 61,125
 52,067
 169,391
 159,486
 66,169
 68,755
Ground/facility leases 2,329
 1,965
 7,151
 6,736
 4,069
 3,549
Provision for real estate impairment —
 —
 15,317
 —
Gain from disposition of real estate (48,525) —
Provision for impairment —
 3,201
Total operating expenses 179,363
 167,133
 489,480
 460,970
 133,918
 183,132
            
Operating income 17,575
 29,278
 79,404
 121,419
 115,486
 58,999
            
Nonoperating income and (expenses):  
  
  
  
Nonoperating income (expenses):  
  
Interest income 1,259
 1,272
 3,723
 4,026
 851
 926
Interest expense (18,654) (19,016) (47,944) (61,762) (27,783) (27,061)
Amortization of deferred financing costs (1,146) (1,344) (3,197) (5,238) (1,287) (1,132)
(Loss) gain from disposition of real estate —
 —
 (632) 17,409
Total nonoperating expense (18,541) (19,088) (48,050) (45,565)
(Loss) income before income taxes (966) 10,190
 31,354
 75,854
Loss from early extinguishment of debt (4,827) —
Total nonoperating expenses (33,046) (27,267)
Income before income taxes 82,440
 31,732
Income tax provision (267) (345) (791) (1,035) (379) (364)
Net (loss) income (1,233) 9,845
 30,563
 74,819
Net income 82,061
 31,368
Net income attributable to noncontrolling interests – partially owned properties (57) (77) (259) (285) (916) (1,568)
Net (loss) income attributable to American Campus Communities Operating Partnership, L.P. (1,290) 9,768
 30,304
 74,534
Series A preferred unit distributions (31) (36) (93) (115)
Net (loss) income attributable to common unitholders $(1,321) $9,732
 $30,211
 $74,419
Net income attributable to American Campus Communities Operating Partnership LP 81,145
 29,800
Series A preferred units distributions (14) (31)
Net income attributable to common unitholders $81,131
 $29,769
            
Other comprehensive income (loss)  
  
  
  
Other comprehensive loss  
  
Change in fair value of interest rate swaps and other 233
 1,271
 872
 (162) (9,801) (5,794)
Comprehensive (loss) income $(1,088) $11,003
 $31,083
 $74,257
Comprehensive income $71,330
 $23,975
            
Net (loss) income per unit attributable to common unitholders  
  
  
  
Basic $(0.01) $0.07
 $0.21
 $0.57
Diluted $(0.01) $0.07
 $0.21
 $0.56
Net income per unit attributable to common unitholders  
  
Basic and diluted $0.58
 $0.21
            
Weighted-average common units outstanding  
  
  
  
  
  
Basic 137,432,872
 132,008,227
 135,731,609
 129,517,442
 137,945,644
 137,696,323
Diluted 137,432,872
 132,789,613
 136,609,098
 130,312,549
 139,055,988
 138,747,166
        
Distributions declared per Common Unit $0.44
 $0.42
 $1.30
 $1.24


See accompanying notes to consolidated financial statements.


6
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP L.P.LP AND SUBSIDIARIES
CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN CAPITAL
(unaudited, in thousands, except unit data)





          Accumulated Noncontrolling  
      Other Interests -  
  General Partner Limited Partner Comprehensive Partially Owned  
  Units Amount Units Amount Loss Properties Total
Capital, December 31, 2016 12,222
 $82
 132,233,447
 $3,448,970
 $(4,067) $5,502
 $3,450,487
Adjustments to reflect redeemable limited partners' interest at fair value —
 —
 —
 5,943
 —
 —
 5,943
Amortization of restricted stock awards —
 —
 —
 10,641
 —
 —
 10,641
Vesting of restricted stock awards and restricted stock units —
 —
 209,481
 (4,160) —
 —
 (4,160)
Distributions —
 (16) —
 (176,183) —
 —
 (176,199)
Distributions to noncontrolling interests - partially owned properties —
 —
 —
 —
 —
 (212) (212)
Conversion of common and preferred operating partnership units to common stock —
 —
 22,000
 154
 —
 —
 154
Issuance of units in exchange for contributions of equity offering proceeds —
 —
 3,949,356
 187,881
 —
 —
 187,881
Change in fair value of interest rate swaps and other —
 —
 —
 —
 564
 —
 564
Amortization of interest rate swap terminations —
 —
 —
 —
 308
 —
 308
Contributions by noncontrolling interest —
 —
 —
 —
 —
 8,158
 8,158
Net income —
 3
 —
 29,973
 —
 265
 30,241
Capital as of September 30, 2017 12,222
 $69
 136,414,284
 $3,503,219
 $(3,195) $13,713
 $3,513,806
          Accumulated Noncontrolling  
      Other Interests -  
  General Partner Limited Partner Comprehensive Partially Owned  
  Units Amount Units Amount Loss Properties Total
Capital, December 31, 2019 12,222
 $40
 137,392,530
 $3,311,582
 $(16,946) $43,998
 $3,338,674
Adjustments to reflect redeemable limited partners’ interest at fair value —
 —
 —
 9,490
 —
 —
 9,490
Amortization of restricted stock awards —
 —
 —
 3,988
 —
 —
 3,988
Vesting of restricted stock awards —
 —
 199,695
 (4,155) —
 —
 (4,155)
Distributions to common and restricted unit holders and other ($0.47 per common unit) —
 (6) —
 (65,236) —
 —
 (65,242)
Distributions to noncontrolling joint venture partners —
 —
 —
 —
 —
 (2,566) (2,566)
Change in fair value of interest rate swaps and other —
 —
 —
 —
 (9,801) —
 (9,801)
Net income —
 7
 —
 80,848
 —
 895
 81,750
Capital, March 31, 2020 12,222
 $41
 137,592,225
 $3,336,517
 $(26,747) $42,327
 $3,352,138



          Accumulated Noncontrolling  
      Other Interests -  
  General Partner Limited Partner Comprehensive Partially Owned  
  Units Amount Units Amount Loss Properties Total
Capital, December 31, 2018 12,222
 $55
 137,024,667
 $3,485,393
 $(4,397) $65,750
 $3,546,801
Adjustments to reflect redeemable limited partners’ interest at fair value —
 —
 —
 (2,547) —
 —
 (2,547)
Amortization of restricted stock awards —
 —
 —
 3,765
 —
 —
 3,765
Vesting of restricted stock awards —
 —
 180,961
 (3,831) —
 —
 (3,831)
Distributions to common and restricted unit holders and other ($0.46 per common unit) —
 (6) —
 (63,605) —
 —
 (63,611)
Contribution by noncontrolling interests - partially owned properties —
 —
 —
 —
 —
 625
 625
Distributions to noncontrolling joint venture partners —
 —
 —
 —
 —
 (3,661) (3,661)
Conversion of common and preferred operating partnership units to common stock —
 —
 42,271
 251
 —
 —
 251
Change in fair value of interest rate swaps and other —
 —
 —
 —
 (5,794) —
 (5,794)
Net income —
 3
 —
 29,637
 —
 1,469
 31,109
Capital, March 31, 2019 12,222
 $52
 137,247,899
 $3,449,063
 $(10,191) $64,183
 $3,503,107

See accompanying notes to consolidated financial statements.


7
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP L.P.LP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)




 Nine Months Ended September 30, Three Months Ended March 31,
 2017 2016 2020 2019
Operating activities        
Net income $30,563
 $74,819
 $82,061
 $31,368
Adjustments to reconcile net income to net cash provided by operating activities:  
  
  
  
Loss (gain) from disposition of real estate 632
 (17,409)
Provision for real estate impairment 15,317
 —
Gain from disposition of real estate (48,525) —
Loss from early extinguishment of debt 4,827
 —
Provision for impairment —
 3,201
Depreciation and amortization 169,391
 159,486
 66,169
 68,755
Amortization of deferred financing costs and debt premiums/discounts (2,691) (4,053) (3) (19)
Share-based compensation 11,401
 7,820
 3,988
 3,765
Income tax provision 791
 1,035
 379
 364
Amortization of interest rate swap terminations and other 308
 309
 428
 102
Changes in operating assets and liabilities:  
  
    
Restricted cash (566) (734)
Student contracts receivable, net (6,775) 1,750
 1,143
 (5,491)
Other assets (2,536) (5,112) 6,990
 (7,723)
Accounts payable and accrued expenses (293) 2,769
 (36,172) (30,595)
Other liabilities 29,581
 22,157
 9,499
 16,885
Net cash provided by operating activities 245,123
 242,837
 90,784
 80,612
        
Investing activities  
  
  
  
Proceeds from disposition of properties 24,462
 72,640
Cash paid for acquisition of operating and under development properties (302,318) (96,604)
Cash paid for land acquisitions (8,886) (856)
Capital expenditures for wholly-owned properties (64,464) (45,155)
Investments in wholly-owned properties under development (409,174) (284,777)
Proceeds from disposition of properties and land parcels 146,144
 —
Capital expenditures for owned properties (11,852) (10,751)
Investments in owned properties under development (84,359) (104,768)
Capital expenditures for on-campus participating properties (2,909) (2,510) (565) (230)
Investment in direct financing lease (759) (7,837)
Change in escrow deposits for real estate investments (727) 5,141
Change in restricted cash related to capital reserves (578) (1,099)
Purchase of corporate furniture, fixtures and equipment (4,997) (4,681)
Net cash used in investing activities (770,350) (365,738)
Other investing activities (1,347) (1,123)
Net cash provided by (used in) investing activities 48,021
 (116,872)
        
Financing activities  
  
  
  
Proceeds from issuance of common units in exchange for contributions, net 188,538
 770,277
Proceeds from unsecured notes 399,240
 —
Pay-off of mortgage and construction loans (99,185) (152,597) (34,219) —
Pay-off of unsecured term loan —
 (400,000)
Proceeds from unsecured term loan 500,000
 150,000
Costs paid related to early extinguishment of debt (4,156) —
Pay-off of unsecured notes (400,000) —
Proceeds from revolving credit facility 974,300
 123,400
 1,295,700
 180,600
Paydowns of revolving credit facility (807,160) (172,300) (1,111,700) (110,500)
Proceeds from construction loans 10,812
 —
 —
 14,174
Scheduled principal payments on debt (9,718) (11,514) (2,040) (2,040)
Debt issuance and assumption costs (7,335) (744)
Contributions by noncontrolling interests 11,526
 —
Debt issuance costs (4,693) (1,853)
Increase in ownership of consolidated subsidiary (77,200) —
Contribution by noncontrolling interests —
 625
Taxes paid on net-share settlements (4,920) (2,977) (4,155) (3,831)
Distributions paid to common and preferred unitholders (176,404) (163,493) (64,814) (63,343)
Distributions paid on unvested restricted stock awards (1,217) (1,051) (662) (573)
Distributions paid to noncontrolling interests - partially owned properties (59,809) (366) (2,566) (3,661)
Net cash provided by financing activities 519,428
 138,635
Net cash (used in) provided by financing activities (11,265) 9,598
        
Net change in cash and cash equivalents (5,799) 15,734
Cash and cash equivalents at beginning of period 22,140
 16,659
Cash and cash equivalents at end of period $16,341
 $32,393
Net change in cash, cash equivalents, and restricted cash 127,540
 (26,662)
Cash, cash equivalents, and restricted cash at beginning of period 81,348
 106,517
Cash, cash equivalents, and restricted cash at end of period $208,888
 $79,855
    
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets    
Cash and cash equivalents $176,758
 $46,166
Restricted cash 32,130
 33,689
Total cash, cash equivalents, and restricted cash at end of period $208,888
 $79,855
        
Supplemental disclosure of non-cash investing and financing activities  
  
  
  
Loans assumed in connection with property acquisitions $(80,296) $(10,012)
Conversion of common and preferred operating partnership units to common stock $154
 $5,441
 $—
 $251
Non-cash contribution from noncontrolling interest $120,618
 $—
Non-cash consideration exchanged in purchase of land parcel $(3,071) $—
Change in accrued construction in progress $24,753
 $32,941
Accrued development costs and capital expenditures $27,056
 $35,545
Change in fair value of derivative instruments, net $564
 $(471) $(10,229) $(5,896)
Change in fair value of redeemable noncontrolling interests $5,943
 $(10,481)
Change in fair value of redeemable noncontrolling interest $9,490
 $(2,547)
Initial recognition of operating lease right of use assets $—
 $280,687
Initial recognition of operating lease liabilities $—
 $279,982
        
Supplemental disclosure of cash flow information  
  
  
  
Cash paid for interest, net of amounts capitalized $49,562
 $69,884
Interest paid $31,959
 $20,912
    


See accompanying notes to consolidated financial statements.


8
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP L.P.LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)






1. Organization and Description of Business
 
American Campus Communities, Inc. (“ACC”) is a real estate investment trust (“REIT”) that commenced operations effective with the completion of an initial public offering (“IPO”) on August 17, 2004.  Through ACC’s controlling interest in American Campus Communities Operating Partnership L.P.LP (“ACCOP”), ACC is one of the largest owners, managers and developers of high quality student housing properties in the United States in terms of beds owned and under management.  ACC is a fully integrated, self-managed and self-administered equity REIT with expertise in the acquisition, design, financing, development, construction management, leasing and management of student housing properties.  ACC’s common stock is publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “ACC.”
 
The general partner of ACCOP is American Campus Communities Holdings, LLC (“ACC Holdings”), an entity that is wholly-owned by ACC.  As of September 30, 2017,March 31, 2020, ACC Holdings held an ownership interest in ACCOP of less than 1%. The limited partners of ACCOP are ACC and other limited partners consisting of current and former members of management and nonaffiliated third parties.  As of September 30, 2017,March 31, 2020, ACC owned an approximate 99.2%99.6% limited partnership interest in ACCOP.  As the sole member of the general partner of ACCOP, ACC has exclusive control of ACCOP’s day-to-day management.  Management operates ACC and ACCOP as one business.  The management of ACC consists of the same members as the management of ACCOP.  ACC consolidates ACCOP for financial reporting purposes, and ACC does not have significant assets other than its investment in ACCOP.  Therefore, the assets and liabilities of ACC and ACCOP are the same on their respective financial statements.  References to the “Company” means collectively ACC, ACCOP and those entities/subsidiaries owned or controlled by ACC and/or ACCOP.  References to the “Operating Partnership” mean collectively ACCOP and those entities/subsidiaries owned or controlled by ACCOP.  Unless otherwise indicated, the accompanying Notes to the Consolidated Financial Statements apply to both the Company and the Operating Partnership.
 
As of September 30, 2017,March 31, 2020, the Company’s property portfolio contained 166 properties with approximately 102,500111,900 beds.  The Company’s property portfolio consisted of 130126 owned off-campus student housing properties that are in close proximity to colleges and universities, 3134 American Campus Equity (“ACE®ACE®”) properties operated under ground/facility leases, with 14 university systems and five6 on-campus participating properties operated under ground/facility leases with the related university systems.  Of the 166 properties, 123 were under development as of September 30, 2017,March 31, 2020, and when completed will consist of a total of approximately 8,30011,300 beds.  The Company’s communities contain modern housing units and are supported by a resident assistant system and other student-oriented programming, with many offering resort-style amenities.
 
Through one of ACC’s taxable REIT subsidiaries (“TRSs”), the Company also provides construction management and development services, primarily for student housing properties owned by colleges and universities, charitable foundations, and others.  As of September 30, 2017,March 31, 2020, also through one of ACC’s TRSs, the Company provided third-party management and leasing services for 3835 properties that represented approximately 28,80026,000 beds.  Third-party management and leasing services are typically provided pursuant to management contracts that have initial terms that range from one year to five years.  As of September 30, 2017,March 31, 2020, the Company’s total owned and third-party managed portfolio included 204201 properties with approximately 131,300137,900 beds.

2. Summary of Significant Accounting Policies
 
Basis of Presentation and use of Estimates
 
The accompanying consolidated financial statements, presented in U.S. dollars, are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements, and revenue and expenses during the reporting periods. The Company’s actual results could differ from those estimates and assumptions. All material intercompany transactions among consolidated entities have been eliminated. All dollar amounts in the tables herein, except share, per share, unit and per unit amounts, are stated in thousands unless otherwise indicated.



9
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP L.P.LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)




Principles of Consolidation


The Company’s consolidated financial statements include its accounts and the accounts of other subsidiaries and joint ventures (including partnerships and limited liability companies) over which it has control. Investments acquired or created are evaluated based on the accounting guidance relating to variable interest entities (“VIEs”), which requires the consolidation of VIEs in which the Company is considered to be the primary beneficiary. If the investment is determined not to be a VIE, then the investment is evaluated for consolidation using the voting interest model.


Recently Issued Accounting Pronouncements


In August 2017,March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2017-12 (“ASU”) 2020-04, “Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2017-12”), “Derivatives2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and Hedging (Topic 815): Targeted Improvementsother contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter, the Company has elected to Accounting for Hedging Activities.” The purpose of this ASU is to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition to that main objective, the amendments in this update make certain targeted improvements to simplify the application ofapply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in current GAAP.the market occur.

In March 2020, the Securities and Exchange Commission (“SEC”) adopted final rules that amend the financial disclosure requirements for subsidiary issuers and guarantors of registered debt securities in Rule 3-10 of Regulation S-X. Under the amended rules, parent companies can provide alternative disclosures in lieu of separate audited financial statements of subsidiary issuers and guarantors that meet certain circumstances. The guidancerule is effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoptionon January 4, 2021, but earlier compliance is permitted in any interim period after the issuance date of this update. All transition requirements and elections should be applied to hedging relationships existing on the date of adoption. The effect of adoption should be reflected as of the beginning of the fiscal year of adoption.permitted. The Company is currently in the process of assessingevaluating the effects of this ASU, but does not anticipate a material impactrule and its potential effect on its consolidated financial statements.

In February 2017, the FASB issued Accounting Standards Update 2017-05 (“ASU 2017-05”), “Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.” The purpose of this ASU is to eliminate the diversity in practice in accounting for derecognition of a nonfinancial asset and in-substance nonfinancial assets (only when the asset or asset group does not meet the definition of a business or the transaction is not a sale to a customer). The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption for the fiscal years beginning after December 15, 2016 is permitted. This ASU is required to be adopted in conjunction with the Company’s adoption of ASU 2014-09, the new revenue recognition standard, which will be adopted as of January 1, 2018. Upon adoption of this ASU, application must be performed on a retrospective basis for each period presented in the Company’s financial statements or a retrospective basis with a cumulative-effect adjustment to retained earnings at the beginning of the fiscal year of adoption. The Company currently does not anticipate a material impact to its consolidated financial statements for property dispositions given the simplicity of the Company’s historical disposition transactions.both ACC and ACCOP.

In February 2016, the FASB issued Accounting Standards Update 2016-02 (“ASU 2016-02”), “Leases (Topic 842): Amendments to the FASB Accounting Standards Codification.” ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The guidance is effective for public business entities for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. Subsequent to the issuance of ASU 2016-02, the FASB issued an additional Accounting Standards Update clarifying aspects of the new lease accounting standard, which will be effective upon adoption of ASU 2016-02. The Company plans to adopt ASU 2016-02 as of January 1, 2019. While the Company is still evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures, it expects to recognize right-of-use assets and related lease liabilities on its consolidated balance sheets related to ground leases under which it is the lessee.

In May 2014, the FASB issued Accounting Standards Update 2014-09 (“ASU 2014-09”), “Revenue From Contracts With Customers (Topic 606)”.  ASU 2014-09 provides a single comprehensive revenue recognition model for contracts with customers (excluding certain contracts, such as lease contracts) to improve comparability within industries.  ASU 2014-09 requires an entity to recognize revenue to reflect the transfer of goods or services to customers at an amount the entity expects to be paid in exchange for those goods and services and provide enhanced disclosures, all to provide more comprehensive guidance for transactions such as service revenue and contract modifications. Subsequent to the issuance of ASU 2014-09, the FASB has issued multiple Accounting Standards Updates clarifying multiple aspects of the new revenue recognition standard, which include the deferral of the effective date by one year.  ASU 2014-09, as amended by subsequent Accounting Standards Updates, is effective for public entities for interim and annual periods beginning after December 15, 2017 and may be applied using either a full retrospective or modified retrospective approach upon adoption.
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)



The Company plans to adopt the new revenue standard using the modified retrospective approach as of January 1, 2018 and is currently evaluating each of its revenue streams to identify any differences in the timing, measurement or presentation of revenue recognition under the new standard. The Company does not expect the adoption of this standard to have a significant impact on its consolidated financial statements, as a substantial portion of its revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU 2014-09, and will be evaluated with the adoption of the lease accounting standard, ASU 2016-02, discussed above. The Company anticipates the primary effects of the new standard will be associated with the Company’s non-leasing revenue streams, which represent less than 5% of consolidated total revenues.


In addition, the Company does not expect the following accounting pronouncements issued by the FASB to have a material effect on its consolidated financial statements:

Accounting Standards UpdateEffective Date
ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes"January 1, 2021

ASU 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting.”
ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.”Recently Adopted Accounting Pronouncements
ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.”
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326):, Measurement of Credit Losses on Financial Instruments.”

Recently Adopted Accounting Pronouncements

On January 1, 2017, The standard requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, and to present the Company adopted Accounting Standards Update 2017-01 (“net amount of the financial instrument expected to be collected. In November 2018, the FASB issued ASU 2017-01”), “Business Combinations (Topic 805): Clarifying2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” which amends the Definitiontransition requirements and scope of a Business.” The amendments in this guidance clarifyASU 2016-13 and clarifies that receivables arising from operating leases are not within the definitionscope of a business with the objective of adding guidance to assist entities with evaluating whether transactionscredit losses standard, but rather, should be accounted for as acquisitions (or disposals) of assets or businesses.in accordance with the leases standard. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years; early adoption is permitted.Company adopted ASU 2017-01 will be applied prospectively to any transactions occurring subsequent to2016-13 on January 1, 2017. Under2020.

The Company notes that a majority of its financial instruments result from operating leasing transactions, which as mentioned above, are not within the scope of the new standard,standard. However, the Company expectsdid perform both a quantitative and qualitative analysis on the financial assets that most property acquisitions will be accounted for as asset acquisitions,are covered under this guidance, including its loans receivable. Based on this analysis, which included analyzing historical performance, occupancy rates, projected future performance, and asmacroeconomic trends, the Company concluded this new standard did not have a result, most transaction costs will be capitalized rather than expensed. Thematerial impact on the Company’s consolidated financial statements will depend on the size and volume of future acquisition activity.statements.


In addition, on January 1, 2017,2020, the Company adopted the following accounting pronouncements which did not have a material effect on the Company’s consolidated financial statements:


ASU 2017-03, “Accounting Changes2018-15, “Intangibles - Goodwill and Error Corrections (Topic 250) and Investments — Equity Method and Joint Ventures (Topic 323)Other - Internal-Use Software (Subtopic 350-40): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update).”Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract”

10
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


ASU 2016-05, “Derivatives and Hedging2018-13, “Fair Value Measurement (Topic 815)820): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships.”Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”


Interim Financial Statements


The accompanying interim financial statements are unaudited but have been prepared in accordance with GAAP for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission.SEC.  Accordingly, they do not include all disclosures required by GAAP for complete financial statements.  In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements of the Company for these interim periods have been included.  Because of the seasonal nature of the Company’s operations, the results of operations and cash flows for any interim period are not necessarily indicative of results for other interim periods or for the full year.  These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2019.
 
UseRestricted Cash
Restricted cash consists of Estimatesfunds held in trust and invested in low risk investments, generally consisting of government backed securities, as permitted by the indentures of trusts, which were established in connection with three bond issues for the Company’s on-campus participating properties.  Additionally, restricted cash includes escrow accounts held by lenders and resident security deposits, as required by law in certain states.  Restricted cash also consists of escrow deposits made in connection with potential property acquisitions and development opportunities.  These escrow deposits are invested in interest-bearing accounts at federally-insured banks.  Realized and unrealized gains and losses are not material for the periods presented.

Leasing Revenue
 
The preparationCompany’s primary business involves leasing properties to students under agreements that are classified as operating leases, and which have terms of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect12 months or less. These student leases do not provide for variable rent payments. The Company is also a lessor under commercial leases at certain owned properties, some of which provide for variable lease payments based upon tenant performance such as a percentage of sales. The Company recognizes the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities atbase lease payments provided for under the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


Investments in Real Estate
Investments in real estate are recorded at historical cost.  Major improvements that extend the life of an asset are capitalized and depreciated over the remaining useful life of the asset.  The cost of ordinary repairs and maintenance are charged to expense when incurred.  Depreciation and amortization are recordedleases on a straight-line basis over the estimated useful liveslease term, and variable payments are recognized in the period in which the changes in facts and circumstances on which the variable payments are based occur. Lease income under both student and commercial leases is included in owned property revenues in the accompanying consolidated statements of the assets as follows:
Buildings and improvements7-40 years
Leasehold interest - on-campus
   participating properties
25-34 years (shorter of useful life or respective lease term)
Furniture, fixtures and equipment3-7 years
Project costs directly associated with the development and construction of an owned real estate project, which include interest, property taxes, and amortization of deferred finance costs, are capitalized as construction in progress.  Upon completion of the project, costs are transferred into the applicable asset category and depreciation commences.  Interest totaling approximately $3.4comprehensive income. Lease income under student leases totaled $231.4 million and $3.3$221.7 million was capitalized duringfor the three months ended September 30, 2017March 31, 2020 and 2016, respectively, and interest totaling approximately $13.52019, respectively. Lease income under commercial leases totaled $3.2 million and $9.0$3.4 million was capitalized duringfor the ninethree months ended September 30, 2017March 31, 2020 and 2016,2019, respectively.

Consolidated VIEs

The Company has investments in various entities that qualify as VIEs for accounting purposes and for which the Company is the primary beneficiary and therefore includes the entities in its consolidated financial statements.  These VIEs include the Operating Partnership, 5 joint ventures that own a total of 10 operating properties and a land parcel, and 6 properties owned under the on-campus participating property structure.  The VIE assets and liabilities consolidated within the Company's assets and liabilities are disclosed at the bottom of the accompanying consolidated balance sheets.   

Impairment of Long-Lived Assets

Management assesses whether there has been an impairment in the value of the Company’s investments in real estate whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment is recognized when estimated expected future undiscounted cash flows are less thanAs of March 31, 2020, the carrying value ofCompany evaluated whether the property, or whenglobal economic disruption caused by the novel coronavirus disease (“COVID-19”), which was characterized on March 11, 2020 by the World Health Organization as a property meets the criteria to be classified as held for sale, at which timepandemic, was an impairment charge is recognized for any excess of the carrying value of the property over the expected net proceeds from the disposal.  The estimation of expected future net cash flows is inherently uncertain and relies on assumptions regarding current and future economics and market conditions.  If such conditions change, then an adjustment to the carrying value of the Company’s long-lived assets could occur in the future period in which the conditions change.  To the extent that a property is impaired, the excess of the carrying amount of the property over its estimated fair value is charged to earnings.indicator. The Company believesexamined a number of factors and concluded that there were no impairment indicatorsimpairments of the carrying values of itsthe Company’s investments in real estate as of September 30, 2017, other than a $15.3 million impairment charge recorded during the second quarter 2017 for one property that is in the process of being transferred to the lender in settlement of the property’s $27.4 million mortgage loan that matured in August 2017 (see Note 7).March 31, 2020.


The Company evaluates each acquisition to determine if the integrated set of assets and activities acquired meet the definition of a business under ASU 2017-01.  If either of the following criteria is met, the integrated set of assets and activities acquired would not qualify as a business:

11
Substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group of similar identifiable assets; or
The integrated set of assets and activities is lacking, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs (i.e. revenue generated before and after the transaction).

Property acquisitions deemed to qualify as a business are accounted for as business combinations, and the related acquisition costs are expensed as incurred. The Company allocates the purchase price of properties acquired in business combinations to net tangible and identified intangible assets based on their fair values.  Fair value estimates are based on information obtained from a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property, the Company’s own analysis of recently acquired and existing comparable properties in the Company’s portfolio, and other market data.  Information obtained about each property as a result of due diligence, marketing and leasing activities is also considered.  The value allocated to land is generally based on the actual purchase price if acquired separately, or market research/comparables if acquired as part of an existing operating property.  The value allocated to building is based on the fair value determined on an “as-if vacant” basis, which is estimated using a replacement cost approach that relies upon assumptions that the Company believes are consistent with current market conditions for similar properties. The value allocated to furniture, fixtures, and equipment is based on an estimate of the fair value of the appliances and fixtures inside the units. The Company has determined these estimates are primarily based upon unobservable inputs and therefore are considered to be Level 3 inputs within the fair value hierarchy. 

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP L.P.LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)




Acquisitions of properties that do not meet the definition of a business are accounted for as asset acquisitions.  The accounting model for asset acquisitions is similar to the accounting model for business combinations except that the acquisition consideration (including transaction costs) is allocated to the individual assets acquired and liabilities assumed on a relative fair value basis.  The relative fair values used to allocate the cost of an asset acquisition are determined using the same methodologies and assumptions as those utilized to determine fair value in a business combination. 3. Earnings Per Share


Redeemable noncontrolling interests

The Company follows guidance issued by the FASB regarding the classification and measurement of redeemable securities. Under this guidance, securities that are redeemable for cash or other assets, at the option of the holder and not solely within the control of the issuer, must be classified outside of permanent equity as redeemable noncontrolling interests. The Company makes this determination based on terms in the applicable agreements, specifically in relation to redemption provisions. The Company initially records the redeemable noncontrolling interests at fair value. The carrying amount of the redeemable noncontrolling interest is subsequently adjusted to the redemption value (assuming the noncontrolling interest is redeemable at the balance sheet date), with the corresponding offset for changes in fair value recorded in additional paid in capital. Reductions in fair value are recorded only to the extent that the Company has previously recorded increases in fair value above the redeemable noncontrolling interests’ initial basis. As the changes in redemption value are based on fair value, there is no effect on the Company’s earnings per share. Redeemable noncontrolling interests on the accompanying consolidated balance sheets of ACC are referred to as redeemable limited partners on the consolidated balance sheets of the Operating Partnership. Refer to Note 9 for a more detailed discussion of redeemable noncontrolling interests for both ACC and the Operating Partnership.

Pre-development Expenditures

Pre-development expenditures such as architectural fees, permits and deposits associated with the pursuit of third-party and owned development projects are expensed as incurred, until such time that management believes it is probable that the contract will be executed and/or construction will commence, at which time the Company capitalizes the costs.  Because the Company frequently incurs these pre-development expenditures before a financing commitment and/or required permits and authorizations have been obtained, the Company bears the risk of loss of these pre-development expenditures if financing cannot ultimately be arranged on acceptable terms or the Company is unable to successfully obtain the required permits and authorizations.  As such, management evaluates the status of third-party and owned projects that have not yet commenced construction on a periodic basis and expenses any deferred costs related to projects whose current status indicates the commencement of construction is unlikely and/or the costs may not provide future value to the Company in the form of revenues.  Such write-offs are included in third-party development and management services expenses (in the case of third-party development projects) or general and administrative expenses (in the case of owned development projects) on the accompanying consolidated statements of comprehensive income.  As of September 30, 2017, the Company has deferred approximately $5.6 million in pre-development costs related to third-party and owned development projects that have not yet commenced construction.  Such costs are included in other assets on the accompanying consolidated balance sheets.

Earnings perPer Share – Company
 
Basic earnings per share is computed using net income attributable to common stockholders and the weighted average number of shares of the Company’s common stock outstanding during the period.  Diluted earnings per share reflects common shares issuable from the assumed conversion of American Campus Communities Operating Partnership Units (“OP Units”) and common share awards granted.  Only those items having a dilutive impact on basic earnings per share are included in diluted earnings per share.
 
The following potentially dilutive securities were outstanding for the three and nine months ended September 30, 2017March 31, 2020 and 2016,2019, but were not included in the computation of diluted earnings per share because the effects of their inclusion would be anti-dilutive. 
  Three Months Ended
March 31,
  2020 2019
Common OP Units (Note 8) 468,475
 594,788
Preferred OP Units (Note 8) 35,242
 64,361
Total potentially dilutive securities 503,717
 659,149

  Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  2017 2016 2017 2016
Common OP Units (Note 9) 1,011,674
 1,221,242
 1,023,248
 1,278,148
Preferred OP Units (Note 9) 77,513
 87,767
 77,513
 95,212
Unvested restricted stock awards (Note10) 818,547
 —
 —
 —
Total potentially dilutive securities 1,907,734
 1,309,009
 1,100,761
 1,373,360

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)



The following is a summary of the elements used in calculating basic and diluted earnings per share:
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		 Three Months Ended
March 31,
 2017 2016 2017 2016 2020 2019
Numerator – basic and diluted earnings per share:            
Net (loss) income $(1,233) $9,845
 $30,563
 $74,819
Net income $82,061
 $31,368
Net income attributable to noncontrolling interests (79) (201) (587) (1,150) (1,206) (1,728)
Net (loss) income attributable to common stockholders (1,312) 9,644
 29,976
 73,669
Net income attributable to ACC, Inc. and Subsidiaries common stockholders 80,855
 29,640
Amount allocated to participating securities (360) (329) (1,217) (1,051) (662) (573)
Net (loss) income attributable to common stockholders $(1,672) $9,315
 $28,759
 $72,618
Net income attributable to common stockholders $80,193
 $29,067
            
Denominator:  
  
  
  
  
  
Basic weighted average common shares outstanding 136,421,198
 130,786,985
 134,708,361
 128,239,294
 137,477,169
 137,101,535
Unvested restricted stock awards (Note 10) —
 781,386
 877,489
 795,107
Unvested restricted stock awards (Note 9) 1,110,344
 1,050,843
Diluted weighted average common shares outstanding 136,421,198
 131,568,371
 135,585,850
 129,034,401
 138,587,513
 138,152,378
            
Earnings per share:            
Net (loss) income attributable to common stockholders - basic $(0.01) $0.07
 $0.21
 $0.57
Net (loss) income attributable to common stockholders - diluted $(0.01) $0.07
 $0.21
 $0.56
Net income attributable to common stockholders - basic and diluted $0.58
 $0.21



12
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


Earnings per Unit – Operating Partnership
 
Basic earnings per OP Unit is computed using net income attributable to common unitholders and the weighted average number of common units outstanding during the period.  Diluted earnings per OP Unit reflects the potential dilution that could occur if securities or other contracts to issue OP Units were exercised or converted into OP Units or resulted in the issuance of OP Units and then shared in the earnings of the Operating Partnership.

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)



The following is a summary of the elements used in calculating basic and diluted earnings per unit: 
  Three Months Ended
March 31,
  2020 2019
Numerator – basic and diluted earnings per unit:    
Net income $82,061
 $31,368
Net income attributable to noncontrolling interests – partially owned properties (916) (1,568)
Series A preferred unit distributions (14) (31)
Amount allocated to participating securities (662) (573)
Net income attributable to common unitholders $80,469
 $29,196
     
Denominator:  
  
Basic weighted average common units outstanding 137,945,644
 137,696,323
Unvested restricted stock awards (Note 9) 1,110,344
 1,050,843
Diluted weighted average common units outstanding 139,055,988
 138,747,166
  Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  2017 2016 2017 2016
Numerator – basic and diluted earnings per unit:        
Net (loss) income $(1,233) $9,845
 $30,563
 $74,819
Net income attributable to noncontrolling interests – partially owned properties (57) (77) (259) (285)
Series A preferred unit distributions (31) (36) (93) (115)
Amount allocated to participating securities (360) (329) (1,217) (1,051)
Net (loss) income attributable to common unitholders $(1,681) $9,403
 $28,994
 $73,368
         
Denominator:  
  
  
  
Basic weighted average common units outstanding 137,432,872
 132,008,227
 135,731,609
 129,517,442
Unvested restricted stock awards (Note 10) —
 781,386
 877,489
 795,107
Diluted weighted average common units outstanding 137,432,872
 132,789,613
 136,609,098
 130,312,549
Earnings per unit:    
Net income attributable to common unitholders - basic and diluted $0.58
 $0.21

Earnings per unit:        
Net (loss) income attributable to common unitholders - basic $(0.01) $0.07
 $0.21
 $0.57
Net (loss) income attributable to common unitholders - diluted $(0.01) $0.07
 $0.21
 $0.56


3. Acquisitions and Joint Venture Investments4. Property Dispositions

Core Transaction Overview: During the third quarter of 2017,Property Dispositions

In March 2020, the Company executedsold The Varsity, an agreement to acquire a portfolioowned property located near University of seven student housing properties from affiliates of Core Spaces and DRW Real Estate Investments (the “Core Transaction”).  The transaction included the purchase of 100% of the ownership interestsMaryland in two operating properties, the purchase of partial ownership interestsCollege Park, Maryland, containing 901 beds for $148.0 million, resulting in two operating properties through a joint venture arrangement (with one property being subject to a purchase option that had not been exercised as of September 30, 2017), and the purchase of partial ownership interests in three in-process development properties through a joint venture arrangement.   In total, the Core Transaction properties contain 3,776 beds.  The initial investment made at closing was $265.4 million, and the Company expects to invest a total of $590.6 million over a two year period including the initial investment.

Core Transaction Property Acquisitions: In August 2017, the Company purchased 100% of the ownership interests in two properties for a total purchase pricenet cash proceeds of approximately $146.1 million. Total cash consideration wasThe net gain on this disposition totaled approximately $144.3$48.5 million. The difference between the contracted purchase price and the cash consideration is due to other assets and liabilities that were not part of the contractual purchase price, but were acquired in the transactions, as well as transaction costs capitalized as part of the acquisitions. A list of these two properties acquired as part of the Core Transaction is as follows:


13
PropertyLocationPrimary University ServedAcquisition DateBeds
Hub EugeneEugene, ORUniversity of OregonAugust 2017513
StateFort Collins, COColorado State UniversityAugust 2017665
1,178

Core Transaction Joint Ventures: As mentioned above, during the third quarter of 2017 as part of the Core Transaction, the Company funded initial investments in two joint ventures. The joint venture transactions involved the joint venture partner making a non-cash contribution of properties and the Company making a cash contribution to the joint ventures in exchange for its membership interests. Both joint ventures were determined to be VIEs, with the Company being the primary beneficiary. As such, both joint ventures are included in the Company’s consolidated financial statements contained herein. Additionally, the partners’ ownership interests in each of the joint ventures are accounted for as redeemable noncontrolling interests. For further discussion, refer to Note 9.
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP L.P.LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)





5. Investments in Real Estate
The first joint venture (the “Core JV I”) holds one
Owned Properties

Owned properties, both wholly-owned and those owned through investments in VIEs, consisted of the following: 
  March 31, 2020 December 31, 2019
Land $643,380
 $654,985
Buildings and improvements 6,646,917
 6,749,757
Furniture, fixtures and equipment 389,589
 391,208
Construction in progress 437,203
 341,554
  8,117,089
 8,137,504
Less accumulated depreciation (1,480,232) (1,442,789)
Owned properties, net 
 $6,636,857
 $6,694,715

Project costs directly associated with the development and construction of an owned real estate project, which include interest, property (The James) that completedtaxes, and amortization of deferred financing costs, are capitalized as construction in progress.  Upon completion of the project, costs are transferred into the applicable asset category and opened for operations in August 2017. The Company's initial investmentdepreciation commences.  Interest totaling approximately $3.2 million and $2.7 million was $95.1 million for an approximate 68% interest in the joint venture, part of which was used to pay off the property's $68.7 million construction loan at closing. The transaction also provided the Company with an option to cause the joint venture partner to contribute a second property, Hub U District Seattle, to the joint venturecapitalized during the fourth quarter 2017. As mentioned in Note 15, the Company exercised this optionthree months ended March 31, 2020 and the contribution of the property to the joint venture is anticipated to close during the fourth quarter 2017. The Company's initial investment in the property will be approximately $40.6 million. Additionally, the Company has an option to purchase the remaining ownership interests in the joint venture in the fourth quarter of 2019, under a put/call agreement with the joint venture partner for an amount to be determined by the fair market value of therespectively.

On-Campus Participating Properties

Our on-campus participating properties at the date of exercise. The value of the remaining ownership interests upon exercise of the option is anticipated to approximate $68.8 million.

The second joint venture (the “Core JV II”) holds three in-process developmentsegment includes 6 on-campus properties that are currentlyoperated under constructionlong-term ground/facility leases with 3 university systems. Under our ground/facility leases, we receive an annual distribution representing 50% of these properties’ net cash flows, as defined in the ground/facility lease agreements.  We also manage these properties under long-term management agreements and are scheduledpaid management fees equal to complete construction and open for operations in Fall 2018. The Company's initial investment was $24.2 million for an approximate 58% interest in the joint venture. Upon the initial funding, the Company assumed sole operational control, while the partner retained certain limited decision making abilities, including responsibility for the development and deliverya percentage of defined gross receipts. 

On-campus participating properties consisted of the properties within an agreed-upon budget and completion timeline. The joint venture partner has also provided a payment guarantee for the construction loans that are partially financing the construction of the properties. Subsequent to the successful completion and delivery of the assets, which is expected to occur in September 2018, the Company anticipates increasing its investment in Core JV II by $130.6 million as a result of paying off the construction loans. Additionally, the Company has an option to purchase the remaining ownership interests in the joint venture in the third quarter of 2019 under a put/call agreement with the joint venture partner for an amount to be determined by the fair market value of the properties at the date of exercise. The value of the remaining ownership interests upon exercise of the option is anticipated to approximate $85.2 million.

A list of the properties contributed to joint ventures as part of the Core Transaction are as follows:following:
  March 31, 2020 December 31, 2019
Buildings and improvements $156,359
 $155,941
Furniture, fixtures and equipment 13,705
 13,552
Construction in progress —
 6
  170,064
 169,499
Less accumulated depreciation (96,348) (94,311)
On-campus participating properties, net 
 $73,716
 $75,188

PropertyLocationPrimary University ServedActual or Targeted Completion DateBeds
Core JV I:
The JamesMadison, WIUniversity of Wisconsin - MadisonAugust 2017850
Hub U District Seattle(1)
Seattle, WAUniversity of WashingtonSeptember 2017248
1,098
Core JV II:
Hub Ann ArborAnn Arbor, MIUniversity of MichiganSeptember 2018310
Hub FlagstaffFlagstaff, AZNorthern Arizona UniversitySeptember 2018591
Hub West LafayetteWest Lafayette, INPurdue UniversitySeptember 2018599
1,500
2,598
(1)
Subject to an option that had not been exercised as of September 30, 2017 (see Note 15).


Other 2017 Property Acquisitions: During the nine months ended September 30, 2017, the Company acquired two additional wholly-owned properties containing 982 beds for approximately $158.5 million. Total cash consideration was approximately $158.0 million. The difference between the contracted purchase price and the cash consideration is due to other assets and liabilities that were not part of the contractual purchase price, but were acquired in the transactions, as well as transaction costs capitalized as part of the acquisitions.

A list of these properties is outlined below:
14
PropertyLocationPrimary University ServedAcquisition DateBeds
The ArlieArlington, TXUniversity of Texas ArlingtonApril 2017598
TWELVE at U DistrictSeattle, WAUniversity of WashingtonJune 2017384
982

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP L.P.LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)




2017 Land Acquisitions: During the nine months ended September 30, 2017, the Company purchased five land parcels with a fair value of $12.0 million for total cash consideration of approximately $8.9 million. The difference between the fair value of the land and the cash consideration represents non-cash consideration. In addition, the Company made an initial investment of $9.0 million in a joint venture that holds a land parcel with fair value of $12.0 million.

2016 Acquisition Activity: During the nine months ended September 30, 2016, the Company acquired University Crossings, a wholly-owned property containing 546 beds that is located adjacent to the University of North Carolina in Charlotte, NC for approximately $40.0 million. Also during the nine months ended September 30, 2016, the Company secured three in-process development properties containing 1,593 beds for a combined purchase price of approximately $66.0 million. As part of these transactions, the Company assumed approximately $10.0 million of fixed rate mortgage debt.

4. Property Dispositions
During the nine months ended September 30, 2017, the Company sold the following wholly-owned property for approximately $25.0 million, resulting in net proceeds of approximately $24.5 million. The net loss on this disposition totaled approximately $0.6 million. Concurrent with the classification of this property as held for sale in December 2016, the Company reduced the property’s carrying amount to its estimated fair value less estimated selling costs, and recorded an impairment charge of $4.9 million:
PropertyLocationPrimary University ServedBeds
The Province - DaytonDayton, OHWright State University657

During the nine months ended September 30, 2016, the Company sold two wholly-owned properties containing 1,324 beds for a total sales price of approximately $73.8 million, resulting in net proceeds of approximately $72.6 million. The combined net gain on these dispositions totaled approximately $17.4 million. Additionally, the Company had a portfolio of 19 wholly-owned properties classified as held for sale as of September 30, 2016.

5. Investments in Wholly-Owned Properties
Wholly-owned properties consisted of the following: 
  September 30, 2017 December 31, 2016 
Land (1) (2)
 $649,597
 $568,266
 
Buildings and improvements 5,986,682
 5,065,137
 
Furniture, fixtures and equipment 366,581
 303,240
 
Construction in progress (2)
 273,367
 349,498
 
  7,276,227
 6,286,141
 
Accumulated depreciation (1,014,150) (859,127) 
Wholly-owned properties, net $6,262,077
 $5,427,014
(3) 
(1)
The land balance above includes undeveloped land parcels with book values of approximately $45.5 million and $38.5 million as of September 30, 2017 and December 31, 2016, respectively.  It also includes land totaling approximately $29.9 million and $61.2 million as of September 30, 2017 and December 31, 2016, respectively, related to properties under development.
(2)
Land includes $19.3 million as of September 30, 2017 and construction in progress includes $60.0 million and $1.9 million as of September 30, 2017 and December 31, 2016, respectively, related to in-process development properties, held by entities determined to be VIEs. The entities that own the properties are deemed to be VIEs, and the Company is determined to be the primary beneficiary of the VIEs.
(3)
Excludes the net book value of one property classified as held for sale in the accompanying consolidated balance sheets at December 31, 2016.

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


6. On-Campus Participating Properties
On-campus participating properties are as follows: 
      Historical Cost
Lessor/University 
Lease
Commencement
 Required Debt
Repayment		 September 30, 2017 December 31, 2016
Texas A&M University System / Prairie View A&M University (1)
 2/1/1996 9/1/2023 $46,446
 $45,310
Texas A&M University System / Texas A&M International 2/1/1996 9/1/2023 7,271
 7,215
Texas A&M University System / Prairie View A&M University (2)
 10/1/1999 8/31/2025 29,207
 28,627
  8/31/2028  
University of Houston System / University of Houston (3)
 9/27/2000 8/31/2035 38,328
 37,960
West Virginia University System / West Virginia University 7/16/2013 7/16/2045 44,597
 43,817
      165,849
 162,929
Accumulated amortization     (82,754) (77,132)
On-campus participating properties, net   $83,095
 $85,797
(1)
Consists of three phases placed in service between 1996 and 1998.
(2)
Consists of two phases placed in service in 2000 and 2003.
(3)
Consists of two phases placed in service in 2001 and 2005.

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


7. Debt
 
A summary of the Company’s outstanding consolidated indebtedness, including unamortized debt premiums and discounts, is as follows: 
  March 31, 2020 December 31, 2019
Debt secured by owned properties:    
Mortgage loans payable:    
Unpaid principal balance $657,840
 $693,584
Unamortized deferred financing costs (1,172) (1,294)
Unamortized debt premiums 5,173
 6,596
Unamortized debt discounts (187) (199)
  661,654
 698,687
Debt secured by on-campus participating properties:  
  
Mortgage loans payable (1)
 65,428
 65,942
Bonds payable (1)
 23,215
 23,215
Unamortized deferred financing costs (395) (418)
  88,248
 88,739
Total secured mortgage, construction and bond debt 749,902
 787,426
Unsecured notes, net of unamortized OID and deferred financing costs (2)
 1,981,472
 1,985,603
Unsecured term loans, net of unamortized deferred financing costs (3)
 199,209
 199,121
Unsecured revolving credit facility 609,700
 425,700
Total debt, net $3,540,283
 $3,397,850
  September 30, 2017 December 31, 2016 
Debt secured by wholly-owned properties:     
Mortgage loans payable:     
Unpaid principal balance $523,328
 $559,642
 
Unamortized deferred financing costs (2,349) (3,040) 
Unamortized debt premiums 20,697
 26,830
 
  541,676
 583,432
 
Construction loans payable (1)
 22,422
 —
 
Unamortized deferred financing costs (1,382) —
 
  562,716
 583,432
 
Debt secured by on-campus participating properties:  
  
 
Mortgage loans payable 70,257
 71,662
 
Bonds payable 30,575
 33,870
 
Unamortized deferred financing costs (674) (769) 
  100,158
 104,763
 
Total secured mortgage, construction and bond debt 662,874
 688,195
 
Unsecured notes, net of unamortized OID and deferred financing costs (2)
 1,190,296
 1,188,737
 
Unsecured term loans, net of unamortized deferred financing costs (3)
 646,675
 149,065
 
Unsecured revolving credit facility 266,440
 99,300
 
Total debt, net $2,766,285
 $2,125,297
 

 
(1) 
Construction loans payable relates to construction loans partially financing the development of four in-process development properties. These properties are owned by entities determined to be VIEs for which the Company is the primary beneficiary, including one of the joint ventures formed as part of the Core Transaction discussed in Note 3. The creditors of these constructionmortgage loans payable and bonds payable related to on-campus participating properties do not have recourse to the assets of the Company.
(2) 
Includes net unamortized original issue discount (“OID”) of $1.7$2.8 million and $2.3 million at September 30, 2017March 31, 2020 and $1.9 million at December 31, 2016,2019, respectively, and net unamortized deferred financing costs of $8.0$15.7 million and $12.1 million at September 30, 2017March 31, 2020 and $9.3 million at December 31, 2016.2019, respectively.
(3) 
Includes net unamortized deferred financing costs of $3.3$0.8 million at September 30, 2017 and $0.9 million at March 31, 2020 and December 31, 2016.2019, respectively.


Mortgage and Construction Loans Payable     


During the ninethree months ended September 30, 2017,March 31, 2020, the Company paid off approximately $30.5$34.2 million of fixed rate mortgage debt secured by 1 owned property. During the three months ended March 31, 2019, the Company did not pay off any mortgage debt.

In January 2019, the Company refinanced $70.0 million of variable rate debt on one wholly-owned property. property, extending the maturity to January 2024. The Company entered into an interest rate swap contract to hedge the variable rate cash flows associated with interest payments on this LIBOR-based mortgage loan, resulting in a fixed rate of 4.00%. Refer to Note 10 for information related to derivatives.

Unsecured Notes

In January 2020, the third quarterOperating Partnership closed a $400 million offering of 2017, as partsenior unsecured notes under its existing shelf registration. These 10-year notes were issued at 99.81% of par value with a coupon of 2.85% and are fully and unconditionally guaranteed by the Core Transaction discussed in detail in Note 3, Core JV I paid off $68.7 million of construction debtCompany. Interest on the notes is payable semi-annually on February 1 and August 1, with the first payment due and payable on August 1, 2020. The notes will mature on February 1, 2030. Net proceeds from the Company's initial investmentsale of the senior unsecured notes totaled approximately $394.5 million, after deducting the underwriting discount and offering expenses which will be amortized over the term of the unsecured notes. The Company used the proceeds to fund the early redemption of its $400 million 3.35% Senior Notes due October 2020. The prepayment resulted in a loss from early extinguishment of debt of approximately $4.8 million for the three months ended March 31, 2020, which is included in the joint venture. During the nine months ended September 30, 2016, the Company paid off approximately $152.6 millionaccompanying statements of fixed rate mortgage debt secured by nine wholly-owned properties.comprehensive income.


In May 2017, the lender of the non-recourse mortgage loan secured by Blanton Common, a wholly-owned property located near Valdosta State University which was acquired as part of the GMH student housing transaction in 2008, sent a formal notice of default and initiated foreclosure proceedings. The property generates insufficient cash flow to cover the debt service on the mortgage, which had a balance of $27.4 million at September 30, 2017 and a contractual maturity date of August 2017.  In May 2017, the lender began receiving the net operating cash flows of the property each month in lieu of scheduled monthly mortgage payments. In August 2017, the property transferred to receivership and a third-party manager began managing the property on behalf of the lender. As of September 30, 2017, the Company was cooperating with the lender to allow for a consensual foreclosure process upon which the property will be surrendered to the lender in satisfaction of the mortgage loan. As discussed in Note 2, in June 2017, the Company recorded an impairment charge for this property of $15.3 million.
15


AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP L.P.LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)



Unsecured Notes

The Company has issued the following senior unsecured notes:notes issued by the Company are outstanding as of March 31, 2020:
Date Issued Amount % of Par Value Coupon Yield Original Issue Discount Term (Years) Amount % of Par Value Coupon Yield Original Issue Discount Term (Years)
April 2013 $400,000
 99.659 3.750% 3.791% $1,364
 10 $400,000
 99.659 3.750% 3.791% $1,364
 10
June 2014 400,000
 99.861 4.125% 4.269%
(1) 
556
 10 400,000
 99.861 4.125% 4.269%
(1) 
556
 10
September 2015 400,000
 99.811 3.350% 3.391% 756
 5
October 2017 400,000
 99.912 3.625% 3.635% 352
 10
June 2019 400,000
 99.704 3.300% 3.680%
(1) 
1,184
 7
January 2020 400,000
 99.810 2.850% 2.872% 760
 10
 $1,200,000
     $2,676
  $2,000,000
     $4,216
 
(1) 
The yield includes the effect of the amortization of interest rate swap terminations (see Note 11)10).


The notes are fully and unconditionally guaranteed by the Company.  Interest on the notes is payable semi-annually. The terms of the unsecured notes include certain financial covenants that require the Operating Partnership to limit the amount of total debt and secured debt as a percentage of total asset value, as defined.  In addition, the Operating Partnership must maintain a minimum ratio of unencumbered asset value to unsecured debt, as well as a minimum interest coverage level. As of September 30, 2017,March 31, 2020, the Company was in compliance with all such covenants.
 
Unsecured Revolving Credit Facility


In January 2017,February 2019, the Company entered intoexercised the Fifth Amended and Restated Credit Agreement (the “Agreement”). Pursuantoption under the existing credit agreement to increase the Agreement,capacity of the Company increased the size of its unsecured revolving credit facility from $500$700 million to $700 million, which$1.0 billion. It may be expanded by up to an additional $500$200 million upon the satisfaction of certain conditions. In connection with the Agreement, theThe maturity date of the revolving credit facility was extended from March 2018 tois March 2022.


The unsecured revolving credit facility bears interest at a variable rate, at the Company’s option, based upon a base rate of one-, two-, three- or six-month LIBOR, plus, in each case, a spread based upon the Company’s investment grade rating from either Moody’s Investor Services, Inc. or Standard & Poor’s Rating Group. Additionally, the Company is required to pay a facility fee of 0.20% per annum on the $700 million$1.0 billion revolving credit facility.  As of September 30, 2017,March 31, 2020, the revolving credit facility bore interest at a weighted average annual rate of 2.44% (1.24%2.13% (0.93% + 1.00% spread + 0.20% facility fee), and availability under the revolving credit facility totaled $433.6$390.3 million.


The terms of the unsecured credit facility include certain restrictions and covenants, which limit, among other items, the incurrence of additional indebtedness and liens.  The facility contains customary affirmative and negative covenants and also contains financial covenants that, among other things, require the Company to maintain certain maximum leverage ratios and minimum ratios of “EBITDA” (earnings before interest, taxes, depreciation and amortization) to fixed charges.  The financial covenants also include a minimum asset value requirement, a maximum secured debt ratio, and a minimum unsecured debt service coverage ratio.  As of September 30, 2017,March 31, 2020, the Company was in compliance with all such covenants.


Unsecured Term Loans


The Company has a $150 million unsecured term loan (“Term Loan I Facility”) which has an accordion feature that allows the Companyis currently party to expand the amount by up to an additional $50 million, subject to the satisfaction of certain conditions. The maturity date of the Term Loan I Facility is March 2021. The weighted average annual rate on the Term Loan I Facility was 2.33% (1.23% + 1.10% spread) at September 30, 2017. 

In June 2017, the Company entered into an Unsecured Term Loan Credit Agreement (the “New Term“Term Loan II Facility”) totaling $200 million. The maturity date of the New Term Loan II Facility ismillion which matures in June 2022. The agreement has an accordion feature that allows the Company to expand the amount by up to an additional $100 million, subject to the satisfaction of certain conditions. In November and December 2019, the Company entered into two interest rate swap contracts to hedge the variable rate cash flows associated with the LIBOR-based interest payments on the Term Loan Facility. The weighted average annual rate on the New Term Loan II Facility was 2.34% (1.24%2.54% (1.44% + 1.10% spread), at September 30, 2017.

In September 2017, the Company entered into an Unsecured Term Loan Credit Agreement (“Term Loan III Facility”) totaling $300 million.March 31, 2020. The maturity dateterms of the Term Loan III Facility is September 2018, and can be extended for two one-year periods at the Company’s option, subject to the satisfaction of certain conditions. The agreement has an accordion feature that allows the
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


Company to expand the amount by up to an additional $100 million, subject to the satisfaction of certain conditions. The weighted average annual rate on this term loan was 2.34% (1.24% + 1.10% spread) at September 30, 2017.
The terms of the term loan facilities described above include certain restrictions and covenants consistent with those of the unsecured revolving credit facility discussed above. As of September 30, 2017,March 31, 2020, the Company was in compliance with all such covenants.




16
8.
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


7. Stockholders’ Equity / Partners’ Capital
 
Stockholders’ Equity - Company


In June 2015, theThe Company establishedhas an at-the-market share offering program (the “ATM Equity Program”) through which the Company may issue and sell, from time to time, shares of common stock having an aggregate offering price of up to $500 million.  Actual sales under the program will depend on a variety of factors including, but not limited to, market conditions, the trading price of the Company’s common stock and determinations of the appropriate sources of funding for the Company.  


The following table presentsThere was no activity under the Company’s ATM Equity Program during the three and nine months ended September 30, 2017March 31, 2020 and 2016:
  Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  2017 2016 2017 2016
Total net proceeds $1,135
 $62,374
 $188,538
 $62,374
Commissions paid to sales agents $14
 $790
 $2,374
 $790
Weighted average price per share $48.09
 $50.98
 $48.34
 $50.98
Shares of common stock sold 23,900
 1,239,000
 3,949,356
 1,239,000

2019. As of September 30, 2017,March 31, 2020, the Company had approximately $233.0$500.0 million available for issuance under its ATM Equity Program.


In February 2016, ACC completed an equity offering, consisting of the sale of 17,940,000 shares of ACC’s common stock at a price of $41.25 per share, including 2,340,000 shares issued as a result of the exercise of the underwriters’ overallotment option in full at closing. The offering generated gross proceeds of approximately $740.0 million. The aggregate proceeds to ACC, net of the underwriting discount and expenses of the offering, were approximately $707.3 million.

In 2015, the Company establishedhas a Non-Qualified Deferred Compensation Plan (“Deferred Compensation Plan”) maintained for the benefit of certain employees and members of the Company’s Board of Directors, in which vested share awards (see Note 10)9), salary, and other cash amounts earned may be deposited. Deferred Compensation Plan assets are held in a rabbi trust, which is subject to the claims of the Company’s creditors in the event of bankruptcy or insolvency. The shares held in the Deferred Compensation Plan are classified within stockholders’ equity in a manner similar to the manner in which treasury stock is classified. Subsequent changes in the fair value of the shares are not recognized. During the ninethree months ended September 30, 2017, 43,597March 31, 2020, 9,365 and 5,877 shares of ACC’s commonvested stock were deposited into and withdrawn from the Deferred Compensation Plan.Plan, respectively. As of September 30, 2017, 63,778March 31, 2020, 81,416 shares of ACC’s common stock were held in the Deferred Compensation Plan.

Partners’ Capital – Operating Partnership
In connection with the equity offering and ATM Equity Program discussed above, ACCOP issued a number of American Campus Operating Partnership Common OP Units (“Common OP Units”) to ACC equivalent to the number of common shares issued by ACC.


9.8. Noncontrolling Interests

Interests in Consolidated Real Estate Joint Ventures and Presale Arrangements


Noncontrolling interests - partially owned properties: As of September 30, 2017,March 31, 2020, the Operating Partnership consolidates three4 joint ventures that own and operate three10 owned off-campus properties. Additionally, in December 2016, the Company entered
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


into a pre-sale agreement to purchase The Edge at Stadium Centre. The portion of net assets attributable to the third-party partners in these arrangements is classified as “noncontrolling interests - partially owned properties” within equity and capital on the accompanying consolidated balance sheets of ACC and the Operating Partnership, respectively.


Redeemable noncontrolling interests (ACC) / redeemable limited partners (Operating Partnership): As part of the Core Transaction discussed in detail in Note 3, the Company entered into two joint venture arrangements in the third quarter of 2017. The company is consolidating these joint ventures and the noncontrolling interest holder in each of these consolidatedthe Core Spaces / DRW Real Estate Investment joint ventures has(the “Core Joint Ventures”), which were formed in 2017, had the option to redeem its noncontrolling interest in the entities through the exercise of put options. The options will be exercisable in the third and fourth quarter of 2019, and the redemption price is based on the fair value of the properties at the time of option exercise. As the exercise of the options iswas outside of the Company’s control, the portion of net assets attributable to the third-party partner in each of the joint ventures iswas classified as “redeemable noncontrolling interests” and “redeemable limited partners” in the mezzanine section of the accompanyingDecember 31, 2019 consolidated balance sheets of ACC and the Operating Partnership, respectively.  During the nine months ended September 30, 2017, there were no changes in theThe redemption value of redeemable noncontrolling interests that resulted from a change inprice was based on the fair value of the net assets held by consolidated joint ventures. For further discussion on accounting for changesproperties at the time of option exercise. These redeemable noncontrolling interests were marked to their redemption value at each balance sheet date.  As the change in redemption value refer to Note 2.

The third-party partners’ share of the income or loss of the joint ventures described above is calculatedwas based on fair value, there was no effect on the partners' economicCompany’s earnings per share. The noncontrolling interest holder exercised its option to redeem its remaining ownership interest in the joint ventures and is includedCore Joint Ventures during the three months ended March 31, 2020, which reduced the redeemable noncontrolling interest by $77.2 million. As of March 31, 2020, the Company had 100% ownership interest in “net income attributable to noncontrolling interests” onall 5 properties initially held by the consolidated statements of comprehensive income of ACC, and is reported as “net income attributable to noncontrolling interests - partially owned properties” on the consolidated statements of comprehensive income of the Operating Partnership.Core Joint Ventures.


Operating Partnership Ownership


Also included in redeemable noncontrolling interests (ACC) / redeemable limited partners (Operating Partnership) are OP Units for which the Operating Partnership is required, either by contract or securities law, to deliver registered common shares of ACC to the exchanging OP unit holder, or for which the Operating Partnership has the intent or history of exchanging such units for cash. The units classified as such include Series A Preferred Units (“Preferred OP Units”) as well as Common OP Units. The value of redeemable noncontrolling interests (ACC) / redeemable limited partners (Operating Partnership) related to OP Units on the accompanying consolidated balance sheets is reported at the greater of fair value, which is based on the closing market value of the Company’s common stock at period end, or historical cost at the end of each reporting period. The OP Unitholders’ share of the income or loss of the Company is included in “net income attributable to noncontrolling interests” on the consolidated statements of comprehensive income of ACC.


As of both September 30, 2017March 31, 2020 and December 31, 2016,2019, approximately 0.8%0.4% of the equity interests of the Operating Partnership were held by owners of Common OP Units and Preferred OP Units not held by ACC or ACC Holdings. During the ninethree months ended September 30, 2017, 22,000March 31, 2020, no Common OP Units were converted into an equal number of shares of ACC’s common stock. During the year ended December 31, 2016, 280,915 Common OP Units and 31,846or Preferred OP Units were converted into an equal number of shares of ACC’s common stock.


17
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


During the year ended December 31, 2019, 126,313 Common OP Units and 42,271 Preferred OP Units were converted into an equal number of shares of ACC’s common stock.

Below is a table summarizing the activity of redeemable noncontrolling interests (ACC) / redeemable limited partners (Operating Partnership) for the ninethree months ended September 30, 2017,March 31, 2020 and 2019, which includes both the redeemable joint venture partners and OP Units discussed above: 
Balance, December 31, 2019$104,381
Net income311
Distributions(234)
Purchase of noncontrolling interests(77,200)
Adjustments to reflect redeemable noncontrolling interests at fair value(9,490)
Balance, March 31, 2020$17,768

December 31, 2016$55,078
Net income322
Distributions(61,019)
Conversion of redeemable limited partner units into shares of ACC common stock(154)
Contribution of properties from noncontrolling interest123,986
Adjustments to reflect redeemable limited partner units at fair value(5,943)
September 30, 2017$112,270

Balance, December 31, 2018$184,446
Net income259
Distributions(305)
Conversion of OP Units into shares of ACC common stock(252)
Adjustments to reflect redeemable noncontrolling interests at fair value2,547
Balance, March 31, 2019$186,695


AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


10.9. Incentive Award Plan


Restricted Stock Units (“RSUs”)

Upon reelection to the Board of Directors in May 2017, all members of the Company’s Board of Directors were granted RSUs in accordance with the American Campus Communities, Inc. 2010The Company has an Incentive Award Plan (the “Plan”).  These RSUs were valued at $150,000 that provides for the Chairmangrant of various stock-based incentive awards to selected employees and directors of the BoardCompany and the Company’s affiliates.  The types of Directorsawards that may be granted under the Plan include incentive stock options, nonqualified stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), profits interest units (“PIUs”) and at $105,000 for all other members.  Additionally, effective July 1, 2017, the Board of Directors’ compensation program was revised to reflect an increase in RSUs of $10,000 for all members of the Board of Directors.stock-based awards.  The number of RSUs was determined based on the fair market valueCompany has reserved a total 3.5 million shares of the Company’s common stock onfor issuance pursuant to the date of grant,Plan, subject to certain adjustments for changes in the Company’s capital structure, as defined in the Plan.  All awards vested and settled immediately on the date of grant, and the Company delivered shares of common stock and cash, as determined by the Compensation Committee of the Board of Directors. A compensation charge of approximately $0.9 million was recorded during the nine months ended September 30, 2017 related to these awards and is included in general and administrative expenses on the Company’s consolidated statements of comprehensive income.

Restricted Stock Awards
 
A summary of ACC’s RSUs under the PlanRSAs as of September 30, 2017March 31, 2020 and activity during the ninethree months then ended is presented below:
Number of RSUs
Outstanding at December 31, 2016—
Granted18,221
Settled in common shares(16,295)
Settled in cash(1,926)
Outstanding at September 30, 2017—

Restricted Stock Awards (“RSAs”)
A summary of RSAs under the Plan as of September 30, 2017 and activity during the nine months then ended, is presented below:
 Number of RSAs
Nonvested balance at December 31, 20162019773,101967,341

Granted344,688443,998

Vested (1)
(193,186295,385)
Forfeited(1)
(110,87510,787)
Nonvested balance at September 30, 2017March 31, 2020813,7281,105,167


(1)Includes shares withheld to satisfy tax obligations upon vesting.

The fair value of RSAs is calculated based on the closing market value of ACC’s common stock on the date of grant.  The fair value of these awards is amortized to expense over the vesting periods, which amounted to approximately $2.4 million and $2.2 millionperiods. Amortization expense for the three months ended September 30, 2017March 31, 2020 and 2016, respectively, and $10.62019 amounted to approximately $4.0 million and $7.1$3.8 million, for the nine months ended September 30, 2017 and 2016, respectively. The amortization of restricted stock awards for the nine months ended September 30, 2017 includes $2.4 million of contractual executive separation and retirement charges incurred with regard to the retirement of the Company’s former Chief Financial Officer, representing the June 30, 2017 vesting of 46,976 RSAs, net of shares withheld for taxes, related to the retirement.
 

18
11.
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


10. Derivative Instruments and Hedging Activities
 
The Company is exposed to certain risks arising from both its business operations and economic conditions.  The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities.  The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments.  Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.  The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)




Cash Flow Hedges of Interest Rate Risk
 
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements.  To accomplish this objective, the Company primarily uses interest rate swaps and forward starting swaps as part of its interest rate risk management strategy.  Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.  Forward starting swaps are used to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows relating to interest payments on a forecasted issuance of debt. The effective portionThese agreements containprovisions such that if the Company defaults on any of changes inits indebtedness, regardless of whether the fair value of derivatives designated and that qualify as cash flow hedges is recorded in other comprehensive income (outside of earnings) and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of changes in the fair valuerepayment of the indebtedness has been accelerated by the lender or not, then the Company could also be declared in default on its derivative is recognized directlyobligations. As of March 31, 2020, the Company was not in earnings. Ineffectiveness resulting from thedefault on any of its indebtedness or derivative instruments summarized below was immaterial for both the three and nine month periods ended September 30, 2017 and 2016.instruments.

The following table summarizes the Company’s outstanding interest rate swap contracts which are included in other liabilities on the accompanying consolidated balance sheets as of September 30, 2017: March 31, 2020:
Hedged Debt Instrument Effective Date Maturity Date Pay Fixed Rate 
Receive Floating
Rate Index
 Current Notional Amount Fair Value
Cullen Oaks mortgage loan 
Feb 18, 2014
 
Feb 15, 2021
 2.2750% LIBOR - 1 month $12,446
 $(209)
Cullen Oaks mortgage loan 
Feb 18, 2014
 
Feb 15, 2021
 2.2750% LIBOR - 1 month 12,575
 (211)
Park Point mortgage loan 
Feb 1, 2019
 
Jan 16, 2024
 2.7475% LIBOR - 1 month 70,000
 (6,368)
College Park mortgage loan 
Oct 16, 2019
 
Oct 16, 2022
 1.2570% LIBOR - 1 month, with 1 day lookback 37,500
 (927)
Unsecured term loan 
Nov 4, 2019
 
Jun 27, 2022
 1.4685% LIBOR - 1 month 100,000
 (2,656)
Unsecured term loan 
Dec 2, 2019
 
Jun 27, 2022
 1.4203% LIBOR - 1 month 100,000
 (2,547)
        Total $332,521
 $(12,918)
Hedged Debt Instrument Effective Date Maturity Date Pay Fixed Rate 
Receive Floating
Rate Index
 
Current Notional
Amount
 Fair Value
Cullen Oaks mortgage loan Feb 18, 2014 Feb 15, 2021 2.2750% LIBOR - 1 month $13,830
 $(224)
Cullen Oaks mortgage loan Feb 18, 2014 Feb 15, 2021 2.2750% LIBOR - 1 month 13,973
 (226)
Park Point mortgage loan Nov 1, 2013 Oct 5, 2018 1.5450% LIBOR - 1 month 70,000
 (60)
        Total $97,803
 $(510)


In January 2017, the interest rate swaps on the Term Loan I Facility expired, and the remaining immaterial balance in accumulated other comprehensive income was reclassified into earnings.
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of September 30, 2017March 31, 2020 and December 31, 2016:2019:
  Asset Derivatives Liability Derivatives
    Fair Value as of   Fair Value as of
Description Balance Sheet Location 3/31/2020 12/31/2019 Balance Sheet Location 3/31/2020 12/31/2019
             
Interest rate swap contracts Other assets $—
 $743
 Other liabilities $12,918
 $3,436
Total derivatives designated
as hedging instruments		   $—
 $743
   $12,918
 $3,436



19
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

  Liability Derivatives
    Fair Value as of
Description Balance Sheet
Location		 September 30, 2017 December 31, 2016
Interest rate swaps contracts Other liabilities $510
 $1,099
Total derivatives designated
  as hedging instruments
   $510
 $1,099


The table below presents the effect of the Company’s derivative financial instruments on the accompanying consolidated statements of comprehensive income for the three months ended March 31, 2020 and 2019.
  Three Months Ended March 31,
Description 2020 2019
Change in fair value of derivatives and other recognized in OCI $(10,229) $(5,896)
Amortization of interest rate swap terminations (1)
 428
 102
Total change in OCI due to derivative financial instruments $(9,801) $(5,794)
     
Interest expense presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded $27,783
 $27,061

(1)
Represents amortization from OCI into interest expense.

12.11.  Fair Value Disclosures


There have been no significant changes in the Company’s policies and valuation techniques utilized to determine fair value from what was disclosed in the Annual Report on Form 10-K for the year ended December 31, 2019.

Financial Instruments Carried at Fair Value


The following table presents information about the Company’s financial instruments measured at fair value on a recurring basis as of September 30, 2017March 31, 2020 and December 31, 2016,2019, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. In general,There were no Level 1 measurements for the periods presented, and the Company had no transfers between Levels 1, 2 or 3 during the periods presented. Refer to Note 8 for a discussion of the Level 3 activity during the period related to the redeemable noncontrolling interests in partially owned properties.

  Fair Value Measurements as of
 March 31, 2020 December 31, 2019
  Level 2 Level 3 Total Level 2 Level 3 Total
Assets:            
Derivative financial instruments $—
 $—
 $—
 $743
(1) 
$—
 $743
Liabilities:  
  
  
  
  
  
Derivative financial instruments $12,918
(1) 
$—
 $12,918
 $3,436
(1) 
$—
 $3,436
Mezzanine:  
  
  
  
  
  
Redeemable noncontrolling interests (Company)/Redeemable limited partners (Operating Partnership) $14,768
(2) 
$3,000
 $17,768
 $23,690
(2) 
$80,691
(3) 
$104,381

(1)
Valued using discounted cash flow analyses with observable market-based inputs of interest rate curves and option volatility, as well as credit valuation adjustments to reflect nonperformance risk.
(2)
Represents the OP Unit component of redeemable noncontrolling interests which is reported at the greater of the fair value of the Company’s common stock or historical cost at the balance sheet date. Represents a quoted price for a similar asset in an active market. Refer to Note 8.
(3)
Represents the Core Joint Ventures component of redeemable noncontrolling interests which is valued using primarily unobservable inputs, including the Company’s analysis of comparable properties in the Company’s portfolio, estimations of net operating results of the properties, capitalization rates, discount rates, and other market data.  Refer to Note 8.
Financial Instruments Not Carried at Fair Value
As of March 31, 2020 and December 31, 2019, the carrying values for the following instruments represent fair values determined by Level 1 inputs utilize quoted prices (unadjusted)due to the short maturity of the instruments: Cash and Cash Equivalents, Restricted Cash, Student Contracts Receivable, certain items in active markets for identical assets or liabilitiesOther Assets (including receivables, deposits, and prepaid expenses), Accounts Payable, Accrued Expenses, and Other Liabilities.

As of March 31, 2020 and December 31, 2019, the Company has the ability to access.  Faircarrying values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.  Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices observable forfollowing instruments represent fair values due the asset or liability, such asvariable interest rates and yield curves observable at commonly quoted intervals.  Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.
In instances in which the inputs used to measure fair value may fall into different levelsrate feature of the fair value hierarchy, the level in the fair value hierarchy within which the fair value measurement in its entirety has been determined is based on the lowest level inputinstruments: Unsecured Revolving Credit Facility and Mortgage Loan Payable (variable rate).


20
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP L.P.LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)




significant to the fair value measurement in its entirety.  The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
Disclosures concerning financial instruments measured at fair value are as follows: 
   Fair Value Measurements as of
  September 30, 2017 December 31, 2016
  
Quoted Prices in
Active Markets for
Identical Assets and
Liabilities (Level 1)
 
Significant
Other
Observable
Inputs (Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 Total 
Quoted Prices in
Active Markets for
Identical Assets and
Liabilities (Level 1)
 
Significant
Other
Observable
Inputs (Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
 
 
Total
Liabilities:  
  
  
  
  
  
  
  
Derivative financial instruments $—
 $510
 $—
 $510
 $—
 $1,099
 $—
 $1,099
Mezzanine:  
  
  
  
  
  
  
  
Redeemable noncontrolling interests (Company)/Redeemable limited partners (Operating Partnership) $—
 $50,887
 $61,383
 $112,270
 $—
 $55,078
 $—
 $55,078
The Company uses derivative financial instruments, specifically interest rate swaps and forward starting swaps, for nontrading purposes.  The Company uses interest rate swaps to manage interest rate risk arising from previously unhedged interest payments associated with variable rate debt and forward starting swaps to reduce exposure to variability in cash flows relating to interest payments on forecasted issuances of debt.  Through September 30, 2017, derivative financial instruments were designated and qualified as cash flow hedges.  Derivative contracts with positive net fair values inclusive of net accrued interest receipts or payments are recorded in other assets.  Derivative contracts with negative net fair values, inclusive of net accrued interest payments or receipts, are recorded in other liabilities.  The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative.  This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves.  The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts).  The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

The Company incorporates credit valuation adjustments to appropriately reflect its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.  In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds and guarantees.
Although the Company has determined the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparty.  However, as of September 30, 2017 and December 31, 2016, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivative financial instruments.  As a result, the Company has determined each of its derivative valuations in its entirety is classified in Level 2 of the fair value hierarchy.
The OP Unit component of redeemable noncontrolling interests has a redemption feature and is marked to its redemption value.  The redemption value is based on the fair value of the Company’s common stock at the redemption date, and therefore, is calculated based on the fair value of the Company’s common stock at the balance sheet date.  Since the valuation is based on observable inputs such as quoted prices for similar instruments in active markets, these instruments are classified in Level 2 of the fair value hierarchy. 

As discussed in Note 2 and Note 9, the redeemable noncontrolling interests related to the joint venture partners in the Core Transaction are marked to their redemption value at each balance sheet date.  The redemption value is based on the fair value of the underlying properties held by the joint ventures.  This analysis incorporates information obtained from a number of sources, including the Company’s analysis of comparable properties in the Company’s portfolio, estimations of net operating results of the properties, capitalization rates, discount rates, and other market data. The Company has determined these estimates are primarily based upon unobservable inputs and therefore are considered to be Level 3 inputs within the fair value hierarchy. 

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


Financial Instruments Not Carried at Fair Value
Cash and Cash Equivalents, Restricted Cash, Student Contracts Receivable, Other Assets, Accounts Payable and Accrued Expenses and Other Liabilities:  The Company estimates that the carrying amount approximates fair value, due to the short maturity of these instruments.
Loans Receivable:  The fair value of loans receivable is based on a discounted cash flow analysis consisting of scheduled cash flows and discount rate estimates to approximate those that a willing buyer and seller might use.  These financial instruments utilize Level 3 inputs.
Mortgage Loans Payable: The fair value of mortgage loans payable is based on the present value of the cash flows at current market interest rates through maturity.  The Company has concluded the fair value of these financial instruments utilize Level 2 inputs as the majority of the inputs used to value these instruments fall within Level 2 of the fair value hierarchy.

Bonds Payable: The fair value of bonds payable is based on quoted prices in markets that are not active due to the unique characteristics of these financial instruments; as such, the Company has concluded the inputs used to measure fair value fall within Level 2 of the fair value hierarchy.

Unsecured Notes: In calculating the fair value of unsecured notes, interest rate and spread assumptions reflect current creditworthiness and market conditions available for the issuance of unsecured notes with similar terms and remaining maturities.  These financial instruments utilize Level 2 inputs.

Construction Loans Payable, Unsecured Revolving Credit Facility, and Unsecured Term Loans: The fair value of these instruments approximates their carrying values due to the variable interest rate feature of these instruments.
The table below contains the estimated fair value and related carrying amounts for the Company’s other financial instruments as of September 30, 2017March 31, 2020 and December 31, 2016: 2019. There were no Level 1 measurements for the periods presented.

  March 31, 2020 December 31, 2019 
    Estimated Fair Value   Estimated Fair Value 
  Carrying Amount Level 2 Level 3 Carrying
Amount		 Level 2 Level 3 
Assets             
Loans receivable $51,268
 $—
 $48,307
(1) 
$50,553
 $—
 $48,307
(1) 
Liabilities (2)
  
      
  
  
 
Unsecured notes $1,981,472
 $1,977,419
(3) 
$—
 $1,985,603
 $2,069,817
(3) 
$—
 
Mortgage loans payable (fixed rate) $723,978
(4) 
$772,773
(5) 
$—
 $761,296
(4) 
$766,821
(5) 
$—
 
Bonds payable $23,017
 $25,292
(6) 
$—
 $23,001
 $25,110
(6) 
$—
 
Unsecured term loan (fixed rate) $199,209
 $203,420
(7) 
$—
 $199,121
 $198,687
(7) 
$—
 
  September 30, 2017  December 31, 2016 
  
Estimated
Fair Value
 
Carrying
Amount
  
Estimated
Fair Value
 
Carrying
Amount
 
Assets:          
Loans receivable $54,396
 $61,052
  $54,396
 $58,539
 
Liabilities:    
   
  
 
Unsecured notes $1,232,338
 $1,190,296
(1) 
 $1,211,344
 $1,188,737
(1) 
Mortgage loans payable 603,789
 611,657
(2) 
 644,617
 654,794
(2) 
Bonds payable 32,983
 30,177
  37,066
 33,401
 

(1)
IncludesValued using a discounted cash flow analysis with inputs of scheduled cash flows and discount rates that a willing buyer and seller might use.
(2)
Carrying amounts disclosed include any applicable net unamortized OID, and net unamortized deferred financing costs, and net unamortized debt premiums and discounts (see Note 7)6).
(2)(3)
Includes net unamortized debt premiumsValued using interest rate and discountsspread assumptions that reflect current creditworthiness and net unamortized deferred financing costsmarket conditions available for the issuance of unsecured notes with similar terms and remaining maturities.
(4)
Does not include 1 variable rate mortgage loan with a principal balance of $2.9 million and $3.1 million as of March 31, 2020 and December 31, 2019, respectively.
(5)
Valued using the present value of the cash flows at current market interest rates through maturity that primarily fall within the Level 2 category.
(6)
Valued using quoted prices in markets that are not active due to the unique characteristics of these financial instruments.
(7)
In 2019, the Company entered into two interest rate swap contracts to hedge the variable rate cash flows associated with the LIBOR-based interest payments on the Term Loan Facility (see Note 7)6). Valued using the present value of the cash flows at interpolated 1-month LIBOR swap rates through maturity that primarily fall within the Level 2 category.


13.12. Commitments and Contingencies
 
Commitments

Construction Contracts: As of September 30, 2017, excluding four properties under construction and subject to presale arrangements which are being funded by construction loans,March 31, 2020, the Company estimates additional costs to complete eight wholly-owned3 owned development projects under construction to be approximately $383.6$355.3 million.


Joint Ventures: As discussed in Note 3, as part of the Core Transaction, the Company entered into two joint ventures during the third quarter of 2017. As part of this transaction, the Company is obligated to increase its investment in the joint ventures over a two year period, resulting in a funding commitment of approximately $325.2 million, including the Company's $40.6 million initial investment related to Hub U District Seattle anticipated to close during the fourth quarter of 2017.Contingencies


Pre-sale Arrangements: In December 2016, the Company entered into a pre-sale agreement to purchase The Edge - Stadium Centre, a property which will be completed in August 2018. Total estimated development costs of approximately $42.6 million include
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


the purchase price, elected upgrades, and capitalized transaction costs. The Company is obligated to purchase the property as long as certain construction completion deadlines and other closing conditions are met.

The Company expects to fund the commitments mentioned above through a combination of proceeds from cash flows generated from operations, anticipated property dispositions, joint venture activity, and a combination of debt and equity transactions, which may include net proceeds from the ATM Equity Program discussed in Note 8, borrowings under the Company’s existing unsecured credit facilities, and accessing the unsecured bond market.

Development-related Guarantees:  For certain of its third-party development projects, the Company commonly provides alternate housing and project cost guarantees, subject to force majeure. These guarantees are typically limited, on an aggregate basis, to the amount of the projects’ related development fees or a contractually agreed-upon maximum exposure amount.  Alternate housing guarantees generally require the Company to provide substitute living quarters and transportation for students to and from the university if the project is not complete by an agreed-upon completion date. These guarantees typically expire at the later of five days after completion of the project or once the Company has moved all students from the substitute living quarters into the project.

Under project cost guarantees, the Company is responsible for the construction cost of a project in excess of an approved budget. The budget consists primarily of costs included in the general contractors’ guaranteed maximum price contract (“GMP”). In most cases, the GMP obligates the general contractor, subject to force majeure and approved change orders, to provide completion date guarantees and to cover cost overruns and liquidated damages. In addition, the GMP is typicallyin certain cases secured with payment and performance bonds. Project cost guarantees expire upon completion of certain developer obligations, which are normally satisfied within one year after completion of the project. The Company’s estimated maximum exposure amount under the above guarantees is approximately $4.0$10.6 million as of September 30, 2017.  March 31, 2020. 

As of September 30, 2017,March 31, 2020, management diddoes not anticipate any material deviations from schedule or budget related to third-party development projects currently in progress. Although the company currently anticipates completing these projects on time and within budget, the project locations are currently subject to “shelter in place” or “stay at home” orders adopted by state and local authorities in response to the COVID-19 pandemic.  Some of these orders may adversely affect the timely completion and final project costs of some or all of our projects under development if, for example, we are required to temporarily cease construction


In
21
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


entirely, experience delays in obtaining governmental permits and authorizations, or experience disruption in the normal coursesupply of business,materials or labor; however, the Company enters into various development-related purchase commitmentsanticipates that deviations from schedule or budget related due to the effects of the COVID-19 pandemic will qualify as force majeure events.

As a part of the development agreement with parties that provide development-related goods and services.Walt Disney World® Resort, the Company has guaranteed the completion of construction of a $614.6 million project to be delivered in phases from 2020 to 2023. In addition, the Company is subject to a development guarantee in the event that the substantial completion of a project phase is delayed beyond its respective targeted delivery date, except in circumstances resulting in unavoidable delays. The agreement dictates that the Company shall pay damages of $20 per bed for each day of delay for any Disney College Internship Program participant who was either scheduled to terminate development services priorlive in the delayed phase as well as any participant who was not able to participate in the program due to the completionlack of projects under construction,available housing and would have otherwise been housed in the Company could potentially be committeddelayed phase. Under the agreement, the maximum exposure related to satisfy outstanding purchase orders with such parties.   the Disney project assuming all beds are not delivered on their respective delivery date is approximately $0.2 million per day.


Conveyance to University: In August 2013, the Company entered into an agreement to convey fee interest in a parcel of land, on which one of the Company’s student housing properties resides (University Crossings), to Drexel University (the “University”). Concurrent with the land conveyance, the Company as lessee entered into a ground lease agreement with the University as lessor for an initial term of 40 years, with three3 10-year extensions, at the Company’s option. The Company also agreed to convey the building and improvements to the University at an undetermined date in the future and to pay real estate transfer taxes not to exceed $2.4 million. The Company paid approximately $0.6 million in real estate transfer taxes upon the conveyance of land to the University, leaving approximately $1.8 million to be paid by the Company upon the transfer of the building and improvements.


ContingenciesOther Guarantees: In June 2019, the Company entered into a purchase and sale agreement to buy a land parcel initially scheduled to close on or before June 30, 2021, with potential extensions at the Company’s option to June 1, 2022 or June 1, 2023.  In connection with the execution of the agreement, the Company made an earnest money deposit of $2.1 million which is included in restricted cash on the accompanying consolidated balance sheet. As a part of the agreement, within 60 days of certain conditions not being met, the seller of the property can either terminate the agreement or exercise an option to require the Company to purchase the undeveloped land, with the Company retaining all rights to fully own, develop, and utilize the land. If the option is exercised, the Company must pay the agreed upon purchase price of $28.7 million and a commission calculated as a percentage of the sales price, and also reimburse the seller for demolition costs.

Pre-development expenditures: The Company incurs pre-development expenditures such as architectural fees, permits, and deposits associated with the pursuit of third-party and owned development projects.  The Company bears the risk of loss of these pre-development expenditures if financing cannot be arranged or the Company is unable to obtain the required permits and authorizations for the project.  As such, management periodically evaluates the status of third-party and owned projects that have not yet commenced construction and expenses any deferred costs related to projects whose current status indicates the commencement of construction is unlikely and/or the costs may not provide future value to the Company in the form of revenues. As of March 31, 2020, the Company has deferred approximately $9.5 million in pre-development costs related to third-party and owned development projects that have not yet commenced construction.  Such costs are net of any contractual arrangements through which the Company could be reimbursed by another party. Such costs are included in other assets on the accompanying consolidated balance sheets.

Litigation:  The Company is subject to various claims, lawsuits and legal proceedings, as well as other matters that have not been fully resolved and that have arisen in the ordinary course of business.  While it is not possible to ascertain the ultimate outcome of such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on the consolidated financial position or results of operations of the Company.  However, the outcome of claims, lawsuits and legal proceedings brought against the Company is subject to significant uncertainty.  Therefore, although management considers the likelihood of such an outcome to be remote, the ultimate results of these matters cannot be predicted with certainty.

LettersLitigation Settlement: Although the Company denied any wrongdoing in this matter and believes it has valid defenses to the claims asserted, in March 2020, the Company entered into a memorandum of Intent:  Insettlement to resolve an alleged collective action pursuant to which the ordinary courseCompany agreed to pay an aggregate of $1.5 million to the plaintiffs, which memorandum is subject to court approval. During the quarter ended December 31, 2019, when the settlement became probable and reasonably estimable, the Company recorded litigation expense of $0.4 million based on legal counsel’s estimate of the Company’s business,settlement amount which was not yet determined. During the first quarter 2020, the Company enters into lettersrecorded an additional $1.1 million in litigation expense to reflect the amount owed under the memorandum of intent indicating a willingness to negotiate for acquisitions, dispositions or joint ventures.  Such letterssettlement, which is reflected in general and administrative expenses in the accompanying consolidated statements of intent are non-binding (except with regard to exclusivity and confidentiality), and neither party to the letter of intent is obligated to pursue negotiations unless and until a definitive contract is entered into by the parties.  Even if definitive contracts are entered into, the letters of intent relating to the acquisition and disposition of real property and resulting contracts generally contemplate that such contracts will provide the acquirer with time to evaluate the property and conduct due diligence, during which periods the acquirer will have the ability to terminate the contracts without penalty or forfeiture of any material deposit or earnest money.  There can be no assurance that definitive contracts will be entered into with respect to any matter covered by letters of intent or that the Company will consummate any transaction contemplated by any definitive contract.  Furthermore, due diligence periods for real property are frequently extended as needed.  Once the due diligence period expires, the Company is then at risk under a real property acquisition contract, but only tooperations.


22
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP L.P.LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)




the extent of any non-refundable earnest money deposits associated with the contract and subject to normal closing conditions being met.13. Segments
 
Environmental Matters:  The Company is not aware of any environmental liability with respect to the properties that would have a material adverse effect on the Company’s business, assets or results of operations. However, there can be no assurance that such a material environmental liability does not exist. The existence of any such material environmental liability could have an adverse effect on the Company’s results of operations and cash flows. 


AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


14. Segments
The Company defines business segments by their distinct customer base and service provided.  The Company has identified four4 reportable segments: Wholly-OwnedOwned Properties, On-Campus Participating Properties, Development Services, and Property Management Services.  Management evaluates each segment’s performance based on operating income before depreciation, amortization and minority interestsinterests.

During the year ended December 31, 2019, the Company updated the presentation of certain items in the reconciliations section in the segment disclosures by including additional detail in the reconciliation of segment income before depreciation and allocation of corporate overhead.  Intercompany fees are reflected atamortization to consolidated net income. These updates were also made in the contractually stipulated amounts.tables below.
  Three Months Ended March 31,
  2020 2019
Owned Properties    
Rental revenues and other income $232,811
 $225,201
Interest income 117
 119
Total revenues from external customers 232,928
 225,320
Operating expenses before depreciation, amortization, and ground/facility lease expense (92,474) (92,169)
Ground/facility lease expense (3,209) (2,667)
Interest expense, net (1)
 (3,046) (4,763)
Operating income before depreciation and amortization $134,199
 $125,721
Depreciation and amortization $63,243
 $65,504
Capital expenditures $96,211
 $115,519
     
On-Campus Participating Properties  
  
Rental revenues and other income $10,709
 $11,448
Interest income 19
 41
Total revenues from external customers 10,728
 11,489
Operating expenses before depreciation, amortization, and ground/facility lease expense (3,366) (3,957)
Ground/facility lease expense (860) (882)
Interest expense, net (1)
 (1,142) (1,303)
Operating income before depreciation and amortization $5,360
 $5,347
Depreciation and amortization $2,037
 $2,029
Capital expenditures $565
 $230
     
Development Services  
  
Development and construction management fees $2,055
 $3,171
Operating expenses (2,525) (2,300)
Operating (loss) income before depreciation and amortization $(470) $871
     
Property Management Services  
  
Property management fees from external customers $3,829
 $2,311
Operating expenses (3,682) (1,886)
Operating income before depreciation and amortization $147
 $425
     
Reconciliations  
  
Total segment revenues and other income $249,540
 $242,291
Unallocated interest income earned on investments and corporate cash 715
 766
Total consolidated revenues, including interest income $250,255
 $243,057
     
Segment income before depreciation and amortization $139,236
 $132,364
Segment depreciation and amortization (65,280) (67,533)
Corporate depreciation (889) (1,222)
Net unallocated expenses relating to corporate interest and overhead (33,038) (27,544)
Gain from disposition of real estate 48,525
 —
Amortization of deferred financing costs (1,287) (1,132)
Provision for impairment —
 (3,201)
Loss from early extinguishment of debt (4,827) —
Income tax provision (379) (364)
Net income $82,061
 $31,368
     

(1)
Net of capitalized interest and amortization of debt premiums.

23
  Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  2017 2016 2017 2016
Wholly-Owned Properties        
Rental revenues and other income $184,282
 $186,504
 $533,866
 $548,403
Interest income 385
 345
 1,161
 878
Total revenues from external customers 184,667
 186,849
 535,027
 549,281
Operating expenses before depreciation, amortization, ground/facility leases and allocation of corporate overhead (97,545) (99,820) (242,315) (254,523)
Ground/facility leases (1,877) (1,614) (5,163) (4,520)
Interest expense, net (1)
 (1,540) (4,078) (1,194) (16,215)
Operating income before depreciation, amortization, and allocation of corporate overhead $83,705
 $81,337
 $286,355
 $274,023
Depreciation and amortization $58,339
 $49,464
 $161,341
 $151,740
Capital expenditures $196,910
 $119,589
 $473,638
 $329,932
Total segment assets at September 30, $6,488,259
 $6,062,852
 $6,488,259
 $6,062,852
         
On-Campus Participating Properties  
  
  
  
Total revenues and other income $6,799
 $6,758
 $23,128
 $23,018
Interest income 24
 2
 47
 4
Total revenues from external customers 6,823
 6,760
 23,175
 23,022
Operating expenses before depreciation, amortization, ground/facility leases and allocation of corporate overhead (3,611) (3,507) (10,109) (9,278)
Ground/facility leases (452) (351) (1,988) (2,216)
Interest expense (1,312) (1,394) (3,987) (4,231)
Operating income before depreciation, amortization and allocation of corporate overhead $1,448
 $1,508
 $7,091
 $7,297
Depreciation and amortization $1,892
 $1,839
 $5,621
 $5,493
Capital expenditures $2,039
 $1,446
 $2,909
 $2,510
Total segment assets at September 30, $101,027
 $105,774
 $101,027
 $105,774
         
Development Services  
  
  
  
Development and construction management fees $3,566
 $773
 $4,697
 $3,929
Operating expenses (4,185) (3,434) (11,396) (10,414)
Operating loss before depreciation, amortization and allocation of corporate overhead $(619) $(2,661) $(6,699) $(6,485)
Total segment assets at September 30, $4,918
 $2,279
 $4,918
 $2,279
         
Property Management Services  
  
  
  
Property management fees from external customers $2,291
 $2,376
 $7,193
 $7,039
Intersegment revenues 5,128
 5,830
 14,835
 17,410
Total revenues 7,419
 8,206
 22,028
 24,449
Operating expenses (3,034) (2,742) (9,719) (8,542)
Operating income before depreciation, amortization and allocation of corporate overhead $4,385
 $5,464
 $12,309
 $15,907
Total segment assets at September 30, $11,067
 $10,692
 $11,067
 $10,692
         
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP L.P.LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)




  Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  2017 2016 2017 2016
         
Reconciliations  
  
  
  
Total segment revenues and other income $202,475
 $202,588
 $584,927
 $600,681
Unallocated interest income earned on investments and corporate cash 850
 925
 2,515
 3,144
Elimination of intersegment revenues (5,128) (5,830) (14,835) (17,410)
Total consolidated revenues, including interest income $198,197
 $197,683
 $572,607
 $586,415
         
Segment operating income before depreciation, amortization and allocation of corporate overhead $88,919
 $85,648
 $299,056
 $290,742
Depreciation and amortization (62,271) (53,411) (172,588) (164,724)
Net unallocated expenses relating to corporate interest and overhead (27,614) (22,047) (79,165) (67,573)
(Loss) gain from disposition of real estate —
 —
 (632) 17,409
Provision for real estate impairment —
 —
 (15,317) —
Income tax provision (267) (345) (791) (1,035)
Net income $(1,233) $9,845
 $30,563
 $74,819
         
Total segment assets $6,605,271
 $6,181,597
 $6,605,271
 $6,181,597
Unallocated corporate assets 81,620
 97,778
 81,620
 97,778
Total assets at September 30, $6,686,891
 $6,279,375
 $6,686,891
 $6,279,375
         
(1)
Net of capitalized interest and amortization of debt premiums.
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


15.14. Subsequent Events

Distributions:  On November 1, 2017,April 29, 2020, the Board of Directors of the Company declared a distribution per share of $0.44,$0.47, which will be paid on November 27, 2017May 22, 2020 to all common stockholders of record as of November 13, 2017.May 11, 2020.  At the same time, the Operating Partnership will pay an equivalent amount per unit to holders of Common OP Units, as well as the quarterly cumulative preferential distribution to holders of Preferred OP Units (see Note 9)8).


October 2017 Bond Offering:  In October 2017, the Operating Partnership closed a $400 million offering of senior unsecured notes under its existing shelf registration.  These 10-year notes were issued at 99.912 percent of par value with a coupon of 3.625 percent and a yield of 3.635 percent, and are fully and unconditionally guaranteedCOVID-19 Pandemic: COVID-19, which was characterized on March 11, 2020 by the Company.  InterestWorld Health Organization as a pandemic, has currently resulted in a widespread health crisis, which has adversely affected international, national and local economies and financial markets generally, and has had an unprecedented effect on many businesses including the notesstudent housing industry. Given the daily evolution of the COVID-19 pandemic and the global responses to curb its spread, the Company is payable semi-annuallynot able to estimate the resulting effects on May 15its results of operations, cash flows, financial condition, or liquidity for the year ending December 31, 2020. The Company will continue to closely monitor the magnitude and November 15,duration of the economic disruption associated with the first payment beginning on May 15, 2018.  The notes will mature on November 15, 2027.  Net proceeds from the sale of the senior unsecured notes totaled approximately $395 million, after expenses,COVID-19 pandemic, especially as it relates to whether future evolving facts and were usedcircumstances indicate if an impairment indicator has occurred with respect to repay the outstanding balance of the Company’s revolving credit facility, with the remaining proceeds available to fund the development pipeline, acquisition activity and for general business purposes.investments in real estate.


Property Acquisitions:  In October 2017, the Company acquired Bridges @ 11th, a 258-bed wholly-owned property located on university-owned land near the University of Washington campus.


Additionally, in October 2017, as part of the Core Transaction, the Company exercised an option to cause the joint venture partner in Core JV I to contribute Hub U District Seattle, a 248-bed property located near the University of Washington campus, to the joint venture. The Company anticipates the closing of the contribution of the property to Core JV I to occur in the fourth quarter 2017 and the Company's initial investment in the property will be approximately $40.6 million.
24


Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Forward-looking Statements
 
This report contains forward-looking statements within the meaning of the federal securities laws. We caution investors that any forward-looking statements presented in this report, or which management may make orally or in writing from time to time, are based on management’s beliefs and assumptions made by, and information currently available to, management. When used, the words “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,” ���project,“project,” “should,” “will,” “result” and similar expressions, do not relate solely to historical matters and are intended to identify forward-looking statements. Such statements are subject to risks, uncertainties and assumptions and may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We caution you that forward-looking statements are not guarantees of future performance and will be impacted by actual events when they occur after we make such statements. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on results and trends at the time they were made, to anticipate future results or trends.
 
Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following: general risks affecting the real estate industry; risks associated with changes in University admission or housing policies; risks associated with the availability and terms of financing and the use of debt to fund acquisitions and developments; failure to manage effectively our growth and expansion into new markets or to integrate acquisitions successfully; risks and uncertainties affecting property development and construction; risks associated with downturns in the national and local economies, volatility in capital and credit markets, increases in interest rates, and volatility in the securities markets; costs of compliance with the Americans with Disabilities Act and other similar laws; potential liability for uninsured losses and environmental contamination; risks associated with our Company’s potential failure to qualify as a REIT under the Internal Revenue Code of 1986 (the “Code”), as amended, and possible adverse changes in tax and environmental laws; risks related to the novel coronavirus disease (“COVID-19”) pandemic as outlined in Part II, Item 1A herein; and the other factors discussed in the “Risk Factors” contained in Item 1A of our Form 10-K for the year ended December 31, 2016.2019.

COVID-19, which was characterized on March 11, 2020 by the World Health Organization as a pandemic, has currently resulted in a widespread health crisis, which has adversely affected international, national and local economies and financial markets generally, and has had an unprecedented effect on many businesses including the student housing industry. The discussions below, including without limitation statements with respect to outlooks of future operating performance and liquidity, are subject to the future effects of the COVID-19 pandemic and the global responses to curb its spread, which continue to evolve daily. As such, as described in Part II, Item 1A, Risk Factors, the full magnitude of the pandemic and its ultimate effect on our results of operations, cash flows, financial condition, and liquidity for the year ending December 31, 2020, as well as for future years, is uncertain at this time.

Our Company and Our Business
 
Overview

American Campus Communities, Inc. (“ACC”) is a real estate investment trust (“REIT”) that commenced operations effective withWe are the completion of an initial public offering (“IPO”) on August 17, 2004. Through ACC’s controlling interest in American Campus Communities Operating Partnership, L.P. (“ACCOP”), ACC is one of the largest owners, managers, and developers of high quality student housing properties in the United States in terms of beds owned and under management. ACC isStates.  We are a fully integrated, self-managed, and self-administered equity REIT with expertise in the acquisition, design, financing, development, construction management, leasing, and management of student housing properties.  ACC’s common stock is publicly traded onRefer to Note 1 in the New York Stock Exchange (“NYSE”) under the ticker symbol “ACC.”  Referencesaccompanying Notes to the “Company,” “we,” “us” or “our” mean collectively ACC, ACCOPConsolidated Financial Statements contained in Item 1 for additional information regarding our business objectives and those entities/subsidiaries owned or controlled by ACC and/or ACCOP.  Referencesinvestment strategies.  Refer to Note 13 in the accompanying Notes to the “Operating Partnership” mean collectively ACCOP and those entities/subsidiaries owned or controlled by ACCOP.  Unless otherwise indicated, the accompanying discussion applies to both the Company and the Operating Partnership.Consolidated Financial Statements contained in Item 1 for information about our operating segments.
 
Property Portfolio

AsWe believe that the ownership and operation of September 30, 2017, our total owned property portfolio contained 166 properties, consisting of owned off-campus student housing properties that arecommunities in close proximity to selected colleges and universities American Campus Equity (“ACE®”) properties operated under ground/facility leasespresents an attractive long-term investment opportunity for our investors.  We intend to continue to execute our strategy of identifying existing differentiated, typically highly amenitized, student housing communities or development opportunities in close proximity to university campuses with university systems, and on-campus participating properties operated under ground/facility leases with the related university systems.  Of the 166 properties, 12 were under development as of September 30, 2017.  Our communities contain modern housing units and are supported by a resident assistant system and other student-oriented programming, with many offering resort-style amenities.

As of September 30, 2017, through ACC’s taxable REIT subsidiary (“TRS”) entities, we provided third-party management and leasing services for 38 properties, bringing our total owned and third-party managed portfoliohigh barriers to 204 properties.  Third-party management and leasing services are typically provided pursuant to management contracts that have initial terms that range from one to five years.  


Leasing Results

During the third quarter, we finalized our annual leasing process for the 2017/2018 academic year.  As of September 30, 2017, occupancy at our 2018 same store properties was 96.6% at a rental rate increase of 2.9% compared to the prior academic year.  Our 2018 same store property portfolio consists of properties owned and operating for both of the entire years ended December 31, 2017 and 2018,entry which are not conducting projected to experience substantial increases in enrollment and/or planning to conduct substantial development, redevelopment, are under-serviced in terms of existing on and/or repositioning activities, and are not classified as held for sale.  Including our 2017 acquisitions and development deliveries, our total wholly-owned portfolio was 95.5% occupied as of September 30, 2017.off-campus student housing.


Below is a summary of our property portfolio as of September 30, 2017:March 31, 2020:
Property portfolio: Properties Beds Properties Beds
Wholly-owned operating properties:    
Owned operating properties:    
Off-campus properties 124
 70,248
 126
 70,223
On-campus ACE (1)
 25
 18,847
On-campus ACE (1) (2)
 31
 25,131
Subtotal – operating properties 149
 89,095
 157
 95,354
        
Wholly-owned properties under development:  
  
Off-campus properties 6
 2,935
On-campus ACE
 6
 5,371
Owned properties under development:  
  
On-campus ACE (2)
 3
 11,296
Subtotal – properties under development 12
 8,306
 3
 11,296
        
Total wholly-owned properties 161
 97,401
Total owned properties 160
 106,650
        
On-campus participating properties 5
 5,086
 6
 5,230
        
Total owned property portfolio 166
 102,487
 166
 111,880
        
Managed properties 38
 28,770
 35
 25,966
Total property portfolio 204
 131,257
 201
 137,846
        
(1)  
Includes threetwo properties at Prairie View A&M University that we ultimately expect to be refinanced under the existing on-campus participating structure.
(2)
Includes 33 properties operated under ground/facility leases with 16 university systems and one property operated under a ground/facility lease with Walt Disney World® Resort.

Leasing Results

Our financial results for the year ended December 31, 2020 are impacted by the results of our annual leasing process for the 2019/2020 and 2020/2021 academic years.  As of September 30, 2019, the beginning of the 2019/2020 academic year, occupancy at our 2020 same store properties was 97.4% with a rental rate increase of 1.4% compared to the prior academic year, and occupancy at our total owned property portfolio (including 2019 development deliveries) was also 97.4%.

As previously discussed, the COVID-19 pandemic has had an unprecedented effect on the student housing industry, including many of the universities in markets where the Company owns properties shifting to an online delivery method for academic instruction in order to accommodate shelter in place orders issued by state and local municipalities. In response to such orders, the Company has adapted its marketing strategies to conduct leasing activities for the upcoming 2020/2021 academic year through virtual channels. Management currently anticipates slower leasing velocity during the upcoming months until such shelter in place orders are lifted, and the ultimate impact of the pandemic on the annual leasing results for the 2020/2021 academic year, if any, is unknown at this time.

Development

Owned development activityDevelopment Projects Under Construction:


Recently completed projects: In the third quarter of 2017, the final stages of construction were completed on three on-campus ACE properties and seven owned off-campus properties. These properties are summarized in the following table:
 
 
Project
 Project Type 
 
 
Location
 
 
Primary University Served
 
 
Beds
 Total Project Cost Opened for Occupancy
             
Tooker House ACE Tempe, AZ Arizona State University 1,594
 $105,500
 August 2017
Sky View ACE Flagstaff, AZ Northern Arizona University 626
 58,200
 August 2017
University Square ACE Prairie View, TX Prairie View A&M University 466
 25,900
 August 2017
U Centre on Turner Off-campus Columbia, MO University of Missouri 718
 69,600
 August 2017
U Pointe on Speight Off-campus Waco, TX Baylor University 700
 51,800
 August 2017
21Hundred @ Overton Park Off-campus Lubbock, TX Texas Tech University 1,204
 82,700
 August 2017
Suites at 3rd Off-campus Champaign, IL University of Illinois 251
 25,200
 August 2017
U Club Binghamton Phase II Off-campus Binghamton, NY SUNY Binghamton University 562
 56,900
 August 2017
Callaway House Apartments Off-campus Norman, OK University of Oklahoma 915
 90,700
 August 2017
U Centre on College Off-campus Clemson, SC Clemson University 418
 42,700
 August 2017
TOTAL – 2017 DELIVERIES 7,454
 $609,200
  

Projects under construction: At September 30, 2017,March 31, 2020, we were in the process of constructing six owned off-campus properties and sixthree on-campus ACE properties.properties, including one property at Walt Disney World® Resort housing college students participating in the Disney student internship program (the “Disney College Program”), which will be delivered in multiple phases from 2020 to 2023. These properties are summarized in the table below:
 
 
Project
 Project Type 
 
 
Location
 
 
Primary University Served
 
 
Beds
 Estimated Project Cost Total Costs Incurred Scheduled Completion
               
Gladding Residence Center ACE Richmond, VA Virginia Commonwealth Univ. 1,524
 $95,700
 $60,215
 August 2018
Irvington House ACE Indianapolis, IN Butler University 648
 38,900
 16,656
 August 2018
Greek Leadership Village ACE Tempe, AZ Arizona State University 957
 69,600
 24,032
 August 2018
Bancroft Residence Hall ACE Berkeley, CA University of California, Berkeley 781
 98,700
 44,570
 August 2018
NAU Honors College ACE Flagstaff, AZ Northern Arizona University 636
 43,400
 15,037
 August 2018
U Club Townhomes Off-campus Oxford, MS University of Mississippi 528
 44,300
 16,960
 August 2018
The Edge - Stadium Centre (1)
 Off-campus Tallahassee, FL Florida State University 412
 42,600
 16,045
 August 2018
        5,486
 $433,200
 $193,515
  
Core Spaces / DRW Portfolio (2)
              
Hub Ann Arbor Off-campus Ann Arbor, MI University of Michigan       September 2018
Hub Flagstaff Off-campus Flagstaff, AZ Northern Arizona University       September 2018
Hub West Lafayette Off-campus West Lafayette, IN Purdue University       September 2018
        1,500
 $240,000
 $63,957
  
SUBTOTAL – 2018 DELIVERIES 6,986
 $673,200
 $257,472
  
               
Columbus Avenue Student Apts. ACE Boston, MA Northeastern University 825
 $153,400
 $30,753
 August 2019
191 College Off-campus Auburn, AL Auburn University 495
 59,300
 11,516
 July 2019
SUBTOTAL – 2019 DELIVERIES 1,320
 $212,700
 $42,269
  
               
TOTAL – ALL PROJECTS 8,306
 $885,900
 $299,741
  
               
Project  Location Primary University Served Project Type Beds Estimated Project Cost Total Costs Incurred Scheduled Occupancy
               
Disney College Program Phases I-II (1)
 Orlando, FL 
Walt Disney World® Resort
 ACE 1,627 $108,500
 $96,113
 May & Aug 2020
Currie Hall Phase II Los Angeles, CA Univ. of Southern California ACE 272 42,000
 32,531
 August 2020
Holloway Residences San Francisco, CA San Francisco State Univ. ACE 584 129,200
 107,475
 August 2020
    SUBTOTAL - 2020 DELIVERIES 2,483 $279,700
 $236,119
  
               
Disney College Program Phases III-V (1)
 Orlando, FL 
Walt Disney World® Resort
 ACE 3,369 $190,400
 $130,262
 Jan, May & Aug 2021
    SUBTOTAL - 2021 DELIVERIES 3,369 $190,400
 $130,262
  
               
Disney College Program Phases VI-VIII (1)
 Orlando, FL 
Walt Disney World® Resort
 ACE 3,235 $193,000
 $43,580
 Jan, May & Aug 2022
SUBTOTAL – 2022 DELIVERIES 3,235 $193,000
 $43,580
  
               
Disney College Program Phases IX-X (1)
 Orlando, FL 
Walt Disney World® Resort
 ACE 2,209 $122,700
 $20,506
 Jan & May 2023
SUBTOTAL - 2023 DELIVERIES 2,209 $122,700
 $20,506
  
               
(1)
In response to the recent developments related to COVID-19, Walt Disney World ® Resort has closed and has not announced a reopening date.  Although completion is currently anticipated to occur as originally scheduled, the ultimate occupancy date and levels will depend on the reopening date.  As such, the effect on the project’s initial operating results cannot be determined. 

(1) In December 2016,Although the Company currently anticipates completing the above projects on time and within budget, the project locations are currently subject to “shelter in place” or “stay at home” orders adopted by state and local authorities in response to the COVID-19 pandemic. Some of these orders may adversely affect the timely completion and final project costs of some or all of our projects under development if, for example, we entered into a pre-sale agreementare required to purchase The Edge - Stadium Centre, a property which is scheduled to be completedtemporarily cease construction entirely, experience delays in August 2018. The estimated project cost includes the purchase price, elected upgradesobtaining governmental permits and transaction costs.
(2) The company funded an initial investment of $24.2 million through a joint venture with Core Spaces/DRW Real Estate Investments in August 2017. Including the initial investment, the company expects to invest a total of $240 million over a two year period. Refer to Note 3authorizations, or experience disruption in the accompanying Notes to the Consolidated Financial Statements contained in Item 1.supply of materials or labor.

Acquisitions and Joint Venture Investments

As discussed in more detail in Notes 3 and 9 in the accompanying Notes to the Consolidated Financial Statements contained in Item 1, during the third quarter of 2017 we executed an agreement to acquire a portfolio of seven student housing properties from affiliates of Core Spaces and DRW Real Estate Investments (the “Core Transaction”).  The transaction included the purchase of 100% of the ownership interests in two operating properties, the purchase of partial ownership interests in two operating properties through a joint venture arrangement (with one property being subject to a purchase option that had not been exercised as of September 30, 2017), and the purchase of partial ownership interests in three in-process development properties through a joint venture arrangement.   In total, the Core Transaction properties contain 3,776 beds.  The initial investment made at closing was $265.4 million, and the Company expects to invest a total of $590.6 million over a two year period including the initial investment.

During the nine months ended September 30, 2017, the Company acquired two additional wholly-owned properties containing 982 beds for approximately $158.5 million.  Refer to Note 3 in the accompanying Notes to Consolidated Financial Statements contained in Item 1 for a more detailed discussion of our recent acquisition activity.
Dispositions

During the nine months ended September 30, 2017, the Company sold one wholly-owned property for approximately $25.0 million. Refer to Note 4 in the accompanying Notes to Consolidated Financial Statements contained in Item 1 for a more detailed discussion of our recent disposition activity.


Third-Party Development and Management Services


Through ACC’s TRS entities, we provide development and construction management services for student housing properties owned by colleges and universities, charitable foundations and others.  During the third quarter 2017 we completed, delivered and

commenced management of Momentum Village Phase II, a 560-bed third party development project on the campus of Texas A&M University Corpus Christi, and Esperanza Hall, a 382-bed third party development project on the campus of Texas A&M University San Antonio. As of September 30, 2017,March 31, 2020, we were under contract on onethree third-party development projectprojects that isare currently under construction and whose fees total $5.9$14.2 million.  As of September 30, 2017,March 31, 2020, fees of approximately $3.0$4.5 million remained to be earned by the Company with respect to this project,these projects, which has ahave scheduled completion datedates in August 2019.2020 and 2021.


Although the completion of the third-party development projects currently under construction is anticipated to occur as originally scheduled, the timely completion of the projects is subject to any future shelter in place or related orders issued by state and/or local municipalities affecting construction sites. To the extent COVID-19 related orders and/or events delay the construction of such projects, the timing of the recognition of third-party development revenue could also be impacted.

Critical Accounting Policies

There have been no material changes to the Company’s critical accounting policies disclosed in the Company’s Form 10-K for the year ended December 31, 2019. Refer to Note 2 in the accompanying Notes to Consolidated Financial statements contained in Item 1 for information regarding recently adopted accounting standards.

Results of Operations


COVID 19, which was characterized on March 11, 2020 by the World Health Organization as a pandemic, did not materially affect the Company’s results of operations for the three months ended March 31, 2020. However, for the reasons described previously, the Company is unable to predict the full magnitude of the pandemic and its effect on our results of operations for the remainder of the year ending December 31, 2020, and future years. The most significant factors affecting the Company’s future results of operations are: (1) the level of lease terminations and rent refunds and abatements granted to student and commercial tenants; (2) the economic hardship experienced by student and commercial tenants and its ultimate effect on rent collections and thus the provision for uncollectible accounts; (3) the ultimate outcome of the Company’s leasing efforts for the 2020/2021 academic year; (4) the impact of any stimulus payments received by the Company, our tenants, and/or our University partners under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”); and (5) any increase in, or reduction to, operating expenses as a result of the pandemic.
Comparison of the Three Months Ended September 30, 2017March 31, 2020 and September 30, 2016
March 31, 2019
The following table presents our results of operations for the three months ended September 30, 2017March 31, 2020 and 2016,2019, including the amount and percentage change in these results between the two periods.
 Three Months Ended 
 September 30,		     Three Months Ended
March 31,		    
 2017 2016 Change ($) Change (%) 2020 2019 Change ($) Change (%)
Revenues        
Wholly-owned properties $183,569
 $185,694
 $(2,125) (1.1)%
Revenues:        
Owned properties $232,091
 $224,419
 $7,672
 3.4 %
On-campus participating properties 6,799
 6,758
 41
 0.6 % 10,709
 11,448
 (739) (6.5)%
Third-party development services 3,566
 773
 2,793
 361.3 % 2,055
 3,171
 (1,116) (35.2)%
Third-party management services 2,291
 2,376
 (85) (3.6)% 3,829
 2,311
 1,518
 65.7 %
Resident services 713
 810
 (97) (12.0)% 720
 782
 (62) (7.9)%
Total revenues 196,938
 196,411
 527
 0.3 % 249,404
 242,131
 7,273
 3.0 %
                
Operating expenses  
  
  
  
Wholly-owned properties 99,423
 100,602
 (1,179) (1.2)%
Operating expenses:  
  
  
  
Owned properties 92,474
 92,169
 305
 0.3 %
On-campus participating properties 3,923
 3,784
 139
 3.7 % 3,366
 3,957
 (591) (14.9)%
Third-party development and management services 3,879
 3,340
 539
 16.1 % 6,207
 4,186
 2,021
 48.3 %
General and administrative 8,684
 5,375
 3,309
 61.6 % 10,158
 7,315
 2,843
 38.9 %
Depreciation and amortization 61,125
 52,067
 9,058
 17.4 % 66,169
 68,755
 (2,586) (3.8)%
Ground/facility leases 2,329
 1,965
 364
 18.5 % 4,069
 3,549
 520
 14.7 %
Gain from disposition of real estate (48,525) —
 (48,525) 100.0 %
Provision for impairment —
 3,201
 (3,201) (100.0)%
Total operating expenses 179,363
 167,133
 12,230
 7.3 % 133,918
 183,132
 (49,214) (26.9)%
                
Operating income 17,575
 29,278
 (11,703) (40.0)% 115,486
 58,999
 56,487
 95.7 %
                
Nonoperating income and (expenses)  
  
  
  
Nonoperating income (expenses):  
  
  
  
Interest income 1,259
 1,272
 (13) (1.0)% 851
 926
 (75) (8.1)%
Interest expense (18,654) (19,016) 362
 (1.9)% (27,783) (27,061) (722) 2.7 %
Amortization of deferred financing costs (1,146) (1,344) 198
 (14.7)% (1,287) (1,132) (155) 13.7 %
Total nonoperating expense (18,541) (19,088) 547
 (2.9)%
Loss from early extinguishment of debt (4,827) —
 (4,827) 100.0 %
Total nonoperating expenses (33,046) (27,267) (5,779) 21.2 %
                
(Loss) income before income taxes (966) 10,190
 (11,156) (109.5)%
Income before income taxes 82,440
 31,732
 50,708
 159.8 %
Income tax provision (267) (345) 78
 (22.6)% (379) (364) (15) 4.1 %
                
Net (loss) income (1,233) 9,845
 (11,078) (112.5)%
Net income 82,061
 31,368
 50,693
 161.6 %
                
Net income attributable to noncontrolling interests (79) (201) 122
 (60.7)% (1,206) (1,728) 522
 (30.2)%
Net (loss) income attributable to ACC, Inc. and Subsidiaries common stockholders
 $(1,312) $9,644
 $(10,956) (113.6)%
Net income attributable to ACC, Inc. and Subsidiaries common stockholders $80,855
 $29,640
 $51,215
 172.8 %


Same Store and New Property Operations
 
We define our same store property portfolio as wholly-ownedowned properties that were owned and operating for both of the full years ended December 31, 20172020 and December 31, 2016,2019, which are not conducting or planning to conduct substantial development, redevelopment, or repositioning activities, and are not classified as held for sale as of September 30, 2017.March 31, 2020. It also 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.


Same store revenues are defined as revenues generated from our same store portfolio and consist of rental revenue earned from student leases as well as other income items such as utility income, damages, parking income, summer conference rent, application and administration fees, income from retail tenants, the provision for uncollectible accounts, and income earned by one of our TRS entities from ancillary activities such as the provision of food services.
 
Same store operating expenses are defined as operating expenses generated from our same store portfolio and include usual and customary expenses incurred to operate a property such as payroll, maintenance, utilities, marketing, general and administrative costs, insurance, and property taxes, and bad debt.taxes.  Same store operating expenses also include an allocation of payroll and other administrative costs related to corporate management and oversight.
 
A reconciliation of our same store, new property and sold/held for saleother property operations to our consolidated statements of comprehensive income is set forth below: 
 Same Store Properties New Properties 
Sold/Held for Sale Properties (1)
 Total - All Properties Same Store Properties New Properties 
Sold Properties/Other(1)
 Total - All Properties 
 Three Months Ended 
 September 30,		 Three Months Ended 
 September 30,		 Three Months Ended 
 September 30,		 Three Months Ended 
 September 30,		 Three Months Ended
March 31,		 Three Months Ended
March 31,		 Three Months Ended
March 31,		 Three Months Ended
March 31,		 
 2017 2016 2017 2016 
2017  (2)
 
2016 (3)
 2017 2016 2020 2019 2020 2019 2020 2019 2020 2019 
Number of properties (4)
 124
 124
 24
 8
 1
 22
 149
 154
 152
 152
 5
 —
 1
 5
(2) 
158
 157
 
Number of beds (4)
 73,871
 73,871
 14,364
 3,737
 860
 13,600
 89,095
 91,208
 92,195
 92,195
 3,159
 —
 901
 2,911
 96,255
 95,106
 
                                 
Revenues (5)(3)
 $162,776
 $160,636
 $20,637
 $4,187
 $869
 $21,681
 $184,282
 $186,504
 $219,767
 $218,231
 $10,343
 $221
 $2,701
 $6,749
 $232,811
 $225,201
 
Operating expenses 87,902
 85,126
 11,232
 2,242
 289
 13,234
 99,423
 100,602
 88,113
 88,120
 3,291
 525
 1,070
 3,524
 92,474
 92,169
 
(1) 
Does not include the allocation of payroll and other administrative costs related to corporate management and oversight. Also includes recurring professional fees related to the operation of the ACC / Allianz Joint Venture.
(2) 
Includes properties sold in 2019 and 2020 and one property currently in receivership that is in the process of being transferred to the lender in July 2019 in settlement of the property’s $27.4 millionits mortgage loan that matured in August 2017.loan.
(3) 
Includes properties sold in 2016 and 2017, and one property that is in the process of being transferred to the lender as discussed above.
(4)
Does not include properties under construction or undergoing redevelopment.
(5)
Includes revenues which are reflected as resident services revenue on the accompanying consolidated statements of comprehensive income.


Same Store Properties:  The increase in revenue from our same store properties was primarily due to an increase in average rental rates for the 2017/20182019/2020 academic year, partially offset by a decreaseas well as an increase in our weighted average occupancy from 92.2%96.9% during the three months ended September 30, 2016March 31, 2019 to 91.9%97.0% during the three months ended September 30, 2017. Future revenues will be dependent on our ability to maintain our current leases in effect for the 2017/2018 academic year and our ability to obtain appropriate rental rates and desired occupancy for the 2018/2019 academic year at our various properties.March 31, 2020.

The increase in operating expenses fromfor our same store properties was primarily due to: (i)to anticipated increases in payroll expenses due to increases in Fair Labor Standards Act (“FLSA”) minimum exempt status salaries and statutory minimum wage increases in numerous states.

On-Campus Participating Properties (“OCPP”) Operations
Same Store OCPP Properties: As of March 31, 2020, we had six on-campus participating properties containing 5,230 beds. Revenues from these properties decreased by $0.7 million, from $11.4 million for the three months ended March 31, 2019, to $10.7 million for the three months ended March 31, 2020. This decrease was primarily due to an increase in repairs and maintenance expense of approximately $1.9 million related to cleanup and repairsthe provision for water intrusion, roofing, and landscaping at the Company’s communities located in Florida and Texas, as a result of hurricanes Harvey and Irma; (ii)uncollectible accounts, offset by an increase in property taxes and related consulting fees due to increased property tax assessmentsaverage rental rates coupled with an increase in various markets; and (iii) other general inflationary factors. We anticipate that operating expenses for our same store property portfolio for 2017 will increase as compared to 2016 as a result of the reasons discussed above.

New Property Operations: Our new propertiesaverage occupancy from 95.8% for the three and nine months ended September 30, 2017 are summarizedMarch 31, 2019, to 98.3% for the three months ended March 31, 2020. Operating expenses at these properties decreased by $0.6 million, from $4.0 million for the three months ended March 31, 2019, to $3.4 million for the three months ended March 31, 2020, primarily due to transaction costs incurred in the table below:prior year associated with the conversion of an owned property to the OCPP structure.

PropertyLocationPrimary University Served BedsAcquisition/ Opening Date
Acquisitions:
University CrossingsCharlotte, NCUniversity of North Carolina546August 2016
U PointSyracuse, NYSyracuse University163October 2016
The ArlieArlington, TXUniversity of Texas at Arlington598April 2017
TWELVE at U DistrictSeattle, WAUniversity of Washington384June 2017
Hub EugeneEugene, ORUniversity of Oregon513August 2017
StateFort Collins, COColorado State University665August 2017
The James (1)
Madison, WIUniversity of Wisconsin850September 2017
SUBTOTAL - Acquisitions3,719
Owned Developments:
Currie HallLos Angeles, CAUniversity of Southern California456August 2016
Fairview HouseIndianapolis, INButler University633August 2016
University PointeLouisville, KYUniversity of Louisville531August 2016
U Club on 28thBoulder, COUniversity of Colorado398August 2016
U Club SunnysideMorgantown, WVWest Virginia University534August 2016
The Court at Stadium CentreTallahassee, FLFlorida State University260August 2016
Merwick Stanworth Phase IIPrinceton, NJPrinceton University379September 2016
Tooker HouseTempe, AZArizona State University1,594August 2017
Sky ViewFlagstaff, AZNorthern Arizona University626August 2017
University SquarePrairie View, TXPrairie View A&M University466August 2017
U Centre on TurnerColumbia, MOUniversity of Missouri718August 2017
U Pointe on SpeightWaco, TXBaylor University700August 2017
21Hundred @ Overton ParkLubbock, TXTexas Tech University1,204August 2017
Suites at 3rdChampaign, ILUniversity of Illinois251August 2017
U Club Binghamton Phase IIBinghamton, NYSUNY Binghamton University562August 2017
Callaway House ApartmentsNorman, OKUniversity of Oklahoma915August 2017
U Centre on CollegeClemson, SCClemson University418August 2017
SUBTOTAL - Owned Developments10,645
Total - New Properties14,364
(1)
The James is a property held by a joint venture formed as part of the Core Transaction. Refer to Note 3 in the accompanying Notes to the Consolidated Financial Statements contained in Item 1.

Third-Party Development Services Revenue


Third-party development services revenue increaseddecreased by approximately $2.8$1.1 million, from $0.8$3.2 million during the three months ended September 30, 2016March 31, 2019, to $3.6$2.1 million for the three months ended September 30, 2017.  This increaseMarch 31, 2020.  The decrease was primarily due to the closing of bond financing and commencement of construction of a fourth phasethe Calhoun Hall project at theDrexel University of California, Irvine during the third quarter 2017.  This projectprior year, which contributed approximately $2.9$1.3 million in revenue duringfor the three months ended September 30, 2017.March 31, 2019.


Development services revenues are dependent on our ability to successfully be awarded such projects, the amount of the contractual fee related to the project and the timing and completion of the development and construction of the project. In addition, to the extent projects are completed under budget, we may be entitled to a portion of such savings, which are recognized as revenue when performance has been agreed upon by all parties, or when performance has been verified by an independent third-party. It

Third-Party Management Services Revenue

Third-party management services revenue increased by approximately $1.5 million, from $2.3 million during the three months ended March 31, 2019, to $3.8 million for the three months ended March 31, 2020. The increase is possible that projectsprimarily due to reimbursed payroll and other costs from the Disney College Program management contract which began in April 2019. As facilities manager, the Company is responsible for which we have deferred pre-developmentthe operations and maintenance of the projects. Because of the company’s role in funding payroll costs will not closefor on-site personnel at the properties, as well as other miscellaneous costs, accounting guidance requires the management fee for this project to be recorded on a gross basis in the Company’s consolidated financial statements. Accordingly, both management services revenue and that we will not bethird-party management services expenses for the three months ended March 31, 2020 include approximately $1.2 million in such reimbursed for such costs. The pre-development costs associated therewith will ordinarily be charged against income forremainder of the then-current period. We anticipate third-party development services revenue to increase in 2017revenue as compared to 2016 as a resultthe prior year is due to newly executed contracts, net of contracts discontinued during the closing and commencement of construction of additional anticipated third-party development projects. However, the commencement of such projects is highly dependent on final determination of feasibility, negotiation, procurement rules and other applicable law, fluctuations in the construction and financing markets, and the availability of project financing.respective periods.



Third-Party Development and Management Services Expenses


Third-party development and management services expenses increased by approximately $0.6$2.0 million, from $3.3$4.2 million during the three months ended September 30, 2016March 31, 2019, to $3.9$6.2 million for the three months ended September 30, 2017. ThisMarch 31, 2020. The increase wasis primarily due to an increase in$1.1 million of payroll and other administrative costs related to corporatefrom the Disney College Program management and oversight,contract described above, as well as an increase in the level of pursuits of potential on-campus development projects, and general inflation. We anticipateprovision for uncollectable accounts related to accounts receivable from third-party development and management services expenses will increase in 2017 as compared to 2016 for the reasons discussed above.projects.


General and Administrative


General and administrative expenses increased by approximately $3.3$2.9 million, from $5.4$7.3 million during the three months ended September 30, 2016March 31, 2019, to $8.7$10.2 million for the three months ended September 30, 2017. ThisMarch 31, 2020. The increase was primarily due to $1.1 million in litigation settlement expenses incurred during the following: (i) $2.9 million of transaction costs incurred in connection with our initial investment in the Core Transaction in August 2017; (ii) increases in travel and related pursuit costs of potential acquisition transactions; (iii)three months ended March 31, 2020, as well as additional expenses incurred in connection with enhancements to our operating systems platform;platform and (iv) other general inflationary factors.  We anticipate general and administrative expenses will increase in 2017 as compared to 2016 for the reasons discussed above.

Depreciation and Amortization
 
Depreciation and amortization increaseddecreased by approximately $9.0$2.6 million, from $52.1$68.8 million during the three months ended September 30, 2016March 31, 2019, to $61.1$66.2 million for the three months ended September 30, 2017.March 31, 2020.  This increasedecrease was primarily due to an approximate $4.2 million decrease related to assets at our same store properties that became fully depreciated or amortized over the following: (i)last year, a $4.8decrease of approximately $1.7 million related to properties sold in 2019 and 2020, and a decrease of approximately $0.3 million in depreciation of corporate assets. These decreases were offset by an increase of approximately $3.6 million related to the completion of construction and opening of seven owned development properties in August and September of 2016 and ten owned development properties in August 2017; (ii) a $3.8 million increase due to property acquisition activity during 2016 and 2017; and (iii) a $2.4 million increase in depreciation expense at our same store properties due to capital improvement projects at various properties. These increases were partially offset by a $2.0 million decrease in depreciation and amortization expense related to properties sold in 2016 and 2017. We anticipate depreciation and amortization expense to increase in 2017 as compared to 2016 for the reasons discussed above.Fall 2019.


Ground/Facility Leases

Ground/facility leases expense increased by approximately $0.3$0.6 million from $2.0$3.5 million during the three months ended September 30, 2016March 31, 2019, to $2.3$4.1 million for the three months ended September 30, 2017.March 31, 2020. This increase was primarily due to ACE development projects that completed construction and opened for operations in Fall 20162019 and 2017. We anticipate ground/facility leases expense to increase for the full year 2017 as compared to 2016 for the reasons discussed above.increased variable payments at various ACE same store properties.


Interest ExpenseGain from Disposition of Real Estate


Interest expense decreased by approximately $0.3 million, from $19.0 million duringDuring the three months ended September 30, 2016March 31, 2020, we sold one owned property containing 901 beds, resulting in a net gain from disposition of real estate of approximately $48.5 million. Refer to $18.7 millionNote 4 in the accompanying Notes to Consolidated Financial Statements contained in Item 1 for additional details regarding our recent disposition transaction.

Provision for Impairment

During the three months ended September 30, 2017. Interest expense decreased as a result of the following: (i) a decrease of approximately $2.2 million related to the disposition of properties with outstanding mortgage debt during 2016; (ii) a decrease of approximately $0.9 million due to the pay-off of $200 million of our $350 million term loan facility (“Term Loan I Facility”) in November 2016; (iii) a $0.5 million decrease related to the pay-off of mortgage loans during 2016; and (iv) a $0.2 million decrease related to lower outstanding balances on our mortgage debt due to continued scheduled principal payments. These decreases were partially offset by (i) a $1.7 million increase related to increased borrowings on our revolving credit facility; (ii) an increase of approximately $1.4 million related to the closings of our $300 million term loan facility (“Term Loan III Facility”) in September 2017 and our $200 million term loan (the “New Term Loan II Facility”) in June 2017; and (iii) an increase of $0.4 million in interest related to the property in receivership incurred while working with the lender to finalize the transfer of the property in settlement of the property’s $27.4 million mortgage loan.

We anticipate interest expense will decrease in 2017 as compared to 2016 due to the pay-off of mortgage debt in 2016 and 2017, the disposition of properties with outstanding mortgage debt during 2016, and the 2016 pay-off of $200 million of the Term Loan I Facility. These decreases will be offset by an increase in borrowings under the Company’s revolving credit facility to fund its development pipeline, an increase related to the closings of the New Term Loan II Facility in June 2017, the Term Loan III Facility in September 2017, and additional interest incurred from the $400 million offering of unsecured notes in October 2017.


Comparison of the Nine Months Ended September 30, 2017 and September 30, 2016
The following table presents our results of operations for the nine months ended September 30, 2017 and 2016, including the amount and percentage change in these results between the two periods.

  Nine Months Ended 
 September 30,		  
  2017 2016 Change ($) Change (%)
Revenues        
Wholly-owned properties $531,556
 $546,078
 $(14,522) (2.7)%
On-campus participating properties 23,128
 23,018
 110
 0.5 %
Third-party development services 4,697
 3,929
 768
 19.5 %
Third-party management services 7,193
 7,039
 154
 2.2 %
Resident services 2,310
 2,325
 (15) (0.6)%
Total revenues 568,884
 582,389
 (13,505) (2.3)%
         
Operating expenses  
  
  
  
Wholly-owned properties 249,552
 257,175
 (7,623) (3.0)%
On-campus participating properties 11,080
 10,125
 955
 9.4 %
  Third-party development and management services 11,789
 10,638
 1,151
 10.8 %
General and administrative 25,200
 16,810
 8,390
 49.9 %
Depreciation and amortization 169,391
 159,486
 9,905
 6.2 %
Ground/facility leases 7,151
 6,736
 415
 6.2 %
Provision for real estate impairment 15,317
 —
 15,317
 100.0 %
Total operating expenses 489,480
 460,970
 28,510
 6.2 %
         
Operating income 79,404
 121,419
 (42,015) (34.6)%
         
Nonoperating income and (expenses)  
  
  
  
Interest income 3,723
 4,026
 (303) (7.5)%
Interest expense (47,944) (61,762) 13,818
 (22.4)%
Amortization of deferred financing costs (3,197) (5,238) 2,041
 (39.0)%
(Loss) gain from disposition of real estate (632) 17,409
 (18,041) (103.6)%
Total nonoperating expense (48,050) (45,565) (2,485) 5.5 %
         
Income before income taxes 31,354
 75,854
 (44,500) (58.7)%
Income tax provision (791) (1,035) 244
 (23.6)%
Net income 30,563
 74,819
 (44,256) (59.2)%
         
Net income attributable to noncontrolling interests (587) (1,150) 563
 (49.0)%
Net income attributable to ACC, Inc. and
   Subsidiaries common stockholders
 $29,976
 $73,669
 $(43,693) (59.3)%


Same Store and New Property Operations

A reconciliation of our same store, new property and sold/held for sale property operations to our consolidated statements of comprehensive income is set forth below:
  Same Store Properties New Properties 
Sold/Held for Sale Properties (1)
 Total - All Properties
  Nine Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  2017 2016 2017 2016 
2017  (2)
 
2016 (3)
 2017 2016
Number of properties (4)
 124
 124
 24
 8
 2
 24
 150
(5) 
156
Number of beds  (4)
 73,871
 73,871
 14,364
 3,737
 1,517
 14,924
 89,752
 92,532
                 
Revenues (6)
 $490,177
 $478,327
 $39,774
 $4,291
 $3,915
 $65,785
 $533,866
 $548,403
Operating expenses 227,993
 220,724
 19,152
 2,400
 2,407
 34,051
 249,552
 257,175
(1)
Does not include the allocation of payroll and other administrative costs related to corporate management and oversight.
(2)
Includes one property that was sold in April 2017 and one property currently in receivership that is in the process of being transferred to the lender in settlement of the property’s $27.4 million mortgage loan that matured in August 2017.
(3)
Includes properties sold in 2016 and 2017, and one property that is in the process of being transferred to the lender as discussed above.
(4)
Does not include properties under construction or undergoing redevelopment.
(5)
Difference from total operating property portfolio represents one property that was sold during the second quarter 2017.
(6)
Includes revenues which are reflected as resident services revenue on the accompanying consolidated statements of comprehensive income.

Same Store Properties:  The increase in revenue from our same store properties was primarily due to an increase in average rental rates for the 2016/2017 and 2017/2018 academic years, partially offset by a slight decrease in our weighted average occupancy from 93.8%during the nine months ended September 30, 2016 to 93.6% for the nine months ended September 30, 2017.

The increase in operating expenses from our same store properties was primarily due to the same factors that contributed to the increase in operating expenses for the three months ended September 30, 2017, as discussed above, as well the following: (i) an increase in utilities expense as a result of overall rate increases in water and sewage in various markets, which was partially offset by increased utility reimbursements from tenants which are included in same store properties revenues; (ii) increases related to 2015 development deliveries caused primarily by the stabilization of property tax assessments in the second year of operations; and (iii) additional marketing expenses incurred due to our efforts to achieve our leasing targets.

New Property Operations: Our new properties for the nine months ended September 30, 2017 are summarized in the table of new properties contained in the discussion of our results of operations for the three months ended September 30, 2017 and 2016.

On-Campus Participating Properties (“OCPP”) Operations
Same Store OCPP Properties: We had five participating properties containing 5,086 beds which were operating during the nine months ended September 30, 2017 and 2016. Revenues from these properties increased by $0.1 million, from $23.0 million for the nine months ended September 30, 2016 to $23.1 million for the nine months ended September 30, 2017 as a result of an increase in average rental rates for the 2016/2017 and 2017/2018 academic years, offset by a decrease in average occupancy from 69.5% for the nine months ended September 30, 2016 to 67.6% for the nine months ended September 30, 2017. Operating expenses at these properties increased by $1.0 million, from $10.1 million for the nine months ended September 30, 2016 as compared to $11.1 million for the nine months ended September 30, 2017, primarily due to (i) an increase in payroll costs related to recently filled staff positions; (ii) increased maintenance costs related to the annual turn process; (iii) an increase in utilities expense; and (iv) increases in general and administrative costs. Future revenues will be dependent on our ability to maintain our current leases in effect for the 2017/2018 academic year and our ability to obtain appropriate rental rates and desired occupancy for the 2018/March 31, 2019, academic year. We anticipate that operating expenses for our OCPP properties for 2017 will increase as compared to 2016 for the reasons discussed above.


Third-Party Development Services Revenue

Third-party development services revenue increased by approximately $0.8 million, from $3.9 million during the nine months ended September 30, 2016 to $4.7 million for the nine months ended September 30, 2017.  This increase was due the closing of bond financing and commencement of construction of a fourth phase at the University of California, Irvine which contributed approximately $2.9 million in revenue for the nine months ended September 30, 2017. These increases were partially offset by the closing of bond financing and commencement of construction of two development projects with the Texas A&M University System at their Corpus Christi and San Antonio campuses, which contributed approximately $2.0 million of revenue, as well as a $0.5 million fee earned for the performance of various predevelopment activities for the University of Kansas during the nine months ended September 30, 2016. During the nine months ended September 30, 2017 we had three projects in progress with an average contractual fee of approximately $3.1 million, as compared to the nine months ended September 30, 2016 in which we had four projects in progress with an average contractual fee of approximately $1.8 million. 

Third-Party Development and Management Services Expenses

Third-party development and management services expenses increased by approximately $1.2 million, from $10.6 million during the nine months ended September 30, 2016 to $11.8 million for the nine months ended September 30, 2017. This increase was due to the same factors that contributed to the increase in third-party development and management services expenses for the three months ended September 30, 2017, as discussed above.

General and Administrative

General and administrative expenses increased by approximately $8.4 million, from $16.8 million during the nine months ended September 30, 2016 to $25.2 million for the nine months ended September 30, 2017. This increase was primarily due to the same factors that contributed to the increase in general and administrative expenses for the three months ended September 30, 2017, as discussed above, as well as $4.5 million in contractual executive separation and retirement charges incurred in the first and second quarter 2017 as a result of the retirement of the former Company’s Chief Financial Officer.
Depreciation and Amortization
Depreciation and amortization increased by approximately $9.9 million, from $159.5 million during the nine months ended September 30, 2016 to $169.4 million for the nine months ended September 30, 2017.  This increase was primarily due to the following: (i) a $10.7 million increase related to the completion of construction and opening of seven owned development properties in August and September of 2016 and ten owned development properties in August 2017; (ii) a $7.0 million increase due to property acquisition activity during 2016 and 2017; (iii) a $4.9 million increase in depreciation expense at our same store properties due to capital improvement projects at various properties; and (iv) a $0.2 million increase in depreciation of corporate assets. These increases were partially offset by a $13.0 million decrease in depreciation and amortization expense related to properties sold in 2016 and 2017.

Ground/Facility Leases

Ground/facility leases expense increased by approximately $0.5 million, from $6.7 million during the nine months ended September 30, 2016 to $7.2 million for the nine months ended September 30, 2017. This increase was due to the same factors that contributed to the increase in ground/facility lease expenses for the three months ended September 30, 2017, as discussed above.

Provision for Real Estate Impairment

During the nine months ended September 30, 2017, we recorded an impairment charge of approximately $15.3$3.2 million for one wholly-ownedowned property currentlyserving students attending Florida A&M University, which was classified as held for sale as of March 31, 2019 and was sold in receivershipMay 2019.

Interest Expense

Interest expense increased by approximately $0.7 million, from $27.1 million during the three months ended March 31, 2019, to $27.8 million for the three months ended March 31, 2020. The increase was primarily due to $3.4 million of additional interest incurred related to our offerings of unsecured notes in June 2019 and January 2020, net of unsecured notes repaid in January 2020 that iswere originally scheduled to mature in the process of beingOctober 2020. This increase was offset by: (i) a $0.9 million decrease in default interest related to a property that was transferred to the lender in settlement of the property’s $27.4 million mortgage loan that matured in August 2017.July 2019; (ii) a $0.5 million decrease in interest on our term loan facility due to interest rate swaps executed in November and December 2019; (iii) a $0.5 million increase in capitalized interest related to the timing of construction activities for our owned development pipeline; (iv) a $0.4 million decrease related to mortgage loans paid off in 2019 and 2020; and (v) an $0.3 million decrease in interest expense related to the timing of borrowings under our unsecured revolving credit facility during the respective three-month periods.

Loss from Early Extinguishment of Debt

During the three months ended March 31, 2020, we recognized a $4.8 million loss on the extinguishment of debt related to the early redemption of our $400 million 3.35% Senior Notes due October 2020. The redemption was funded using net proceeds from the Operating Partnership’s closing of a $400 million offering of senior unsecured notes under its existing shelf registration in January 2020. Refer to Note 76 in the accompanying Notes to Consolidated Financial Statements in Item 1 for a detailed discussion of this transaction.



Net Income Attributable to Noncontrolling Interests
Interest Expense

Interest expenseNet income attributable to noncontrolling interests represents consolidated joint venture partners’ share of net income, as well as net income allocable to holders of Operating Partnership units. Net income attributable to noncontrolling interests decreased by approximately $13.9$0.5 million, from $61.8 million during the nine months ended September 30, 2016 to $47.9$1.7 million for the ninethree months ended September 30, 2017. Interest expense decreased as a result ofMarch 31, 2019 to $1.2 million for the following: (i) athree months ended March 31, 2020. This decrease of approximately $7.4 million related to the disposition of properties with outstanding mortgage debt during 2016; (ii) a $4.6 million increase in capitalized interestis primarily due to the timing and volume of construction activities on our owned development projects during the comparable nine month periods; (iii) a $3.5 million decrease related to the pay-off of mortgage loans during 2016; and (iv) a decrease of approximately $3.6 million due to the pay-off of our $250 million term loan facility (“Term Loan II Facility”) in February 2016 and the pay-off of a portionpurchase of the Term Loan I Facilityremaining ownership interests in November 2016. These decreases were partially offset by (i)properties held in a $3.6 million increase in interest expense related to increased borrowings on our revolving credit facility; and (ii) a $1.4 million increase in interest related to closings of our Term Loan III Facility in September 2017 and our New Term Loan II Facility in June 2017.

Amortization of Deferred Financing Costs

Amortization of deferred financing costs decreased by approximately $2.0 million, from $5.2 million during the nine months ended September 30, 2016 to $3.2 million for the nine months ended September 30, 2017. This decrease was primarily due to $1.1 million of accelerated amortization related to the pay-off of our Term Loan II Facility in February 2016, $0.6 million related to the pay-off of a portionjoint venture as part of the Term Loan I Facility in November 2016, and $0.3 million related to properties with mortgage debt sold in 2016. We anticipate amortization of deferred finance costs will decrease in 2017 for the reasons discussed above, offset by increases related to the New Term Loan II and Term Loan III facilities, and the offering of unsecured notes in October 2017.

(Loss) Gain from Disposition of Real Estate

During the nine months ended September 30, 2017, we sold one wholly-owned property containing 657 beds, resulting in a net loss from disposition of real estate of approximately $0.6 million. During the nine months ended September 30, 2016, we sold two wholly-owned properties containing 1,324 beds, resulting in a net gain from disposition of real estate of approximately $17.4 million. Refer to Note 4 in the accompanying Notes to the Consolidated Financial Statements contained in Item 1.
Noncontrolling Interests

Noncontrolling interests represent holders of common and preferred units in our Operating Partnership not held by ACC or ACC HoldingsCore Transaction, as well as decreased operating performance at certain third-party partners inproperties held through joint ventures consolidated by us for financial reporting purposes. Accordingly, these external partners are allocated their share of income/loss during the respective reporting periods. Refer to Note 9 in the accompanying Notes to Consolidated Financial Statements in Item 1 for a detailed discussion of noncontrolling interests.ventures.


Liquidity and Capital Resources
 
Cash Balances and Cash Flows
 
As of September 30, 2017, excluding our on-campus participating properties,March 31, 2020, we had $29.7$208.9 million in cash and cash equivalents and restricted cash as compared to $32.3$81.3 million in cash and cash equivalents and restricted cash as of December 31, 2016.2019.  Restricted cash primarily consists of escrow accounts held by lenders, and resident security deposits as required by law in certain states, and funds held in escrow in connection with potential acquisition and development opportunities.  The following discussion relates to changes in cash due to operating, investing and financing activities, which are presented in our consolidated statements of cash flows included in Item 1.
 
Operating Activities: For the ninethree months ended September 30, 2017,March 31, 2020, net cash provided by operating activities was approximately $245.1$90.8 million, as compared to approximately $242.8$80.6 million for the ninethree months ended September 30, 2016,March 31, 2019, an increase of $2.3$10.2 million.  This increase in cash flows was due to operating cash flows provided byfrom the completion of construction and opening of ten owned development properties and presale development properties in third quarter of 2017, and the completion of seven owned development projects in the third quarter of 2016,2019 as well as property acquisitions in 2016 and 2017. Thethe timing of collections of student contracts receivable. This increase was partially offset by the timing of collectionsproperty tax payments for owned properties and the disposition of our student accounts receivableproperties in 2019 and 2020.


Investing Activities:  For the three months ended March 31, 2020, net cash provided by investing activities totaled approximately $48.0 million as well as a decrease in operatingcompared to net cash flows related to property dispositions during 2016 and 2017.
Investing Activities:  Investingutilized by investing activities utilized approximately $770.4 million and $365.7of $116.9 million for the ninethree months ended September 30, 2017 and 2016, respectively.March 31, 2019. The $404.7$164.9 million increase in cash utilized inprovided by investing activities was primarily a result of $146.1 million in proceeds from the following: (i) a $205.7 million increase in cash paid fordisposition of one property acquisitions during the ninethree months ended September 30, 2017, (ii) a $124.4March 31, 2020 as compared to none in the prior year, and $20.4 million increasedecrease in cash used to fund the construction of our wholly-owned development properties, related

to the timing of construction commencement and completion of our owned development pipeline; (iii)properties. These increases were partially offset by a $48.2 million decrease in proceeds from the disposition of wholly-owned properties, as we sold two properties during the nine months ended September 30, 2016 as compared to the sale of one property during the nine months ended September 30, 2017; (iv) a $19.3$1.4 million increase in cash used to fund capital expenditures at our wholly-owned properties;owned and (v) an $8.0 million increase inon-campus participating properties.

Financing Activities: For the three months ended March 31, 2020, net cash paid to acquire undeveloped land parcels in 2017.

Financing Activities: Cash providedutilized by financing activities totaled approximately $519.4$11.3 million and $138.6as compared to net cash provided by financing activities of $9.6 million for the ninethree months ended September 30, 2017 and 2016, respectively. March 31, 2019.
The $380.8$20.9 million increase in cash providedutilized by financing activities was primarily a result of the following: (i) the $404.2 million pay-off of unsecured notes including costs associated with the early extinguishment of the notes; (ii) the purchase of the remaining ownership interest in two properties for $77.2 million; (iii) the $34.2 million pay-off of mortgage debt; (iv) a $750.0$14.2 million netdecrease due to proceeds from construction loans in the prior year period; (v) a $2.8 million increase in payments of debt issuance costs; and (vi) a $1.6 million increase in distributions to common and restricted stockholders. These increases in cash utilized were partially offset by: (i) $399.2 million in proceeds from the issuance of unsecured term loans;notes in January 2020 and (ii) a $216.0$113.9 million increase in net proceeds on our revolving credit facility; (iii) a $53.4 million decrease in cash used to pay off mortgage and construction debt during the comparable nine month periods; (iv) $11.5 million in contributions from noncontrolling interests during the nine months ended September 30, 2017; and (v) $10.8 million in proceeds from construction loans. These increases were partially offset by the following: (i) a $581.7 million decrease in net proceeds from the sale of common stock, related to our equity offering in February 2016 as compared to the issuance of common stock under our ATM Equity Program in 2017; (ii) a $72.5 million increase in distributions to common and restricted stockholders and noncontrolling partners due to the distribution of $59.6 million of the Company's initial investment to its joint venture partners; and (iii) a $6.6 million increase in payments of debt issuance costs due to the amendment of our credit agreement in January 2017 and our New Term Loan II and Term Loan III facilities in June and September 2017.facility.


Liquidity Needs, Sources and Uses of Capital

As previously discussed, the ultimate effect of the COVID-19 pandemic on the student housing industry generally, and the Company specifically, is uncertain at this time. As such, the Company is unable to predict the full magnitude of the pandemic and its effect on our future cash flows and liquidity needs. The most significant factors affecting our future results are outlined above under Results of Operations.

As of September 30, 2017,March 31, 2020, our short-term liquidity needs included, but were not limited to, the following: (i) the pay-off of $300 million related to our Term Loan III Facility due to mature in September 2018; (ii) anticipated distribution payments to our common and restricted stockholders totaling approximately $241.5$260.8 million based on an assumed annual cash distribution of $1.76$1.88 per share and based on the number of our shares outstanding as of September 30, 2017; (iii)March 31, 2020; (ii) anticipated distribution payments to our Operating Partnership unitholders totaling approximately $1.9$0.9 million based on an assumed annual distribution of $1.76$1.88 per common unit and a cumulative preferential per annum cash distribution rate of 5.99% on our Preferred OP Units based on the number of units outstanding as of September 30, 2017; (iv) the pay-off of approximately $35.5 million of outstanding fixed rate mortgage debt scheduled to mature during the next 12 months; (v)March 31, 2020; (iii) estimated development costs over the next 12 months totaling approximately $319.8$255.4 million for our wholly-ownedowned properties currently under construction; (vi) a $42.6 million obligation to purchase a property subject to a presale arrangement (see Note 13 in the accompanying Notes to the Consolidated Financial Statements contained in Item 1); (vii) an obligation to increase our investment in two joint ventures, resulting in a funding commitment of approximately $171.2 million (see Note 3 and Note 13 in the accompanying Notes to the Consolidated Financial Statements contained in Item 1); (viii) funds for other development projects scheduled to commence construction during the next 12 months; and (ix)(iv) potential future developments, property or land acquisitions, including mezzanine financed developments.acquisitions; and (v) recurring capital expenditures.

We expect to meet our short-term liquidity requirements by: (i) utilizing current cash on hand and net cash provided by (i)operations; (ii) borrowing under our existing unsecuredrevolving credit facility; (ii)facility, which has availability of $390.3 million as of March 31, 2020; (iii) accessing the unsecured bond market; (iii)(iv) exercising debt extension options to the extent they are available; (iv)(v) issuing securities, including common stock, under our ATM Equity Program discussed more fully in Note 87 in the accompanying Notes to Consolidated Financial Statements contained in Item 1, or otherwise; (v)and (vi) potentially disposing of properties and/or entering into joint venture arrangements, depending on market conditions; and (vi) utilizing current cash on hand and net cash provided by operations.conditions. Our ability to obtain additional financing will depend on a variety of factors such as market conditions, the general availability of credit, the overall availability of credit to the real estate industry, our credit ratings and credit capacity, as well as the perception of lenders regarding our long or short-term financial prospects.

In January 2017, the Company amended and expanded its senior unsecured revolving credit facility, increasing the facility size to $700 million and extending the maturity date to March 2022. The amended facility has an accordion feature that allows the Company to expand the facility by up to an additional $500 million, subject to the satisfaction of certain conditions. Borrowing rates under the credit facility float at a margin over LIBOR plus an annual facility fee with spreads reflecting current market terms which are more favorable than those contained in the prior facility. Both the margin and the facility fee are priced on a grid that is tied to the Company’s credit rating. Based on the Company’s current Baa2/BBB rating, the annual facility fee is 20 basis points and the LIBOR margin is 100 basis points, a reduction of 10 basis points from the prior facility.

In June 2017, the Company entered into a New Term Loan II Facility totaling $200 million which will mature in June 2022. The agreement has an accordion feature that allows the Company to expand the amount by up to an additional $100 million, subject to the satisfaction of certain conditions. Borrowing rates under this agreement float at a margin over LIBOR and the margin is priced on a grid that is tied to the Company’s credit rating. Based on the Company’s current Baa2/BBB rating, the LIBOR margin is 110 basis points.

In September 2017, the Company entered into a Term Loan III Facility totaling $300 million which will mature in September 2018, and can be extended for two one-year periods at our option, subject to the satisfaction of certain conditions. The agreement has an accordion feature that allows the Company to expand the amount by up to an additional $100 million, subject to the satisfaction of certain conditions. Borrowing rates under this agreement float at a margin over LIBOR and the margin is priced on a grid that is tied to the Company’s credit rating. Based on the Company’s current Baa2/BBB rating, the LIBOR margin is 110 basis points.
As discussed in Note 7 in the accompanying Notes to Consolidated Financial Statements contained in Item 1, in May 2017, the lender of the non-recourse mortgage loan secured by Blanton Common, a wholly-owned property located near Valdosta State University which was acquired as part of the GMH student housing transaction in 2008, sent a formal notice of default and initiated foreclosure proceedings. The property generated insufficient cash flow to cover the debt service on the $27.4 million mortgage loan that matured in August 2017. As of September 30, 2017, the underlying property was in receivership and the Company was cooperating with the lender to allow for a consensual foreclosure process upon which the property will be surrendered to the lender in satisfaction of the mortgage loan.

As discussed in Note 15 in the accompanying Notes to the Consolidated Financial Statements contained in Item 1, in October 2017, we raised $395 million in net proceeds from an unsecured $400 million bond offering. Proceeds from the offering were used to repay the outstanding balance on our revolving credit facility. We intend to use the remaining proceeds for potential repayment of other outstanding debt, to fund our development pipeline, for potential acquisitions of student housing properties and for general corporate purposes.


We may seek additional funds to undertake initiatives not contemplated by our business plan or obtain additional cushion against possible shortfalls. We also may pursue additional financing as opportunities arise. Future financings may include a range of different sizes or types of financing, including the incurrence of additional secured debt and the sale of additional debt or equity securities. These funds may not be available on favorable terms or at all. Our ability to obtain additional financing depends on several factors, including future market conditions, our success or lack of success in penetrating our markets, our future creditworthiness, and restrictions contained in agreements with our investors or lenders, including the restrictions contained in the agreements governing our unsecured credit facility and unsecured notes. These financings could increase our level of indebtedness or result in dilution to our equity holders. Although the Company’s liquidity position and cash flows were unaffected by the COVID-19 pandemic as of and for the quarter ended March 31, 2020, the impact of the pandemic on global capital markets and the related effect on the Company’s stock price has introduced additional economic uncertainty which could affect our ability to obtain additional financing to meet short-term and/or long-term liquidity needs.

Distributions
 
We are required to distribute 90% of our REIT taxable income (excluding capital gains) on an annual basis in order to qualify as a REIT for federal income tax purposes.  Distributions to common stockholders are at the discretion of the Board of Directors. We may use borrowings under our unsecured revolving credit facility to fund distributions.  The Board of Directors considers a number of factors when determining distribution levels, including market factors and our Company’s performance in addition to REIT requirements.
 
On November 1, 2017, weApril 29, 2020, our Board of Directors declared a distribution per share of $0.44,$0.47, which will be paid on November 27, 2017May 22, 2020 to all common stockholders of record as of November 13, 2017.May 11, 2020.  At the same time, the Operating Partnership will pay an equivalent amount per unit to holders of Common OP Units, as well as the quarterly cumulative preferential distribution to holders of Preferred OP Units.


Pre-Development Expenditures

Our third-party and owned development activities have historically required us to fund pre-development expenditures such as architectural fees, permits and deposits.  The closing and/or commencement of construction of these development projects is subject to a number of risks such as our inability to obtain financing on favorable terms and delays or refusals in obtaining necessary zoning, land use, building, and other required governmental permits and authorizations  As such, we cannot always predict accuratelyAlthough the liquidity needs of these activities.  We frequently incur these pre-development expenditures before a financing commitment and/or required permits and authorizations have been obtained.  Accordingly, we bear the riskultimate magnitude of the lossimpact of these pre-development expenditures if financing cannot ultimately be arrangedCOVID-19 on acceptable termsthe Company’s cash flows is uncertain, any curtailed or deferred tenant demand, lease terminations, rent refunds and abatements, and increased uncollectible accounts we are unableexperience could materially adversely affect our cash flows from operations, and thus our ability to successfully obtain the required permits and authorizations.  Historically, our third-party and owned development projects have been successfully structured and financed; however, these developments have at times been delayed beyond the period initially scheduled, causing revenuemake distributions to be recognized in later periods.  As of September 30, 2017, we have deferred approximately $5.6 million in pre-development costs related to third-party and owned development projects that have not yet commenced construction.stockholders.
 

Indebtedness
 
The amounts below exclude net unamortized debt premiums and discounts related to mortgage loans assumed in connection with property acquisitions, original issue discounts (“OID”s), and deferred financing costs (see Note 76 in the accompanying Notes to the Consolidated Financial Statements contained in Item 1). A summary of our consolidated indebtedness as of September 30, 2017March 31, 2020 is as follows:
 Amount % of Total 
Weighted Average Rates (1)
 Weighted Average Maturities Amount % of Total 
Weighted Average Rates (1)
 Weighted Average Maturities
Secured $646,582
 23.4% 4.8% 5.3 Years $746,483
 21.2% 4.5% 6.2 Years
Unsecured 2,116,440
 76.6% 3.1% 4.3 Years 2,809,700
 78.8% 3.2% 5.0 Years
Total consolidated debt $2,763,022
 100.0% 3.5% 4.5 Years $3,556,183
 100.0% 3.4% 5.3 Years
              
Fixed rate debt              
Secured              
Project-based taxable bonds $30,575
 1.1% 7.6% 7.0 Years $23,215
 0.7% 7.6% 4.6 Years
Mortgage 593,585
 21.4% 4.7% 5.4 Years 720,361
 20.4% 4.4% 6.2 Years
Unsecured              
April 2013 Notes 400,000
 14.5% 3.8% 5.5 Years 400,000
 11.2% 3.8% 3.0 Years
June 2014 Notes 400,000
 14.5% 4.1% 6.8 Years 400,000
 11.2% 4.1% 4.3 Years
September 2015 Notes 400,000
 14.5% 3.4% 3.0 Years
October 2017 Notes 400,000
 11.2% 3.6% 7.6 Years
June 2019 Notes 400,000
 11.2% 3.3% 6.3 Years
January 2020 Notes 400,000
 11.2% 2.9% 9.8 Years
Term loans 200,000
 5.7% 2.5% 2.2 Years
Total - fixed rate debt 1,824,160
 66.0% 4.1% 5.2 Years 2,943,576
 82.8% 3.7% 5.9 Years
              
Variable rate debt:              
Secured              
Construction 22,422
 0.8% 4.2% 2.3 Years
Mortgage 2,907
 0.1% 3.3% 25.3 Years
Unsecured              
Term loans 650,000
 23.5% 2.3% 2.7 Years
Unsecured revolving credit facility 266,440
 9.7% 2.4% 4.5 Years 609,700
 17.1% 2.1% 2.0 Years
Total - variable rate debt 938,862
 34.0% 2.4% 4.4 Years 612,607
 17.2% 2.1% 2.1 Years
Total consolidated debt $2,763,022
 100.0% 3.5% 4.5 Years $3,556,183
 100.0% 3.4% 5.3 Years
              
(1) 
Represents stated interest rate and does not include the effect of the amortization of deferred financing costs, debt premiums and discounts, OIDs, and interest rate swap terminations.

As discussed previously, the Company’s ability to service its debt and related financial obligations was unaffected by the COVID-19 pandemic as of March 31, 2020; however, the ultimate magnitude of the pandemic on our future cash flows and liquidity position is uncertain at this time. While the Company was in compliance with all debt covenants for both secured and unsecured indebtedness as of March 31, 2020, the economic disruption caused by the COVID-19 pandemic could affect our future ability to remain in compliance with our debt covenants, depending on the ultimate impact to the valuation of collateral and any additional financing we obtain to meet our liquidity needs. The specific covenants that management is closely monitoring as the situation evolves

include the debt to total asset value and fixed charge coverage requirements per the Company’s unsecured revolving credit facility. As it relates to the debt to total asset value covenant, which is highly dependent on net operating income levels of the Company’s operating properties, management estimates that net operating income at such properties could decrease in the next twelve months by up to approximately $165 million before the Company would be in the position of potentially violating the covenant. As it relates to the fixed charge coverage requirement, which is highly dependent upon a specific measure of Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”), as defined in the related agreement, management estimates that the EBITDA measure for the next twelve months could decrease by up to approximately $280 million before the Company would be in the position of potentially violating the covenant. In addition, our credit ratings given by Moody’s and Standard & Poor’s are based on a number of factors, which include their assessment of our financial strength, liquidity, capital structure, asset quality and sustainability of cash flow and earnings. If we are unable to maintain our current credit ratings due to the COVID-19 pandemic or other changes in market conditions, the cost of funds under our credit facilities and our liquidity and access to capital markets would be adversely affected. The Company has a BBB credit rating with a stable outlook from Moody’s Investors Services, Inc. and a Baa2 credit rating with a negative outlook from Standard & Poor’s Rating Group.


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Funds From Operations (“FFO”)


The National Association of Real Estate Investment Trusts (“NAREIT”) currently defines 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, many of which present FFO when reporting their results.  FFO excludes GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time.  Historically, however, real estate values have risen or fallen with market conditions.  We therefore believe that FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, and interest costs, among other items, providing perspective not immediately apparent from net income.  We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its March 1995December 2018 White Paper, (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to such other 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 the elimination of property acquisitiontransaction costs, contractual executive separation and retirement charges and other non-cash items, as we determine in good faith. Under our

participating ground leases, we and the participating university systems each receive 50% of the properties’ net cash available for distribution after payment of operating expenses, debt service (which includes significant amounts towards repayment of principal), and capital expenditures.  A substantial portion of our revenues attributable to these properties is reflective of cash that is required to be used for capital expenditures and for the amortization of applicable property indebtedness. These amounts do not increase our economic interest in these properties or otherwise benefit us since our interest in the properties terminates upon the repayment of the applicable property indebtedness.  Therefore, unlike the ownership of our wholly-ownedowned properties, the unique features of our ownership interest in our on-campus participating properties cause the value of these properties to diminish over time.  For example, since the ground/facility leases under which we operate the participating properties require the reinvestment from operations of specified amounts for capital expenditures and for the repayment of debt while our interest in these properties terminates upon the repayment of the debt, such capital expenditures do not increase the value of the property to us and mortgage debt amortization only increases the equity of the ground lessor. Accordingly, we believe it is meaningful to modify FFO to exclude the operations of our on-campus participating properties and to consider their impact on our performance by including only that portion of our revenues from those properties that are reflective of our share of net cash flow and the management fees that we receive, both of which increase and decrease with the operating performance of the properties.  This narrower measure of performance measures our profitability for these properties in a manner that is similar to the measure of our profitability from our third-party services business where we similarly incur no initial or ongoing capital investment in a property and derive only consequential benefits from capital expenditures and debt amortization. We believe, however, that this narrower measure of performance is inappropriate in traditional real estate ownership structures where debt amortization and capital expenditures enhance the property owner’s long-term profitability from its investment.

Our FFOM may have limitations as an analytical tool because it reflects the contractual calculation of net cash flow from our on-campus participating properties, which is unique to us and is different from that of our owned off-campus properties.  Companies that are considered to be in our industry may not have similar ownership structures; and therefore those companies may not calculate FFOM in the same manner that we do, or at all, limiting its usefulness as a comparative measure. We compensate for these limitations by relying primarily on our GAAP and FFO results and using FFOM only supplementally.  Further, FFO and FFOM do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments and uncertainties.  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.


During the year ended December 31, 2019, the Company updated the presentation of the calculation of FFO, as it relates to the presentation of consolidated joint venture partners' share of FFO and the presentation of corporate depreciation. Prior period amounts have been updated to conform to the current presentation. There were no changes to the FFO calculated or the underlying financial information used in the calculation.



The following table presents a reconciliation of our net income attributable to common stockholders to FFO and FFOM:
  Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
  2017 2016 2017 2016
Net (loss) income attributable to ACC, Inc. and
  Subsidiaries common stockholders
 $(1,312) $9,644
 $29,976
 $73,669
Noncontrolling interests 85
 201
 593
 1,150
Loss (gain) from disposition of real estate —
 —
 632
 (17,409)
Elimination of provision for real estate impairment (1)
 —
 —
 15,317
 —
Real estate related depreciation and amortization 60,202
 51,301
 166,931
 157,232
Funds from operations (“FFO”) attributable to
  common stockholders and OP unitholders
 58,975
 61,146
 213,449
 214,642
         
Elimination of operations of on-campus participating properties:  
  
  
  
  Net loss (income) from on-campus participating properties 479
 365
 (1,373) (1,702)
  Amortization of investment in on-campus participating properties (1,892) (1,839) (5,621) (5,493)
  57,562
 59,672
 206,455
 207,447
Modifications to reflect operational performance of on-campus participating properties:  
  
  
  
  Our share of net cash flow (2)
 452
 351
 1,987
 2,216
  Management fees 306
 304
 1,046
 1,027
Contribution from on-campus participating properties 758
 655
 3,033
 3,243
Property acquisition costs (3)
 2,855
 114
 2,855
 114
Contractual executive separation and retirement charges (4)
 —
 —
 4,515
 —
Funds from operations – modified (“FFOM”) attributable to
  common stockholders and OP unitholders
 $61,175
 $60,441
 $216,858
 $210,804
         
FFO per share – diluted $0.43
 $0.46
 $1.56
 $1.65
FFOM per share – diluted $0.44
 $0.45
 $1.59
 $1.62
Weighted-average common shares outstanding – diluted 138,328,932
 132,877,380
 136,686,611
 130,407,761
  Three Months Ended
March 31,
  2020 2019
Net income attributable to ACC, Inc. and Subsidiaries common stockholders $80,855
 $29,640
Noncontrolling interests' share of net income 1,206
 1,728
     
Joint Venture (“JV”) partners’ share of FFO    
JV partners' share of net income (916) (1,568)
JV partners' share of depreciation and amortization (1,965) (2,157)
  (2,881) (3,725)
     
Gain from disposition of real estate (48,525) —
Elimination of provision for real estate impairment —
 3,201
Total depreciation and amortization 66,169
 68,755
Corporate depreciation (1)
 (889) (1,222)
FFO attributable to common stockholders and OP unitholders 95,935
 98,377
     
Elimination of operations of on-campus participating properties ("OCPPs")  
  
  Net income from OCPPs (3,706) (3,692)
  Amortization of investment in OCPPs (2,037) (2,029)
  90,192
 92,656
     
Modifications to reflect operational performance of OCPPs  
  
  Our share of net cash flow (2)
 860
 882
  Management fees and other 583
 820
Contribution from OCPPs 1,443
 1,702
     
Elimination of loss from extinguishment of debt (3)
 4,827
 —
Elimination of FFO from property in receivership (4)
 —
 969
Elimination of litigation settlement expense (5)
 1,100
 —
Funds from operations-modified ("FFOM") attributable to common stockholders and OP unitholders $97,562
 $95,327
     
FFO per share – diluted $0.69
 $0.71
FFOM per share – diluted $0.70
 $0.69
Weighted-average common shares outstanding – diluted 139,091,230
 138,811,527
(1) 
Represents an impairment charge recordeddepreciation on corporate assets not added back for a wholly-owned property currently in receivership that is in the processpurposes of being transferred to the lender in settlement of the property’s $27.4 million mortgage loan that matured in August 2017.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. Represents amounts accrued for the interim periods,expenditures which is included in ground/facility leases expense in the consolidated statements of comprehensive income.
(3) 
The three and nine months ended September 30, 2017 amounts represent transaction costs relatedRepresents loss associated with the January 2020 redemption of the Company's $400 million 3.35% Senior Notes originally scheduled to our initial investmentmature in two joint ventures. Refer to Notes 3 and 9 in the accompanying Notes to Consolidated Financial Statements contained in Item 1 for a more detailed discussion.October 2020.
(4) 
Represents contractual executive separationFFO for an owned property that was transferred to the lender in July 2019 in settlement of the property's mortgage loan.
(5)
Represents the settlement of a litigation matter that is included in general and retirement charges incurredadministrative expenses in the first and second quarter 2017 with regard to the retirementaccompanying consolidated statements of the Company’s former Chief Financial Officer.comprehensive income.


Inflation

Our student leases do not typically provide for rent escalations. However, they typically do not have terms that extend beyond 12 months. Accordingly, although on a short term basis we would be required to bear the impact of rising costs resulting from inflation, we have the opportunity to raise rental rates at least annually to offset such rising costs. However, a weak economic environment or declining student enrollment at our principal universities may limit our ability to raise rental rates.


36


Item 3.  Quantitative and Qualitative Disclosures About Market Risk
 
Market risk is the risk of loss from adverse changes in market prices and interest rates.  Our future earnings and cash flows are dependent upon prevailing market rates.  Accordingly, we manage our market risk by matching projected cash inflows from operating, investing, and financing activities with projected cash outflows for debt service, acquisitions, capital expenditures, distributions to stockholders and unitholders, and other cash requirements.  The majority of our outstanding debt has fixed interest rates, which minimizes the risk of fluctuating interest rates.  Our exposure to market risk includes interest rate fluctuations in connection with our revolving credit facilities and variable rate construction loansfacility and our ability to incur more debt without stockholder approval, thereby increasing our debt service obligations, which could adversely affect our cash flows.  No material changes have occurred in relation to market risk since our Annual Report on Form 10-K for the year ended December 31, 2016.2019, except as disclosed in Part II, Item 1A, herein, “Risk Factors.”

Item 4.  Controls and Procedures
 
American Campus Communities, Inc.
 
(a)Evaluation of Disclosure Controls and Procedures


As required by SEC Rule 13a-15(b), we have carried out an evaluation, under the supervision of and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures for the quarter covered by this report were effective at the reasonable assurance level.
 
(b)
Changes in Internal Control Over Financial Reporting


There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
American Campus Communities Operating Partnership L.P.LP
 
(a)Evaluation of Disclosure Controls and Procedures


As required by SEC Rule 13a-15(b), we have carried out an evaluation, under the supervision of and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures for the quarter covered by this report were effective at the reasonable assurance level.
 
(b)Changes in Internal Control Over Financial Reporting


There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

37



PART II OTHER INFORMATION
 
Item 1.  Legal Proceedings
 
We are subject to various claims, lawsuits and legal proceedings that arise in the ordinary course of business.  While it is not possible to ascertain the ultimate outcome of such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on the our consolidated financial position or our results of operations.
 
Item 1A.  Risk Factors
 
ThereExcept as described below, there have been no material changes to the risk factors that were discussed in Part 1, Item 1A of the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2016.2019.

The effects of the COVID-19 pandemic have materially affected how we are operating our business, and the duration and extent to which this will impact our future results of operations and overall financial performance remains uncertain.
The novel coronavirus disease (“COVID-19”), which was characterized on March 11, 2020 by the World Health Organization as a pandemic, has currently resulted in a widespread health crisis, which has adversely affected international, national and local economies and financial markets generally, and has had an unprecedented effect on many businesses including the student housing industry.

Beginning in April 2020, our operations have begun to be negatively affected by a range of external factors related to the COVID-19 pandemic that are not within our control. All of the colleges and universities our properties serve have canceled in-person classes and many have closed their on-campus residence halls or encouraged students living in on-campus residence halls to return to their permanent residences for the remainder of the spring term and in some cases for the summer term. Also, many governmental entities have imposed a wide range of restrictions on physical movement to limit the spread of COVID-19. While our properties remain open, as a result of these actions, we have experienced significant decreases in students physically occupying their units at many of our properties. We have waived all late fees and financial-related eviction proceedings temporarily and are working with residents and families who endure financial hardship on a case by case basis. We have also offered rent abatement and refunds at some of our on-campus properties based on individual university policies. In addition, we have closed our on-site offices to walk-in traffic and transitioned property tours to virtual experiences. Furthermore, we have experienced cancellations of summer conferences and other events, which will impact revenue we typically earn during the summer months at certain of our properties. Any curtailed or deferred tenant demand we experience could materially adversely affect our revenues and cash flows from operations, and thus our ability to make distributions to stockholders and service indebtedness.

At this time, there is uncertainty as to the dates for reopening by colleges and universities, and whether they will resume in-person classes for the upcoming 2020/2021 academic year, continue to offer classes online, adopt a hybrid online/on-campus model, or possibly, in some cases, reopen at all. Should a significant number of the colleges and universities that our properties serve fail to resume in-person classes for the upcoming 2020/2021 academic year, we would experience further adverse effects.

A significant number of the locations in which we conduct business are subject to “shelter in place” or “stay at home” orders adopted by state and local authorities. This has resulted in the temporary closing of our corporate headquarters and other offices and the implementation of travel restrictions, all of which have disrupted how we operate our business. We have taken steps to allow our workforce to render critical business functions remotely. Many of these measures are being deployed for the first time and there is no guarantee that the data security and privacy safeguards we have put in place will be completely effective or that we will not encounter some of the common risks associated with employees accessing data and systems remotely. Additionally, some of these orders may adversely affect the completion of some or all of our projects under development at both universities and at Walt Disney World® Resort if we are required to temporarily cease construction entirely, experience delays in obtaining governmental permits and authorizations, or experience disruption in the supply of materials or labor, which may result in our not completing these development projects on schedule or within budgeted amounts.

The COVID-19 pandemic has impacted the capital markets and could impact our cost of borrowing. Also, the pandemic may pose risks arising from market liquidity and credit concerns. Any deterioration of the capital markets could cause our income and expense to vary from expectations. As of March 31, 2020, we had no impairment charges associated with our long-term real estate investments, but we cannot predict future market conditions, market liquidity or credit availability, and can provide no assurance that our real estate portfolio will remain materially unimpaired. While we were in compliance with all debt covenants for both secured and unsecured indebtedness as of March 31, 2020, the economic disruption caused by the COVID-19 pandemic could


affect our future ability to remain in compliance with our debt covenants, depending on the ultimate impact to the valuation of collateral and any additional financing we obtain to meet our liquidity needs. In addition, our credit ratings given by Moody’s and Standard & Poor’s are based on a number of factors, which include their assessment of our financial strength, liquidity, capital structure, asset quality and sustainability of cash flow and earnings. If we are unable to maintain our current credit ratings due to the COVID-19 pandemic or other changes in market conditions, the cost of funds under our credit facilities and our liquidity and access to capital markets would be adversely affected.

The COVID-19 pandemic and the responses to curb its spread continue to evolve daily. As such, it is uncertain as to the full magnitude of the pandemic on our results of operations, cash flows, financial condition, or liquidity for the year ending December 31, 2020, or future years.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
 
None.
 
Item 3.  Defaults Upon Senior Securities
 
None.
 
Item 4.  Mine Safety Disclosures
 
Not applicable.
 
Item 5.  Other Information
 
None.



39


Item 6.  Exhibits
 
Exhibit Number Description of Document
3.2
Amendment to Bylaws of American Campus Communities, Inc. Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K of American Campus Communities, Inc. (File No. 001-32265) and American Campus Communities Operating Partnership LP (File No. 333-181102-01) filed on April 21, 2017
   
31.1
 American Campus Communities, Inc. - Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
31.2
 American Campus Communities, Inc. - Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
31.3
 American Campus Communities Operating Partnership L.P.LP - Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
31.4
 American Campus Communities Operating Partnership L.P.LP - Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
32.1
 American Campus Communities, Inc. - Certification of Chief Executive Officer Pursuant to 18 U. S. C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
32.2
 American Campus Communities, Inc. - Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
32.3
 American Campus Communities Operating Partnership L.P.LP - Certification of Chief Executive Officer Pursuant to 18 U. S. C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
32.4
 American Campus Communities Operating Partnership L.P.LP - Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
   
101.SCH XBRL Taxonomy Extension Schema Document
   
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)


 




40


SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Dated:November 3, 2017May 1, 2020
AMERICAN CAMPUS COMMUNITIES, INC.
  
By:/s/ Daniel B. Perry
  
 
Daniel B. Perry

Executive Vice President,

Chief Financial Officer,
Treasurer and Secretary
  
By:/s/ Kim K. Voss
  
 Kim K. Voss

Executive Vice President,

Chief Accounting Officer,

and Assistant Secretary
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Dated:November 3, 2017May 1, 2020
AMERICAN CAMPUS COMMUNITIES
OPERATING PARTNERSHIP L.P.LP
By:
American Campus Communities Holdings,
   LLC, its general partner
 By:American Campus Communities, Inc.,

its sole member
   
 By:/s/ Daniel B. Perry
   
  Daniel B. Perry

Executive Vice President,

Chief Financial Officer,

Treasurer and Secretary
   
 By:/s/ Kim K. Voss
   
  
Kim K. Voss

Executive Vice President,

Chief Accounting Officer,
and Assistant Secretary
 




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