American Campus Communities Inc. Reports First Quarter 2010 Financial Results
AUSTIN, Texas--(BUSINESS WIRE)—April 27, 2010--American Campus Communities Inc. (NYSE:ACC) today announced the following financial results for the quarter ended March 31, 2010.
Highlights
| § | Increased quarterly FFOM 19.1 percent to $22.0 million or $0.41 per fully diluted share compared to $18.5 million or $0.42 per fully diluted share in the first quarter prior year. |
§ | Increased same store wholly-owned net operating income ("NOI") by 6.0 percent over the first quarter 2009. |
| § | Increased same store wholly-owned occupancy to 96.2 percent as of March 31, 2010 compared to 92.8 percent for the same date prior year. |
§ | Leased same store wholly-owned portfolio for the upcoming academic year to 79.3 percent applied for and 73.8 percent leased as of April 23, 2010, with an average rental rate increase of 2.2 percent. This compares to 77.2 percent applied for and 73.9 percent leased as of April 24, 2009. |
| § | Completed the disposition of Cambridge at Southern, a wholly-owned asset containing 564 beds in Statesboro, Georgia, for a sale price of $19.5 million. |
First Quarter 2010 Operating Results
Revenue for the 2010 first quarter totaled $81.5 million, up 7.7 percent from $75.7 million in the 2009 first quarter. Operating income for the quarter increased $6.1 million or 34.9 percent over the prior year first quarter primarily due to the opening of Barrett Honors College in August 2009 and the improved lease-up of the GMH portfolio for the 2009-2010 academic year. Net loss for the 2010 first quarter totaled $2.2 million, or $0.05 per fully diluted share, compared with net income of $0.3 million, or zero per fully diluted share, for the same quarter in 2009. The net loss for the 2010 first quarter was primarily due to a $3.6 million loss on disposition of real estate resulting from the sale of our Cambridge at Southern property in March 2010 and a $4.0 million impairment charge recorded for our Campus Walk ̵ 1; Oxford property, offset by the increase in operating income discussed above. FFO for the 2010 first quarter, which includes the impairment charge discussed above, totaled $19.6 million, or $0.36 per fully diluted share. FFOM for the 2010 first quarter was $22.0 million, or $0.41 per fully diluted share. A reconciliation of FFO and FFOM to net income is shown on Table 3.
NOI for same store wholly-owned properties was $37.2 million in the quarter, up 6.0 percent from $35.1 million in the 2009 first quarter. Same store wholly-owned property revenues increased by 3.4 percent over the 2009 first quarter, primarily due to an increase in occupancy resulting from the improved lease-up for the 2009-2010 academic year. Same store wholly-owned operating expenses were relatively flat as compared to the prior year’s quarter. NOI for the total wholly-owned property portfolio increased 14.4 percent to $40.2 million for the quarter from $35.1 million in the comparable period of 2009. For purposes of calculating property NOI, the company defines property NOI as property revenues less direct property operating expenses, excluding depreciation but including allocated corporate gen eral and administrative expenses.
“We are very pleased with our continued internal growth with a 6 percent increase in same store NOI over the same quarter prior year,” said Bill Bayless, American Campus CEO. “In addition, we believe our strong pre-leasing results and external growth prospects positions the company as an attractive investment for shareholders.”
Portfolio Update
As of April 23, 2010, the company’s combined same store wholly-owned portfolio, which includes the GMH assets, was 79.3 percent applied for and 73.8 percent leased compared to 77.2 percent applied for and 73.9 percent leased for the same date prior year, with a current projected rental rate increase over the current in place rent of 2.2 percent. The same store ACC legacy portfolio was 79.1 percent applied for and 71.4 percent leased compared to 79.5 percent applied for and 75.0 percent leased for the same date one year ago. The GMH same store portfolio was 79.4 percent applied for and 76.5 percent leased compared to 74.7 percent applied for and 72.8 percent leased for the same date prior year.
On March 5, 2010, one of the Fidelity joint ventures, in which the company has a 10 percent interest, assigned its ownership interest in the University Heights property to the company for a price of $9.9 million, the value of the property’s mortgage indebtedness. This 528-bed, off-campus property serving students attending the University of Alabama at Birmingham is now 100 percent wholly owned by the company.
On March 26, 2010, the company completed the disposition of Cambridge at Southern, a 564-bed owned off-campus property serving students attending Georgia Southern University, for a sale price of $19.5 million, including the assumption of the existing $18.4 million mortgage loan due December 1, 2016.
In March 2010, in connection with classifying the Campus Walk – Oxford property as an asset Held for Sale, the company recorded a $4.0 million impairment charge to reflect the property at fair value. The 432-bed owned off-campus property serving students attending the University of Mississippi is anticipated to be sold during the second quarter 2010.
The company continues to make progress on the University of New Mexico - American Campus Equity (ACE®) transaction and is on track to commence construction during the second quarter. UNM met with Moody’s regarding the project during mid-April. The ground lease is in the final stages of negotiation and we expect to receive final UNM Board approval on May 11, 2010. The first phase of the project is expected to open in fall 2011.
On April 8, 2010, Moody’s Investors Service issued a Global Credit Research report in conjunction with Boise State University’s proposed 2010 general revenue bond sale. The report, which included an assessment of the company’s proposed 860-bed Phase I on-campus ACE project, affirmed Boise State University’s “A1” rating and maintained their outlook on the rating as stable. Based on their evaluation of the project and partnership structure, which includes no obligation of BSU to financially support the project, Moody’s did not include the development costs of the project in the direct debt calculations of the University. The company is pleased that the project received the expected favorable credit treatment, further supporting the viability of the ACE program. However, the BSU administration informed American Campus that the Idaho State Board of Education did not approve the Ground Lease Agreement between the company and BSU at their April 22nd meeting. American Campus intends to work with the University regarding the delivery of this project; however, at this time, the previously anticipated Q2 2010 commencement and 2011 delivery are not probable.
Supplemental Information and Earnings Conference Call
Supplemental financial and operating information, as well as this release, are available in the investor relations section of the American Campus Communities website, www.americancampus.com. In addition, the company will host a conference call to discuss first quarter results and the 2010 outlook on Wednesday April 28, 2010 at 11 a.m. EDT (10:00 a.m. CDT). To participate by telephone, call 866-730-5766 passcode 25376760 at least five minutes prior to the call.
To listen to the live broadcast, go to www.americancampus.com or www.earnings.com at least 15 minutes prior to the call so that required audio software can be downloaded. Informational slides in the form of the supplemental analyst package can be accessed via the website. A replay of the conference call will be available beginning two hours after the end of the call until May 4, 2010 by dialing 888-286-8010 or 617-801-6888 passcode 96277720. The replay also will be available for 30 days at www.americancampus.com and at www.earnings.com. The call will also be available as a podcast on www.reitcafe.comwww.REITcafe.com and on the company’s website shortly after the call.
Non-GAAP Financial Measures
As defined by NAREIT, FFO represents income (loss) before allocation to minority interests (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization (excluding amortization of loan origination costs) 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 is intended to exclude 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, howev er, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, 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 1995 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. Further, FFO does 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 should not be considered as an alternative to net income (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 is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions.
As noted above, FFO excludes GAAP historical cost depreciation and amortization of real estate and related assets because these GAAP items assume that the value of real estate diminishes over time. However, unlike the ownership of our owned off-campus 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 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 les sor. Accordingly, when considering our FFO, we believe it is also a meaningful measure of our performance to modify FFO to exclude the operations of our on-campus participating properties and to consider their impact on 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 measure of the properties, a measure we refer to as FFOM. We also exclude impairment charges from FFOM, as we believe the inclusion of such charges is inconsistent with the treatment of gains and losses on the disposition of real estate, which are not included in FFO. Additionally, we believe that excluding impairment charges from FFOM more appropriately presents the operating performance of the company’s real estate investments on a comparative basis.
About American Campus Communities
American Campus Communities Inc. is one of the largest developers, owners and managers of high-quality student housing communities in the United States. The company is a fully integrated, self-managed and self-administered equity real estate investment trust (REIT) with expertise in the design, finance, development, construction management, and operational management of student housing properties. American Campus Communities owns 85 student housing properties containing approximately 52,100 beds. The company also owns a minority interest in 18 joint venture properties containing approximately 9,800 beds. Including its owned, joint venture and third-party managed properties, ACC's total managed portfolio consists of 136 properties with approximately 86,600 beds. Additional information, including the company’s 2009 Interactive Annu al Review, is available at www.americancampus.com.
Forward-Looking Statements
In addition to historical information, this press release contains forward-looking statements under the federal securities law. These statements are based on current expectations, estimates and projections about the industry and markets in which American Campus operates, management's beliefs, and assumptions made by management. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict.
Table 1
American Campus Communities Inc. and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands)
| | | March 31, 2010 | | | December 31, 2009 | |
| Assets | | (unaudited) | | | | |
| | | | | | | |
| Investments in real estate: | | | | | | |
| Wholly-owned properties, net | | $ | 1,977,067 | | | $ | 2,014,970 | |
| Wholly-owned property held for sale | | | 9,100 | | | | - | |
| On-campus participating properties, net | | | 64,655 | | | | 65,690 | |
| Investments in real estate, net | | | 2,050,822 | | | | 2,080,660 | |
| | | | | | | | | |
| Cash and cash equivalents | | | 21,550 | | | | 66,093 | |
| Restricted cash | | | 28,451 | | | | 29,899 | |
| Student contracts receivable, net | | | 4,520 | | | | 5,381 | |
| Other assets | | | 50,212 | | | | 52,948 | |
| | | | | | | | | |
| Total assets | | $ | 2,155,555 | | | $ | 2,234,981 | |
| | | | | | | | | |
| Liabilities and equity | | | | | | | | |
Liabilities: | | | | | | | | |
| Secured mortgage, construction and bond debt | | $ | 974,539 | | | $ | 1,029,455 | |
| Senior secured term loan | | | 100,000 | | | | 100,000 | |
| Secured agency facility | | | 94,000 | | | | 94,000 | |
| Accounts payable and accrued expenses | | | 22,214 | | | | 26,543 | |
| Other liabilities | | | 46,521 | | | | 45,487 | |
| Total liabilities | | | 1,237,274 | | | | 1,295,485 | |
| | | | | | | | | |
| Redeemable noncontrolling interests | | | 36,015 | | | | 36,722 | |
| | | | | | | | | |
| Equity: | | | | | | | | |
American Campus Communities, Inc. and Subsidiaries
stockholders’ equity: | | | | | | | | |
| Common stock | | | 521 | | | | 521 | |
| Additional paid in capital | | | 1,092,301 | | | | 1,092,030 | |
| Accumulated earnings and distributions | | | (209,201 | ) | | | (189,165 | ) |
| Accumulated other comprehensive loss | | | (5,188 | ) | | | (4,356 | ) |
Total American Campus Communities, Inc. and Subsidiaries
stockholders’ equity | | | 878,433 | | | | 899,030 | |
| Noncontrolling interests | | | 3,833 | | | | 3,744 | |
| Total equity | | | 882,266 | | | | 902,774 | |
| | | | | | | | | |
| Total liabilities and equity | | $ | 2,155,555 | | | $ | 2,234,981 | |
Table 2
American Campus Communities Inc. and Subsidiaries
Consolidated Statements of Operations
(unaudited, dollars in thousands, except share and per share data)
| | | Three Months Ended March 31, | |
| | | 2010 | | | 2009 | |
| Revenues: | | | |
| Wholly-owned properties | | $ | 71,192 | | | $ | 65,335 | |
| On-campus participating properties | | | 7,311 | | | | 6,874 | |
| Third-party development services | | | 574 | | | | 1,052 | |
| Third-party management services | | | 2,214 | | | | 2,242 | |
| Resident services | | | 252 | | | | 240 | |
| Total revenues | | | 81,543 | | | | 75,743 | |
| | | | | | | | | |
| Operating expenses: | | | | | | | | |
| Wholly-owned properties | | | 31,476 | | | | 30,490 | |
| On-campus participating properties | | | 2,399 | | | | 2,030 | |
| Third-party development and management services | | | 3,099 | | | | 2,977 | |
| General and administrative | | | 2,753 | | | | 2,748 | |
| Depreciation and amortization | | | 17,488 | | | | 19,332 | |
| Ground/facility leases | | | 571 | | | | 552 | |
| Total operating expenses | | | 57,786 | | | | 58,129 | |
| | | | | | | | | |
| Operating income | | | 23,757 | | | | 17,614 | |
| | | | | | | | | |
| Non-operating income and (expenses): | | | | | | | | |
| Interest income | | | 17 | | | | 39 | |
| Interest expense | | | (15,301 | ) | | | (15,264 | ) |
| Amortization of deferred financing costs | | | (1,042 | ) | | | (790 | ) |
| Loss from unconsolidated joint ventures | | | (1,414 | ) | | | (554 | ) |
| Total nonoperating expenses | | | (17,740 | ) | | | (16,569 | ) |
| | | | | | | | | |
| Income before income taxes and discontinued operations | | | 6,017 | | | | 1,045 | |
| Income tax provision | | | (143 | ) | | | (135 | ) |
| Income from continuing operations | | | 5,874 | | | | 910 | |
| | | | | | | | | |
| Discontinued operations: | | | | | | | | |
| Loss attributable to discontinued operations | | | (4,283 | ) | | | (401 | ) |
| Loss from disposition of real estate | | | (3,646 | ) | | | - | |
| Total discontinued operations | | | (7,929 | ) | | | (401 | ) |
| | | | | | | | | |
| Net (loss) income | | | (2,055 | ) | | | 509 | |
| Net income attributable to noncontrolling interests | | | (134 | ) | | | (232 | ) |
Net (loss) income attributable to American Campus
Communities, Inc. and Subsidiaries | | $ | ( 2,189 | ) | | $ | 277 | |
| | | | | | | | | |
Net (loss) income per share attributable to American Campus
Communities, Inc. and Subsidiaries common stockholders-
basic and diluted | | $ | (0.05 | ) | | $ | 0.00 | |
| Weighted average common shares outstanding: | | | | | | | | |
| Basic | | | 52,235,644 | | | | 42,377,638 | |
| Diluted | | | 52,805,966 | | | | 42,820,592 | |
