Exhibit 99.1
CCG Announces 2Q14 Results
Charlotte, NC – July 30, 2014 – Campus Crest Communities, Inc. (NYSE: CCG) (the “Company”), today announced results for the three and six months ended June 30, 2014.
Highlights
Second Quarter 2014
| · | Funds From Operations Adjusted (“FFOA”) of $10.4 million, resulting in $0.16 per diluted share for the second quarter of 2014 |
| · | Same store net operating income (“NOI”) of $11.4 million at 90.1% occupancy and a 54.8% margin |
| · | Achieved leasing results ahead of prior year as of July 27, 2014. Leasing for all 69 operating properties was 87.9% versus 85.8%, an increase of 210 bps from the same period prior year and breaks down as follows: |
| o | Leasing for the Company’s 41 Grove operating properties was 86.2% compared to 82.3% the prior year – 390 basis points ahead |
| § | Leasing for the Company’s 32 wholly-owned Grove assets was 89.1% versus 85.2% the prior year, an increase of 390 basis points over the same period prior year |
| § | Leasing for the Company’s 9 joint venture Grove assets was 76.2% versus 72.7%, an increase of 350 basis points over the same period prior year. |
| o | Leasing for the Company’s Copper Beech Brand portfolio of 28 operating properties was 90.8% versus 91.8%, a decrease from the same period prior year of 100 basis points. |
| § | Driven mainly by three markets that are absorbing more slowly than prior years |
"We are pleased to have delivered stable second quarter results," said Ted W. Rollins, Campus Crest CEO. "We believe our continued focus on operations supports the success we have seen year-to-date and will be instrumental in maximizing our value potential. Our wholly-owned Grove portfolio has achieved the highest level of pre-leasing activity in the Company's history at this point in the cycle. We are acutely focused on the leasing activity for our evo projects in Montreal and Philadelphia, as their progress has fallen below expectations. We believe the projects will see improvements in leasing over the remainder of the third quarter, but are hesitant to quantify our expected initial weighted average development yields given the current lack of clarity at this point in time. To further strengthen our focus on operations, we are slowing our forward development activity in 2015 to just four Grove projects - a full 60% reduction from current year construction activity."
"Given our current leasing results in our evo projects and our decision to reduce development activity, we are revising our 2014 guidance," said Donnie Bobbitt, Campus Crest CFO. "Our revised guidance for fiscal year 2014 FFOA per fully diluted share is now $0.66 to $0.68. Given the mid-year change in guidance, we are providing one-time quarterly guidance of at least $0.16 per fully diluted share for the third quarter 2014. This revision reflects (i) lower expected initial weighted average development yields on our projects in Montreal and Philadelphia; and (ii) a reduction in development and construction fees associated with fewer projects being delivered in 2015."
Financial Results for the Three and Six Months Ended June 30, 2014
For the three and six months ended June 30, 2014, Funds From Operations (“FFO”) and FFOA are shown in the table below.
| FFO/FFOA | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| ($mm, except per share) | | 2014 | | | Per share -
diluted | | | 2013 | | | Per share -
diluted | | | 2014 | | | Per share -
diluted | | | 2013 | | | Per share -
diluted | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| FFO | | $ | 10.7 | | | $ | 0.16 | | | $ | 12.8 | | | $ | 0.20 | | | $ | 22.7 | | | $ | 0.35 | | | $ | 20.9 | | | $ | 0.38 | |
| FFOA1 | | $ | 10.4 | | | $ | 0.16 | | | $ | 12.2 | | | $ | 0.19 | | | $ | 21.3 | | | $ | 0.33 | | | $ | 20.6 | | | $ | 0.37 | |
1Includes eliminations for the write-off of transaction costs and the fair value adjustments of Copper Beech debt as reflected in the Q2 2014Supplemental Analyst Package.
A reconciliation of net income (loss) attributable to common stockholders to FFO and to FFOA can be found at the end of this release.
For the three months ended June 30, 2014, the Company reported total revenues of $35.3 million and net income (loss) attributable to common stockholders of ($3.5) million, compared to $36.5 million and $2.8 million, respectively, in the same period in 2013. For the six months ended June 30, 2014, the Company reported total revenues of $67.3 million and net income (loss) attributable to common stockholders of ($5.4) million, compared to $69.5 million and $3.8 million, respectively, in the same period in 2013.
Operating Results
For the three and six months ended June 30, 2014, results for wholly-owned same store properties were as follows:
| Same Store Results | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| ($mm) | | 2014 | | | 2013 | | | Change | | | 2014 | | | 2013 | | | Change | |
| | | | | | | | | | | | | | | | | | | |
| Number of Assets | | | 28 | | | | 28 | | | | | | | | 28 | | | | 28 | | | | | |
| Number of Beds | | | 14,920 | | | | 14,920 | | | | | | | | 14,920 | | | | 14,920 | | | | | |
| Occupancy | | | 90.1 | % | | | 92.5 | % | | | (240) bps | | | | 90.3 | % | | | 93.0 | % | | | (270) bps | |
| Total Revenues | | $ | 20.8 | | | $ | 21.5 | | | | (3.3 | %) | | $ | 41.8 | | | $ | 43.0 | | | | (2.8 | %) |
| NOI | | $ | 11.4 | | | $ | 12.1 | | | | (5.9 | %) | | $ | 22.9 | | | $ | 24.0 | | | | (4.4 | %) |
| NOI Margin | | | 54.8 | % | | | 56.3 | % | | | (150) bps | | | | 54.9 | % | | | 55.8 | % | | | (90) bps | |
NOI margin is calculated by dividing NOI for the period by total student housing rental and services revenues for the period. A reconciliation of net income (loss) attributable to common stockholders to NOI can be found at the end of this release. In addition, details regarding same store NOI and calculations thereof may be found in theSupplemental Analyst Packagelocated athttp://investors.campuscrest.com/.
Portfolio Information
As of June 30, 2014, the Company owned interests in 79 properties totaling approximately 43,256 beds across North America. A summary of the leasing for the 2014/2015 academic year follows:
| 2014/2015 Academic Year Leasing Summary | | | | | | | | | | | | | | |
| | | | | | | | | | | | 2014-2015 | | | 2013-2014 | | | | | | Rental Rate |
| Property | | Properties | | | Unit | | | Beds | | | Signed(1) | | | % | | | Signed(1) | | | % | | | Change | | | Change |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Wholly-Owned | | | 32 | | | | 6,400 | | | | 17,476 | | | | 15,569 | | | | 89.1 | % | | | 14,884 | | | | 85.2 | % | | | 3.9 | % | | n/a |
| HSRE Joint venture | | | 9 | | | | 1,870 | | | | 5,148 | | | | 3,923 | | | | 76.2 | % | | | 3,742 | | | | 72.7 | % | | | 3.5 | % | | n/a |
| Total Operating | | | 41 | | | | 8,270 | | | | 22,624 | | | | 19,492 | | | | 86.2 | % | | | 18,626 | | | | 82.3 | % | | | 3.9 | % | | 1.0% - 2.0% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Copper Beech Portfolio | | | 28 | | | | 5,047 | | | | 13,177 | | | | 11,963 | | | | 90.8 | % | | | 12,096 | | | | 91.8 | % | | | (1.0 | %) | | 0.0% - 1.0% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Operating Portfolio | | | 69 | | | | 13,317 | | | | 35,801 | | | | 31,455 | | | | 87.9 | % | | | 30,722 | | | | 85.8 | % | | | 2.1 | % | | n/a |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total 2014 Deliveries | | | 10 | | | | 3,128 | | | | 7,455 | | | | 3,268 | | | | 43.8 | % | | | n/a | | | | n/a | | | | n/a | | | n/a |
Note: The redevelopment of the Company's 100% owned property in Toledo, OH is excluded.
1 As of July 27, 2014 and July 27, 2013, respectively.
Investment Activity
Development
The Company expects to deliver eight new development projects, totaling 5,213 beds, for the 2014/2015 academic year, at a total cost of approximately $384.9 million, $214.5 million of which is the Company’s share of total development cost. The assets are located a median of 0.3 miles from campuses of primary non-flagship and flagship universities.
Redevelopment
The Company expects to deliver two redevelopment projects in its Canadian joint venture, totaling 2,242 beds, for the 2014/2015 academic year, at a total cost of approximately $166.0 million, $58.1 million of which is the Company’s share of total development cost. The two assets are located in downtown Montréal, Québec and serve over 120,000 students in the market.
Balance Sheet and Capital Markets
The Company proactively manages its balance sheet and looks to opportunistically access capital to fund growth and maintain a conservative capital structure.
As of June 30, 2014, the Company had $17.6 million of cash and $5.7 million of restricted cash. Additionally, the Company had net availability under its revolving credit facility of $84.1 million as of June 30, 2014.
As of June 30, 2014, the Company had not sold any shares under its $100.0 million At-the-Market common equity offering program.
Dividends
On July 22, 2014, the Company announced that its Board of Directors declared its third quarter 2014 common stock dividend of $0.165 per share. Based on a closing price of $8.99 on July 21, 2014, the annualized dividend yield is 7.3%. The dividend is payable on October 8, 2014 to stockholders of record as of September 24, 2014.
The Board of Directors also declared a cash dividend of $0.50 per Series A Cumulative Redeemable Preferred Share for the third quarter of 2014. The preferred share dividend is payable on October 15, 2014 to stockholders of record as of September 24, 2014.
2014 Earnings Guidance and Outlook
Based on management’s current estimates of market conditions and future operating results, the Company revises its previous guidance for fiscal year 2014 FFOA per fully diluted share to a new range of $0.66 to $0.68. Further, we have assumed $0.16 for the low end range for the third quarter. Our revised guidance reflects (i) lower expected initial yields on our evo projects in Montreal and Philadelphia and (ii) a reduction in development and construction fees associated with fewer projects being delivered in 2015. As previously disclosed, this assumes that the Company does not elect to exercise purchase option one for the Copper Beech portfolio.
The Company's FFOA guidance excludes non-recurring and non-cash items, such as any severance-related charges, the write-off of deferred financing costs as a result of early payoff of financings, potential impairments, transaction costs associated with the Copper Beech investment and other acquisitions and the mark-to-market adjustment of the Copper Beech debt. Additionally, it excludes the potential impact of any asset dispositions or capital raises.
Conference Call Details
The Company will host a conference call on Thursday, July 31, 2014, at 9:00 a.m. (EST) to discuss the financial results.
The call can be accessed live over the phone by dialing 877-407-0789, or for international callers, 201-689-8562. A replay will be available shortly after the call and can be accessed by dialing 877-870-5176, or for international callers, 858-384-5517. The pin number for the replay is 13585309. The replay will be available until August 7, 2014.
Interested parties may also listen to a simultaneous webcast of the conference call by logging onto the Company's website athttp://investors.campuscrest.com/. A recording of the call will also be available on the Company's website following the call.
Supplemental Schedules
The Company has published aSupplemental Analyst Package in order to provide additional disclosure and financial information for the benefit of the Company’s stakeholders. These can be found under the “Earnings Center” tab in the Investors section of the Company’s web site athttp://www.campuscrest.com/.
About Campus Crest Communities, Inc.
Campus Crest Communities, Inc. is a leading developer, builder, owner and manager of high-quality student housing properties located close to college campuses in targeted markets. Pro forma for the Copper Beech restructure, the Company has ownership interests in 79 student housing properties and over 43,000 beds across North America, of which 69 are operating and 10 are development or redevelopment properties. The Company is an equity REIT that differentiates itself through its vertical integration and consistent branding across the portfolio through three unique brands targeting different segments of the college student population. The Grove® brand offers more traditional apartment floor plans and focuses on customer service, privacy, on-site amenities and a proprietary residence life program. The Copper Beech brand and townhome product offers more residential-type living to students looking for a larger floor plan with a front door and back porch. The evo brand provides urban students with a luxury student housing option with all the conveniences of city living. Additional information can be found on the Company's website athttp://www.campuscrest.com/.
Forward-Looking Statements
This press release, together with other statements and information publicly disseminated by the Company, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. Forward-looking statements in this press release include, among others, the performance of properties in occupancy and yield targets, outlook and guidance for full-year 2014 FFOA and the related underlying assumptions, growth and development opportunities, leasing activities, financing strategies, and development and construction projects. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond the Company’s control that may cause actual results to differ significantly from those expressed in any forward-looking statement. All forward-looking statements reflect the Company’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Furthermore, except as otherwise required by federal securities laws, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause the Company’s future results to differ materially from any forward-looking statements, see the risk factors discussed in the Company’s most recent Annual Report on Form 10-K, as updated in the Company’s Quarterly Reports on Form 10-Q.
Contact:
Jessica Martino, Investor Relations
(704) 496-2571
Investor.Relations@CampusCrest.com
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| CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) |
| (in $000s) |
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| | | June 30, | | | December 31, | |
| | | 2014 | | | 2013 | |
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| Assets | | | | | | | | |
| Investment in real estate, net: | | | | | | | | |
| Student housing properties | | $ | 743,882 | | | $ | 716,285 | |
| Accumulated depreciation | | | (114,607 | ) | | | (102,356 | ) |
| Development in process | | | 163,433 | | | | 91,184 | |
| Investment in real estate, net | | | 792,708 | | | | 705,113 | |
| Investment in unconsolidated entities1 | | | 370,538 | | | | 324,838 | |
| Cash and cash equivalents | | | 17,601 | | | | 32,054 | |
| Restricted cash2 | | | 5,652 | | | | 32,636 | |
| Student receivables, net | | | 2,828 | | | | 2,825 | |
| Notes receivable | | | | | | | - | |
| Cost and earnings in excess of construction billings | | | 23,861 | | | | 42,803 | |
| Other assets, net | | | 59,448 | | | | 42,410 | |
| Total assets | | $ | 1,272,636 | | | $ | 1,182,679 | |
| | | | | | | | | |
| Liabilities and equity | | | | | | | | |
| Liabilities: | | | | | | | | |
| Mortgage and construction loans | | $ | 241,134 | | | $ | 205,531 | |
| Line of credit and other debt | | | 285,030 | | | | 207,952 | |
| Accounts payable and accrued expenses | | | 62,569 | | | | 62,448 | |
| Construction billings in excess of cost and earnings | | | 368 | | | | 600 | |
| Other liabilities | | | 13,625 | | | | 11,167 | |
| Total liabilities | | | 602,726 | | | | 487,698 | |
| Equity: | | | | | | | | |
| Preferred stock | | $ | 61 | | | $ | 61 | |
| Common stock | | | 645 | | | | 645 | |
| Additional common and preferred paid-in capital | | | 775,525 | | | | 773,896 | |
| Accumulated deficit and distributions | | | (110,921 | ) | | | (84,143 | ) |
| Accumulated other comprehensive loss | | | 152 | | | | (71 | ) |
| Total stockholders' equity | | | 665,462 | | | | 690,388 | |
| Noncontrolling interests | | | 4,448 | | | | 4,593 | |
| Total equity | | | 669,910 | | | | 694,981 | |
| Total liabilities and equity | | $ | 1,272,636 | | | $ | 1,182,679 | |
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1As of June 30, 2014, March 31, 2014 and December 31, 2013, includes the Company’s investment in Copper Beech equating to a 67% effective ownership interest in 30 properties, of which 28 are operating and two are non-operating properties.
2As of June 30, 2014, March 31, 2014 and December 31, 2013, includes approximately $0, $15,600 and $28,200, respectively, of cash held in escrow from the sale of four wholly-owned Grove-branded student housing properties on December 27, 2013.
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| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) |
| (in $000s, except per share data) |
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| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | 2014 | | | 2013 | | | $ Change | | | 2014 | | | 2013 | | | $ Change | |
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| Revenues: | | | | | | | | | | | | | | | | | | | | | | | | |
| Student housing rental | | $ | 23,637 | | | $ | 21,205 | | | $ | 2,432 | | | $ | 47,272 | | | $ | 41,953 | | | $ | 5,319 | |
| Student housing services | | | 1,026 | | | | 953 | | | | 73 | | | | 1,999 | | | | 1,777 | | | | 222 | |
| Development, construction and management services | | | 10,622 | | | | 14,368 | | | | (3,746 | ) | | | 18,058 | | | | 25,795 | | | | (7,737 | ) |
| Total revenues | | | 35,285 | | | | 36,526 | | | | (1,241 | ) | | | 67,329 | | | | 69,525 | | | | (2,196 | ) |
| Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
| Student housing operations | | | 10,747 | | | | 9,822 | | | | 925 | | | | 21,360 | | | | 19,512 | | | | 1,848 | |
| Development, construction and management services | | | 8,920 | | | | 13,657 | | | | (4,737 | ) | | | 15,315 | | | | 24,315 | | | | (9,000 | ) |
| General and administrative | | | 3,649 | | | | 2,908 | | | | 741 | | | | 7,155 | | | | 5,559 | | | | 1,596 | |
| Transaction costs1 | | | 1,460 | | | | 203 | | | | 1,257 | | | | 2,045 | | | | 588 | | | | 1,457 | |
| Ground leases | | | 120 | | | | 54 | | | | 66 | | | | 237 | | | | 108 | | | | 129 | |
| Depreciation and amortization | | | 7,254 | | | | 5,894 | | | | 1,360 | | | | 14,233 | | | | 11,572 | | | | 2,661 | |
| Total operating expenses | | | 32,150 | | | | 32,538 | | | | (388 | ) | | | 60,345 | | | | 61,654 | | | | (1,309 | ) |
| Equity in earnings (loss) of unconsolidated entities2, 3 | | | (891 | ) | | | 1,896 | | | | (2,787 | ) | | | (572 | ) | | | 2,306 | | | | (2,878 | ) |
| Operating income | | | 2,244 | | | | 5,884 | | | | (3,640 | ) | | | 6,412 | | | | 10,177 | | | | (3,765 | ) |
| Nonoperating income (expense): | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest expense, net | | | (2,950 | ) | | | (2,789 | ) | | | (161 | ) | | | (6,326 | ) | | | (5,673 | ) | | | (653 | ) |
| Other income4 | | | 104 | | | | 689 | | | | (585 | ) | | | 170 | | | | 725 | | | | (555 | ) |
| Total nonoperating expense, net | | | (2,846 | ) | | | (2,100 | ) | | | (746 | ) | | | (6,156 | ) | | | (4,948 | ) | | | (1,208 | ) |
| Net income before income tax benefit (expense) | | | (602 | ) | | | 3,784 | | | | (4,386 | ) | | | 256 | | | | 5,229 | | | | (4,973 | ) |
| Income tax benefit | | | 210 | | | | (106 | ) | | | 316 | | | | 400 | | | | 346 | | | | 54 | |
| Income from continuing operations | | | (392 | ) | | | 3,678 | | | | (4,070 | ) | | | 656 | | | | 5,575 | | | | (4,919 | ) |
| Income (loss) from discontinued operations | | | - | | | | 262 | | | | (262 | ) | | | - | | | | 532 | | | | (532 | ) |
| Net income | | | (392 | ) | | | 3,940 | | | | (4,332 | ) | | | 656 | | | | 6,107 | | | | (5,451 | ) |
| Dividends on preferred stock | | | 3,050 | | | | 1,150 | | | | 1,900 | | | | 6,100 | | | | 2,300 | | | | 3,800 | |
| Net income (loss) attributable to noncontrolling interests | | | 12 | | | | 19 | | | | (7 | ) | | | (3 | ) | | | 30 | | | | (33 | ) |
| Net income (loss) attributable to common stockholders | | ($ | 3,454 | ) | | $ | 2,771 | | | ($ | 6,225 | ) | | ($ | 5,441 | ) | | $ | 3,777 | | | ($ | 9,218 | ) |
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| Net income (loss) per share attributable to common stockholders - Basic and Diluted: | | ($ | 0.05 | ) | | $ | 0.04 | | | | | | | ($ | 0.08 | ) | | $ | 0.07 | | | | | |
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| Weighted average common shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 64,681 | | | | 64,512 | | | | | | | | 64,588 | | | | 55,382 | | | | | |
| Diluted | | | 65,115 | | | | 64,948 | | | | | | | | 65,022 | | | | 55,818 | | | | | |
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1For the three and six months ended June 30, 2014, includes $1,460 and $2,045, respectively, of transaction costs related to Copper Beech, the Montreal investments and other transaction costs. Additionally, for the three and six months ended June 30, 2013, includes $203 and $588, respectively, of transaction costs related to Copper Beech.
2 For the three and six months ended June 30, 2014 and the period from March 18, 2013 to June 30, 2013, includes results from the Company’s investment in Copper Beech. The Company made its initial investment on March 18, 2013 and subsequently made additional investments. On September 30, 2013, the Company entered into an amendment to the purchase and sale agreement that, subject to receipt of required third-party lender consents, enabled the Company to acquire a 67% ownership interest in 30 properties, while deferring ownership in seven properties until the Company exercises future purchase options. As of June 30, 2014, the Company held a 67% effective interest in 28 operating and two non-operating properties.
3 For the three and six months ended June 30, 2014, includes $1,765 and $3,519, respectively, of fair value adjustment related to Copper Beech's debt. For the three and six months ended June 30, 2013, includes $833 and $945, respectively, of fair value adjustment related to Copper Beech's debt.
4For the three and six months ended June 30, 2013, includes interest income from the 8.5%, $31,700 loan made to existing investors in Copper Beech on March 18, 2013. In conjunction with the September 30, 2013 amendment to the purchase and sale agreement, the $31,700 loan was repaid by Copper Beech.
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| RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS TO FUNDS FROM OPERATIONS ("FFO"), FUNDS FROM OPERATIONS ADJUSTED ("FFOA") & NET OPERATING INCOME ("NOI") (unaudited) |
| (in $000s, except per share data) |
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| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | 2014 | | | 2013 | | | $ Change | | | 2014 | | | 2013 | | | $ Change | |
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| Net income (loss) attributable to common stockholders | | $ | (3,454 | ) | | $ | 2,771 | | | $ | (6,225 | ) | | $ | (5,441 | ) | | $ | 3,777 | | | $ | (9,218 | ) |
| Net income (loss) attributable to noncontrolling interests | | | 12 | | | | 19 | | | | (7 | ) | | | (3 | ) | | | 30 | | | | (33 | ) |
| Real estate related depreciation and amortization | | | 6,908 | | | | 5,646 | | | | 1,262 | | | | 13,585 | | | | 11,181 | | | | 2,404 | |
| Real estate related depreciation and amortization - discontinued operations | | | - | | | | 764 | | | | (764 | ) | | | - | | | | 1,525 | | | | (1,525 | ) |
| Real estate related depreciation and amortization - unconsolidated entities | | | 7,264 | | | | 3,624 | | | | 3,640 | | | | 14,597 | | | | 4,431 | | | | 10,166 | |
| FFO available to common shares and OP units1, 2, 3 | | | 10,730 | | | | 12,824 | | | | (2,094 | ) | | | 22,738 | | | | 20,944 | | | | 1,794 | |
| Elimination of transactions costs | | | 1,460 | | | | 203 | | | | 1,257 | | | | 2,045 | | | | 588 | | | | 1,457 | |
| Elimination of FV adjustment of CB debt | | | (1,765 | ) | | | (833 | ) | | | (932 | ) | | | (3,519 | ) | | | (945 | ) | | | (2,574 | ) |
| Funds from operations adjusted (FFOA) available to common shares and OP units | | $ | 10,425 | | | $ | 12,194 | | | ($ | 1,769 | ) | | $ | 21,264 | | | $ | 20,587 | | | $ | 677 | |
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| FFO per share - diluted1, 2, 3 | | $ | 0.16 | | | $ | 0.20 | | | $ | (0.04 | ) | | $ | 0.35 | | | $ | 0.38 | | | $ | (0.03 | ) |
| FFOA per share - diluted | | $ | 0.16 | | | $ | 0.19 | | | $ | (0.03 | ) | | $ | 0.33 | | | $ | 0.37 | | | $ | (0.04 | ) |
| Weighted average common shares and OP units outstanding - diluted | | | 65,115 | | | | 64,948 | | | | | | | | 65,022 | | | | 55,818 | | | | | |
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| | | | | | | |
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | 20141 | | | 20131 | | | 20141 | | | 20131 | |
| | | | | | | | | | | | | |
| Net income (Loss) attributable to common stockholders | | $ | (3,454 | ) | | $ | 2,771 | | | $ | (5,441 | ) | | $ | 3,777 | |
| Net income (Loss) attributable to noncontrolling interests | | | 12 | | | | 19 | | | | (3 | ) | | | 30 | |
| Preferred stock dividends | | | 3,050 | | | | 1,150 | | | | 6,100 | | | | 2,300 | |
| Income tax benefit (expense) | | | (210 | ) | | | 106 | | | | (400 | ) | | | (346 | ) |
| Other income (expense) | | | (104 | ) | | | (689 | ) | | | (170 | ) | | | (725 | ) |
| (Income) loss on discontinued operations | | | - | | | | (262 | ) | | | - | | | | (532 | ) |
| Interest expense | | | 2,950 | | | | 2,789 | | | | 6,326 | | | | 5,673 | |
| Equity in earnings of unconsolidated entities | | | 891 | | | | (1,896 | ) | | | 572 | | | | (2,306 | ) |
| Depreciation and amortization | | | 7,254 | | | | 5,894 | | | | 14,233 | | | | 11,572 | |
| Ground lease expense | | | 120 | | | | 54 | | | | 237 | | | | 108 | |
| General and administrative expense | | | 3,649 | | | | 2,908 | | | | 7,155 | | | | 5,559 | |
| Transaction costs | | | 1,460 | | | | 203 | | | | 2,045 | | | | 588 | |
| Development, construction and management services expenses | | | 8,920 | | | | 13,657 | | | | 15,315 | | | | 24,315 | |
| Development, construction and management services revenues | | | (10,622 | ) | | | (14,368 | ) | | | (18,058 | ) | | | (25,795 | ) |
| Total NOI | | $ | 13,916 | | | $ | 12,336 | | | $ | 27,911 | | | $ | 24,218 | |
| Same store properties NOI4 | | $ | 11,393 | | | $ | 12,109 | | | $ | 22,937 | | | $ | 23,988 | |
| New properties NOI4 | | $ | 1,770 | | | $ | 0 | | | $ | 3,552 | | | $ | 0 | |
| The Grove at Pullman & Toledo NOI5 | | $ | 753 | | | $ | 227 | | | $ | 1,422 | | | $ | 230 | |
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1For the three and six months ended June 30, 2014 and the period March 18, 2013 to June 30, 2013, includes results from the Company’s investment in Copper Beech. The Company made its initial investment on March 18, 2013 and subsequently made additional investments. On September 30, 2013, the Company entered into an amendment to the purchase and sale agreement that, subject to receipt of required third-party lender consents, enabled the Company to acquire a 67% ownership interest in 30 properties, while deferring ownership in seven properties until the Company exercises future purchase options. As of June 30, 2014, the Company held a 67% effective interest in 28 operating and two non-operating properties.
2For the three and six months ended June 30, 2014, includes $1,460 and $2,045, respectively, of transaction costs related to Copper Beech, the Montreal investments and other transaction costs. Additionally, for the three and six months ended June 30, 2013, includes $203 and $588, respectively, of transaction costs related to Copper Beech.
3For the three and six months ended June 30, 2014, includes $1,765 and $3,519, respectively, of fair value adjustment related to Copper Beech's debt. For the three and six months ended June 30, 2013, includes $833 and $945, respectively, of fair value adjustment related to Copper Beech's debt.
4"Same store" properties are our wholly-owned operating properties acquired or placed in-service prior to the beginning of the earliest period presented and owned by us and remaining in service through the end of the latest period presented or period being analyzed. "New properties" are our wholly-owned operating properties that we acquired or placed in service after the beginning of the earliest period presented or period being analyzed.
5 Includes NOI contribution from the operations of The Grove at Pullman and the Toledo, OH redevelopment, as well as business interruption insurance proceeds from The Grove at Pullman.
Non-GAAP Financial Measures
FFO and FFOA
FFO is a non-GAAP financial measure. We calculate FFO in accordance with the definition that was adopted by the Board of Governors of NAREIT. FFO, as defined by NAREIT, represents net income (loss) determined in accordance with U.S. GAAP, excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. In addition, in October 2011, NAREIT communicated to its members that the exclusion of impairment write-downs of depreciable real estate is consistent with the definition of FFO.
We use FFO as a supplemental performance measure because, in excluding real estate-related depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating expenses. We also believe that, as a widely recognized measure of the performance of equity REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially and adversely impact our results of operations, the utility of FFO as a measure of our performance is limited.
While FFO is a relevant and widely used measure of operating performance of equity REITs, other equity REITs may use different methodologies for calculating FFO and, accordingly, FFO as disclosed by such other REITs may not be comparable to FFO published herein. Therefore, we believe that in order to facilitate a clear understanding of our historical operating results, FFO should be examined in conjunction with net income (loss) (computed in accordance with U.S. GAAP) as presented in the consolidated financial statements included elsewhere in this document. FFO should not be considered as an alternative to net income (loss) (computed in accordance with U.S. GAAP) as an indicator of our properties’ financial performance or to cash flow from operating activities (computed in accordance with U.S. 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.
FFOA is a non-GAAP financial measure. In addition to FFO, we believe it is also a meaningful measure of our performance to adjust FFO to exclude the write-off of unamortized deferred financing fees, transaction costs, the write-off of development cost and fair value debt adjustments on equity method investments. Excluding the write-off of unamortized deferred financing fees, transaction costs the write-off of development costs, and fair value debt adjustments on equity method investments adjusts FFO to be more reflective of operating results prior to capital replacement or expansion, debt service obligations or other commitments and contingencies.
NOI
NOI is a non-GAAP financial measure. We calculate NOI by adding back (or subtracting from) to net income (loss) attributable to common stockholders the following expenses or charges: income tax expense, interest expense, equity in loss of unconsolidated entities, preferred stock dividends, depreciation and amortization, transaction costs, ground lease expense, general and administrative expense and development, construction and management services expense. The following income or gains are then deducted from net income (loss) attributable to common stockholders, adjusted for add backs of expenses or charges: equity in earnings of unconsolidated entities, income tax benefit, other income, and development, construction and management services revenue. We believe these adjustments help provide a performance measure, when compared year over year, that illustrates the operating results of our wholly-owned properties and captures trends in student housing rental and services income and student housing operating expenses.
NOI excludes multiple components of net income (loss) (computed in accordance with U.S. GAAP) and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially and adversely impact our results of operations. Therefore, the utility of NOI as a measure of our performance is limited. Additionally, other companies, including other equity REITs, may use different methodologies for calculating NOI and, accordingly, NOI as disclosed by such other companies may not be comparable to NOI published herein. Therefore, we believe that in order to facilitate a clear understanding of our historical operating results, NOI should be examined in conjunction with net income (loss) (computed in accordance with U.S. GAAP) as presented in the consolidated financial statements included elsewhere in this document. NOI should not be considered as an alternative to net income (loss) (computed in accordance with U.S. GAAP) as an indicator of our properties’ financial performance or to cash flow from operating activities (computed in accordance with U.S. 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.
