American Campus Communities Inc. Reports Third Quarter 2009 Financial Results
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AUSTIN, Texas--(BUSINESS WIRE)-- American Campus Communities Inc. (NYSE: ACC) today announced the following financial results for the quarter ended September 30, 2009.
Highlights
-- Quarterly FFOM of $13.7 million or $0.25 per fully diluted share,
compared to $6.4 million or $0.15 per fully diluted share in the third
quarter prior year.
-- Increased net operating income ("NOI") at the same store wholly-owned
properties by 25.1 percent over the third quarter 2008. Excluding
hurricane charges incurred during the third quarter 2008 and the effect
of conforming certain GMH accounting policies to be consistent with the
company's, same store wholly-owned NOI would have increased 10.7 percent
over the same quarter prior year.
-- Increased occupancy at the same store wholly-owned portfolio to 95.9
percent as of September 30, 2009 compared to 92.0 percent for the same
date prior year. Occupancy at ACC same store wholly-owned properties was
96.3 percent as of September 30, 2009 compared to 96.5 percent for the
same date prior year, and occupancy at the GMH same store wholly-owned
properties increased to 95.5 percent compared to 87.6 percent for the
same date prior year.
-- Renewed the company's revolving credit facility arranged by KeyBank,
increasing the capacity to $225 million from $160 million.
-- Completed a $125 million secured revolving credit facility with PNC
ARCS, LLC on behalf of Freddie Mac.
-- Completed construction and opened Barrett Honors College, the 1,721-bed
owned American Campus Equity (ACE)(TM) development at Arizona State
University, which opened 95 percent occupied.
-- Commenced construction on a third-party development project at Cleveland
State University containing 600 beds with anticipated completion for
phase one occurring August 2010.
Third Quarter 2009 Operating Results
Revenue for the 2009 third quarter totaled $78.4 million, up 8.7 percent from $72.1 million in the 2008 third quarter. Operating income for the quarter increased $7.0 million or 141.8 percent over the prior year third quarter primarily due to the GMH acquisition and related transition costs and the opening of Vista del Sol and Villas at Chestnut Ridge in August 2008 and Barrett Honors College in August 2009. Net loss for the 2009 third quarter totaled $5.8 million, or $0.11 per fully diluted share, compared with a net loss of $13.1 million, or $0.31 per fully diluted share, for the same quarter in 2008. This decrease over the prior year was primarily due to the increase in operating income discussed above and a reduction to interest expense resulting from the pay down of $103 million of mortgage and construction debt. FFO for the 2009 third quarter totaled $13.1 million, or $0.24 per fully diluted share, compared to $5.1 million, or $0.12 per fully diluted share, for the same quarter in 2008. FFOM for the 2009 third quarter was $13.7 million, or $0.25 per fully diluted share, compared to $6.4 million, or $0.15 per fully diluted share, for the same quarter in 2008. A reconciliation of FFO and FFOM to net income is shown on Table 3.
NOI for same store wholly-owned properties was $26.0 million in the quarter, up 25.1 percent from $20.8 million in the 2008 third quarter. Same store wholly-owned property revenues increased by 7.4 percent over the 2008 third quarter, primarily a result of conforming certain GMH accounting policies to be consistent with the company's as well as the improved lease-up for the GMH portfolio for the 2009-2010 academic year. The decrease in same store wholly-owned operating expenses of 2.3 percent over the 2008 third quarter was primarily due to $0.4 million of charges incurred during the third quarter 2008 related to hurricane damage as well as efficiencies experienced in the third quarter 2009 related to the integration of the GMH portfolio. Excluding the effect of conforming certain GMH accounting policies to be consistent with the company's and the $0.4 million of hurricane charges incurred during the third quarter 2008, same store wholly-owned revenues would have increased by 3.0 percent, expenses would have declined by 1.3 percent, and NOI would have increased by 10.7 percent compared to the prior year quarter. NOI for the total wholly-owned property portfolio increased 37.1 percent to $30.8 million for the quarter from $22.5 million in the comparable period of 2008. For purposes of calculating property NOI, the company defines property NOI as property revenues less direct property operating expenses, excluding depreciation and unallocated corporate general and administrative expenses.
"We continue to be very pleased with the turnaround of the GMH properties," commented American Campus CEO Bill Bayless. "With occupancy gains and revenue growth across the portfolio, we believe we are on track for internal value creation while also achieving meaningful progress in the ACE program."
Portfolio Update
The University of New Mexico board of regents has approved the Master Agreement, which is the relationship document between ACC and UNM that details the terms for the company to develop various phases of student housing under the ACE program.
The Oregon University System has approved the preliminary ground lease terms that detail the process whereby ACC and Portland State University jointly proceed to develop student housing under the ACE program.
The company completed third-party development services for The Highlands, a 796-bed community at Edinboro University, and for a 362-bed student housing project at West Virginia University's downtown campus.
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.studenthousing.com. In addition, the company will host a conference call to discuss third quarter results and the 2009 outlook on Wednesday, October 28, 2009 at 11 a.m. EST (10:00 a.m. CST). To participate by telephone, call 866-711-8198 passcode 45319988 at least five minutes prior to the call.
To listen to the live broadcast, go to www.studenthousing.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 November 4, 2009 by dialing 888-286-8010 or 617-801-6888 passcode 21071313. The replay also will be available for 30 days at www.studenthousing.com and at www.earnings.com. The call will also be available as a podcast on www.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, however, 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 lessor. 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.
The company defines property NOI as property revenues less direct property operating expenses, excluding depreciation, but including allocated corporate general and administrative expenses.
About American Campus Communities
American Campus Communities Inc. is 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 86 student housing properties containing approximately 52,800 beds, with a minority interest in 21 joint venture properties containing approximately 12,100 beds. Including its owned, joint venture and third-party managed properties, ACC's total managed portfolio consists of 139 properties with approximately 88,600 beds. Additional information is available at www.studenthousing.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)
September 30, 2009 December 31, 2008
Assets (unaudited)
Investments in real estate:
Wholly-owned properties, net $ 2,050,352 $ 1,986,833
On-campus participating properties, net 66,677 69,302
Investments in real estate, net 2,117,029 2,056,135
Cash and cash equivalents 86,753 25,600
Restricted cash 29,103 32,558
Student contracts receivable, net 7,058 5,185
Other assets 59,760 64,431
Total assets $ 2,299,703 $ 2,183,909
Liabilities and equity
Liabilities:
Secured mortgage, construction and bond $ 1,055,526 $ 1,162,221
debt
Senior secured term loan 100,000 100,000
Secured revolving credit facility - 14,700
Secured agency facility 94,000 -
Accounts payable and accrued expenses 31,679 35,440
Other liabilities 59,880 56,052
Total liabilities 1,341,085 1,368,413
Redeemable noncontrolling interests 35,449 26,286
Equity:
American Campus Communities Inc. and
Subsidiaries
stockholders' equity:
Common stock 521 423
Additional paid in capital 1,093,018 901,641
Accumulated earnings and distributions (169,477 ) (111,828 )
Accumulated other comprehensive loss (4,815 ) (5,117 )
Total American Campus Communities Inc. and 919,247 785,119
Subsidiaries stockholders' equity
Noncontrolling interests 3,922 4,091
Total equity 923,169 789,210
Total liabilities and equity $ 2,299,703 $ 2,183,909
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 September Nine Months Ended September 30,
30,
2009 2008 2009 2008
Revenues:
Wholly-owned $ 69,735 $ 60,663 $ 203,219 $ 129,638
properties
On-campus
participating 4,433 4,301 15,229 14,993
properties
Third-party
development 1,760 4,519 3,698 6,898
services
Third-party
management 2,229 2,041 6,576 4,185
services
Resident 288 610 733 1,409
services
Total revenues 78,445 72,134 229,455 157,123
Operating
expenses:
Wholly-owned 39,234 38,812 103,611 69,435
properties
On-campus
participating 2,690 3,274 7,503 8,068
properties
Third-party
development and 2,842 3,277 8,629 7,713
management
services
General and 2,667 3,191 8,244 8,562
administrative
Depreciation
and 18,630 18,148 59,132 37,291
amortization
Ground/facility 474 508 1,478 1,235
leases
Total operating 66,537 67,210 188,597 132,304
expenses
Operating 11,908 4,924 40,858 24,819
income
Nonoperating
income and
(expenses):
Interest income 21 244 101 1,048
Interest (15,789 ) (17,022 ) (47,121 ) (32,734 )
expense
Amortization of
deferred (845 ) (832 ) (2,426 ) (1,591 )
financing costs
Loss from
unconsolidated (907 ) (926 ) (1,944 ) (1,181 )
joint ventures
Other
nonoperating - 486 402 486
income
Total
nonoperating (17,520 ) (18,050 ) (50,988 ) (33,972 )
expenses
Loss before
income taxes,
redeemable
noncontrolling (5,612 ) (13,126 ) (10,130 ) (9,153 )
interests and
discontinued
operations
Income tax (135 ) (128 ) (405 ) (261 )
provision
Redeemable
noncontrolling
interests share 87 307 114 (12 )
of loss
(income)
Loss from
continuing (5,660 ) (12,947 ) (10,421 ) (9,426 )
operations
Loss
attributable to - (115 ) - (23 )
discontinued
operations
Net loss (5,660 ) (13,062 ) (10,421 ) (9,449 )
Income
attributable to (144 ) (32 ) (416 ) (186 )
noncontrolling
interests
Net loss
attributable to
American Campus $ (5,804 ) $ (13,094 ) $ (10,837 ) $ (9,635 )
Communities,
Inc. and
Subsidiaries
Net loss per
share
attributable to
American Campus
Communities,
Inc. and
Subsidiaries
common
stockholders:
Basic $ (0.11 ) $ (0.31 ) $ (0.24 ) $ (0.28 )
Diluted $ (0.11 ) $ (0.31 ) $ (0.23 ) $ (0.27 )
Weighted
average common
shares
outstanding:
Basic 52,195,869 42,314,175 47,526,198 35,139,189
Diluted 53,516,117 43,577,493 48,804,267 36,549,728
Table 3
American Campus Communities Inc. and Subsidiaries
Calculation of FFO and FFOM
(unaudited, dollars in thousands, except share and per share data)
Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 2009 2008
Net loss
attributable
to American
Campus $ (5,804 ) $ (13,094 ) $ (10,837 ) $ (9,635 )
Communities,
Inc. and
Subsidiaries
Noncontrolling 57 (275 ) 302 198
interests
Loss from
unconsolidated 907 926 1,944 1,181
joint ventures
FFO from
unconsolidated (308 ) (216 ) (155 ) (355 )
joint ventures
(1)
Real estate
related
depreciation 18,249 17,771 57,981 36,562
and
amortization
Funds from
operations 13,101 5,112 49,235 27,951
("FFO")
Elimination of
operations of
on-campus
participating
properties and
unconsolidated
joint venture:
Net loss from
on-campus 995 1,780 586 1,454
participating
properties
Amortization
of investment
in on-campus (1,087 ) (1,087 ) (3,269 ) (3,230 )
participating
properties
FFO from
Hampton Roads
unconsolidated (180 ) (22 ) - 187
joint venture
(2)
12,829 5,783 46,552 26,362
Modifications
to reflect
operational
performance of
on-campus
participating
properties:
Our share of
net cash flow 223 383 715 1,110
(3)
Management 210 206 709 696
fees
Impact of
on-campus 433 589 1,424 1,806
participating
properties
Elimination of
our share of
impairment
charges 464 - 464 -
recorded for
unconsolidated
joint ventures
(4)
Funds from
operations - $ 13,726 $ 6,372 $ 48,440 $ 28,168
modified
("FFOM")
FFO per share $ 0.24 $ 0.12 $ 1.00 $ 0.76
- diluted
FFOM per share $ 0.25 $ 0.15 $ 0.98 $ 0.76
- diluted
Weighted
average common
shares 53,981,650 43,860,667 49,263,052 36,827,477
outstanding -
diluted
(1) Represents our share of the FFO from three joint ventures in which we are a minority partner. Includes the Hampton Roads Military Housing joint venture in which we have a minimal economic interest as well as our 10% minority interest in two joint ventures (the "Fidelity Joint Ventures") formed or assumed as part of the company's acquisition of GMH. For the three and nine months ended September 30, 2009, ACC's 10% share of the FFO of the Fidelity Joint Ventures was negative $0.5 million and negative $0.2 million, respectively. For the three and nine months ended September 30, 2009, ACC's 10% share of the net operating income of the Fidelity Joint Ventures was $0.5 million and $1.9 million, respectively.
(2) Our share of the FFO from the Hampton Roads Military Housing unconsolidated joint venture is excluded from the calculation of FFOM, as management believes this amount does not accurately reflect the company's participation in the economics of the transaction.
(3) 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.
(4) Represents our share of impairment charges recorded for two properties owned through our unconsolidated Fidelity Joint Ventures.
Source: American Campus Communities Inc.
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