American Campus Communities (ACC) Misses Q2 EPS by 5c, Revenues Miss

American Campus Communities (NYSE: ACC) reported Q2 EPS of ($0.10), $0.05 worse than the analyst estimate of ($0.05). Revenue for the quarter came in at $185.55 million versus the consensus estimate of $199.54 million.

Highlights

• Reported net loss attributable to ACC of $13.3 million or $0.10 per fully diluted share, versus net income of $10.4 million or $0.07 per fully diluted share in the second quarter 2019.
• Reported FFOM of $50.9 million or $0.37 per fully diluted share versus $77.4 million or $0.56 per fully diluted share in the second quarter prior year.
• Continued to implement the company’s COVID-19 crisis response plan consistent with the eight principle objectives discussed on its first quarter earnings call, which are reiterated below in the COVID-19 update.
• Through its COVID-19 Resident Hardship Program, the company provided $8.6 million in direct financial relief to its residents suffering financial hardship and an additional $15.1 million in rent relief to students through its university partnerships. In addition to this $23.7 million of financial assistance, the company waived all late fees, online payment fees and did not pursue any financial related evictions.
• At the company’s off-campus communities and on-campus 12-month ACE® apartment communities, on average 93.7 percent of residents made their rent payments during the quarter.
• Same store net operating income ("NOI") decreased by 20.9 percent versus the second quarter 2019. Revenues decreased 14.2 percent and operating expenses decreased 5.7 percent as compared to the prior year quarter. Same store revenue was impacted by approximately $30.6 million of rent relief, lost revenues from summer camps and conferences, increased uncollectible accounts, waived fees and other COVID related items.
• As of July 19 The Chronicle of Higher Education reported that 63 of the 68 universities served by the company’s communities are planning for a return to in-person classes or a hybrid in-person model for Fall 2020, while only five are planning for primarily online classes.
• Delivered the first phase of the Disney College Program project on schedule and within budget. Due to the COVID-19 related temporary suspension of the Disney College Program, initial occupancy is expected upon reinstatement of the program.
• Issued $400.0 million of 10-year senior unsecured notes at a yield of 3.974 percent, with the proceeds used to repay borrowings under the company’s revolving credit facility.
• Launched “Be safe. Be smart. Do your part.TM” program, which includes a comprehensive review of cleaning products and procedures by a third-party hygiene and disinfectant specialist, that integrates enhanced cleaning standards, resident responsibility education and touchless preventative measures in the company’s college communities across the country.
• Published an Environmental, Social, Governance (ESG) report outlining the company’s year-in-review of successful activities and its continued commitment to healthy, sustainable environments conducive to academic achievement.

“Throughout this pandemic, we have strived to ‘Do the right thing’ by our stakeholders and continued to follow the eight principle objectives we laid out at the beginning of this crisis,” said Bill Bayless, American Campus Communities CEO. “We are pleased with our progress in relation to all of these guiding principles. As we expected and communicated on the last earnings call, this quarter was significantly impacted by the short term financial impacts of the COVID pandemic, largely driven by our commitment to responsibly manage our business with compassion towards those residents and families who need financial assistance during these challenging times, with nearly $24 million in financial relief given during the quarter. While we anticipate that we will continue to have short term financial impacts, over the longer term we are pleased with the progress that we have made in our efforts associated with the Fall 2020 lease-up and our outreach to assist universities in their plans to return to some level of in-person curriculum delivery this fall. Although we don’t expect a full return to normalcy in Fall 2020, universities are focused on the policies and procedures necessary to promote a safe environment in the delivery of their academic curriculum this fall, and our leasing trends and consumer sentiment at this time make us cautiously optimistic that we are on a path that many would have considered a best-case scenario at the outset of this pandemic.”

For earnings history and earnings-related data on American Campus Communities (ACC) click here.

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