Third Quarter Operating Results
Revenue for the 2012 third quarter totaled $118.8 million, up 24.8 percent from $95.2 million in the third quarter 2011. The increase in revenues was primarily due to growth resulting from property acquisitions, recently completed development properties, and increased rental rates for the 2012-2013 academic year. FFO for the 2012 third quarter totaled $28.9 million, or $0.32 per fully diluted share, as compared to $23.7 million, or $0.33 per fully diluted share for the same quarter in 2011. FFOM for the 2012 third quarter was $29.4 million, or $0.32 per fully diluted share as compared to $24.0 million, or $0.34 per fully diluted share for the same quarter in 2011. Excluding acquisition-related costs, FFO for the 2012 third quarter totaled $33.6 million or $0.37 per fully diluted share and FFOM for the 2012 third quarter totaled $34.1 million or $0.38 per fully diluted share. A reconciliation of FFO and FFOM to net income is shown in Table 3.
AcquisitionsDuring the quarter, the company completed the purchase of Campus Acquisitions’ student housing portfolio containing 15 assets containing 6,579 beds for approximately $627.0 million including $231.1 million of secured debt. The company anticipates investing $13.7 million in capital improvements to drive future rental rate and revenue growth. The projected year-one cap rate is 5.9 percent nominal (inclusive of upfront capital improvements) and 5.6 percent economic (inclusive of the assumed $200 per bed capital reserves, upfront capital improvements, loan assumption costs, and transaction expenses). For more details on the transaction, please refer to the press release previously posted on the company's website. In August, the company acquired The Block, a six-community off-campus property consisting of 1,555 beds, for a purchase price of $165.0 million. Built in 2007-2008, The Block is located within the West Campus submarket and serves students attending The University of Texas at Austin. The community is currently 98.6 percent occupied. The projected year-one cap rate for the project (inclusive of $3.5 million in upfront capital for upgraded amenities and deferred maintenance) is 5.9 percent nominal and 5.6 percent economic. Mezzanine Investment Program In September, the company exercised its option to purchase The Retreat, a 780-bed cottage community that opened in August 2012 and serves students attending Texas State University in San Marcos, as part of the company’s mezzanine investment program for $52.0 million. The projected year-one cap rate is 7.0 percent nominal and 6.6 percent economic.