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American Campus Communities, Inc. Reports Third Quarter 2012 Financial Results

Stocks in this article: ACC

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 the largest owner and manager 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 141 student housing properties containing approximately 85,500 beds. Including its owned and third-party managed properties, ACC’s total managed portfolio consists of 169 properties with approximately 108,300 beds. Visit www.americancampus.com or 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, 2012 December 31, 2011
Assets (unaudited)
 
Investments in real estate:
Wholly-owned properties, net $ 3,944,757 $ 2,761,757
Wholly-owned properties held for sale 22,010 27,300
On-campus participating properties, net   58,080     59,850  
Investments in real estate, net 4,024,847 2,848,907
 
Cash and cash equivalents 18,011 22,399
Restricted cash 51,078 22,956
Student contracts receivable, net 9,483 5,324
Other assets   111,153     108,996  
 
Total assets $ 4,214,572   $ 3,008,582  
 
Liabilities and equity
 

Liabilities:

Secured mortgage, construction and bond debt $ 1,157,388 $ 858,530
Unsecured term loan 350,000 200,000
Unsecured revolving credit facility 206,000 273,000
Secured agency facility 116,000 116,000
Accounts payable and accrued expenses 57,700 36,884
Other liabilities   113,637     77,840  
Total liabilities 2,000,725 1,562,254
 
Redeemable noncontrolling interests 56,838 42,529
 
Equity:
American Campus Communities, Inc. and Subsidiaries
stockholders’ equity:
Common stock 917 725
Additional paid in capital 2,470,737 1,664,416
Accumulated earnings and dividends (335,667 ) (286,565 )
Accumulated other comprehensive loss   (7,551 )   (3,360 )

Total American Campus Communities, Inc. and Subsidiaries

stockholders’ equity 2,128,436 1,375,216
Noncontrolling interests   28,573     28,583  
Total equity   2,157,009     1,403,799  
 
Total liabilities and equity $ 4,214,572   $ 3,008,582  
 
 
Table 2
American Campus Communities, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(unaudited, dollars in thousands, except share and per share data)
       
Three Months Ended

September 30,

Nine Months Ended

September 30,

2012   2011 2012   2011
Revenues
Wholly-owned properties $ 110,112 $ 86,420 $ 304,346 $ 252,120
On-campus participating properties 5,087 5,011 17,766 17,115
Third-party development services 1,467 1,568 7,427 6,150
Third-party management services 1,687 1,794 5,083 5,427
Resident services   454     407     982     1,022  
Total revenues 118,807 95,200 335,604 281,834
 
Operating expenses
Wholly-owned properties 60,682

1

 

48,612 148,721

1

 

122,808
On-campus participating properties 3,010 2,870 8,306 7,495
Third-party development and management services 2,602 2,488 8,013 7,801
General and administrative 7,582

2

 

2,880 15,760

2

 

8,931
Depreciation and amortization 28,336 21,701 76,838 64,050
Ground/facility leases   1,093     810     2,861     2,624  
Total operating expenses   103,305     79,361     260,499     213,709  
 
Operating income 15,502 15,839 75,105 68,125
 
Nonoperating income and (expenses)
Interest income 429 167 1,358 374
Interest expense (13,812 ) (13,046 ) (39,591 ) (38,928 )
Amortization of deferred financing costs (1,072 ) (1,223 ) (3,047 ) (3,776 )
(Loss) income from unconsolidated joint ventures - (42 ) 444 (67 )
Other nonoperating income   136     -     14     -  
Total nonoperating expenses   (14,319 )   (14,144 )   (40,822 )   (42,397 )
 
Income before income taxes and discontinued operations 1,183 1,695 34,283 25,728
Income tax provision   (181 )   (88 )   (493 )   (373 )
Income from continuing operations 1,002 1,607 33,790 25,355
 
Discontinued operations
Income attributable to discontinued operations 20 185 961 1,924
Gain from disposition of real estate   -     -     83     14,574  
Total discontinued operations   20     185     1,044     16,498  
 
Net income 1,022 1,792 34,834 1,853
Net income attributable to noncontrolling interests   (395 )   (151 )   (1,853 )   (1,059 )
Net income attributable to American Campus
Communities, Inc. and Subsidiaries $ 627   $ 1,641   $ 32,981   $ 40,794  
 
Other comprehensive (loss) income
Change in fair value of interest rate swaps   (2,386 )   468     (4,191 )   1,395  
Comprehensive (loss) income $ (1,759 ) $ 2,109   $ 28,790   $ 42,189  
 

Net income per share attributable to American

Campus Communities, Inc. and Subsidiaries
common stockholders
Basic $ -   $ 0.02   $ 0.41   $ 0.59  
Diluted $ -   $ 0.02   $ 0.40   $ 0.58  
 
Weighted-average common shares outstanding
Basic   89,169,868     70,008,276     79,404,323     68,551,434  
Diluted   89,751,495     70,561,514     80,009,463     69,120,438  
1.   Wholly-owned properties operating expenses for the three and nine months ended September 30, 2012 include $0.9 million and $1.6 million, respectively, of acquisition-related costs such as broker fees, due diligence costs and legal and accounting fees.
2. General and administrative expenses for the three and nine months ended September 30, 2012 include $3.8 million and $4.5 million, respectively, of acquisition-related costs such as due diligence costs and legal and accounting fees related to the acquisition of a 15-property portfolio from Campus Acquisitions in September 2012.
 
 
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,

2012   2011 2012   2011
Net income attributable to American Campus    
Communities, Inc. and Subsidiaries $ 627

1

$ 1,641 $ 32,981

1

$ 40,794
Noncontrolling interests 2 129 151 798 1,059
Gain from disposition of real estate - - (83 ) (14,574 )
Loss (income) from unconsolidated joint ventures - 42 (444 ) 67
FFO from unconsolidated joint ventures 3 - (26 ) 429 (19 )
Real estate related depreciation and amortization   28,122     21,917     76,201     65,569  
 
Funds from operations (“FFO”) 28,878 23,725 109,882 92,896
 

Elimination of operations of on-campus participating

properties

Net loss (income) from on-campus participating

properties 919 770 (535 ) (576 )

Amortization of investment in on-campus participating

properties   (1,167 )   (1,123 )   (3,481 )   (3,330 )
28,630 23,372 105,866 88,990
 
Modifications to reflect operational performance of

on-campus participating properties

Our share of net cash flow 4 529 441 1,602 1,715
Management fees   236     215     814     770  
Impact of on-campus participating properties 765 656 2,416 2,485
Elimination of gain on debt restructuring -
unconsolidated joint venture 5 - - (424 ) -
Loss on remeasurement of equity method investment 6   -     -     122     -  
Funds from operations-modified ("FFOM”) $ 29,395   $ 24,028   $ 107,980   $ 91,475  
 
FFO per share – diluted $ 0.32   $ 0.33   $ 1.36   $ 1.32  
 
FFOM per share – diluted 7 $ 0.32   $ 0.34   $ 1.33   $ 1.30  
 
Weighted average common shares outstanding –

diluted

  90,764,959     71,580,468     81,011,069     70,152,495  
 
1.   Net income for the three and nine months ended September 30, 2012 includes $4.7 million and $6.1 million, respectively, of acquisition-related costs such as broker fees, due diligence costs and legal and accounting fees.
2. The adjustment to FFO for noncontrolling interests’ share of net income excludes $0.3 million and $1.1 million for the three and nine months ended September 30, 2012, respectively, of income attributable to the noncontrolling partner in The Varsity, a property purchased in December 2011 from a seller that retained a 20.5% noncontrolling interest in the property.
3. Represents our 10% share of FFO from a joint venture with Fidelity (“Fund II”) in which we were a noncontrolling partner. In January 2012, we purchased the full ownership interest in the one remaining property owned by Fund II (University Heights). Subsequent to the acquisition, the property is now wholly-owned and is consolidated by the company.
4. 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.
5. Immediately prior to our purchase of University Heights from Fund II (see Note 3), Fund II negotiated a Settlement Agreement with the lender of the property’s mortgage loan whereby the lender agreed to accept a discounted amount that was less than the original principal amount of the loan as payment in full. Accordingly, Fund II recorded a gain on debt restructuring to reflect the discounted payoff. Our 10% share of such gain is reflected above as an adjustment to FFOM.
6. Represents a non-cash loss recorded to remeasure our equity method investment in Fund II to fair value as a result of our purchase of the full ownership interest in University Heights from Fund II in January 2012.
7. Excluding the acquisition-related costs mentioned in note 1, FFOM per fully diluted share was $0.38 and $1.41 for the three and nine months ended September 30, 2012, respectively.
 
Table 4
American Campus Communities, Inc. and Subsidiaries

2012 Outlook 1

(unaudited, dollars in thousands, except per share data)
         
Low High
Net income $ 53,100 $ 56,400
Noncontrolling interests 1,250 1,350

Depreciation and amortization

  109,750     109,750  
Funds from operations (“FFO”) 164,100 167,500
 
Elimination of operations from on-campus participating properties (7,500 ) (7,500 )
 

Modifications to reflect operational performance of on-campus

participating properties   3,000     3,000  
Funds from operations – modified (“FFOM”) $ 159,600   $ 163,000  
 
Weighted average common shares outstanding – diluted   84,300,000     84,300,000  
 
Net income per share – diluted $ 0.63   $ 0.67  
 
FFO per share – diluted $ 1.95   $ 1.99  
 
FFOM per share – diluted $ 1.89   $ 1.93  
 
 
Acquisition and debt defeasance costs $ 8,100   $ 8,100  
 
FFO per share (excluding acq. and debt defeasance costs) $ 2.04   $ 2.08  
 
FFOM per share (excluding acq. and debt defeasance costs) $ 1.99   $ 2.03  
 
1.   Assumes: (1) the company will achieve property level net operating income, including dispositions and excluding acquisition-related costs, of $238.2 million to $239.6 million; (2) the company will initiate an inaugural bond offering during the fourth quarter 2012 or early 2013; and (3) no additional property acquisitions or dispositions, other than what has been disclosed subsequent to the third quarter of 2012.




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