American Campus Communities Inc. (



Q3 2010 Earnings Call

October 27, 2010 11:00 am ET


Gina Cowart - VP of IR and Corporate Marketing

Bill Bayless - President & CEO

Greg Dowell - SVP & COO

William Talbot - SVP, Investments

Jamie Wilhelm - EVP, Public and Private Partnerships

Jon Graf - EVP, Treasurer & CFO


Eric Wolfe - Citigroup

Michelle Ko - Bank of America

Dustin Pizzo - UBS

Paula Poskon - Robert W. Baird

Andrew McCulloch - Green Street Advisors

Eric Wolfe - Citigroup

Karin Ford - KeyBanc

Haendel St. Juste - KBW



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Good day, ladies and gentlemen, and welcome to the Third Quarter 2010 American Campus Communities Earnings Conference Call. My name is Tawanda and I will be your coordinator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is been recorded for replay purposes.

I would now like to turn the conference over to Ms. Gina Cowart, Vice President of Investor Relations. You may proceed.

Gina Cowart

Thank you, Tawanda. Good morning and thank you for joining the American Campus Communities third quarter conference call. The press release is furnished on Form 8-K to provide access to the widest possible audience. In the release, the company has reconciled non-GAAP financial measures to those directly comparable GAAP measures in accordance with regulatory requirements. If you don’t have a copy of the release, it’s available on the company’s website at in the Investor Relations section under Press Releases.

Also posted on the website in the Investor Relations section you’ll find a supplemental financial package. We’re also hosting a live webcast for today’s call, which you can access on the website with the replay available for one month. Our supplemental analyst package and our webcast presentation are one and the same. Webcast slides may be advanced by you to facilitate following along.

Management will be making forward-looking statements today, the references to the disclosure in the press release on the website with the slides and SEC filings. Management would like to inform you that certain statements made during this conference call, which are not historical facts, may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995.

Although, the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, they are subject to economic risks and uncertainties. The company can provide no assurance that its expectations will be achieved and actual results may vary.

Factors and risks that could cause actual results to differ materially from expectations are detailed in the press release and from time to time in the company’s periodic filings with the SEC. The company undertakes no obligation to advise or update any forward-looking statements to reflect events or circumstances after the date of this release.

Having said all that, I’d now like to turn the call over to Bill Bayless, Chief Executive Officer, for his opening remarks.

Bill Bayless

Thank you, Gina. Good morning and thank you all for joining us as we discuss our Q3 2010 results. As you may have surmised from our press release last night, we’re very pleased with our operational results, our growth activities and the capital market activities that occurred during the quarter. With that, let me address the format of our presentation.

Greg Dowell will address our operational leasing results; William Talbot, our investment activities; Jamie Wilhelm will discuss ACE and third-party development services; and Jon Graf will discuss the financial results and our updated guidance. Daniel Perry and I will then lead the Q&A.

With that, I’ll turn it over to Greg Dow.

Greg Dowell

Thanks, Bill. Our third quarter operating results exceeded our internal expectations. We closed out a great 2009-2010 academic year and delivered a strong start to the 2010-2011 academic year with gains and occupancy and rental rates setting the stage for meaningful core growth in 2011.

If you turn to page 5 of the supplemental package, you will see that our third quarter same-store NOI increased by 7.3% over Q3 of 2009.

This was the result of a 4.5% increase in revenue and an increase in operating expenses of only 2.3%. This increase in operating expenses was largely attributable to variable expenses related to increased occupancy over the prior year. You will also see that on a year-to-date basis, our same-store NOI growth was a healthy 6.9%.

As you can see on page 8 of the supplemental, September 30, 2010 occupancy at our same-store wholly-owned properties was 98.4% compared to 95.9% for the same date in the prior year. This represents an increase of 250 basis points in occupancy over the prior year with an average rental rate increase of 1.9%.

With these increases, we anticipate same-store rental revenue growth to be in the area of 4.5% during the 2010-2011 academic year. As of September 30, occupancy for our total wholly-owned portfolio was 98.1%. Based on the final fall occupancies and rental rates, we would anticipate same-store NOI growth of 3.5 to 6% for the remainder of the 2010-2011 academic year dependent upon our ability to continue to control expenses.

We are also pleased that we were able to lease the previously announced acquisition portfolio of 14 joint venture properties to a September 30 occupancy of 97.2% which is an occupancy increase of 280 basis points over the prior year while achieving our rental rate increase at 2.4%.

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