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Share Name | Share Symbol | Market | Type |
---|---|---|---|
American Campus Communities Inc | NYSE:ACC | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 65.42 | 0 | 01:00:00 |
American Campus Communities, Inc. (NYSE:ACC) today announced the following financial results for the quarter ended June 30, 2019.
Highlights
“We continue to be pleased with our core operating performance through the second quarter and I want to thank the American Campus team for their tireless efforts to produce value for our shareholders,” said Bill Bayless, American Campus Communities CEO. “Of course, we still have a lot remaining to complete this year, including the always important final months of the Fall lease-up, ongoing efforts to control operating expenses through our asset management initiatives, and closing third-party development transactions for our university clients. We are also excited to be opening our 10 new owned, presale and third-party developments this Fall. These living-learning communities represent the latest in innovative designs that incorporate sustainability and affordability while fostering academic and personal success for students.”
Second Quarter Operating Results
Revenues for the 2019 second quarter totaled $217.4 million versus $201.1 million in the second quarter 2018, and operating income for the quarter totaled $37.8 million versus $73.2 million in the prior year second quarter. The increase in revenue was primarily due to growth resulting from an increase in average occupancy and rental rates for the 2018-2019 academic year and development properties completed in 2018. The decrease in operating income was primarily due to a $42.3 million gain from the disposition of real estate in the prior year quarter. Net income for the 2019 second quarter totaled $10.4 million, or $0.07 per fully diluted share, compared with $46.0 million, or $0.33 per fully diluted share for the same quarter in 2018. The decrease in net income as compared to the prior year quarter is primarily due to the $42.3 million gain from the disposition of real estate in the prior year quarter, offset by an increase in revenues, as described above.
FFO for the 2019 second quarter totaled $76.2 million, or $0.55 per fully diluted share, as compared to $65.7 million, or $0.47 per fully diluted share for the same quarter in 2018. FFOM for the 2019 second quarter was $77.4 million, or $0.56 per fully diluted share as compared to $72.6 million, or $0.52 per fully diluted share for the same quarter in 2018. A reconciliation of FFO and FFOM to net income is provided in Table 3.
NOI for same store properties was $106.0 million in the quarter, an increase of 3.5 percent versus $102.5 million in the 2018 second quarter. Same store property revenues increased by 3.2 percent and same store property operating expenses increased by 2.9 percent. NOI for the total owned portfolio increased 8.7 percent to $113.1 million for the quarter from $104.1 million in the comparable period of 2018. A reconciliation of same store NOI to total NOI is provided in Table 4.
Portfolio Update
Developments
The company continues to progress on the construction of its $767.5 million development pipeline and $107.3 million presale development pipeline that includes expected deliveries in Fall 2019 through 2021. These projects are all core Class A assets located on campus or pedestrian to campus in their respective markets and remain on track to meet their targeted stabilized development yield in the range of 6.25 – 6.8 percent for developments and 5.75 – 6.25 percent for presale developments.
Third-Party Services
Subsequent to quarter end, the company closed on financing and commenced construction on a third-party on-campus development project with the University of California, Riverside, which represents the company’s second phase of development under the larger multi-phase award. The company expects to earn $6.7 million in fees throughout the construction period of this phase and expects to provide management services upon the opening of the community in Fall 2021.
Dispositions
During the quarter, the company completed the sale of College Club Townhomes, at Florida A&M University, and subsequent to quarter end the company completed the disposition of Blanton Common, at Valdosta State University, which was surrendered to the lender in satisfaction of the property’s $27.4 million mortgage loan. These non-core properties, located 0.9 and 1.6 miles from small regional universities, were included in larger high-quality portfolio acquisitions in 2005 and 2008, but individually were not consistent with the company’s investment criteria. Proceeds from the transactions, including the forgiveness of debt, totaled $36.9 million.
Capital Markets
In June, the company issued $400 million of senior unsecured notes under its existing shelf registration, which are fully and unconditionally guaranteed by the company. These 7-year notes were issued at 99.704 percent of par value with a coupon of 3.300 percent and a yield of 3.347 percent. When including the effect of an interest rate swap entered into in 2018, the effective interest rate on the notes is 3.7 percent. The notes will mature on July 15, 2026. Moody’s and S&P rated the notes Baa2 and BBB, respectively. Net proceeds from the transaction totaled approximately $394 million, after expenses, and were used to repay borrowings under the company’s revolving credit facility, to fund projects in its current development pipeline and potential acquisitions of student housing properties and for general business purposes.
At-The-Market (ATM) Share Offering Program
The company did not sell any shares under the ATM during the quarter.
2019 Outlook
The company is maintaining its previously stated guidance range for the fiscal year 2019, anticipating that FFO will be in the range of $2.40 to $2.50 per fully diluted share and FFOM will be in the range of $2.35 to $2.45 per fully diluted share. For additional details regarding the company’s 2019 outlook, please see pages S-16 through S-17 of the Supplemental Analyst Package 2Q 2019. All guidance is based on the current expectations and judgment of the company’s management team.
A reconciliation of the range provided for projected net income to projected FFO and FFOM for the fiscal year ending December 31, 2019 is included in Table 5.
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.americancampus.com. In addition, the company will host a conference call to discuss second quarter results and the 2019 outlook on Tuesday, July 23, 2019 at 10:00 a.m. ET (9:00 a.m. CT). The conference call may be accessed by dialing 888-317-6003 passcode 5132979, or 412-317-6061 for international participants.
To listen to the live webcast, go to www.americancampus.com at least 15 minutes prior to the call so that required audio software can be downloaded. A replay of the conference call will be available beginning one hour after the end of the call until August 6, 2019 by dialing 877-344-7529 or 412-317-0088 conference number 10132391. Additionally, the replay will be available for one year at www.americancampus.com.
Non-GAAP Financial Measures
The National Association of Real Estate Investment Trusts ("NAREIT") currently defines Funds from Operations ("FFO") as net income or loss attributable to common shares computed in accordance with generally accepted accounting principles ("GAAP"), excluding gains or losses from depreciable operating property sales, impairment charges and real estate depreciation and amortization, 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. We also believe it is meaningful to present a measure we refer to as FFO-Modified, or (“FFOM”), which reflects certain adjustments related to the economic performance of our on-campus participating properties and excludes property acquisition costs and other non-cash items, as we determine in good faith. FFO and FFOM should not be considered as alternatives to net income or 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 are these measures indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions.
The company defines property net operating income (“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, manager and developer 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. As of June 30, 2019, American Campus Communities owned 169 student housing properties containing approximately 108,800 beds. Including its owned and third-party managed properties, ACC's total managed portfolio consisted of 203 properties with approximately 133,100 beds. Visit www.americancampus.com.
Forward-Looking Statements
In addition to historical information, this press release contains forward-looking statements under the applicable federal securities law. These statements are based on management’s current expectations and assumptions regarding markets in which American Campus Communities, Inc. (the “Company”) operates, operational strategies, anticipated events and trends, the economy, and other future conditions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. For discussions of some risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements, please refer to our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2018 under the heading “Risk Factors” and under the heading “Business - Forward-looking Statements” and subsequent quarterly reports on Form 10-Q. We undertake no obligation to publicly update any forward-looking statements, including our expected 2019 operating results, whether as a result of new information, future events, or otherwise.
Table 1
American Campus Communities, Inc. and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands)
June 30, 2019
December 31, 2018
(unaudited)
Assets
Investments in real estate:
Owned properties, net
$
6,676,217
$
6,583,397
On-campus participating properties, net
77,390
77,637
Investments in real estate, net
6,753,607
6,661,034
Cash and cash equivalents
51,541
71,238
Restricted cash
37,185
35,279
Student contracts receivable
9,446
8,565
Other assets1
531,118
262,730
Total assets
$
7,382,897
$
7,038,846
Liabilities and equity
Liabilities:
Secured mortgage, construction and bond debt, net
$
872,922
$
853,084
Unsecured notes, net
1,983,895
1,588,446
Unsecured term loans, net
198,945
198,769
Unsecured revolving credit facility
185,600
387,300
Accounts payable and accrued expenses
67,079
88,767
Operating lease liabilities2
285,224
—
Other liabilities2
162,437
191,233
Total liabilities
3,756,102
3,307,599
Redeemable noncontrolling interests
185,910
184,446
Equity:
American Campus Communities, Inc. and Subsidiaries
stockholders’ equity:
Common stock
1,372
1,370
Additional paid in capital
4,460,412
4,458,240
Common stock held in rabbi trust
(3,368
)
(3,092
)
Accumulated earnings and dividends
(1,059,633
)
(971,070
)
Accumulated other comprehensive loss
(18,784
)
(4,397
)
Total American Campus Communities, Inc. and
Subsidiaries stockholders’ equity
3,379,999
3,481,051
Noncontrolling interests – partially owned properties
60,886
65,750
Total equity
3,440,885
3,546,801
Total liabilities and equity
$
7,382,897
$
7,038,846
Table 2
American Campus Communities, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(dollars in thousands, except share and per share data)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
(unaudited)
(unaudited)
Revenues
Owned properties1
$
203,156
$
189,488
$
427,575
$
395,020
On-campus participating properties1
6,396
6,182
17,844
16,625
Third-party development services
3,607
2,202
6,778
3,048
Third-party management services
3,465
2,452
5,776
5,183
Resident services
747
735
1,529
1,592
Total revenues
217,371
201,059
459,502
421,468
Operating expenses
Owned properties1 2
90,763
86,136
182,932
174,196
On-campus participating properties1
3,806
3,730
7,763
7,155
Third-party development and management services
4,513
3,544
8,699
7,742
General and administrative2
8,115
13,173
15,430
19,872
Depreciation and amortization
68,815
63,537
137,570
128,316
Ground/facility leases
3,236
2,733
6,785
5,575
Loss (gain) from disposition of real estate3
282
(42,314
)
282
(42,314
)
Provision for real estate impairment4
—
—
3,201
—
Other operating income
—
(2,648
)
—
(2,648
)
Total operating expenses
179,530
127,891
362,662
297,894
Operating income
37,841
73,168
96,840
123,574
Nonoperating income (expenses)
Interest income
969
1,243
1,895
2,466
Interest expense
(27,068
)
(23,338
)
(54,129
)
(47,022
)
Amortization of deferred financing costs
(1,218
)
(2,214
)
(2,350
)
(3,628
)
Loss from early extinguishment of debt
—
(784
)
—
(784
)
Total nonoperating expenses
(27,317
)
(25,093
)
(54,584
)
(48,968
)
Income before income taxes
10,524
48,075
42,256
74,606
Income tax provision2
(314
)
(2,085
)
(678
)
(2,366
)
Net income
10,210
45,990
41,578
72,240
Net loss (income) attributable to noncontrolling interests
176
19
(1,552
)
(304
)
Net income attributable to ACC, Inc. and
Subsidiaries common stockholders
$
10,386
$
46,009
$
40,026
$
71,936
Other comprehensive (loss) income
Change in fair value of interest rate swaps and other
(8,593
)
180
(14,387
)
645
Comprehensive income
$
1,793
$
46,189
$
25,639
$
72,581
Net income per share attributable to ACC, Inc.
and Subsidiaries common shareholders
Basic and diluted
$
0.07
$
0.33
$
0.28
$
0.52
Weighted-average common shares outstanding
Basic
137,268,696
136,677,255
137,185,576
136,599,816
Diluted
138,243,388
137,576,366
138,198,134
137,536,368
Table 3
American Campus Communities, Inc. and Subsidiaries
Consolidated Statements of Funds from Operations
(unaudited, dollars in thousands, except share and per share data)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Net income attributable to ACC, Inc. and Subsidiaries
common stockholders
$
10,386
$
46,009
$
40,026
$
71,936
Noncontrolling interests1
54
453
214
775
Loss (gain) from disposition of real estate
282
(42,314
)
282
(42,314
)
Elimination of provision for real estate impairment
—
—
3,201
—
Real estate related depreciation and amortization2
65,458
61,571
130,834
125,149
Funds from operations (“FFO”) attributable to common stockholders and OP unitholders
76,180
65,719
174,557
155,546
Elimination of operations of on-campus participating properties
Net loss (income) from on-campus participating properties
1,130
1,218
(2,562
)
(2,151
)
Amortization of investment in on-campus participating properties
(2,016
)
(1,952
)
(4,045
)
(3,894
)
75,294
64,985
167,950
149,501
Modifications to reflect operational performance of on-campus participating properties
Our share of net cashflow3
828
793
1,710
1,588
Management fees and other
408
279
1,228
756
Contribution from on-campus participating properties
1,236
1,072
2,938
2,344
Transaction costs4
—
7,818
—
7,818
Elimination of loss from early extinguishment of debt5
—
784
—
784
Elimination of gain from litigation settlement6
—
(2,648
)
—
(2,648
)
Elimination of FFO from property in receivership7
839
606
1,808
1,195
Funds from operations-modified (“FFOM”) attributable to common stockholders and OP unitholders
$
77,369
$
72,617
$
172,696
$
158,994
FFO per share – diluted
$
0.55
$
0.47
$
1.26
$
1.12
FFOM per share – diluted
$
0.56
$
0.52
$
1.24
$
1.15
Weighted-average common shares outstanding - diluted
138,873,418
138,592,562
138,842,644
138,561,640
Table 4
American Campus Communities, Inc. and Subsidiaries
Owned Properties Results of Operations1
(unaudited, dollars in thousands)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
$ Change
% Change
2019
2018
$ Change
% Change
Owned properties revenues
Same store properties
$
190,207
$
184,281
$
5,926
3.2
%
$
395,576
$
383,396
$
12,180
3.2
%
New properties
12,759
136
12,623
31,317
257
31,060
Sold and held for sale properties2
937
3,992
(3,055
)
2,211
10,227
(8,016
)
Total revenues3 4
$
203,903
$
188,409
$
15,494
8.2
%
$
429,104
$
393,880
$
35,224
8.9
%
Owned properties operating expenses
Same store properties
$
84,175
$
81,791
$
2,384
2.9
%
$
169,012
$
166,173
$
2,839
1.7
%
New properties
5,781
191
5,590
11,896
315
11,581
Other5
26
344
(318
)
135
344
(209
)
Sold and held for sale properties2 6
781
1,996
(1,215
)
1,889
4,632
(2,743
)
Total operating expenses3
$
90,763
$
84,322
$
6,441
7.6
%
$
182,932
$
171,464
$
11,468
6.7
%
Owned properties net operating income
Same store properties
$
106,032
$
102,490
$
3,542
3.5
%
$
226,564
$
217,223
$
9,341
4.3
%
New properties
6,978
(55
)
7,033
19,421
(58
)
19,479
Other5
(26
)
(344
)
318
(135
)
(344
)
209
Sold and held for sale properties2 6
156
1,996
(1,840
)
322
5,595
(5,273
)
Total net operating income
$
113,140
$
104,087
$
9,053
8.7
%
$
246,172
$
222,416
$
23,756
10.7
%
Table 5
American Campus Communities, Inc. and Subsidiaries
2019 Outlook1
(dollars in thousands, except share and per share data)
Low
High
Net income2
$
74,600
$
86,700
Noncontrolling interests
900
1,000
Depreciation and amortization
258,200
259,100
Funds from operations (“FFO”)
$
333,700
$
346,800
Elimination of operations from on-campus participating properties
(14,100
)
(13,700
)
Contribution from on-campus participating properties
5,500
6,100
Transaction costs3
800
800
Funds from operations - modified (“FFOM”)
$
325,900
$
340,000
Net income per share - diluted
$
0.54
$
0.62
FFO per share - diluted
$
2.40
$
2.50
FFOM per share - diluted
$
2.35
$
2.45
Weighted-average common shares outstanding - diluted
138,866,100
138,866,100
1. The company believes that the financial results for the fiscal year ending December 31, 2019 may be affected by, among other factors:
2. Does not include any potential gain or loss on sale from anticipated dispositions or the effect of transferring Blanton Common to the lender, as such will be eliminated for the purposes of calculating FFOM.
3. Represents transaction costs related to the closing of two presale development properties.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190722005609/en/
American Campus Communities, Inc., Austin Ryan Dennison, 512-732-1000
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