American Campus Communities, Inc. Reports Fourth Quarter and Year End 2020 Financial Results

Nachrichtenquelle: Business Wire (engl.)
22.02.2021, 22:15  |  95   |   |   

American Campus Communities, Inc. (NYSE:ACC) today announced the following financial results for the quarter and year ended December 31, 2020.

Highlights

Fourth Quarter 2020

  • Grew net income attributable to ACC to $24.8 million or $0.18 per fully diluted share, versus $24.7 million or $0.18 per fully diluted share in the fourth quarter 2019.
  • Reported FFOM of $81.8 million or $0.59 per fully diluted share, versus $99.4 million or $0.72 in the fourth quarter prior year.
  • Same store net operating income (NOI) decreased by 13.7 percent over the fourth quarter prior year, as revenues decreased 9.0 percent and operating expenses decreased 2.1 percent. Same store revenues were impacted by approximately $6.1 million of rent relief, waived fees, increased uncollectible accounts primarily associated with previous academic year leases, and other COVID-19 related items. In addition, due to the decrease in occupancy of the same store portfolio for Academic Year 2020-2021, same store revenues for the quarter were approximately $18.6 million below those anticipated prior to the impacts of COVID-19.
  • Executed a predevelopment agreement for the first phase of development under the previously announced University of California Berkeley Master Development engagement. The proposed 750-bed project is anticipated to be structured as an American Campus Equity (ACE) transaction with delivery targeting Fall 2024, although the full scope, transaction structure, feasibility, fees and timing have not yet been finalized.

Full Year 2020

  • Reported net income attributable to ACC of $72.8 million or $0.51 per fully diluted share, versus $85.0 million or $0.60 per fully diluted share for the full year 2019.
  • Reported FFOM of $275.5 million or $1.98 per fully diluted share, compared to $336.2 million and $2.42 for the full year 2019.
  • Same store NOI decreased by 11.3 percent over the year ended December 31, 2019, as revenues decreased 7.8 percent and operating expenses decreased 3.3 percent. Same store revenues were impacted by approximately $51.8 million of rent relief, waived fees, lost revenues from summer camps and conference business, increased uncollectible accounts primarily associated with previous academic year leases, and other COVID-19 related items. In addition, due to the decrease in occupancy of the same store portfolio for Academic Year 2020-2021, same store revenues in the academic year were approximately $27.2 million below those anticipated prior to the impacts of COVID-19.
  • In response to COVID-19, the company successfully implemented eight principle objectives as guidelines to follow during the pandemic. These principle objectives focused the company’s response to the pandemic in terms of resident, university partner and employee interactions, business continuity and consideration of future growth opportunities.
  • Delivered two owned ACE developments and three phases of the Disney College Program project on schedule and within budget.
  • Remained dedicated to the Company’s ESG program as further outlined below in Corporate Responsibility.
  • Recognized for the second consecutive year as an honoree of Texan by Nature 20 (TxN20), an official ranking of the top 20 companies in Texas for its leadership and commitment to conservation and sustainability.
  • Earned Great Place to Work certification based on extensive ratings provided by employees in anonymous surveys.

“2020 was a tale of two periods operationally. The year began with financial results that exceeded expectations in each of the first three months of the year and preleasing was tracking significantly ahead of the prior year pace including rental rate growth above original expectations. Beginning in March, with the COVID-19 global pandemic affecting every aspect of our lives, we focused on ‘Doing the right thing’ and following the eight principle objectives we laid out at the beginning of the crisis,” said Bill Bayless, American Campus Communities CEO. “As we look forward into 2021, the business fundamentals of the student housing industry continue to show signs of improvement. Thus far, we have signed 3,600 leases for spring 2021 move-ins - roughly 50% more than last year’s 2,400. We are also hearing incrementally positive news in terms of university planned Fall 2021 in-person classes - as exemplified by the recent announcements of both the U-Cal and Cal State systems.”

Fourth Quarter Operating Results

Revenue for the 2020 fourth quarter totaled $233.0 million, a decrease of 8.9 percent from $255.8 million in the fourth quarter 2019, and operating income for the quarter totaled $51.1 million versus $55.7 million in the prior year fourth quarter. The decrease in revenue and operating income was primarily due to the impacts of COVID-19, including a decrease in owned properties’ occupancy from the Academic Year 2020-2021 lease-up, with owned property revenues for the quarter approximately $23.1 million below those initially anticipated prior to the impact of COVID-19. Additionally, COVID-19 related rent abatements, early lease terminations, increased uncollectible accounts and reduced fee income totaled approximately $6.4 million, partially offset by a decrease in owned properties operating expenses of $2.2 million. Net income for the 2020 fourth quarter totaled $24.8 million, or $0.18 per fully diluted share, compared with net income of $24.7 million, or $0.18 per fully diluted share, for the same quarter in 2019. FFO for the fourth quarter totaled $89.9 million, or $0.65 per fully diluted share, compared to $89.8 million, or $0.65 per fully diluted share for the same quarter in 2019. FFOM for the fourth quarter was $81.8 million, or $0.59 per fully diluted share, as compared to $99.4 million, or $0.72 per fully diluted share for the same quarter in 2019. A reconciliation of FFO and FFOM to net income is provided in Table 3.

Same store NOI was $115.7 million in the quarter, a decrease of 13.7 percent from $134.1 million in the 2019 fourth quarter. Same store property revenues decreased by 9.0 percent and same store property operating expenses decreased by 2.1 percent over the prior year quarter. NOI for the total owned portfolio decreased 13.6 percent to $124.4 million for the quarter from $143.9 million in the comparable period of 2019. A reconciliation of same store NOI to total NOI is provided in Table 4.

Corporate Governance Enhancements

Subsequent to year end, the company identified and recruited three independent directors with extensive real estate and capital allocation experience to the company’s Board with the appointment of Herman Bulls, Alison Hill and Craig Leupold. To take full advantage of the directors’ experience and expertise, the company formed an advisory Capital Allocation Committee to evaluate capital allocation strategy and priorities to further improve investment strategies, net asset value creation and the quality of earnings growth.

Academic Year 2021-2022 Preleasing Update

“As anticipated and consistent with our comments last quarter, industry-wide preleasing is progressing at a slower pace than last year at this time, partially due to an extended winter break that spanned from Thanksgiving to late January in many university markets. We expect an acceleration in velocity compared to the prior year as we proceed into the spring and summer months, the period when leasing activity slowed dramatically at the beginning of the pandemic last year,” said Jennifer Beese, American Campus Communities COO. “In our markets, asking rental rates remain in-line or slightly above prior year pricing, our leasing velocity is outpacing our peers in the majority of markets, and our overall preleasing velocity is tracking in-line with the broader industry, as reported by AxioMetrics for January. While it’s early, we are cautiously optimistic as college application data and university admissions commentary indicate a potential increase in demand for higher education this fall.”

Portfolio Update

Developments

In January, the company completed the $54.4 million third phase of the Disney College Program development within budget. Due to COVID-19 related restrictions, Walt Disney World Resort continues to take a measured and phased approach to reopening and is reviewing the timing for resuming the Disney College Program and the related occupancy of the project. As previously announced, in support of the relationship, Walt Disney World agreed that ground rent will not commence until occupancy occurs and is assisting ACC in marketing and leasing the project to a broader rental market until the internship program is resumed to a level at which participants can fully occupy the available beds. The company commenced leasing to the broader rental market in late 2020 and to-date has signed 88 leases. While this is a seasonally slow time for apartment leasing, it is anticipated that leasing will accelerate through the remainder of the year.

The company continues construction on the remaining phases of the project, which are expected to be completed as originally anticipated through 2023. The company expects the project to meet its original targeted stabilized development yield of 6.8 percent within 12 to 24 months after the originally anticipated date in 2023, which was projected prior to the impacts of COVID-19.

On-Campus Developments

As previously announced, the company was selected as the student housing master plan development partner for UC Berkeley as part of the university’s student housing initiative which is anticipated to provide in excess of 6,000 new beds on several project sites. During the quarter, the company executed a predevelopment agreement for a 750-bed first phase development, which is anticipated to be structured as an ACE development with delivery targeting Fall 2024, although the full scope, transaction structure, feasibility, fees and timing have not yet been finalized.

Capital Markets

As of December 31, 2020, the company exhibited a healthy balance sheet with ample liquidity including approximately $54.0 million in cash and $628.9 million available on its unsecured revolving credit facility. The company has approximately $111 million in planned development expenditures and only $75 million of debt maturities during 2021, after completing the refinance of a $24.0 million on-campus participating property mortgage subsequent to year-end, which extended the maturity to 2028.

At-The-Market (ATM) Share Offering Program

The company did not sell any shares under the ATM during the quarter.

Corporate Responsibility

As outlined in the company’s 2019 ESG Update, it is our mission to consistently provide every resident and team member with an environment conducive to healthy living, personal growth, academic achievement and professional success.

Highlights of achievements in delivering on this mission include:

  • Building more Leadership in Energy and Environmental Design (LEED)-certified projects across the country than any other student housing provider. In 2020:
    • The company’s on-campus development in Boston, LightView, was awarded the U.S. Green Building Council’s (USGBC) highest level of green building certification.
    • The company entered into an energy contract to source almost 7 million kWh of renewable energy. According to the Environmental Protection Agency (EPA) Greenhouse Gas Equivalencies Calculator, the same amount of electricity produced using conventional fuels such as coal, emits a national average of 5,205 tons of carbon dioxide.
  • Making proximity to campus one of the company’s development and acquisition criteria, reducing emissions and noise - 93% of ACC-owned communities are located within a half mile from campus, allowing students to easily walk or bike to class.
  • Making high-quality housing affordable to students without sacrificing location or quality.
  • Focusing on student mental health by expanding the company’s long-term partnership with the Hi, How Are You Project and launching staff training on peer-to-peer support at more than 200 communities across the country.

In 2020, the company placed a focus on employee diversity, equity, and inclusion. To continue to support the company’s diverse team - roughly half of our team members are female and half are minorities - we formed a diversity and inclusion task force and became a signatory of the CEO Action for Diversity & Inclusion pledge. Additionally, three new directors were appointed to the board, enhancing board diversity, and Ms. Cydney Donnell will become Board Chairwoman effective as of the 2021 Annual Meeting.

To assist residents financially impacted by the global pandemic, the company provided $32.9 million of assistance through its Resident Hardship Program and university partnerships during 2020. The company also paid bonuses to on-site employees who provided ongoing essential services during the COVID-19 pandemic, and we collaborated with RB, the makers of Lysol, to set a new standard and formalized approach to cleanliness and disinfection at our student housing communities.

COVID-19 Update

The company continues to implement its COVID-19 response plan consistent with the eight principle objectives previously reported. The company continues to collaborate in good faith with its university partners, and at the request of one of these partners, agreed to refund a portion of students’ rent for on-campus leases with terms extending into 2021. During the fourth quarter, refunded rent totaled $1.5 million and the company anticipates an additional $1.1 million in early 2021, which compares to the $17.2 million in on-campus rent refunds provided during the first nine months of 2020. No other rental refunds related to the company’s on-campus ACE properties are being discussed at this time.

The company collected an average of 97.6 percent of rent during the fourth quarter, representing total delinquency of approximately $4.9 million. This compares to rent delinquency of $10.4 and $8.5 million reported during the second and third quarters, respectively. For the fourth quarter, of the total $4.9 million in delinquent rent noted above, the company granted approximately $900 thousand in rent relief under the Resident Hardship Program, representing a significant reduction from the $8.6 million and $4.7 million in relief granted under the program during the second and third quarters, respectively.

2021 Outlook

Due to remaining uncertainty regarding the ongoing COVID-19 global pandemic, the company is unable to predict with a reasonable degree of certainty the full magnitude of the pandemic and its effect on its results of operations for the year ended December 31, 2021; therefore, the company is only providing a financial outlook for the first quarter of 2021. The company believes that the financial results for the three months ending March 31, 2021 may be affected by, among other factors:

  • national and regional economic trends and events;
  • the level of lease terminations, rent refunds, and/or abatements granted to student and commercial tenants;
  • economic hardship experienced by student and commercial tenants and its ultimate effect on rent collections and thus the provision for uncollectible accounts;
  • canceled or delayed third-party development projects;
  • reduced revenues at our third-party managed properties resulting in reduced third-party management fee income;
  • the impact of any stimulus payments that may be received by the company, our tenants, and/or our University partners under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and any future similar governmental actions;
  • any increase in, or reduction to, operating expenses as a result of COVID-19;
  • the amount of leasing and related fees earned for the 2021-2022 academic year, which are affected by the timing and velocity of the company’s leasing process;
  • the timing and amount of any acquisitions, dispositions or joint venture activity;
  • interest rate risk;
  • the timing of commencement and completion of construction for owned development projects;
  • university enrollment, funding and policy trends;
  • the amount of income recognized by the taxable REIT subsidiaries and any corresponding income tax expense;
  • the outcome of legal proceedings arising in the normal course of business; and
  • the finalization of property tax rates and assessed values in certain jurisdictions.

Based upon these factors, management anticipates that first quarter 2021 FFO will be in the range of $0.56 to $0.58 per fully diluted share and FFOM will be in the range of $0.54 to $0.56 per fully diluted share.

For additional details regarding the company’s outlook, please see pages S-18 and S-19 of the Supplemental Analyst Package 4Q 2020. 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 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 fourth quarter and full year 2020 results and the 2021 outlook on Tuesday, February 23, 2021 at 10:00 a.m. ET (9:00 a.m. CT). The conference call may be accessed by dialing 888-317-6003 passcode 2405075, 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 March 9, 2021 by dialing 877-344-7529 or 412-317-0088 conference number 10150485. 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 December 31, 2020, American Campus Communities owned 166 student housing properties containing approximately 111,900 beds. Including its owned and third-party managed properties, ACC's total managed portfolio consisted of 206 properties with approximately 141,100 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. These risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward looking-statements include those related to the COVID-19 pandemic, about which there are still many unknowns, including the duration of the pandemic and the extent of its impact, and those discussed in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2019 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 preleasing activity or expected full year 2021 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)

 

 

 

 

 

 

 

December 31, 2020

 

December 31, 2019

 

 

(unaudited)

 

 

Assets

 

 

 

 

 

Investments in real estate:

 

 

Owned properties, net

$

6,721,744

 

$

6,694,715

 

On-campus participating properties, net

 

69,281

 

 

75,188

 

Investments in real estate, net

 

6,791,025

 

 

6,769,903

 

 

 

 

Cash and cash equivalents

 

54,017

 

 

54,650

 

Restricted cash

 

19,955

 

 

26,698

 

Student contracts receivable, net

 

11,090

 

 

13,470

 

Operating lease right of use assets 1

 

457,573

 

 

460,857

 

Other assets 1

 

197,500

 

 

234,176

 

 

 

 

Total assets

$

7,531,160

 

$

7,559,754

 

 

 

 

Liabilities and equity

 

 

 

 

 

Liabilities:

 

 

Secured mortgage and bond debt, net

$

646,827

 

$

787,426

 

Unsecured notes, net

 

2,375,603

 

 

1,985,603

 

Unsecured term loans, net

 

199,473

 

 

199,121

 

Unsecured revolving credit facility

 

371,100

 

 

425,700

 

Accounts payable and accrued expenses

 

85,070

 

 

88,411

 

Operating lease liabilities 2

 

486,631

 

 

473,070

 

Other liabilities 2

 

185,352

 

 

157,368

 

Total liabilities

 

4,350,056

 

 

4,116,699

 

 

 

 

Redeemable noncontrolling interests

 

24,567

 

 

104,381

 

 

 

 

Equity:

 

 

American Campus Communities, Inc. and Subsidiaries stockholders’ equity:

 

 

Common stock

 

1,375

 

 

1,373

 

Additional paid in capital

 

4,472,170

 

 

4,458,456

 

Common stock held in rabbi trust

 

(3,951

)

 

(3,486

)

Accumulated earnings and dividends

 

(1,332,689

)

 

(1,144,721

)

Accumulated other comprehensive loss

 

(22,777

)

 

(16,946

)

Total American Campus Communities, Inc. and Subsidiaries stockholders’ equity

 

3,114,128

 

 

3,294,676

 

Noncontrolling interests – partially owned properties

 

42,409

 

 

43,998

 

Total equity

 

3,156,537

 

 

3,338,674

 

 

 

 

Total liabilities and equity

$

7,531,160

 

$

7,559,754

 

1.

For purposes of calculating net asset value ("NAV") at December 31, 2020, the company excludes other assets of approximately $2.6 million related to net deferred financing costs on its revolving credit facility and the net value of in-place leases, as well as operating lease right of use assets disclosed above.

2.

For purposes of calculating NAV at December 31, 2020, the company excludes other liabilities of approximately $48.3 million related to deferred revenue and fee income, as well as operating lease liabilities disclosed above.

 

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
December 31,

 

Twelve Months Ended
December 31,

 

 

2020

 

2019

 

2020

 

2019

 

 

(unaudited)

 

(unaudited)

 

 

Revenues

 

 

 

 

Owned properties 1

$

217,311

 

$

238,908

 

$

818,298

 

$

877,565

 

On-campus participating properties

 

9,710

 

 

11,558

 

 

29,906

 

 

36,346

 

Third-party development services

 

2,012

 

 

662

 

 

7,543

 

 

13,051

 

Third-party management services

 

3,168

 

 

3,818

 

 

12,436

 

 

12,936

 

Resident services

 

757

 

 

889

 

 

2,401

 

 

3,144

 

Total revenues

 

232,958

 

 

255,835

 

 

870,584

 

 

943,042

 

 

 

 

 

 

Operating expenses (income)

 

 

 

 

Owned properties

 

93,713

 

 

95,896

 

 

378,454

 

 

390,664

 

On-campus participating properties

 

3,164

 

 

3,443

 

 

13,521

 

 

15,028

 

Third-party development and management services

 

5,455

 

 

5,786

 

 

21,700

 

 

19,915

 

General and administrative 2

 

8,311

 

 

8,486

 

 

36,874

 

 

31,081

 

Depreciation and amortization

 

67,724

 

 

68,546

 

 

267,703

 

 

275,046

 

Ground/facility leases

 

3,480

 

 

4,151

 

 

13,513

 

 

14,151

 

(Gain) loss from disposition of real estate, net

 

 

 

(229

)

 

(48,525

)

 

53

 

Provision for impairment 3

 

 

 

14,013

 

 

 

 

17,214

 

Total operating expenses

 

181,847

 

 

200,092

 

 

683,240

 

 

763,152

 

 

 

 

 

 

Operating income

 

51,111

 

 

55,743

 

 

187,344

 

 

179,890

 

 

 

 

 

 

Nonoperating income (expenses)

 

 

 

 

Interest income

 

363

 

 

831

 

 

2,939

 

 

3,686

 

Interest expense

 

(28,500

)

 

(28,855

)

 

(112,507

)

 

(111,287

)

Amortization of deferred financing costs

 

(1,368

)

 

(1,347

)

 

(5,259

)

 

(5,012

)

(Loss) gain from extinguishment of debt 4

 

 

 

 

 

(4,827

)

 

20,992

 

Other nonoperating income 5

 

3,243

 

 

 

 

3,507

 

 

 

Total nonoperating expenses

 

(26,262

)

 

(29,371

)

 

(116,147

)

 

(91,621

)

 

 

 

 

 

Income before income taxes

 

24,849

 

 

26,372

 

 

71,197

 

 

88,269

 

Income tax provision

 

(216

)

 

(524

)

 

(1,349

)

 

(1,507

)

Net income

 

24,633

 

 

25,848

 

 

69,848

 

 

86,762

 

Net loss (income) attributable to noncontrolling interests

 

174

 

 

(1,128

)

 

2,955

 

 

(1,793

)

Net income attributable to ACC, Inc. and Subsidiaries common stockholders

$

24,807

 

$

24,720

 

$

72,803

 

$

84,969

 

Other comprehensive income (loss)

 

 

 

 

Change in fair value of interest rate swaps and other

 

1,837

 

 

1,983

 

 

(5,831

)

 

(12,549

)

Comprehensive income

$

26,644

 

$

26,703

 

$

66,972

 

$

72,420

 

 

 

 

 

 

Net income per share attributable to ACC, Inc. and Subsidiaries common shareholders

 

 

 

 

 

 

 

 

 

Basic

$

0.18

 

$

0.18

 

$

0.51

 

$

0.61

 

 

 

 

 

 

Diluted

$

0.18

 

$

0.18

 

$

0.51

 

$

0.60

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

 

 

 

 

 

 

 

Basic

 

137,632,091

 

 

137,404,752

 

 

137,588,964

 

 

137,295,837

 

 

 

 

 

 

Diluted

 

138,725,378

 

 

138,372,433

 

 

138,710,430

 

 

138,286,778

 

1.

Refer to page Table 4 for more detail regarding the impact of the COVID-19 pandemic on revenues for our same store portfolio.

2.

General and administrative expenses for the twelve months ended December 31, 2020 include $1.1 million related to the settlement of a litigation matter.

3.

The three and twelve months ended December 31, 2019 amounts represent a non-cash impairment charge for an intangible asset related to a property tax incentive arrangement at one owned property. The twelve months ended December 31, 2019 amount also includes an impairment charge recorded in March 2019 concurrent with the classification of one owned property as held for sale.

4.

The twelve months ended December 31, 2020 amount represents the loss associated with the January 2020 redemption of the company's $400 million 3.35% Senior Notes originally scheduled to mature in October 2020. The twelve months ended December 31, 2019 amount represents the gain on the extinguishment of debt associated with a property that was transferred to the lender in settlement of the property's mortgage loan in July 2019.

5.

In October 2020, the company received full repayment of the outstanding balance of a loan receivable, including accrued interest, totaling $55.0 million. As a result of the early repayment of the note, the company recorded a gain totaling $2.1 million which is included in other nonoperating income on the accompanying consolidated statements of comprehensive income. The loan was acquired in 2013 and generated annual interest income of approximately $2.9 million prior to its repayment. The three and twelve months ended December 31, 2020 also include a gain of $1.1 million related to the settlement of a litigation matter.

 

Table 3

American Campus Communities, Inc. and Subsidiaries

Consolidated Statements of Funds from Operations (“FFO”)

(unaudited, dollars in thousands, except share and per share data)

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

2020

 

2019

 

2020

 

2019

Net income attributable to ACC, Inc. and Subsidiaries common stockholders

$

24,807

 

$

24,720

 

$

72,803

 

$

84,969

 

Noncontrolling interests' share of net (loss) income

 

(174

)

 

1,128

 

 

(2,955

)

 

1,793

 

 

 

 

 

 

Joint Venture ("JV") partners' share of FFO

 

 

 

 

JV partners' share of net loss (income)

 

272

 

 

(1,030

)

 

3,259

 

 

(1,398

)

JV partners' share of depreciation and amortization

 

(1,911

)

 

(2,156

)

 

(7,747

)

 

(8,644

)

 

 

(1,639

)

 

(3,186

)

 

(4,488

)

 

(10,042

)

 

 

 

 

 

(Gain) loss from disposition of real estate

 

 

 

(229

)

 

(48,525

)

 

53

 

Elimination of provision for real estate impairment

 

 

 

 

 

 

 

3,201

 

Total depreciation and amortization

 

67,724

 

 

68,546

 

 

267,703

 

 

275,046

 

Corporate depreciation 1

 

(818

)

 

(1,200

)

 

(3,450

)

 

(4,728

)

FFO attributable to common stockholders and OP unitholders

 

89,900

 

 

89,779

 

 

281,088

 

 

350,292

 

Elimination of operations of on-campus participating properties ("OCPPs")

 

 

 

 

Net income from OCPPs

 

(3,510

)

 

(4,449

)

 

(3,716

)

 

(6,587

)

Amortization of investment in OCPPs

 

(2,050

)

 

(2,046

)

 

(8,015

)

 

(8,380

)

 

 

84,340

 

 

83,284

 

 

269,357

 

 

335,325

 

Modifications to reflect operational performance of OCPPs

 

 

 

 

Our share of net cashflow 2

 

(273

)

 

1,004

 

 

1,359

 

 

3,067

 

Management fees and other

 

727

 

 

652

 

 

1,873

 

 

2,249

 

Contribution from OCPPs

 

454

 

 

1,656

 

 

3,232

 

 

5,316

 

 

 

 

 

 

Transaction costs 3

 

 

 

451

 

 

 

 

598

 

Elimination of loss (gain) from extinguishment of debt 4

 

 

 

 

 

4,827

 

 

(20,992

)

Elimination of provision for impairment of intangible asset 5

 

 

 

14,013

 

 

 

 

14,013

 

Elimination of litigation settlements 6

 

(1,100

)

 

 

 

 

 

 

Elimination of gain from early repayment of loan receivable 7

 

(2,136

)

 

 

 

(2,136

)

 

 

Elimination of FFO from property in receivership 8

 

 

 

 

 

 

 

1,912

 

Stockholder engagement and other proxy advisory costs 9

 

215

 

 

 

 

215

 

 

 

Funds from operations-modified (“FFOM”) attributable to common stockholders and OP unitholders

$

81,773

 

$

99,404

 

$

275,495

 

$

336,172

 

 

 

 

 

 

FFO per share – diluted

$

0.65

 

$

0.65

 

$

2.02

 

$

2.52

 

 

 

 

 

 

FFOM per share – diluted

$

0.59

 

$

0.72

 

$

1.98

 

$

2.42

 

 

 

 

 

 

Weighted-average common shares outstanding - diluted

 

139,229,095

 

 

138,876,150

 

 

139,214,147

 

 

138,860,311

 

1.

Represents depreciation on corporate assets not added back for purposes of calculating FFO.

2.

50% of the properties’ net cash available for distribution after payment of operating expenses, debt service (including repayment of principal) and capital expenditures which is included in ground/facility leases expense in the consolidated statements of comprehensive income (refer to table 2). During the three months ended December 31, 2020, the company waived its right to one property's 50% share of the net cash flow for the 2019/2020 academic year, which resulted in a $0.6 million reversal of contribution from OCPPs.

3.

The three and twelve months ended December 31, 2019 amounts represent transaction costs incurred in connection with the closing of presale development transactions.

4.

The twelve months ended December 31, 2020 amount represents the loss associated with the January 2020 redemption of the Company's $400 million 3.35% Senior Notes originally scheduled to mature in October 2020. The twelve months ended December 31, 2019 amount represents the gain on the extinguishment of debt associated with a property that was transferred to the lender in settlement of the property's mortgage loan in July 2019.

5.

Represents a non-cash impairment charge for an intangible asset related to a property tax incentive arrangement at one owned property.

6.

The three months ended December 31, 2020 amount represents a $1.1 million gain associated with the settlement of a litigation matter, which is included in other nonoperating income on the accompanying consolidated statements of comprehensive income. The twelve months ended December 31, 2020 amount represents the gain recorded during the fourth quarter 2020, offset by litigation settlement expense of $1.1 million recorded in the first quarter 2020 for another matter which is included in general and administrative expenses in the accompanying consolidated statements of comprehensive income. For purposes of calculating FFOM for the twelve months ended December 31, 2020, the two amounts offset each other for a net effect of $0.

7.

In October 2020, the company received full repayment of the outstanding balance of a loan receivable, including accrued interest, totaling $55.0 million. As a result of the early repayment of the note, the company recorded a gain totaling $2.1 million which is included in other nonoperating income on the accompanying consolidated statements of comprehensive income. The loan was acquired in 2013 and generated annual interest income of approximately $2.9 million prior to its repayment.

8.

Represents FFO for an owned property that was transferred to the lender in July 2019 in settlement of the property's mortgage loan.

9.

Represents consulting, legal, and other related costs incurred in relation to stockholder engagement activities in preparation for the company’s 2021 annual stockholders’ meeting.

 

Table 4

American Campus Communities, Inc. and Subsidiaries

Owned Properties Results of Operations1

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2020

 

2019

 

$ Change

 

% Change

 

2020

 

2019

 

$ Change

 

% Change

Owned properties revenues

 

 

 

 

 

 

 

 

Same store properties 2

$

204,068

 

$

224,328

 

$

(20,260

)

(9.0

%)

$

775,929

 

$

841,523

 

$

(65,594

)

(7.8

%)

New properties

 

14,000

 

 

10,583

 

 

3,417

 

 

 

42,069

 

 

15,693

 

 

26,376

 

 

Sold and held for sale properties 3

 

 

 

4,886

 

 

(4,886

)

 

 

2,701

 

 

23,493

 

 

(20,792

)

 

Total revenues 4

$

218,068

 

$

239,797

 

$

(21,729

)

(9.1

%)

$

820,699

 

$

880,709

 

$

(60,010

)

(6.8

%)

Owned properties operating expenses

 

 

 

 

 

 

 

 

Same store properties

$

88,378

 

$

90,237

 

$

(1,859

)

(2.1

%)

$

359,553

 

$

371,926

 

$

(12,373

)

(3.3

%)

New properties

 

5,254

 

 

3,608

 

 

1,646

 

 

 

17,520

 

 

7,400

 

 

10,120

 

 

Other 5

 

81

 

 

128

 

 

(47

)

 

 

364

 

 

338

 

 

26

 

 

Sold and held for sale properties 3 6

 

 

 

1,923

 

 

(1,923

)

 

 

1,017

 

 

11,000

 

 

(9,983

)

 

Total operating expenses

$

93,713

 

$

95,896

 

$

(2,183

)

(2.3

%)

$

378,454

 

$

390,664

 

$

(12,210

)

(3.1

%)

Owned properties net operating income

 

 

 

 

 

 

 

 

Same store properties

$

115,690

 

$

134,091

 

$

(18,401

)

(13.7

%)

$

416,376

 

$

469,597

 

$

(53,221

)

(11.3

%)

New properties

 

8,746

 

 

6,975

 

 

1,771

 

 

 

24,549

 

 

8,293

 

 

16,256

 

 

Other 5

 

(81

)

 

(128

)

 

47

 

 

 

(364

)

 

(338

)

 

(26

)

 

Sold and held for sale properties 3 6

 

 

 

2,963

 

 

(2,963

)

 

 

1,684

 

 

12,493

 

 

(10,809

)

 

Total net operating income

$

124,355

 

$

143,901

 

$

(19,546

)

(13.6

%)

$

442,245

 

$

490,045

 

$

(47,800

)

(9.8

%)

1.

The same store grouping above represents properties owned and operating for both of the entire years ended December 31, 2020 and 2019, which are not conducting or planning to conduct substantial development, redevelopment, or repositioning activities, and are not classified as held for sale as of December 31, 2020. Includes the full operating results of properties owned through joint ventures in which the company has a controlling financial interest and which are consolidated for financial reporting purposes.

2.

The most significant impacts to our same store property revenues resulting from COVID-19 are as follows:

 

Approximately $1.5 million and $18.7 million in rent refunds and/or early lease terminations was provided to tenants at our on-campus ACE properties and certain off-campus residence halls during the three and twelve months ended December 31, 2020, respectively;

 

Approximately $0.9 million and $13.6 million in rent was forgiven during the three and twelve months ended December 31, 2020, respectively, as part of our Resident Hardship Program for residents and families at our same store properties who experienced financial hardship due to COVID-19;

 

Approximately $3.7 million and $19.5 million of the decrease during the three and twelve months ended December 31, 2020, respectively, as compared to the prior year was a result of lost summer camp and conference revenue, waived fees, an increase in the provision for uncollectible accounts resulting from rent delinquencies, and other items;

 

Approximately $18.6 and $27.2 million of the decrease in revenues as compared to the amount initially anticipated prior to the impact of COVID-19 for the three months and twelve months ended December 31, 2020, respectively, was due to the decrease in occupancy from the Academic Year 2020-2021 lease-up.

3.

Includes properties sold in 2019 and 2020 and one property that was transferred to the lender in July 2019 in settlement of the property's mortgage loan.

4.

Includes revenues that are reflected as Resident Services Revenue on the accompanying consolidated statements of comprehensive income.

5.

Includes professional fees related to the operation of consolidated joint ventures that are included in owned properties operating expenses in the consolidated statements of comprehensive income (refer to Table 2).

6.

Does not include the allocation of payroll and other administrative costs related to corporate management and oversight.

 

Table 5

American Campus Communities, Inc. and Subsidiaries

Outlook - Summary (Q1 2021) 1

(dollars in thousands, except share and per share data)

 

 

 

 

 

Low

 

High

 

 

 

Net income

$

12,400

 

$

15,600

 

Noncontrolling interests' share of net income

 

300

 

 

300

 

 

 

 

Joint Venture ("JV") partners' share of FFO

 

 

JV partners' share of net income

 

(300

)

 

(300

)

JV partners' share of depreciation and amortization

 

(1,900

)

 

(1,900

)

 

 

(2,200

)

 

(2,200

)

 

 

 

Total depreciation and amortization

 

67,800

 

 

67,800

 

Corporate depreciation

 

(800

)

 

(800

)

FFO

 

77,500

 

 

80,700

 

 

 

 

Elimination of operations from on-campus participating properties ("OCPPs")

 

(4,800

)

 

(4,800

)

Contribution from OCPPs

 

1,100

 

 

1,100

 

Stockholder engagement and other proxy advisory costs 2

 

900

 

 

900

 

Funds from operations - modified ("FFOM")

$

74,700

 

$

77,900

 

 

 

 

Net income per share - diluted

$

0.09

 

$

0.11

 

 

 

 

FFO per share - diluted

$

0.56

 

$

0.58

 

 

 

 

FFOM per share - diluted

$

0.54

 

$

0.56

 

 

 

 

Weighted-average common shares outstanding - diluted

 

139,576,200

 

 

139,576,200

 

 

 

 

1.

The company believes that the financial results for the three months ended March 31, 2021 may be affected by a number of factors, many of which are directly related to the ongoing financial impacts associated with COVID-19. Such factors include:

 
  • national and regional economic trends and events;
  • the level of lease terminations, rent refunds, and/or abatements granted to student and commercial tenants;
  • economic hardship experienced by student and commercial tenants and its ultimate effect on rent collections and thus the provision for uncollectible accounts;
  • canceled or delayed third-party development projects;
  • reduced revenues at our third-party managed properties resulting in reduced third-party management fee income;
  • the ability of the company to replace any short-term leases expiring through March 31, 2021;
  • the impact of any stimulus payments that may be received by the company, our tenants, and/or our University partners under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and any future similar governmental actions;
  • any increase in, or reduction to, operating expenses as a result of COVID-19;
  • the amount of leasing and related fees earned for the 2021-2022 academic year, which are affected by the timing and velocity of the company’s leasing process;
  • the timing and amount of any acquisitions, dispositions or joint venture activity;
  • interest rate risk;
  • the timing of commencement and completion of construction on owned development projects;
  • university enrollment, funding and policy trends;
  • the amount of income recognized by the taxable REIT subsidiaries and any corresponding income tax expense;
  • the outcome of legal proceedings arising in the normal course of business; and
  • the finalization of property tax rates and assessed values in certain jurisdictions.

2.

Represents consulting, legal, and other related costs incurred in relation to stockholder engagement activities in preparation for the company’s 2021 annual stockholders' meeting.

Category: Earnings



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Disclaimer

American Campus Communities, Inc. Reports Fourth Quarter and Year End 2020 Financial Results American Campus Communities, Inc. (NYSE:ACC) today announced the following financial results for the quarter and year ended December 31, 2020. Highlights Fourth Quarter 2020 Grew net income attributable to ACC to $24.8 million or $0.18 per fully …

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