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Press Release

American Campus Communities, Inc. Reports Fourth Quarter and Year End 2017 Financial Results

Company Release - 2/20/2018 4:05 PM ET

Achieves 13th consecutive year of same store growth in rental rate, rental revenue and NOI.

Awarded the nation’s largest third-party on-campus student housing development in history.

AUSTIN, Texas--(BUSINESS WIRE)-- American Campus Communities, Inc. (NYSE:ACC) today announced the following financial results for the quarter and year ended December 31, 2017.

Highlights

Fourth Quarter 2017

  • Reported net income attributable to ACC of $39.1 million or $0.28 per fully diluted share, versus $25.4 million or $0.19 per fully diluted share in the fourth quarter 2016.
  • Increased quarterly FFOM to $99.6 million or $0.72 per fully diluted share, versus $86.9 million or $0.65 in the fourth quarter prior year, an increase of 10.8 percent per share.
  • Grew same store net operating income (NOI) by 4.2 percent over the fourth quarter prior year with revenues increasing 1.7 percent and operating expenses decreasing 1.8 percent, primarily through targeted reductions in controllable expenses.
  • Achieved same store average physical occupancy of 96.7 percent for the fourth quarter 2017 compared to 97.6 percent for the fourth quarter 2016.
  • Executed a presale agreement for a new $36.7 million development project located pedestrian to Florida State University, a Power-5 conference, Carnegie R1 university market. Upon delivery in Fall 2019, the asset will further diversify the company’s existing product offering and provide additional opportunities for multi-asset market efficiencies.
  • Awarded what is expected to be the nation’s largest third-party on-campus student housing project in history for a new development on the campus of the University of California, Riverside as part of the University of California System initiative. The project is currently anticipated to include as many as 6,000 beds and over $1 billion in new development, expected to be completed in multiple phases over several years. The company was also awarded a new third-party development project with Delaware State University during the quarter.
  • Earned Great Place to Work® certification based on extensive ratings provided by employees in anonymous surveys, resulting in 97 percent of employees saying that there is great pride in the work done at ACC, 97 percent saying that ACC has a great atmosphere, and 91 percent saying that their workplace is great.
  • Awarded the Best Student Housing Rental Apartment Community 2017 Multifamily Pillars of the Industry Award from the National Association of Home Builders for The Summit at University City.
  • American Campus Communities CEO Bill Bayless was named the 2017 National Ernst & Young Entrepreneur Of The Year in the category of Real Estate, Hospitality and Construction. Now in its 31st year, the award recognizes leaders and visionaries who demonstrate excellence and extraordinary success in innovation, financial performance and personal commitment to building world-class businesses and supporting their communities.

Full Year 2017

  • Reported net income attributable to ACC of $69.0 million or $0.50 per fully diluted share, versus $99.1 million or $0.75 per fully diluted share for the full year 2016. Excluding net gains and losses from dispositions of real estate, impairment charges and losses from the early extinguishment of debt, net income attributable to ACC would have been $85.0 million, versus $95.6 million for 2016.
  • Increased full year FFOM to $316.4 million or $2.31 per fully diluted share, compared to $297.7 million or $2.27 for the full year 2016.
  • Increased same store NOI by 2.5 percent over the year ended December 31, 2016, with revenues increasing 2.3 percent and operating expenses increasing 2.1 percent. Excluding expenses of $2.0 million associated with Hurricanes Harvey and Irma, operating expenses would have increased by only 1.4 percent and NOI would have increased by 3.0 percent.
  • Completed construction and delivered 10 new owned development assets into service on-schedule. The pedestrian communities total $609.2 million in development cost, contain 7,454 beds and are located an average of one-tenth of a mile from their respective campuses.
  • Construction continued on 14 owned development and presale development projects totaling $1.0 billion for delivery in Fall 2018 and 2019. The projects include three presale developments from the Core Spaces transaction and total approximately 9,700 beds with an average distance to campus of less than one-tenth of a mile.
  • Executed an agreement to recapitalize and ultimately acquire seven select student housing properties, including three presale developments for delivery in 2018, all totaling 3,776 beds for $590.6 million from affiliates of Core Spaces and DRW Real Estate Investments. The portfolio investment provides strategic growth in seven key Power-5 conference, Carnegie R1 university and existing American Campus Equity (ACE®) markets.
  • Entered the highly underserved University of Washington market with the acquisition of three Seattle-based assets including Hub U District Seattle, part of the Core Spaces portfolio. Totaling 890 beds, the properties average only two years old and are well-located pedestrian to campus.
  • Awarded nine new on-campus development projects including three ACE developments and six third-party projects.
  • In May, increased the common dividend to $1.76 per share on an annualized basis, an increase of over 30 percent since 2012.

“We are pleased to have produced a 13th consecutive year of growth in same store rental rate, rental revenue and NOI. Consistent with most publicly traded REITs, however, we believe our current valuation does not appropriately reflect the value of our assets and the many value creation opportunities ahead of us,” said Bill Bayless, American Campus Communities CEO. “We do recognize that the company’s current valuation is impacted partially by ongoing funding needs for our growth pipeline, and as previously communicated, we intend to address these capital needs by selling joint venture interests in existing core assets at highly attractive private market valuations. We have made great strides in sourcing a joint venture partner over the last few months and intend to execute a transaction in the first half of 2018. In addition, over the past several years, we have strategically positioned our balance sheet to fund our high-yielding development pipeline by executing on the disposition of older, non-core assets and opportunistically raising equity capital at attractive prices. While creating this capacity has diminished recent earnings growth, these strategic actions have refined our portfolio into one consisting almost entirely of core Class A assets located pedestrian to tier-1 universities, and most importantly, positioned the company for sustainable long-term value creation.”

Fourth Quarter Operating Results

Revenue for the 2017 fourth quarter totaled $227.6 million, an increase of 11.6 percent from $204.0 million in the fourth quarter 2016 and operating income for the quarter totaled $63.1 million versus $51.7 million in the prior year fourth quarter. The increase in revenue and operating income was primarily due to growth resulting from increased rental rates for the 2017-2018 academic year, recently completed development properties and property acquisitions completed in 2017. Net income for the 2017 fourth quarter totaled $39.1 million, or $0.28 per fully diluted share, compared with net income of $25.4 million, or $0.19 per fully diluted share, for the same quarter in 2016. FFO for the 2017 fourth quarter totaled $103.9 million, or $0.75 per fully diluted share, compared to $78.0 million, or $0.58 per fully diluted share for the same quarter in 2016. FFOM for the 2017 fourth quarter was $99.6 million, or $0.72 per fully diluted share, an increase of 10.8 percent per share, as compared to $86.9 million, or $0.65 per fully diluted share for the same quarter in 2016. A reconciliation of FFO and FFOM to net income is provided in Table 3.

Same store NOI was $103.0 million in the quarter, up 4.2 percent from $98.8 million in the 2016 fourth quarter. Same store revenues increased by 1.7 percent over the 2016 fourth quarter due to an increase in average rental rates for the 2017-2018 academic year. Same store operating expenses decreased by 1.8 percent over the prior year quarter. NOI for the total owned portfolio increased 13.7 percent to $125.2 million for the quarter from $110.1 million in the comparable period of 2016. A reconciliation of same store NOI to total NOI is provided in Table 4.

Portfolio Update

Developments

Construction continues on the company’s $688.0 million development pipeline and $319.3 million presale development pipeline with expected delivery in Fall 2018 and Fall 2019. These construction projects are all core Class A assets located on campus or pedestrian to campus in their respective markets and remain on track to achieve stabilized development yields in the range of 6.25 - 7.0 percent for developments and 5.7 – 6.25 percent for presale developments.

Off-Campus Owned

Subsequent to quarter end, the company executed a $36.7 million presale agreement for a 340-bed pedestrian development serving students attending Florida State University, a Power-5 conference, Carnegie R1 university market. Upon opening in Fall 2019, Stadium Centre Phase IV will be incorporated into the company’s existing five Stadium Centre assets, allowing the group to efficiently operate as a single property, while also providing significant diversification from the company’s existing assets in the market due to a new 5-bedroom, 5-bathroom unit type. Under the presale agreement, the company is responsible for the management, operations and initial lease up of the project while the developer retains delivery and construction cost risk.

American Campus Equity (ACE)

During the quarter, the company commenced construction on a new in-residence honors college on the campus of the University of Arizona with delivery scheduled for Fall 2019. Designed as a stand-alone, full-service living-learning honors college, the comprehensive project features modern residential accommodations for 1,056 students with an integrated dining hall, over 24,000 square feet of office and academic space including five spacious classrooms, and an adjacent recreation and wellness center and structured parking. The $84.7 million residential facility will be funded through the company’s ACE program while the dining, academic and office facilities, recreation and wellness center and structured parking will be funded and operated by the University. The company expects to earn approximately $2.4 million in third-party fees for its role in the development of these non-residential facilities during the construction period.

Third-Party Services

The company was awarded what is expected to be the nation’s largest third-party on-campus student housing development project in history for a multi-phase project on the campus of the University of California, Riverside. The project was the largest awarded to-date under the broadly publicized University of California System student housing initiative aimed at addressing the current and growing demand for on-campus student housing across the UC System. While the full scope, fees, feasibility and construction periods have not been finalized, the procurement award is currently anticipated to include as many as 6,000 beds completed in multiple phases, beginning with a first-phase development of a 760-bed student residence hall and 830-seat dining facility. Construction of Dundee Residence Hall and Glasgow Dining Hall, for which the company expects to earn a total of $4.7 million in development fees during the construction period, is anticipated to begin in late 2018 with delivery scheduled for Fall 2020. The next phase of on-campus development, North District Phase One, is expected to include approximately 1,500 beds with commencement of construction in early 2019 and delivery scheduled for Fall 2021. The company expects to earn a total of $8.0 million during the construction period related to this phase of the project. The company anticipates providing joint management services with the University for these projects upon completion.

Additionally during the quarter, the company was awarded a new third-party development project on the campus of Delaware State University. The project is currently targeting approximately 620 beds for delivery in Fall 2019. The company anticipates providing management services upon completion and expects to earn a total of $2.5 million in development fees throughout the construction period although the full scope, fees, feasibility and construction period have not been finalized.

Also during the quarter, the company closed on financing and commenced construction on third-party on-campus development projects with the University of Illinois at Chicago and the University of Arizona, as discussed above. In addition, the company completed an advisory services project related to a not-for-profit entity’s acquisition of Miramar, a student housing community at Texas A&M University-Corpus Christi.

Capital Markets

During the quarter, the company issued $400 million of senior unsecured notes under its existing shelf registration, which are fully and unconditionally guaranteed by the company. These 10-year notes were issued at 99.912 percent of par value with a coupon of 3.625 percent and a yield of 3.635 percent. The notes will mature on November 15, 2027. Moody’s and S&P rated the notes Baa2 and BBB, respectively. Net proceeds from the transaction totaled approximately $395 million, after expenses, and were used to repay the outstanding balance of the company’s revolving credit facility, with the remaining proceeds available to fund the development pipeline, acquisitions and general business activities.

At-The-Market (ATM) Share Offering Program

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

2018 Outlook

The company believes that the financial results for the fiscal year ending December 31, 2018 may be affected by, among other factors:

  • national and regional economic trends and events;
  • the success of leasing the company’s owned properties for the 2018-2019 academic year
  • the timing of acquisitions, dispositions or joint venture activity;
  • interest rate risk;
  • the timing of commencement and completion of construction on owned development projects;
  • the ability of the company to be awarded and the timing of the commencement of construction on third-party development projects;
  • university enrollment, funding and policy trends;
  • the ability of the company to earn third-party management revenues;
  • property tax rates and assessed values in certain jurisdictions;
  • the amount of income recognized by the taxable REIT subsidiaries and any corresponding income tax expense;
  • the ability of the company to integrate acquired properties; and
  • the outcome of legal proceedings arising in the normal course of business.

Based upon these factors, management anticipates that fiscal year 2018 FFO will be in the range of $2.51 to $2.60 per fully diluted share and FFOM will be in the range of $2.33 to $2.43 per fully diluted share. For additional details regarding the company’s 2018 outlook, please see pages S-17 and S-18 of the Supplemental Analyst Package 4Q 2017. 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, 2018 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 2017 results and the 2018 outlook on Wednesday, February 21, 2017 at 10:00 a.m. ET (9:00 a.m. CT). The conference call may be accessed by dialing 888-317-6003 passcode 5284451, 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 7, 2018 by dialing 877-344-7529 or 412-317-0088 conference number 10115480. 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, contractual executive separation and retirement charges, 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, 2017, American Campus Communities owned 169 student housing properties containing approximately 104,100 beds. Including its owned and third-party managed properties, ACC's total managed portfolio consisted of 206 properties with approximately 134,100 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, 2016 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 2018 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, 2017 December 31, 2016
(unaudited)
Assets
 
Investments in real estate:
Owned properties, net $ 6,450,364 $ 5,427,014
Owned properties held for sale 25,350
On-campus participating properties, net   81,804     85,797  
Investments in real estate, net 6,532,168 5,538,161
 
Cash and cash equivalents 41,182 22,140
Restricted cash 23,590 24,817
Student contracts receivable, net 9,170 8,428
Other assets1   291,260     272,367  
 
Total assets $ 6,897,370   $ 5,865,913  
 
Liabilities and equity
 
Liabilities:
Secured mortgage, construction and bond debt $ 664,020 $ 688,195
Unsecured notes 1,585,855 1,188,737
Unsecured term loans 647,044 149,065
Unsecured revolving credit facility 127,600 99,300
Accounts payable and accrued expenses 53,741 76,614
Other liabilities1   187,983     158,437  
Total liabilities 3,266,243 2,360,348
 
Redeemable noncontrolling interests 132,169 55,078
 
Equity:

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

Common stock 1,364 1,322
Additional paid in capital 4,326,910 4,118,842
Common stock held in rabbi trust (2,944 ) (975 )
Accumulated earnings and dividends (837,644 ) (670,137 )
Accumulated other comprehensive loss   (2,701 )   (4,067 )

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

3,484,985 3,444,985
Noncontrolling interests – partially owned properties   13,973     5,502  
Total equity   3,498,958     3,450,487  
 
Total liabilities and equity $ 6,897,370   $ 5,865,913  
 

1.

  For purposes of calculating net asset value at December 31, 2017, the company excludes other assets of approximately $8.8 million related to net deferred financing costs on its revolving credit facility and the net value of in-place leases and other liabilities of approximately $47.8 million related to deferred revenue and fee income.
 
         
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,
2017     2016 2017     2016
(unaudited) (unaudited)
Revenues
Owned properties $ 207,154 $ 189,314 $ 738,710 $ 735,392
On-campus participating properties 10,817 10,415 33,945 33,433
Third-party development services 6,064 677 10,761 4,606
Third-party management services 2,639 2,685 9,832 9,724
Resident services   889     881     3,199     3,206  
Total revenues 227,563 203,972 796,447 786,361
 
Operating expenses
Owned properties 82,877 80,121 332,429 337,296
On-campus participating properties 3,304 3,322 14,384 13,447
Third-party development and management services 3,436 3,895 15,225 14,533
General and administrative1 6,186 5,683 31,386 22,493
Depreciation and amortization 65,564 51,901 234,955 211,387
Ground/facility leases 3,062 2,431 10,213 9,167
Provision for real estate impairment2       4,895     15,317     4,895  
Total operating expenses 164,429 152,248 653,909 613,218
 
Operating income 63,134 51,724 142,538 173,143
 
Nonoperating income and (expenses)
Interest income 1,222 1,455 4,945 5,481
Interest expense (23,178 ) (16,925 ) (71,122 ) (78,687 )
Amortization of deferred financing costs (1,422 ) (1,282 ) (4,619 ) (6,520 )
Gain (loss) from disposition of real estate 3,788 (632 ) 21,197
Loss from early extinguishment of debt       (12,841 )       (12,841 )
Total nonoperating expense   (23,378 )   (25,805 )   (71,428 )   (71,370 )
 
Income before income taxes 39,756 25,919 71,110 101,773
Income tax provision   (198 )   (115 )   (989 )   (1,150 )
Net income 39,558 25,804 70,121 100,623
Net income attributable to noncontrolling interests   (496 )   (412 )   (1,083 )   (1,562 )

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

$ 39,062   $ 25,392   $ 69,038   $ 99,061  
Other comprehensive income
Change in fair value of interest rate swaps and other   494     1,925     1,366     1,763  
Comprehensive income $ 39,556   $ 27,317   $ 70,404   $ 100,824  

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

 
Basic $ 0.28   $ 0.19   $ 0.50   $ 0.76  
 
Diluted $ 0.28   $ 0.19   $ 0.50   $ 0.75  
 
Weighted-average common shares outstanding
 
Basic   136,426,506     132,175,589     135,141,423     129,228,748  
 
Diluted   137,238,418     132,950,306     136,002,385     130,018,729  
 

1.

  The year ended December 31, 2017 includes $4.5 million of contractual executive separation and retirement charges incurred in the first and second quarter of 2017 with regard to the retirement of the company's former Chief Financial Officer, and $2.9 million in transaction costs incurred in the third quarter of 2017 related to the company's initial investment in the Core Spaces/DRW joint ventures.
 

2.

Represents an impairment charge recorded in the fourth quarter of 2016 for a property classified as held for sale as of December 31, 2016, and an impairment charge recorded in the second quarter of 2017 for a property currently in receivership that is in the process of being transferred to the lender in settlement of the property's $27.4 million mortgage loan that matured in August 2017.
 
         
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
December 31,
Twelve Months Ended
December 31,
2017     2016 2017     2016

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

$ 39,062 $ 25,392 $ 69,038 $ 99,061
Noncontrolling interests 483 412 1,076 1,562
(Gain) loss from disposition of real estate (3,788 ) 632 (21,197 )
Elimination of provision for real estate impairment1 4,895 15,317 4,895
Real estate related depreciation and amortization   64,364     51,044     231,295     208,276  
Funds from operations ("FFO") attributable to common stockholders and OP unitholders 103,909 77,955 317,358 292,597
Elimination of operations of on-campus participating properties
Net income from on-campus participating properties (3,760 ) (3,492 ) (5,133 ) (5,194 )
Amortization of investment in on-campus participating properties   (1,915 )   (1,850 )   (7,536 )   (7,343 )
98,234 72,613 304,689 280,060
Modifications to reflect operational performance of on-campus participating properties
Our share of net cash flow2 854 794 2,841 2,964
Management fees   488     476     1,534     1,503  
Contribution from on-campus participating properties 1,342 1,270 4,375 4,467
 
Property acquisition costs3 212 2,855 326
Contractual executive separation and retirement charges4 4,515
Elimination of loss from early extinguishment of debt5       12,841         12,841  
Funds from operations-modified ("FFOM") attributable to common stockholders and OP unitholders $ 99,576   $ 86,936   $ 316,434   $ 297,694  
 
FFO per share – diluted $ 0.75   $ 0.58   $ 2.31   $ 2.23  
 
FFOM per share – diluted $ 0.72   $ 0.65   $ 2.31   $ 2.27  
 
Weighted-average common shares outstanding - diluted   138,323,062     134,120,391     137,099,084     131,340,992  
 

1.

  Represents an impairment charge recorded in the fourth quarter of 2016 for a property classified as held for sale as of December 31, 2016, and an impairment charge recorded in the second quarter of 2017 for a property currently in receivership that is in the process of being transferred to the lender in settlement of the property's $27.4 million mortgage loan that matured in August 2017.
 

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).
 

3.

The year ended December 31, 2017 amount represents transaction costs incurred in the third quarter of 2017 related to the company's initial investment in the Core Spaces/DRW joint ventures.
 

4.

Represents contractual executive separation and retirement charges incurred in the first and second quarter of 2017 with regard to the retirement of the company's former Chief Financial Officer.
 

5.

Represents losses associated with the early pay-off of mortgage loans for nine properties sold during the twelve months ended December 31, 2016. Such costs are excluded from gains from disposition of real estate reported in accordance with GAAP. However, the company views the losses from early extinguishment of debt associated with the sales of real estate as an incremental cost of the sale transactions because the debt was extinguished in connection with the consummation of the sale transactions and had no intent to extinguish the debt absent such transactions. The company believes that adjusting FFOM to exclude these losses more appropriately reflects the results of its operations exclusive of the impact of our disposition transactions.
 
         
Table 4
American Campus Communities, Inc. and Subsidiaries
Owned Properties Results of Operations
(unaudited, dollars in thousands)
 
Three Months Ended December 31, Twelve Months Ended December 31,
2017     2016    

$ Change

    % Change 2017     2016    

$ Change

    % Change
Owned properties revenues
Same store properties $ 172,624 $ 169,743 $ 2,881 1.7 % $ 662,801 $ 648,070 $ 14,731 2.3 %
New properties 34,571 8,980 25,591 74,345 13,271 61,074
Sold and held for sale properties1   848   11,472   (10,624 )     4,763   77,257   (72,494 )  
Total revenues2 $ 208,043 $ 190,195 $ 17,848   9.4 % $ 741,909 $ 738,598 $ 3,311   0.4 %
Owned properties operating expenses
Same store properties3 $ 69,640 $ 70,918 $ (1,278 ) (1.8 %) $ 297,633 $ 291,642 $ 5,991 2.1 %
New properties 12,846 3,252 9,594 31,998 5,652 26,346
Sold and held for sale properties1 4   391   5,951   (5,560 )     2,798   40,002   (37,204 )  
Total operating expenses $ 82,877 $ 80,121 $ 2,756   3.4 % $ 332,429 $ 337,296 $ (4,867 ) (1.4 %)
Owned properties net operating income
Same store properties3 $ 102,984 $ 98,825 $ 4,159 4.2 % $ 365,168 $ 356,428 $ 8,740 2.5 %
New properties 21,725 5,728 15,997 42,347 7,619 34,728
Sold and held for sale properties1   457   5,521   (5,064 )     1,965   37,255   (35,290 )  
Total net operating income $ 125,166 $ 110,074 $ 15,092   13.7 % $ 409,480 $ 401,302 $ 8,178   2.0 %
 
Note: The same store grouping above represents properties owned and operating for both of the entire years ended December 31, 2017 and 2016, 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, 2017.
 

1.

Includes properties sold in 2016 and 2017, and one property currently in receivership that is in the process of being transferred to the lender in settlement of the property's $27.4 million mortgage loan that matured in August 2017.
 

2.

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

3.

Excluding expenses of $0.1 million and $2.0 million incurred during the three and twelve months ended December 31, 2017, respectively, associated with Hurricanes Harvey and Irma, same store owned operating expenses would have decreased by 1.9% and only increased by 1.4%, respectively, and same store owned net operating income would have increased 4.3% and 3.0%, respectively.
 

4.

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
2018 Outlook(1)
(dollars in thousands, except share and per share data)
 
Low High
 
Net income $ 93,200 $ 104,200
Noncontrolling interests 1,300 1,350
Depreciation and amortization   253,400     255,200  
Funds from operations ("FFO") $ 347,900 $ 360,750
 
Elimination of operations from on-campus participating properties (12,700 ) (12,300 )
Contribution from on-campus participating properties 4,150 4,750
Elimination of effect of transfer of asset to lender2   (17,000 )   (17,000 )
Funds from operations - modified ("FFOM") $ 322,350   $ 336,200  
 
Net income per share - diluted $ 0.67   $ 0.75  
 
FFO per share - diluted $ 2.51   $ 2.60  
 
FFOM per share - diluted $ 2.33   $ 2.43  
 
Weighted-average common shares outstanding - diluted   138,565,000     138,565,000  
 

1.

 

The company believes that the financial results for the fiscal year ending December 31, 2018 may be affected by, among other factors:

  • national and regional economic trends and events;
  • the success of leasing the company's owned properties for the 2018-2019 academic year;
  • the timing of acquisitions, dispositions or joint venture activity;
  • interest rate risk;
  • the timing of commencement and completion of construction on owned development projects;
  • the ability of the company to be awarded and the timing of the commencement of construction on third-party development projects;
  • university enrollment, funding and policy trends;
  • the ability of the company to earn third-party management revenues;
  • the amount of income recognized by the taxable REIT subsidiaries and any corresponding income tax expense;
  • the ability of the company to integrate acquired properties;
  • 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 the net effect of a gain on the extinguishment of debt for one property being transferred to the lender in settlement of the property's $27.4 million mortgage loan, offset by a loss expected to be incurred as a result of the transfer to the lender.

 

American Campus Communities, Inc.
Ryan Dennison, 512-732-1000

Source: American Campus Communities, Inc.