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| ACC > SEC Filings for ACC > Form 10-Q on 10-Nov-2008 | All Recent SEC Filings |
10-Nov-2008
Quarterly Report
Forward-looking Statements
This report contains forward-looking statements within the meaning of the federal securities laws. We caution investors that any forward-looking statements presented in this report, or which management may make orally or in writing from time to time, are based on management's beliefs and assumptions made by, and information currently available to, management. When used, the words "anticipate," "believe," "expect," "intend," "may," "might," "plan," "estimate," "project," "should," "will," "result" and similar expressions, which do not relate solely to historical matters, are intended to identify forward-looking statements. Such statements are subject to risks, uncertainties and assumptions and may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We caution you that while forward-looking statements reflect our good faith beliefs when we make them, they are not guarantees of future performance and are impacted by actual events when they occur after we make such statements. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on results and trends at the time they were made, to anticipate future results or trends.
Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following: general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, dependence on tenants' financial condition, and competition from other developers, owners and operators of real estate); risks associated with changes in University admission or housing policies; risks associated with the availability and terms of financing and the use of debt to fund acquisitions and developments; failure to manage effectively our growth and expansion into new markets or to integrate acquisitions successfully; risks and uncertainties affecting property development and construction (including, without limitation, construction delays, cost overruns, inability to obtain necessary permits and public opposition to such activities); risks associated with downturns in the national and local economies, increases in interest rates, and volatility in the securities markets; costs of compliance with the Americans with Disabilities Act and other similar laws; potential liability for uninsured losses and environmental contamination; risks associated with our potential failure to qualify as a REIT under the Internal Revenue Code of 1986 (the "Code"), as amended, and possible adverse changes in tax and environmental laws; and risks associated with our dependence on key personnel whose continued service is not guaranteed.
The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks included in other sections of this report. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.
Our Company and Our Business
American Campus Communities, Inc. (referred to herein as "the Company," "us," "we," and "our") is a real estate investment trust ("REIT") that was incorporated on March 9, 2004 and commenced operations effective with the completion of our initial public offering ("IPO") on August 17, 2004. Through our controlling interest in American Campus Communities Operating Partnership LP (the "Operating Partnership"), we are one of the largest owners, managers and developers of high quality student housing properties in the United States in terms of beds owned and under management. We are a fully integrated, self-managed and self-administered equity REIT with expertise in the acquisition, design, financing, development, construction management, leasing and management of student housing properties.
On April 23, 2008, we completed an equity offering, consisting of the sale of 9,200,000 shares of our common stock at a price of $28.75 per share, including the exercise of 1,200,000 shares issued as a result of the exercise of the underwriters' overallotment option in full at closing. The offering generated gross proceeds of $264.5 million. The aggregate proceeds, net of the underwriting discount, structuring fee and expenses of the offering, were approximately $252.1 million.
As of September 30, 2008, our property portfolio contained 86 student housing properties with approximately 52,800 beds and approximately 17,500 apartment units, including 40 properties containing approximately 23,500 beds and approximately 7,500 units added as a result of our acquisition of the student housing business of GMH. Our property portfolio consisted of 80 owned off-campus properties that are in close proximity to colleges and universities, two ACE properties operated under ground/facility leases with a related university system and four on-campus participating properties operated under ground/facility leases with the related university systems. As of September 30, 2008, we also owned a minority interest in joint ventures that owned an aggregate of 21 student housing properties with approximately 12,100 beds in approximately 3,600 units. Our communities contain modern housing units, offer resort-style amenities and are supported by a resident assistant system and other student-oriented programming.
Through our TRS entities, we also provide construction management and development services, primarily for student housing properties owned by colleges and universities, charitable foundations, and others. As of September 30, 2008, we provided third-party management and leasing services for 35 properties (six of which we served as the third-party developer and construction manager) that represented approximately 25,200 beds in approximately 9,100 units. Third-party management and leasing services are typically provided pursuant to multi-year management contracts that have initial terms that range from one to five years. As of September 30, 2008, our total owned, joint venture and third-party managed portfolio included 142 properties with approximately 90,100 beds in approximately 30,200 units.
Third-Party Development Services
Our third-party development and construction management services as of September 30, 2008 consisted of four projects under contract and currently in progress with fees ranging from $0.2 million to $7.6 million. As of September 30, 2008, fees of approximately $5.5 million remained to be earned by us with respect to these projects, which have scheduled completion dates of July 2009 through August 2010.
We recently completed two projects with a total of 1,077 beds in 379 units, with total fees of approximately $4.0 million.
While we believe that our third party development/construction management and property management services allow us to develop strong and key relationships with colleges and universities, revenue from this area has over time become a smaller portion of our operations due to the continued focus on and growth of our wholly-owned property portfolio. Nevertheless, we believe these services continue to provide synergies with respect to our ability to identify, acquire or develop, and successfully operate, student housing properties.
Acquisitions
On June 11, 2008, we completed the acquisition of GMH's student housing
business. At the time of closing, the GMH student housing portfolio consisted of
42 wholly-owned properties containing 24,953 beds located in various markets
throughout the country. Two of the acquired properties were sold in the third
quarter. See Note 4 in the accompanying Notes to Consolidated Financial
Statements for additional information on the property dispositions. The total
estimated purchase price of GMH was approximately $1,042.4 million which was
paid as follows: (i) the issuance of approximately $155.0 million of our common
stock and Common Units valued at $28.43 per share; (ii) cash consideration paid
of approximately $239.6 million which represented the payment of $3.36 per share
for each GMH common share and each unit in the GMH Operating Partnership issued
and outstanding as of the date of the Merger Agreement (February 11, 2008);
(iii) the assumption of $598.8 million of fixed-rate mortgage debt, which
includes a net debt discount of $9.4 million; and (iv) $49.0 million of merger
costs incurred as it relates to severance payments, legal, banking, accounting
and finance costs.
In February 2008, we acquired a 144-unit, 528-bed property (Pirate's Place) located near the campus of East Carolina University in Greenville, North Carolina, for a purchase price of $10.6 million, which excludes $0.8 million of transaction costs, initial integration expenses and capital expenditures necessary to bring this property up to our operating standards. As part of the transaction, we assumed approximately $7.0 million in fixed-rate mortgage debt with an annual interest rate of 7.15% and remaining term to maturity of 14.9 years.
In February 2008, we also acquired a 68-unit, 161-bed property (Sunnyside Commons) located near the campus of West Virginia University in Morgantown, West Virginia, for a purchase price of $7.5 million, which excludes $0.6 million of transaction costs, initial integration expenses and capital expenditures necessary to bring this property up to our operating standards. We did not assume any debt as part of this transaction.
Owned Development Activities
Vista del Sol: In August 2008, we completed the final stages of construction on our first ACE property located in Tempe, Arizona, which contains 1,866 beds in 613 units and serves students attending Arizona State University. Total development costs incurred for the project were approximately $137.5 million.
Villas at Chestnut Ridge: In August 2008, we completed the final stages of construction on this owned off-campus property located in Amherst, New York, which contains 552 beds in 196 units and serves students attending the State University of New York, Buffalo. Total development costs incurred for the project were approximately $34.8 million.
Barrett Honors College: As of September 30, 2008, our Barrett Honors College ACE property was under construction with total development costs estimated to be approximately $126.5 million. The project is scheduled to complete construction and open for occupancy in August 2009 and serve students attending Arizona State University. As of September 30, 2008, the project was approximately 36% complete, and we estimate that remaining development costs will be approximately $82.5 million. As of September 30, 2008, we have funded 100% of the project's development costs and will fund the remaining development costs internally.
Property Operations
As of September 30, 2008, our property portfolio consisted of the following:
YR
ACQUIRED
/
DEVELOPED PRIMARY UNIVERSITY
PROPERTY (1) LOCATION SERVED UNITS BEDS
Wholly-Owned
properties:
1. Villas on Apache Arizona State
University Main
1999 Tempe, AZ Campus 111 288
2. The Village at Blacksburg, Virginia Tech
Blacksburg 2000 VA University 288 1,056
3. River Club The University of
Apartments 1999 Athens, GA Georgia - Athens 266 792
4. River Walk The University of
Townhomes 1999 Athens, GA Georgia - Athens 100 336
5. The Callaway College
House 2001 Station, TX Texas A&M University 173 538
6. The Village at The University of
Alafaya Club 2000 Orlando, FL Central Florida 228 839
7. The Village at The University of
Science Drive 2001 Orlando, FL Central Florida 192 732
8. University
Village at Boulder The University of
Creek 2002 Boulder, CO Colorado at Boulder 82 309
9. University California State
Village at Fresno 2004 Fresno, CA University - Fresno 105 406
10. University Philadelphia,
Village at TU 2004 PA Temple University 220 749
11. University Club Tallahassee, Florida State
Tallahassee 2005 FL University 152 608
12. The Grove at Tallahassee, Florida State
University Club 2005 FL University 64 128
13. College Club Tallahassee, Florida A&M
Tallahassee 2005 FL University 96 384
14. The Greens at Tallahassee, Florida A&M
College Club 2005 FL University 40 160
15. University Club Gainesville,
Gainesville 2005 FL University of Florida 94 376
16. City Parc at Fry University of North
Street 2005 Denton, TX Texas 136 418
Gainesville,
17. The Estates 2005 FL University of Florida 396 1,044
18. University
Village at Sweet State University of
Home 2005 Amherst, NY New York - Buffalo 269 828
19. Entrada Real 2006 Tucson, AZ University of Arizona 98 363
Tallahassee, Florida State
20. Royal Oaks 2006 FL University 82 224
Tallahassee, Florida State
21. Royal Pavilion 2006 FL University 60 204
22. Royal Village Tallahassee, Florida State
Tallahassee 2006 FL University 75 288
23. Royal Village Gainesville,
Gainesville 2006 FL University of Florida 118 448
The University of
24. Northgate Lakes 2006 Orlando, FL Central Florida 194 710
University of
25. Royal Lexington 2006 Lexington, KY Kentucky 94 364
26. The Woods at Murfreesboro, Middle Tennessee
Greenland 2006 TN State University 78 276
Murfreesboro, Middle Tennessee
27. Raiders Crossing 2006 TN State University 96 276
28. Raiders Pass 2006 Lubbock, TX Texas Tech University 264 828
College
29. Aggie Station 2006 Station, TX Texas A&M University 156 450
Texas State
30. The Outpost San San Marcos, University - San
Marcos 2006 TX Marcos 162 486
31. The Outpost San San Antonio, University of Texas -
Antonio 2006 TX San Antonio 276 828
College
32. Callaway Villas 2006 Station, TX Texas A&M University 236 704
Huntington,
33. Village on Sixth 2007 WV Marshall University 248 752
University of
34. Newtown Crossing 2007 Lexington, KY Kentucky 356 942
35. Olde Towne
University Square 2007 Toledo, OH University of Toledo 224 550
Eastern Michigan
36. Peninsular Place 2007 Ypsilanti, MI University 183 478
37. University Rutgers University,
Centre 2007 Newark, NJ NJIT, Essex CCC 234 838
38. Sunnyside Morgantown, West Virginia
Commons (2) 2008 WV University 68 161
39. Pirate's Place Greenville, East Carolina
(2) 2008 NC University 144 528
40. University University of Nevada
Highlands (3) 2008 Reno, NV at Reno 216 732
41. Jacob Heights I Minnesota State
(3) 2008 Mankato, MN University 42 162
42. Jacob Heights Minnesota State
III (3) 2008 Mankato, MN University 24 96
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YR
ACQUIRED
/
DEVELOPED PRIMARY UNIVERSITY
PROPERTY (1) LOCATION SERVED UNITS BEDS
Wholly-Owned
properties:
Minnesota State
43. The Summit (3) 2008 Mankato, MN University 192 672
44. GrandMarc - University of
Seven Corners (3) 2008 Minneapolis, MN Minnesota 186 440
45. University California State
Village - Sacramento University -
(3) 2008 Sacramento, CA Sacramento 250 394
San Diego State
46. Aztec Corner (3) 2008 San Diego, CA University 180 606
47. University University of
Crossing (3) 2008 Philadelphia, PA Pennsylvania / Drexel 507 1026
48. Campus Corner
(3) 2008 Bloomington, IN Indiana University 256 800
University of
49. Tower at 3rd (3) 2008 Champaign, IL Illinois 147 295
50. University Mills University of
(3) 2008 Cedar Falls, IA Northern Iowa 121 481
East Carolina
51. Pirates Cove (3) 2008 Greenville, NC University 264 1056
52. University Manor East Carolina
(3) 2008 Greenville, NC University 168 600
53. Brookstone
Village (3) 2008 Wilmington, NC UNC - Wilmington 124 238
54. Campus Walk -
Wilmington (3) 2008 Wilmington, NC UNC - Wilmington 289 290
55. Riverside University of South
Estates (3) 2008 Cayce, SC Carolina 205 700
56. Cambridge at Georgia Southern
Southern (3) 2008 Statesboro, GA University 228 564
57. Campus Club - Georgia Southern
Statesboro (3) 2008 Statesboro, GA University 276 984
58. University Pines Georgia Southern
(3) 2008 Statesboro, GA University 144 552
59. Lakeside (3) 2008 Athens, GA University of Georgia 244 776
60. The Club (3) 2008 Athens, GA University of Georgia 120 480
61. Pegasus
Connection (3) 2008 McKay, FL Central Florida 306 930
62. University Place University of
(3) 2008 Charlottesville, VA Virginia 144 528
63. Southview (3) James Madison
2008 Harrisonburg, VA University 240 960
64. Stonegate (3) James Madison
2008 Harrisonburg, VA University 168 672
65. The Commons (3) James Madison
2008 Harrisonburg, VA University 132 528
66. University Middle Tennessee
Gables (3) 2008 Murfreesboro, TN State University 168 648
67. Campus Ridge (3) East Tennessee State
2008 Johnson City, TN University 132 528
68. The Enclave I Bowling Green State
(3) 2008 Bowling Green, OH University 120 480
69. Hawks Landing Miami University of
(3) 2008 Oxford, OH Ohio 122 484
70. Willow Tree University of
Apartments (3) 2008 Ann Arbor, MI Michigan 310 568
71. Willow Tree University of
Towers (3) 2008 Ann Arbor, MI Michigan 163 283
Michigan State
72. Abbott Place (3) 2008 East Lansing, MI University 222 654
73. University
Centre - Kalamazoo Western Michigan
(3) 2008 Kalamazoo, MI University 232 700
74. University Central Michigan
Meadows (3) 2008 Mt. Pleasant, MI University 184 616
75. Campus Way (3) 2008 Tuscaloosa, AL University of Alabama 196 684
76. Campus Walk - University of
Oxford (3) 2008 Oxford, MS Mississippi 108 432
77. Campus Trails Mississippi State
(3) 2008 Starkville, MS University 156 480
78. University
Pointe (3) 2008 Lubbock, TX Texas Tech University 204 682
79. University
Trails (3) 2008 Lubbock, TX Texas Tech University 240 684
80. Vista del Sol Arizona State
(4) 2008 Tempe, AZ University 613 1,866
81. Villas at State University of
Chestnut Ridge (4) 2008 Amherst, NY New York - Buffalo 196 552
82. Barrett Honors Arizona State
College (5) 2009 Tempe, AZ University 601 1,720
Total wholly-owned 15,598 48,312
properties
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YEAR
ACQUIRED
/
DEVELOPED PRIMARY UNIVERSITY
PROPERTY (1) LOCATION SERVED UNITS BEDS
On-campus
participating
properties:
83. University 1996 / 97 Prairie Prairie View A&M
Village - PVAMU / 98 View, TX University 612 1,920
84. University 2000 / Prairie Prairie View A&M
College - PVAMU 2003 View, TX University 756 1,470
Texas A&M
85. University International
Village - TAMIU 1997 Laredo, TX University 84 250
86. Cullen Oaks - 2001 / Houston, The University of
Phase I and II 2006 TX Houston 411 879
Total on-campus participating properties 1,863 4,519
Total - all
properties 17,461 52,831
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(1) As of September 30, 2008, the average age of our operating properties was approximately 9.2 years.
(2) Property was acquired in February 2008.
(3) GMH property acquired in June 2008.
(4) Construction was completed and property commenced operations in August 2008.
(5) Currently under development with a scheduled completion date of August 2009.
Results of Operations
Comparison of the Three Months Ended September 30, 2008 and September 30, 2007
The following table presents our results of operations for the three months
ended September 30, 2008 and 2007, including the amount and percentage change in
these results between the two periods:
Three Months Ended September 30,
2008 2007 Change ($) Change (%)
Revenues:
Wholly-owned properties $ 60,663 $ 30,045 $ 30,618 101.9 %
On-campus participating properties 4,301 4,083 218 5.3 %
. . .
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