t67263_10k.htm
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
x Annual Report Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
For the
fiscal year ended December 31, 2009.
o Transition Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
For the
Transition Period From _____________________ to __________________.
Commission
file number 001-32265
AMERICAN
CAMPUS COMMUNITIES, INC.
(Exact
name of registrant as specified in its charter)
Maryland
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76-0753089
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(State
or Other Jurisdiction of Incorporation or Organization)
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(IRS
Employer Identification No.)
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805
Las Cimas Parkway, Suite 400 Austin, TX
(Address
of Principal Executive Offices)
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78746
(Zip
Code)
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(512)
732-1000
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
(Title
of Each Class)
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(Name
of Each Exchange on Which Registered)
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Common
Stock, $.01 par value
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New
York Stock Exchange
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Securities registered pursuant to
Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes x No oX
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
Yes o No x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every
Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).
Yes o No oX
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer x Accelerated
filer o
Non-accelerated
filer o
(Do not check if a smaller reporting company) Smaller reporting
company o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes o No x
The
aggregate market value of voting and non-voting common equity held by
non-affiliates of the registrant was $1,155,094,432 based on the last sale price
of the common equity on June 30, 2009 which is the last business day of the
Company’s most recently completed second quarter.
There
were 52,208,669 shares of the Company’s common stock with a par value of $0.01
per share outstanding as of the close of business on February 24,
2010.
DOCUMENTS
INCORPORATED BY REFERENCE
Part III
of this report incorporates information by reference from the definitive Proxy
Statement for the 2010 Annual Meeting of Stockholders.
FOR
THE YEAR ENDED DECEMBER 31, 2009
TABLE
OF CONTENTS
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PAGE
NO.
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PART
I. |
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Item
1.
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Business
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1
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Item
1A.
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Risk
Factors
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7
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Item
1B.
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Unresolved
Staff Comments
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16
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Item
2.
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Properties
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17
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Item
3.
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Legal
Proceedings
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22
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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22
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PART
II. |
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Item
5.
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Market
for Registrant’s Common Equity and Related Stockholder
Matters
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23
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Item
6.
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Selected
Financial Data
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25
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Item
7.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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26
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Item
7A.
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Quantitative
and Qualitative Disclosures About Market Risk
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46
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Item
8.
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Financial
Statements and Supplementary Data
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46
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Item
9.
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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46
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Item
9A.
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Controls
and Procedures
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46
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PART
III.
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Item
10.
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Directors,
Executive Officers and Corporate Governance
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48
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Item
11.
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Executive
Compensation
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48
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Item
12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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48
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Item
13.
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Certain
Relationships, Related Transactions and Director
Independence
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48
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Item
14.
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Principal
Accounting Fees and Services
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48
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PART
IV.
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Item
15.
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Exhibits
and Financial Statement Schedules
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49
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SIGNATURES
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53
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PART
I
Item
1. Business
Overview
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,
developed, 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.
As of
December 31, 2009, our property portfolio contained 85 student housing
properties with approximately 52,100 beds and approximately 17,000 apartment units, including 39 properties
containing approximately 22,800 beds and approximately 7,300 units added as a
result of our acquisition of the student housing business of GMH Communities
Trust (“GMH”) on June 11, 2008. Our property portfolio consisted of
79 owned off-campus properties that are in close proximity to colleges and
universities, two American Campus Equity (“ACETM”)
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
December 31, 2009, we also owned a noncontrolling interest in two joint ventures
that owned an aggregate of 20 student housing properties with approximately
11,300 beds in approximately 3,400 units. Our communities contain
modern housing units and are supported by a resident assistant system and other
student-oriented programming, with many offering resort-style
amenities.
Through
our taxable REIT subsidiaries (“TRS”), we provide construction management and
development services, primarily for student housing properties owned by colleges
and universities, charitable foundations, and others. As of December
31, 2009, we provided third-party management and leasing services for 31
properties (five of which we served as the third-party developer and
construction manager) that represented approximately 23,300 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 December
31, 2009, our total owned, joint venture and third-party managed portfolio was
comprised of 136 properties with approximately 86,700 beds in approximately
29,500 units.
Business
Objectives, Investment Strategies, and Operating Segments
Business Objectives
Our
primary business objectives are to create long-term stockholder value by
deploying capital to develop, redevelop, acquire and operate student housing
communities, and to sell communities when they no longer meet our long-term
investment strategy and when market conditions are favorable. We
believe we can achieve these objectives by continuing to implement our
investment strategies and successfully manage our operating segments, which are
described in more detail below.
Investment
Strategies
We seek
to own high quality, well designed and well located student housing properties.
We seek to acquire or develop properties in markets that have stable or
increasing student populations, are in submarkets with barriers to entry and
provide opportunities for economic growth as a result of their product position
and/or differentiated design and close proximity to campuses, or through our
superior operational capabilities. We believe that our reputation and
established relationships with universities give us an advantage in sourcing
acquisitions and developments and obtaining municipal approvals and community
support for our development projects.
GMH Acquisition:
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 24,939 beds located in
various markets throughout the country. Two of the acquired
properties totaling 1,468 beds were sold in the third quarter of 2008 and one
property totaling 700 beds was sold on December 31, 2009. The total
consideration paid for GMH was approximately $1,018.7 million, inclusive of
transaction costs.
We
believe our relationship with university systems and individual educational
institutions, our knowledge of the student housing market and our prominence as
the first publicly-traded REIT focused exclusively on student housing in the
United States will afford us a competitive advantage in acquiring additional
student housing properties.
Development: Since
1996, we have developed 14 of our owned properties, consisting of 10
wholly-owned properties and four on-campus participating
properties. This includes one wholly-owned property that opened for
occupancy in August 2009 and two wholly-owned properties that opened for
occupancy in August 2008.
Our
experienced development staff intends to continue to identify and acquire land
parcels in close proximity to colleges and universities that offer location
advantages or that allow for the development of unique products that offer a
competitive advantage. We expect to continue to benefit from
opportunities derived from our extensive network with colleges and universities
as well as our relationship with certain developers with whom we have previously
developed off-campus student housing properties.
Operating
Segments
We define
business segments by their distinct customer base and service
provided. We have identified four reportable segments: Wholly-Owned
Properties, On-Campus Participating Properties, Development Services and
Property Management Services. For a detailed financial analysis of
our segments’ results of operations and financial position, please refer to Note
18 in the accompanying Notes to Consolidated Financial Statements contained in
Item 8.
Property Operations
Unique Leasing
Characteristics: Student housing properties are typically
leased by the bed on an individual lease liability basis, unlike multifamily
housing where leasing is by the unit. Individual lease liability
limits each resident’s liability to his or her own rent without liability for a
roommate’s rent. A parent or guardian is required to execute each
lease as a guarantor unless the resident provides adequate proof of income or
financial aid. The number of lease contracts that we administer is
therefore equivalent to the number of beds occupied and not the number of
units. Unlike traditional multifamily housing, most of our leases for
an individual property commence and terminate on the same dates and typically
have terms of 9 or 12 months. (Please refer to the property table
contained in Item 2 – Properties for a listing of the typical lease terms at our
properties.) As an example, in the case of our typical 12-month
leases, the commencement date coincides with the commencement of the respective
university’s Fall academic term and the termination date is the last day of the
subsequent summer school session. As such, we must re-lease each
property in its entirety each year.
Management
Philosophy: Our management philosophy is based upon meeting
the following objectives:
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Satisfying
the specialized needs of residents by providing the highest levels of
customer service;
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Developing
and maintaining an academically oriented environment via a premier
residence life/student development
program;
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Maintaining
each project’s physical plant in top
condition;
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Maximizing
revenue through the development and implementation of a strategic annual
marketing plan and leasing administration program;
and
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Maximizing
cash flow through maximizing revenue coupled with prudent control of
expenses.
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Wholly-Owned
Properties: As of December 31, 2009, our Wholly-Owned
Properties segment consisted of 79 owned off-campus properties within close
proximity to 59 colleges and universities in 23 states and two ACE owned
on-campus properties operated under ground/facility leases with a related
university system. Off-campus properties are generally located in
close proximity to the school campus, generally with pedestrian, bicycle, or
university shuttle access. Off-campus housing tends to offer more
relaxed rules and regulations than on-campus housing, resulting in off-campus
housing being generally more appealing to upper-classmen. We believe
that the support of colleges and universities can be beneficial to the success
of our wholly-owned properties. We actively seek to have these
institutions recommend our facilities to their students or to provide us with
mailing lists so that we may directly market to students and
parents. In some cases, the institutions actually promote our
off-campus facilities in their recruiting and admissions
literature. In cases where the educational institutions do not
provide mailing lists or recommendations for off-campus housing, most provide
comprehensive lists of suitable properties to their students, and we continually
work to ensure that our properties are on these lists in each of the markets
that we serve.
Off-campus
housing is subject to competition for tenants with on-campus housing owned by
colleges and universities, and vice versa. Colleges and universities
can generally avoid real estate taxes and borrow funds at lower interest rates
than us (and other private sector operators), thereby decreasing their operating
costs. Residence halls owned and operated by the primary colleges and
universities in the markets of our off-campus properties may charge lower rental
rates, but typically offer fewer amenities than we offer at our
properties. Additionally, most universities are only able to house a
small percentage of their overall enrollment, and are therefore highly dependant
upon the off-campus market to provide housing for their
students. High-quality, well run off-campus student housing can be a
critical component to an institution’s ability to attract and retain
students. Therefore, developing and maintaining good relationships
with educational institutions can result in a privately owned off-campus
facility becoming, in effect, an extension of the institution’s housing program,
with the institution providing highly valued references and recommendations to
students and parents.
This
segment also competes with national and regional owner-operators of off-campus
student housing in a number of markets as well as with smaller local
owner-operators. Therefore, the performance of this segment could be
affected by the construction of new on-campus or off-campus residences,
increases or decreases in the general levels of rents for housing in competing
communities, increases or decreases in the number of students enrolled at one or
more of the colleges or universities in the market of a property, and other
general economic conditions.
American Campus Equity
(ACE): An emerging opportunity in the wholly-owned property
segment is the equity investment and ownership of on-campus housing via
traditional long-term ground leases. Branded and marketed to colleges
and universities as the ACE program, the transaction structure provides us with
what we believe is a lower-risk opportunity compared to other off-campus
projects, as our ACE projects will have premier on-campus locations with
marketing and operational assistance from the university. The subject
university substantially benefits by increasing its housing capacity with
modern, well-amenitized student housing with no or minimal impacts to its own
credit ratios, preserving the university’s credit capacity to fund academic and
research facilities.
On-Campus Participating
Properties: Our On-Campus Participating Properties segment
includes on-campus properties owned by one of our TRSs that are operated under
ground/facility leases with the related university systems. We participate with
two university systems in the operations and cash flows of four on-campus
participating properties under long-term ground/facility leases. The
subject universities hold title to both the land and improvements on these
properties.
Under our
ground/facility leases, we receive an annual distribution representing 50% of
these properties’ net cash available for distribution after payment of operating
expenses (which includes our management fees), debt service (which includes
repayment of principal) and capital expenditures. We also manage
these properties under multi-year management agreements and are paid a
management fee representing 5% of receipts. We have developed each of
our on-campus participating properties. For purposes of our
consolidated financial statements contained in Item 8, the development fee
earned by our TRS during the construction period is deferred and recognized in
revenue over the term of the underlying ground leases. However, for
purposes of our calculation of Funds from Operations – Modified for Operational
Performance of On-Campus Participating Properties (“FFOM”) contained in Item 7,
we reflect such development fees as earned over the construction period based on
the percentage-of-completion method.
While the
terms of each specific ground/facility lease agreement tend to vary in certain
respects, the following terms are generally common to all: (i) a term of 30-40
years, subject to early termination upon repayment of the related financing,
which generally has a 25-year amortization; (ii) ground/facility lease rent of a
nominal amount (e.g., $100 per annum over the lease term) plus 50% of net cash
flow; (iii) the
right of first refusal by the institution to purchase our leasehold interest in
the event we propose to sell it to any third-party; (iv) an obligation by the
educational institution to promote the project, include information relative to
the project in brochures and mailings and to permit us to advertise the project;
(v) the requirement to receive the educational institution’s consent to increase
rental rates by a percentage greater than the percentage increase in our
property operating expenses plus the amount of any increases in debt service,
and (vi) the option of the institution to purchase our interest in and assume
management of the facility, with the purchase price calculated at the discounted
present cash value of our leasehold interest.
We do not
have access to the cash flows and working capital of these on-campus
participating properties except for the annual net cash
distribution. Additionally, a substantial portion of these
properties’ cash flow is dedicated to capital reserves required under the
applicable property indebtedness and to the amortization of such
indebtedness. These amounts do not increase our economic interest in
these properties since our interest, including our right to share in the net
cash available for distribution from the properties, terminates upon the
amortization of their indebtedness. Our economic interest in these
properties is therefore limited to our interest in the net cash flow, management
fees, and development fees from these properties. Accordingly, when
considering these properties’ contribution to our operations, we focus upon our
share of these properties’ net cash available for distribution and the
management/development fees that we receive from these properties rather than
upon their contribution to our gross revenues and expenses for financial
reporting purposes.
Our
on-campus participating properties are susceptible to some of the same risks as
our wholly-owned properties, including: (i) seasonality in rents; (ii) annual
re-leasing that is highly dependent on marketing and university admission
policies; and (iii) competition for tenants from other on-campus housing
operated by educational institutions or other off-campus
properties.
Third-Party Services
Our
third-party services consist of development services and management services and
are typically provided to university and college clients. Many of our
third-party management services are provided to clients for whom we also provide
development services. While management evaluates the operational
performance of our third-party services based on the distinct segments
identified below, at times we also evaluate these segments on a combined
basis.
Development
Services: Our Development Services segment consists of
development and construction management services that we provide through one of
our TRSs for third-party owners. These services range from short-term
consulting projects to long-term full-scale development and construction
projects. Development revenues are generally recognized based on a
proportionate performance method based on contract deliverables and construction
revenues are generally recognized based on the percentage-of-completion
method. We typically provide these services to colleges and
universities seeking to modernize their on-campus student housing
properties. They look to us to bring our student housing experience
and expertise to ensure they develop marketable, functional, and financially
sustainable facilities. Educational institutions usually seek to
build housing that will enhance their recruitment and retention of students
while facilitating their academic objectives. Most of these
development service contracts are awarded via a competitive request for proposal
(“RFP”) process that qualifies developers based on their overall capability to
provide specialized student housing design, development, construction
management, financial structuring, and property management
services. Our development services typically include pre-development,
design and financial structuring services. Our pre-development
services typically include feasibility studies for third-party owners and design
services. Feasibility studies include an initial feasibility
analysis, review of conceptual design, and assistance with master
planning. Some of the documents produced in this process include the
conceptual design documents, preliminary development and operating budgets, cash
flow projections and a preliminary market assessment. Our design
services include coordination with the architect and other members of the design
team, review of construction plans and assistance with project due diligence and
project budgets.
Construction
management services typically consist of hiring of project professionals and a
general contractor, coordinating and supervising the construction, equipping and
furnishing process on behalf of the project owner, including site visits, hiring
of a general contractor and project professionals, and full coordination and
administration of all activities necessary for project completion in accordance
with plans and specifications and with verification of adequate
insurance.
Our
Development Services activities benefit our primary goal of owning and operating
student housing properties in a number of ways. By providing these
services to others, we are able to expand and refine our unit plan and community
design, the operational efficiency of our material specifications and our
ability to determine market acceptance of unit and community
amenities. Our development and construction management personnel
enable us to establish relationships with general contractors, architects and
project professionals throughout the nation. Through these services,
we gain experience and expertise in residential and commercial construction
methodologies under various labor conditions, including right-to-work labor
markets, markets subject to prevailing wage requirements and fully unionized
environments. This segment is subject to competition from other
specialized student housing development companies as well as from national real
estate development companies.
Property Management
Services: Our Property Management Services segment, conducted
by our TRSs, includes revenues generated from third-party management contracts
in which we are typically responsible for all aspects of operations, including
marketing, leasing administration, facilities maintenance, business
administration, accounts payable, accounts receivable, financial reporting,
capital projects, and residence life student development. As of
December 31, 2009, we provided third-party management and leasing services for
31 properties that represented approximately 23,300 beds in approximately 9,100
units, five of which we developed. We provide these services pursuant
to multi-year management agreements (generally ranging between one to five
years).
There are
several housing options that compete with our third-party managed properties
including, but not limited to, multifamily housing, for-rent single family
dwellings, other off-campus specialized student housing and the aforementioned
on-campus participating properties.
Americans
with Disabilities Act and Federal Fair Housing Act
Many laws
and governmental regulations are applicable to our properties and changes in the
laws and regulations, or their interpretation by agencies and the courts, occur
frequently. Our properties must comply with Title III of the
Americans with Disabilities Act, or ADA, to the extent that such properties are
“public accommodations” as defined by the ADA. The ADA may require
removal of structural barriers to access by persons with disabilities in certain
public areas of our properties where such removal is readily
achievable. We believe that the existing properties are in
substantial compliance with the ADA and that we will not be required to make
substantial capital expenditures to address the requirements of the
ADA. However, noncompliance with the ADA could result in imposition
of fines or an award of damages to private litigants. The obligation
to make readily achievable accommodations is an ongoing one, and we intend to
continue to assess our properties and to make alterations as appropriate in this
respect.
Under the
federal and state fair housing laws, discrimination on the basis of certain
protected classes is prohibited. Violation of these laws can result
in significant damage awards to victims.
Environmental
Matters
Under
various laws and regulations relating to the protection of the environment, an
owner of real estate may be held liable for the costs of removal or remediation
of certain hazardous or toxic substances located on or in its
property. These laws often impose liability without regard to whether
the owner was responsible for, or even knew of, the presence of such
substances. The presence of such substances may adversely affect the
owner’s ability to rent or sell the property or use the property as
collateral. Independent environmental consultants conducted Phase I
environmental site assessments (which involve visual inspection but not soil or
groundwater analysis) on all of the wholly-owned properties and on-campus
participating properties in our existing portfolio. Phase I
environmental site assessments did not reveal any environmental liabilities that
would have a material adverse effect on us. In addition, we are not
aware of any environmental liabilities that management believes would have a
material adverse effect on the Company. There is no assurance that
Phase I environmental site assessments would reveal all environmental
liabilities or that environmental conditions not known to us may exist now or in
the future which would result in liability to the Company for remediation or
fines, either under existing laws and regulations or future changes to such
requirements.
From time
to time, the United States Environmental Protection Agency, or EPA, designates
certain sites affected by hazardous substances as “Superfund” sites pursuant to
CERCLA. Superfund sites can cover large areas, affecting many
different parcels of land. Although CERCLA imposes joint and several
liability for contamination on property owners and operators regardless of
fault, the EPA may choose to pursue potentially responsible parties (“PRPs”)
based on their actual contribution to the contamination. PRPs are
liable for the costs of responding to the hazardous substances. Each
of Villas on Apache, The Village on University (disposed of in December 2006)
and University Village at San Bernardino (disposed of in January 2005) are
located within federal Superfund sites. The EPA designated these
areas as Superfund sites because groundwater underneath these areas is
contaminated. We have not been named, and do not expect to be named,
as a PRP with respect to these sites. However, there can be no
assurance regarding potential future developments concerning such
sites.
Insurance
We carry
comprehensive liability and property insurance on our properties, which we
believe is of the type and amount customarily obtained on real property
assets. We intend to obtain similar coverage for properties we
acquire in the future. However, there are certain types of losses,
generally of a catastrophic nature, such as losses from floods or earthquakes,
which may be subject to limitations in certain areas. When not
otherwise contractually stipulated, we exercise our judgment in determining
amounts, coverage limits, and deductibles, in an effort to maintain appropriate
levels of insurance on our investments. If we suffer a substantial
loss, our insurance coverage may not be sufficient due to market conditions at
the time or other unforeseen factors. Inflation, changes in building
codes and ordinances, environmental considerations and other factors also might
make it infeasible to use insurance proceeds to replace a property after it has
been damaged or destroyed.
Employees
As of
December 31, 2009, we had approximately 2,183 employees, consisting
of:
●
|
approximately
1,020 on-site employees in our wholly-owned properties segment, including
430 Resident Assistants;
|
●
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approximately
97 on-site employees in our on-campus participating properties segment,
including 44 Resident Assistants;
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●
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approximately
947 employees in our property management services segment, including 860
on-site employees and 87 corporate office
employees;
|
●
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approximately
39 corporate office employees in our development services segment;
and
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●
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approximately
80 executive, corporate administration and financial
personnel.
|
Our
employees are not currently represented by a labor union.
Offices
and Website
Our
principal executive offices are located at 805 Las Cimas Parkway, Suite 400,
Austin, Texas 78746. Our telephone number at that location is (512)
732-1000.
We file
our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K and other reports required by Sections 13(a) and 15(d) of the
Securities Exchange Act of 1934. You may read and copy any materials
we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE,
Washington, DC 20549. You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC maintains an internet site that contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the SEC. The address of that site is www.sec.gov.
Our
website is located at www.americancampuscommunities.com or
www.studenthousing.com. We make available free of charge through our website our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and amendments to these reports filed or furnished pursuant to Sections
13(a) or 15(d) of the Securities Act of 1934, as amended, as soon as reasonably
practicable after we electronically file such material with, or furnish it to,
the SEC. Our website also contains copies of our Corporate Governance
Guidelines and Code of Business Ethics as well as the charters of our Nominating
and Corporate Governance, Audit, and Compensation committees. The
information on our website is not part of this filing.
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, do not relate
solely to historical matters and 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 forward-looking statements are not guarantees of
future performance and will be 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; 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; risks associated with downturns in the national
and local economies, volatility in capital and credit markets, 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 Company’s 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 the other factors discussed in the “Risk
Factors” contained in Item 1A of this report.
Item
1A. Risk Factors
The
following risk factors may contain defined terms that are different from those
used in other sections of this report. Unless otherwise indicated,
when used in this section, the terms “we” and “us” refer to American Campus
Communities, Inc. and its subsidiaries, including American Campus Communities
Operating Partnership LP, our Operating Partnership, and the term “securities”
refers to shares of common stock of American Campus Communities, Inc. and units
of limited partnership interest in our Operating Partnership.
The
factors described below represent the Company’s principal risks. Other factors
may exist that the Company does not consider to be significant based on
information that is currently available or that the Company is not currently
able to anticipate.
Risks
Related to Our Properties, Our Markets and Our Business
Volatility in capital and credit
markets could adversely impact us.
The
capital and credit markets have been experiencing volatility and disruption,
which has made it more difficult to borrow money. If current levels
of market disruption and volatility continue or worsen, we may not be able to
obtain new debt financing or refinance our existing debt on favorable terms or
at all. This market turmoil and tightening of credit have led to
reduction of business activity generally, which may adversely impact us,
including our ability to acquire and dispose of assets and continue our
development pipeline.
Our results of
operations are subject to an annual leasing cycle, short lease-up period,
seasonal cash flows, changing university admission and housing policies and
other risks inherent in the student housing industry.
We
generally lease our owned properties under 12-month leases, and in certain
cases, under nine-month or shorter-term semester leases. As a result,
we may experience significantly reduced cash flows during the summer months at
properties leased under leases having terms shorter than 12
months. Furthermore, all of our properties must be entirely re-leased
each year, exposing us to increased leasing risk. In addition, we are
subject to increased leasing risk on our properties under construction and
future acquired properties based on our lack of experience leasing those
properties and unfamiliarity with their leasing cycles. Student
housing properties are also typically leased during a limited leasing season
that usually begins in January and ends in August of each year. We
are therefore highly dependent on the effectiveness of our marketing and leasing
efforts and personnel during this season.
Changes
in university admission policies could adversely affect us. For
example, if a university reduces the number of student admissions or requires
that a certain class of students, such as freshman, live in a university owned
facility, the demand for beds at our properties may be reduced and our occupancy
rates may decline. While we may engage in marketing efforts to
compensate for such change in admission policy, we may not be able to effect
such marketing efforts prior to the commencement of the annual lease-up period
or our additional marketing efforts may not be successful.
We rely
on our relationships with colleges and universities for referrals of prospective
student-tenants or for mailing lists of prospective student-tenants and their
parents. Many of these colleges and universities own and operate
their own competing on-campus facilities. Any failure to maintain
good relationships with these colleges and universities could therefore have a
material adverse effect on us. If colleges and universities refuse to
make their lists of prospective student-tenants and their parents available to
us or increase the costs of these lists, there could be a material adverse
effect on us.
Federal
and state laws require colleges to publish and distribute reports of on-campus
crime statistics, which may result in negative publicity and media coverage
associated with crimes occurring on or in the vicinity of our on-campus
properties. Reports of crime or other negative publicity regarding
the safety of the students residing on, or near, our properties may have an
adverse effect on both our on-campus and off-campus business.
We face
significant competition from university-owned on-campus student housing, from
other off-campus student housing properties and from traditional multifamily
housing located within close proximity to universities.
On-campus
student housing has certain inherent advantages over off-campus student housing
in terms of physical proximity to the university campus and integration of
on-campus facilities into the academic community. Colleges and
universities can generally avoid real estate taxes and borrow funds at lower
interest rates than us and other private sector operators. We also
compete with national and regional owner-operators of off-campus student housing
in a number of markets as well as with smaller local
owner-operators.
Currently,
the industry is fragmented with no participant holding a significant market
share. There are a number of student housing complexes that are
located near or in the same general vicinity of many of our owned properties and
that compete directly with us. Such competing student housing
complexes may be newer than our properties, located closer to campus, charge
less rent, possess more attractive amenities or offer more services or shorter
term or more flexible leases.
Rental
income at a particular property could also be affected by a number of other
factors, including the construction of new on-campus and off-campus residences,
increases or decreases in the general levels of rents for housing in competing
communities, increases or decreases in the number of students enrolled at one or
more of the colleges or universities in the market of the property and other
general economic conditions.
We
believe that a number of other large national companies with substantial
financial and marketing resources may be potential entrants in the student
housing business. The entry of one or more of these companies could
increase competition for students and for the acquisition, development and
management of other student housing properties.
We may be unable
to successfully complete and operate our properties or our third-party developed
properties.
We intend
to continue to develop and construct student housing. These
activities may include any of the following risks:
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we
may be unable to obtain financing on favorable terms or at
all;
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we
may not complete development projects on schedule, within budgeted amounts
or in conformity with building plans and
specifications;
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we
may encounter delays or refusals in obtaining all necessary zoning, land
use, building, occupancy and other required governmental permits and
authorizations;
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occupancy
and rental rates at newly developed or renovated properties may fluctuate
depending on a number of factors, including market and economic
conditions, and may reduce or eliminate our return on
investment;
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we
may become liable for injuries and accidents occurring during the
construction process and for environmental liabilities, including off-site
disposal of construction materials;
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we
may decide to abandon our development efforts if we determine that
continuing the project would not be in our best interests;
and
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we
may encounter strikes, weather, government regulations and other
conditions beyond our control.
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Our newly
developed properties will be subject to risks associated with managing new
properties, including lease-up and integration risks. In addition,
new development activities, regardless of whether or not they are ultimately
successful, typically will require a substantial portion of the time and
attention of our development and management personnel. Newly
developed properties may not perform as expected.
We
anticipate that we will, from time to time, elect not to proceed with ongoing
development projects. If we elect not to proceed with a development
project, the development costs associated therewith will ordinarily be charged
against income for the then-current period. Any such charge could
have a material adverse effect on our results of operations in the period in
which the charge is taken.
We may in
the future develop properties nationally, internationally or in geographic
regions other than those in which we currently operate. We do not
possess the same level of familiarity with development in these new markets,
which could adversely affect our ability to develop such properties successfully
or at all or to achieve expected performance. Future development
opportunities may not be available to us on terms that meet our investment
criteria or we may be unsuccessful in capitalizing on such
opportunities. Our ability to capitalize on such opportunities will
be largely dependent upon external sources of capital that may not be available
to us on favorable terms or at all.
We
typically provide guarantees of timely completion of projects that we develop
for third parties. In certain cases, our contingent liability under
these guarantees may exceed our development fee from the
project. Although we seek to mitigate this risk by, among other
things, obtaining similar guarantees from the project contractor, we could
sustain significant losses if development of a project were to be delayed or
stopped and we were unable to cover our guarantee exposure with the guarantee
received from the project contractor.
We may be unable
to successfully acquire properties on favorable terms.
Our
future growth will be dependent upon our ability to successfully acquire new
properties on favorable terms. With respect to recently acquired
properties, and as we acquire additional properties, we will continue to be
subject to risks associated with managing new properties, including lease-up and
integration risks. Newly developed and recently acquired properties
may not perform as expected and may have characteristics or deficiencies unknown
to us at the time of acquisition. Future acquisition opportunities
may not be available to us on terms that meet our investment criteria or we may
be unsuccessful in capitalizing on such opportunities. Our ability to
capitalize on such opportunities will be largely dependent upon external sources
of capital that may not be available to us on favorable terms or at all,
especially under the current credit environment.
Our
ability to acquire properties on favorable terms and successfully operate them
involves the following significant risks:
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our
potential inability to acquire a desired property may be caused by
competition from other real estate
investors;
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competition
from other potential acquirers may significantly increase the purchase
price and decrease expected yields;
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we
may be unable to finance an acquisition on favorable terms or at
all;
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we
may have to incur significant unexpected capital expenditures to improve
or renovate acquired properties;
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we
may be unable to quickly and efficiently integrate new acquisitions,
particularly acquisitions of portfolios of properties, into our existing
operations;
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market
conditions may result in higher than expected costs and vacancy rates and
lower than expected rental rates;
and
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we
may acquire properties subject to liabilities but without any recourse, or
with only limited recourse, to the sellers, or with liabilities that are
unknown to us, such as liabilities for clean-up of undisclosed
environmental contamination, claims by tenants, vendors or other persons
dealing with the former owners of our properties and claims for
indemnification by members, directors, officers and others indemnified by
the former owners of our
properties.
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Our
failure to finance property acquisitions on favorable terms, or operate acquired
properties to meet our financial expectations, could adversely affect
us.
Difficulties of
selling real estate could limit our flexibility.
We intend
to evaluate the potential disposition of assets that may no longer help us meet
our objectives. When we decide to sell an asset, we may encounter
difficulty in finding buyers in a timely manner as real estate investments
generally cannot be disposed of quickly, especially when market conditions are
poor. These difficulties have been exacerbated in the current credit
environment because buyers have experienced difficulty in obtaining the
necessary financing. This may limit our ability to vary our portfolio
promptly in response to changes in economic or other conditions. In
addition, in order to maintain our status as a REIT, the Internal Revenue Code
imposes restrictions on our ability to sell properties held fewer than two
years, which may cause us to incur losses thereby reducing our cash flows and
adversely impacting distributions to shareholders.
Our debt level
reduces cash available for distribution and could have other important adverse
consequences.
As of
December 31, 2009, our total consolidated indebtedness was approximately
$1,228.2 million (excluding unamortized debt premiums and
discounts). Our debt service obligations expose us to the risk of
default and reduce or eliminate cash resources that are available to operate our
business or pay distributions that are necessary to maintain our qualification
as a REIT. There is no limit on the amount of indebtedness that we
may incur except as provided by the covenants in our corporate-level
debt. We may incur additional indebtedness to fund future property
development, acquisitions and other working capital needs, which may include the
payment of distributions to our security holders. The amount
available to us and our ability to borrow from time to time under our
corporate-level debt is subject to certain conditions and the satisfaction of
specified financial covenants. Our level of debt and the limitations
imposed on us by our debt agreements could have significant adverse
consequences, including the following:
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We
may be unable to borrow additional funds as needed or on favorable
terms.
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We
may be unable to refinance our indebtedness at maturity or the refinancing
terms may be less favorable than the terms of our original
indebtedness.
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We
may be forced to dispose of one or more of our properties, possibly on
disadvantageous terms.
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We
may default on our scheduled principal payments or other obligations as a
result of insufficient cash flow or otherwise, and the lenders or
mortgagees may foreclose on our properties that secure their loans and
receive an assignment of rents and
leases.
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Foreclosures
could create taxable income without accompanying cash proceeds, a
circumstance that could hinder our ability to meet the REIT distribution
requirements imposed by the Internal Revenue
Code.
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Compliance with the
provisions of our debt agreements, including the financial and other
covenants, such as the maintenance of specified financial ratios, could
limit our flexibility and a default in these requirements, if
uncured, could result in a requirement that we repay indebtedness, which
could severely affect our liquidity and increase our financing
costs.
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We may be unable
to renew, repay or refinance our outstanding debt.
We are
subject to the risk that our indebtedness will not be able to be renewed, repaid
or refinanced when due or that the terms of any renewal or refinancing will not
be as favorable as the existing terms of such indebtedness. If we
were unable to refinance our indebtedness on acceptable terms, or at all, we
might be forced to dispose of one or more of our properties on disadvantageous
terms, which might result in losses to us. Such losses could have a
material adverse effect on us and our ability to make distributions to our
stockholders and pay amounts due on our debt.
Variable rate
debt is subject to interest rate risk.
We have a
construction loan with a varying interest rate that is dependent upon the market
index. In addition, we have a secured revolving credit facility and
secured agency facility both bearing interest at a variable rate on all amounts
drawn on the facilities. We may incur additional variable rate debt
in the future. Increases in interest rates on variable rate debt
would increase our interest expense, unless we make arrangements that hedge the
risk of rising interest rates, which would adversely affect net income and cash
available for payment of our debt obligations and distributions to
stockholders.
We may incur
losses on interest rate swap and hedging arrangements.
We may
periodically enter into agreements to reduce the risks associated with increases
in interest rates. Although these agreements may partially protect
against rising interest rates, they also may reduce the benefits to us if
interest rates decline. If an arrangement is not indexed to the same
rate as the indebtedness that is hedged, we may be exposed to losses to the
extent which the rate governing the indebtedness and the rate governing the
hedging arrangement change independently of each other. Finally,
nonperformance by the other party to the arrangement may subject us to increased
credit risks.
We face risks
associated with land holdings.
We hold
land for future development and may in the future acquire additional land
holdings. The risks inherent in owning or purchasing and developing
land increase as demand for student housing, or rental rates,
decrease. As a result, we hold certain land and may in the future
acquire additional land in our development pipeline at a cost we may not be able
to recover fully or on which we cannot build and develop into a profitable
student housing project. Also, real estate markets are highly
uncertain and, as a result, the value of undeveloped land has fluctuated
significantly and may continue to fluctuate as a result of changing market
conditions. In addition, carrying costs can be significant and can
result in losses or reduced margins in a poorly performing
project. Under current market conditions, we may have impairments of
our land held for development.
We may not be
able to recover pre-development costs for third-party university
developments.
University
systems and educational institutions typically award us development services
contracts on the basis of a competitive award process, but such contracts are
typically executed following the formal approval of the transaction by the
institution’s governing body. In the intervening period, we may incur
significant pre-development and other costs in the expectation that the
development services contract will be executed. If an institution’s
governing body does not ultimately approve our selection and the terms of the
pending development contract, we may not be able to recoup these costs from the
institution and the resulting losses could be material.
Our awarded
projects may not be successfully structured or financed and may delay our
recognition of revenues.
The
recognition and timing of revenues from our awarded development services
projects will, among other things, be contingent upon successfully structuring
and closing project financing as well as the timing of
construction. The development projects that we have been awarded have
at times been delayed beyond the originally scheduled construction commencement
date. If such delays were to occur with our current awarded projects,
our recognition of expected revenues and receipt of expected fees from these
projects would be delayed.
We
may encounter delays in completion or experience cost overruns with respect to
our properties under construction.
Although
we do not currently have any projects under construction, in the long term we
intend to continue to construct student housing projects for our
portfolio. Properties under construction may be exposed to various
risks referred to elsewhere in these risk factors, including the risks that we
may encounter delays in completion and that any such project may experience cost
overruns or may not be completed on time. Additionally, if we do not
complete the construction of properties on schedule, we may be required to
provide alternative housing to the students with whom we have signed
leases. We generally do not make any arrangements for such
alternative housing for these properties and we would likely incur significant
expenses in the event we provide such housing. If construction is not
completed on schedule, students may attempt to break their leases and our
occupancy at such properties for that academic year may suffer.
Our guarantees
could result in liabilities in excess of our development
fees.
In
third-party developments, we typically provide guarantees of the obligations of
the developer, including development budgets and timely project
completion. These guarantees include, among other things, the cost of
providing alternate housing for students in the event we do not timely complete
a development project. These guarantees typically exclude delays
resulting from force majeure and also, in third-party transactions, are
typically limited in amount to the amount of our development fees from the
project. In certain cases, however, our contingent liability under
these guarantees has exceeded our development fee from the project and we may
agree to such arrangements in the future. Our obligations under
alternative housing guarantees typically expire five days after construction is
complete. Project cost guarantees are normally satisfied within one
year after completion of the project.
Universities have
the right to terminate our participating ground leases.
The
ground leases through which we own our on-campus participating properties
provide that the university lessor may purchase our interest in and assume the
management of the facility, with the purchase price calculated at the discounted
present value of cash flows from our leasehold interest. The exercise
of any such buyout would result in a reduction in our portfolio.
Changes in laws
and litigation risks could affect our business.
We are
generally not able to pass through to our residents under existing leases real
estate taxes, income taxes or other taxes. Consequently, any such tax
increases may adversely affect our financial condition and limit our ability to
satisfy our financial obligations and make distributions to security
holders. Changes that increase our potential liability under
environmental laws or our expenditures on environmental compliance could have
the same impact.
As a
publicly traded owner of properties, we may become involved in legal
proceedings, including consumer, employment, tort or commercial litigation, that
if decided adversely to or settled by us, and not adequately covered by
insurance, could result in liability that is material to our financial condition
or results of operations.
Risks
Related to the Real Estate Industry
Our performance
and value are subject to risks associated with real estate assets and with the
real estate industry.
Our
ability to satisfy our financial obligations and make expected distributions to
our security holders depends on our ability to generate cash revenues in excess
of expenses and capital expenditure requirements. Events and
conditions generally applicable to owners and operators of real property that
are beyond our control may decrease cash available for distribution and the
value of our properties. These events include:
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general
economic conditions;
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rising
level of interest rates;
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local
oversupply, increased competition or reduction in demand for student
housing;
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inability
to collect rent from tenants;
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vacancies
or our inability to rent units on favorable
terms;
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inability
to finance property development and acquisitions on favorable
terms;
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increased
operating costs, including insurance premiums, utilities, and real estate
taxes;
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costs
of complying with changes in governmental
regulations;
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the
relative illiquidity of real estate
investments;
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decreases
in student enrollment at particular colleges and
universities;
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changes
in university policies related to admissions and housing;
and
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changing
student demographics.
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In
addition, periods of economic slowdown or recession, such as are being currently
experienced, rising interest rates or declining demand for real estate, or the
public perception that any of these events may occur, could result in a general
decline in rents or an increased incidence of defaults under existing leases,
which would adversely affect us.
Potential losses
may not be covered by insurance.
We carry
fire, earthquake, terrorism, business interruption, vandalism, malicious
mischief, boiler and machinery, commercial general liability and workers’
compensation insurance covering all of the properties in our portfolio under
various policies. We believe the policy specifications and insured
limits are appropriate and adequate given the relative risk of loss, the cost of
the coverage and industry practice. There are, however, certain types
of losses, such as property damage from generally unsecured losses such as
riots, wars, punitive damage awards or acts of God that may be either
uninsurable or not economically insurable. Some of our properties are
insured subject to limitations involving large deductibles and policy limits
that may not be sufficient to cover losses. In addition, we may
discontinue earthquake, terrorism or other insurance on some or all of our
properties in the future if the cost of premiums from any of these policies
exceeds, in our judgment, the value of the coverage discounted for the risk of
loss.
If we
experience a loss that is uninsured or that exceeds policy limits, we could lose
the capital invested in the damaged properties as well as the anticipated future
cash flows from those properties. In addition, if the damaged
properties are subject to recourse indebtedness, we would continue to be liable
for the indebtedness, even if these properties were irreparably damaged and
require substantial expenditures to rebuild or repair. In the event
of a significant loss at one or more of our properties, the remaining insurance
under our policies, if any, could be insufficient to adequately insure our other
properties. In such event, securing additional insurance, if
possible, could be significantly more expensive than our current
policies.
Unionization or
work stoppages could have an adverse effect on us.
We are at
times required to use unionized construction workers or to pay the prevailing
wage in a jurisdiction to such workers. Due to the highly labor
intensive and price competitive nature of the construction business, the cost of
unionization and/or prevailing wage requirements for new developments could be
substantial. Unionization and prevailing wage requirements could
adversely affect a new development’s profitability. Union activity or
a union workforce could increase the risk of a strike, which would adversely
affect our ability to meet our construction timetables.
We could incur
significant costs related to government regulation and private litigation over
environmental matters.
Under
various environmental laws, including the Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”), a current or previous owner or
operator of real property may be liable for contamination resulting from the
release or threatened release of hazardous or toxic substances or petroleum at
that property, and an entity that arranges for the disposal or treatment of a
hazardous or toxic substance or petroleum at another property may be held
jointly and severally liable for the cost to investigate and clean up such
property or other affected property. Such parties are known as
potentially responsible parties (“PRPs”). Such environmental laws
often impose liability without regard to whether the owner or operator knew of,
or was responsible for, the presence of the contaminants, and the costs of any
required investigation or cleanup of these substances can be
substantial. PRPs are liable to the government as well as to other
PRPs who may have claims for contribution. The liability is generally
not limited under such laws and could exceed the property’s value and the
aggregate assets of the liable party. The presence of contamination
or the failure to remediate contamination at our properties may expose us to
third-party liability for personal injury or property damage, or adversely
affect our ability to sell, lease or develop the real property or to borrow
using the real property as collateral.
Environmental
laws also impose ongoing compliance requirements on owners and operators of real
property. Environmental laws potentially affecting us address a wide
variety of matters, including, but not limited to, asbestos-containing building
materials (“ACBM”), storage tanks, storm water and wastewater discharges,
lead-based paint, wetlands, and hazardous wastes. Failure to comply
with these laws could result in fines and penalties or expose us to third-party
liability. Some of our properties may have conditions that are
subject to these requirements and we could be liable for such fines or penalties
or liable to third parties.
Existing
conditions at some of our properties may expose us to liability related to
environmental matters.
Some of
the properties in our portfolio may contain asbestos-containing building
materials, or ACBMs. Environmental laws require that ACBMs be
properly managed and maintained, and may impose fines and penalties on building
owners or operators for failure to comply with these
requirements. Also, some of the properties in our portfolio contain,
or may have contained, or are adjacent to or near other properties that have
contained or currently contain storage tanks for the storage of petroleum
products or other hazardous or toxic substances. These operations
create a potential for the release of petroleum products or other hazardous or
toxic substances. Third parties may be permitted by law to seek
recovery from owners or operators for personal injury associated with exposure
to contaminants, including, but not limited to, petroleum products, hazardous or
toxic substances, and asbestos fibers. Also, some of the properties
may contain regulated wetlands that can delay or impede development or require
costs to be incurred to mitigate the impact of any
disturbance. Absent appropriate permits, we can be held responsible
for restoring wetlands and be required to pay fines and penalties.
Over the
past several years, there have been an increasing number of lawsuits against
owners and managers of residential properties, although not against us, alleging
personal injury and property damage caused by the presence of mold in
residential real estate. Some of these lawsuits have resulted in
substantial monetary judgments or settlements. Insurance carriers
have reacted to these liability awards by excluding mold related programs
designed to minimize the existence of mold in any of our properties as well as
guidelines for promptly addressing and resolving reports of mold to minimize any
impact mold might have on residents or the property.
We do not
carry environmental insurance on our properties. Environmental
liability at any of our properties may have a material adverse effect on our
financial condition, results of operations, cash flow, the trading price of our
stock or our ability to satisfy our debt service obligations and pay dividends
or distributions to our security holders.
We may incur
significant costs complying with the Americans with Disabilities Act and similar
laws.
Under the
Americans with Disabilities Act of 1990, or the ADA, all public accommodations
must meet federal requirements related to access and use by disabled
persons. Additional federal, state and local laws also may require
modifications to our properties, or restrict our ability to renovate our
properties. For example, the Fair Housing Amendments Act of 1988, or
FHAA, requires apartment properties first occupied after March 13, 1990 to be
accessible to the handicapped. We have not conducted an audit or
investigation of all of our properties to determine our compliance with present
requirements. Noncompliance with the ADA or FHAA could result in the
imposition of fines or an award or damages to the government or private
litigants and also could result in an order to correct any non-complying
feature. Also, discrimination on the basis of certain protected
classes can result in significant awards to victims. We cannot
predict the ultimate amount of the cost of compliance with the ADA, FHAA or
other legislation. If we incur substantial costs to comply with the
ADA, FHAA or any other legislation, we could be materially and adversely
affected.
We may incur
significant costs complying with other regulations.
The
properties in our portfolio are subject to various federal, state and local
regulatory requirements, such as state and local fire and life safety
requirements. If we fail to comply with these various requirements,
we might incur governmental fines or private damage
awards. Furthermore, existing requirements could change and require
us to make significant unanticipated expenditures that would materially and
adversely affect us.
Joint venture
investments could be adversely affected by our lack of sole decision-making
authority, our reliance on co-venturers’ financial
condition and disputes between our co-venturers and us.
We have
co-invested, and anticipate that we will continue in the future to co-invest,
with third parties through partnerships, joint ventures or other entities,
acquiring non-controlling interests in or sharing responsibility for managing
the affairs of a property, partnership, joint venture or other
entity. In connection with joint venture investments, we do not have
sole decision-making control regarding the property, partnership, joint venture
or other entity. Investments in partnerships, joint ventures or other
entities may, under certain circumstances, involve risks not present were a
third-party not involved, including the possibility that our partners or
co-venturers might become bankrupt or fail to fund their share of required
capital contributions. Our partners or co-venturers also may have
economic or other business interests or goals that are inconsistent with our
business interests or goals, and may be in a position to take actions contrary
to our preferences, policies or objectives. Such investments also
will have the potential risk of impasses on decisions, such as a sale, because
neither we nor our partners or co-venturers would have full control over the
partnership or joint venture. Disputes between us and our partners or
co-venturers may result in litigation or arbitration that would increase our
expenses and prevent our officers and/or directors from focusing their time and
effort exclusively on our business. Consequently, actions by or
disputes with our partners or co-venturers might result in subjecting properties
owned by the partnership, joint venture or other entity to additional
risk. In addition, we may in certain circumstances be liable for the
actions of our partners or co-venturers.
Risks
Related to Our Organization and Structure
Our stock price
will fluctuate.
The
market price and volume of our common stock will fluctuate due not only to
general stock market conditions but also to the risk factors discussed above and
below and the following:
●
|
operating
results that vary from the expectations of securities analysts and
investors;
|
●
|
investor
interest in our property portfolio;
|
●
|
the
reputation and performance of
REITs;
|
●
|
the
attractiveness of REITs as compared to other investment
vehicles;
|
●
|
our
financial condition and the results of our
operations;
|
●
|
the
perception of our growth and earnings
potential;
|
●
|
dividend
payment rates and the form of the
payment;
|
●
|
increases
in market rates, which may lead purchasers of our common stock to demand a
higher yield; and
|
●
|
changes in
financial markets and national economic and general market
conditions.
|
To qualify as a
REIT, we may be forced to limit the activities of a TRS.
To
qualify as a REIT, no more than 25% of the value of our total assets may consist
of the securities of one or more taxable REIT subsidiaries, or
TRSs. Certain of our activities, such as our third-party development,
management and leasing services, must be conducted through a TRS for us to
qualify as a REIT. In addition, certain non-customary services must
be provided by a TRS or an independent contractor. If the revenues
from such activities create a risk that the value of our TRS entities, based on
revenues or otherwise, approaches the 25% threshold, we will be forced to
curtail such activities or take other steps to remain under the 25%
threshold. Since the 25% threshold is based on value, it is possible
that the IRS could successfully contend that the value of our TRS entities
exceeds the 25% threshold even if the TRS accounts for less than 25% of our
consolidated revenues, income or cash flow. Our on-campus
participating properties and our third-party services are held by a
TRS. Consequently, income earned from our on-campus participating
properties and our third-party services will be subject to regular federal
income taxation and state and local income taxation where applicable, thus
reducing the amount of cash available for distribution to our security
holders.
A TRS is
not permitted to directly or indirectly operate or manage a “hotel, motel or
other establishment more than one-half of the dwelling units in which are used
on a transient basis.” We believe that our method of operating our
TRS entities will not be considered to constitute such an
activity. Future Treasury Regulations or other guidance interpreting
the applicable provisions might adopt a different approach, or the IRS might
disagree with our conclusion. In such event we might be forced to
change our method of operating our TRS entities, which could adversely affect
us, or of one of our TRS entities could fail to qualify as a taxable REIT
subsidiary, which would likely cause us to fail to qualify as a
REIT.
Failure to
qualify as a REIT would have significant adverse consequences to us and the
value of our securities.
We intend
to operate in a manner that will allow us to qualify as a REIT for federal
income tax purposes under the Internal Revenue Code. If we lose our
REIT status, we will face serious tax consequences that would substantially
reduce or eliminate the funds available for investment and for distribution to
security holders for each of the years involved, because:
●
|
we
would not be allowed a deduction for dividends to security holders in
computing our taxable income and such amounts would be subject to federal
income tax at regular corporate
rates;
|
●
|
we
also could be subject to the federal alternative minimum tax and possibly
increased state and local taxes;
and
|
●
|
unless
we are entitled to relief under applicable statutory provisions, we could
not elect to be taxed as a REIT for four taxable years following the year
during which we were disqualified.
|
In
addition, if we fail to qualify as a REIT, we will not be required to pay
dividends to stockholders, and all dividends to stockholders will be subject to
tax as ordinary income to the extent of our current and accumulated earnings and
profits. As a result of all these factors, our failure to qualify as
a REIT also could impair our ability to expand our business and raise capital,
and would adversely affect the value of our common stock.
Qualification
as a REIT involves the application of highly technical and complex Internal
Revenue Code provisions for which there are only limited judicial and
administrative interpretations. The complexity of these provisions
and of the applicable Treasury Regulations that have been promulgated under the
Internal Revenue Code is greater in the case of a REIT that, like us, holds its
assets through a partnership or a limited liability company. The
determination of various factual matters and circumstances not entirely within
our control may affect our ability to qualify as a REIT. In order to
qualify as a REIT, we must satisfy a number of requirements, including
requirements regarding the composition of our assets and two “gross income
tests”: (a) at least 75% of our gross income in any year must be derived from
qualified sources, such as rents from real property, mortgage interest,
dividends from other REITs and gains from sale of such assets, and (b) at least
95% of our gross income must be derived from sources meeting the 75% income test
above, and other passive investment sources, such as other interest and
dividends and gains from sale of securities. Also, we must pay
dividends to stockholders aggregating annually at least 90% of our REIT taxable
income, excluding any net capital gains. In addition, legislation,
new regulations, administrative interpretations or court decisions may adversely
affect our investors, our ability to qualify as a REIT for federal income tax
purposes or the desirability of an investment in a REIT relative to other
investments.
Even if
we qualify as a REIT for federal income tax purposes, we may be subject to some
federal, state and local taxes on our income or property and, in certain cases,
a 100% penalty tax, in the event we sell property as a dealer or if a TRS enters
into agreements with us or our tenants on a basis that is determined to be other
than an arm’s length basis.
To qualify as a
REIT, we may be forced to borrow funds on a short-term basis during unfavorable
market conditions.
In order
to qualify as a REIT, we are required under the Internal Revenue Code to
distribute annually at least 90% of our REIT taxable income, determined without
regard to the dividends paid deduction and excluding any net capital
gain. A TRS may, in its discretion, retain any income it generates
net of any tax liability it incurs on that income without affecting the 90%
distribution requirements to which we are subject as a REIT. Net
income of our TRS entities is included in REIT taxable income and increases the
amount required to be distributed, only if such amounts are paid out as a
dividend by a TRS. If a TRS distributes any of its after-tax income
to us, that distribution will be included in our REIT taxable
income. In addition, we will be subject to income tax at regular
corporate rates to the extent that we distribute less than 100% of our net
taxable income, including any net capital gains. Because of these
distribution requirements, we may not be able to fund future capital needs,
including any necessary acquisition financing, from operating cash
flow. Consequently, we will be compelled to rely on third-party
sources to fund our capital needs. We may not be able to obtain this
financing on favorable terms or at all. Any additional indebtedness
that we incur will increase our leverage. Our access to third-party
sources of capital depends, in part, on:
●
|
general
market conditions;
|
●
|
our
current debt levels and the number of properties subject to
encumbrances;
|
●
|
our
current performance and the market’s perception of our growth
potential;
|
●
|
our
cash flow and cash dividends; and
|
●
|
the
market price per share of our
stock.
|
If we
cannot obtain capital from third-party sources, we may not be able to acquire or
develop properties when strategic opportunities exist, satisfy our debt service
obligations or make cash distributions to our security holders, including those
necessary to qualify as a REIT.
Our charter
contains restrictions on the ownership and transfer of our
stock.
Our
charter provides that, subject to certain exceptions, no person or entity may
beneficially own, or be deemed to own by virtue of the applicable constructive
ownership provisions of the Internal Revenue Code, more than 9.8% (by value or
by number of shares, whichever is more restrictive) of the outstanding shares of
our common stock or more than 9.8% by value of all our outstanding shares,
including both common and preferred stock. We refer to this
restriction as the “ownership limit.” A person or entity that becomes
subject to the ownership limit by virtue of a violative transfer that results in
a transfer to a trust is referred to as a “purported beneficial transferee” if,
had the violative transfer been effective, the person or entity would have been
a record owner and beneficial owner or solely a beneficial owner of our stock,
or is referred to as a “purported record transferee” if, had the violative
transfer been effective, the person or entity would have been solely a record
owner of our stock.
The
constructive ownership rules under the Internal Revenue Code are complex and may
cause stock owned actually or constructively by a group of related individuals
and/or entities to be owned constructively by one individual or
entity. As a result, the acquisition of less than 9.8% of our stock
(or the acquisition of an interest in an entity that owns, actually or
constructively, our stock) by an individual or entity, could, nevertheless cause
that individual or entity, or another individual or entity, to own
constructively in excess of 9.8% of our outstanding stock and thereby subject
the stock to the ownership limit. Our charter, however, requires
exceptions to be made to this limitation if our board of directors determines
that such exceptions will not jeopardize our tax status as a
REIT. This ownership limit could delay, defer or prevent a change of
control or other transaction that might involve a premium price for our common
stock or otherwise be in the best interest of our security holders.
Certain tax and
anti-takeover provisions of our charter and bylaws may inhibit a change of our
control.
Certain
provisions contained in our charter and bylaws and the Maryland General
Corporation Law may discourage a third-party from making a tender offer or
acquisition proposal to us. If this were to happen, it could delay,
deter or prevent a change in control or the removal of existing
management. These provisions also may delay or prevent the security
holders from receiving a premium for their securities over then-prevailing
market prices. These provisions include:
●
|
the
REIT ownership limit described
above;
|
●
|
authorization
of the issuance of our preferred shares with powers, preferences or rights
to be determined by our board of
directors;
|
●
|
the
right of our board of directors, without a stockholder vote, to increase
our authorized shares and classify or reclassify unissued
shares;
|
●
|
advance-notice
requirements for stockholder nomination of directors and for other
proposals to be presented to stockholder meetings;
and
|
●
|
the
requirement that a majority vote of the holders of common stock is needed
to remove a member of our board of directors for
“cause.”
|
The Maryland
business statutes also impose potential restrictions on a change of control of
our company.
Various
Maryland laws may have the effect of discouraging offers to acquire us, even if
the acquisition would be advantageous to security holders. Our bylaws
exempt us from some of those laws, such as the control share acquisition
provisions, but our board of directors can change our bylaws at any time to make
these provisions applicable to us.
Our rights and
the rights of our security holders to take action against our directors and
officers are limited.
Maryland
law provides that a director or officer has no liability in that capacity if he
or she performs his or her duties in good faith, in a manner he or she
reasonably believe to be in our best interests and with the care that an
ordinary prudent person in a like position would use under similar
circumstances. In addition, our charter eliminates our directors’ and
officers’ liability to us and our stockholders for money damages except for
liability resulting from actual receipt of an improper benefit in money,
property or services or active and deliberate dishonesty established by a final
judgment and which is material to the cause of action. Our bylaws
require us to indemnify directors and officers for liability resulting from
actions taken by them in those capacitates to the maximum extent permitted by
Maryland law. As a result, we and our security holders may have more
limited rights against our directors and officers than might otherwise exist
under common law. In addition, we may be obligated to fund the
defense costs incurred by our directors and officers.
Item
1B. Unresolved Staff Comments
There
were no unresolved comments from the staff of the SEC at December 31,
2009.
Item
2. Properties
The
following table presents certain summary information about our
properties. Our properties generally are modern facilities, and
amenities at most of our properties include a swimming pool, basketball courts
and a large community center featuring a fitness center, computer center,
tanning beds, study areas, and a recreation room with billiards and other games.
Some properties also have a jacuzzi/hot tub, volleyball courts, tennis courts
and in-unit washers and dryers. Callaway House also has a food
service facility. One wholly-owned property completed construction
and opened in August 2009. Lease terms are generally 12 months at
wholly-owned properties and 9 months at our on-campus participating
properties. These properties are included in the Wholly-Owned
Properties and On-Campus Participating Properties segments discussed in Item 1
and the accompanying Notes to Consolidated Financial Statements contained in
Item 8. All dollar amounts in this table and others herein, except
share and per share amounts, are stated in thousands unless otherwise
indicated.
We own
fee title to all of these properties except for:
●
|
University
Village at TU, which is subject to a 75-year ground lease with Temple
University (with four additional six-year
extensions);
|
●
|
University
Centre, which is subject to a 95-year ground
lease;
|
●
|
Vista
del Sol, which is subject to a 65-year ground/facility lease with Arizona
State University (with two additional ten-year
extensions);
|
●
|
Barrett
Honors College, which is subject to a 65-year ground/facility lease with
Arizona State University (with two additional ten-year extensions);
and
|
●
|
Four
on-campus participating properties held under ground/facility leases with
two university systems.
|
Property
|
|
Year Built
|
|
Date Acquired/
Developed
|
|
Primary
University Served
|
|
Typical Lease Term
(Mos)
|
|
Year
Ended December 31, 2009 Revenue
|
|
Average
Monthly Revenue/ Bed (1)
|
|
2009
Average Occupancy (1)
|
|
Occupancy as
of 12/31/09
|
|
#
of Buildings
|
|
#
of Units
|
|
#
of Beds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WHOLLY-OWNED
PROPERTIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Villas
on Apache
|
|
1987
|
|
May-99
|
|
Arizona
State University Main Campus
|
|
12
|
|
$ 1,794
|
|
$ 568
|
|
86.4%
|
|
69.8%
|
|
6
|
|
111
|
|
288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Village at Blacksburg
|
|
1990/
1998
|
|
Dec-00
|
|
Virginia
Polytechnic Institute and State
University
|
|
12
|
|
4,952
|
|
381
|
|
99.4%
|
|
99.4%
|
|
26
|
|
288
|
|
1,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
River
Club Apartments
|
|
1996
|
|
Aug-99
|
|
The
University of Georgia - Athens
|
|
12
|
|
3,301
|
|
365
|
|
92.8%
|
|
96.0%
|
|
18
|
|
266
|
|
792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
River
Walk Townhomes
|
|
1998
|
|
Aug-99
|
|
The
University of Georgia - Athens
|
|
12
|
|
1,421
|
|
362
|
|
94.7%
|
|
98.5%
|
|
20
|
|
100
|
|
336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Callaway House (2)
|
|
1999
|
|
Mar-01
|
|
Texas
A&M University
|
|
9
|
|
7,083
|
(3)
|
n/a
|
(3)
|
103.5%
|
|
103.5%
|
|
1
|
|
173
|
|
538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Village at Alafaya Club
|
|
1999
|
|
Jul-00
|
|
The
University of Central Florida
|
|
12
|
|
6,093
|
|
576
|
|
99.3%
|
|
99.4%
|
|
20
|
|
228
|
|
839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Village at Science Drive
|
|
2000
|
|
Nov-01
|
|
The
University of Central Florida
|
|
12
|
|
5,372
|
|
586
|
|
99.4%
|
|
99.6%
|
|
17
|
|
192
|
|
732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Village at Boulder Creek
|
|
2002
|
|
Aug-02
|
|
The
University of Colorado at Boulder
|
|
12
|
|
2,703
|
|
697
|
|
98.5%
|
|
98.4%
|
|
4
|
|
82
|
|
309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Village at Fresno
|
|
2004
|
|
Aug-04
|
|
California
State University - Fresno
|
|
12
|
|
2,690
|
|
510
|
|
98.5%
|
|
98.3%
|
|
9
|
|
105
|
|
406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Village at TU (4)
|
|
2004
|
|
Aug-04
|
|
Temple
University
|
|
12
|
|
6,544
|
|
669
|
|
99.1%
|
|
99.2%
|
|
3
|
|
220
|
|
749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Village at Sweet Home
|
|
2005
|
|
Aug-05
|
|
State
University of New York – Buffalo
|
|
12
|
|
6,076
|
|
641
|
|
93.7%
|
|
99.4%
|
|
11
|
|
269
|
|
828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Club Tallahassee (5)
|
|
2000
|
|
Feb-05
|
|
Florida
State University
|
|
12
|
|
4,217
|
|
436
|
|
99.1%
|
|
99.0%
|
|
19
|
|
152
|
|
608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Grove at University Club (5)
|
|
2002
|
|
Feb-05
|
|
Florida
State University
|
|
12
|
|
888
|
|
448
|
|
96.5%
|
|
93.8%
|
|
8
|
|
64
|
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
College
Club Tallahassee (5)
|
|
2001
|
|
Feb-05
|
|
Florida
A&M University
|
|
12
|
|
2,068
|
|
374
|
|
87.9%
|
|
94.0%
|
|
12
|
|
96
|
|
384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Greens at College Club (5)
|
|
2004
|
|
Feb-05
|
|
Florida
A&M University
|
|
12
|
|
862
|
|
366
|
|
89.7%
|
|
95.6%
|
|
5
|
|
40
|
|
160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Club Gainesville
|
|
1999
|
|
Feb-05
|
|
University
of Florida
|
|
12
|
|
2,260
|
|
426
|
|
96.7%
|
|
94.7%
|
|
9
|
|
94
|
|
376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Estates
|
|
2002
|
|
Mar-05
|
|
University
of Florida
|
|
12
|
|
7,105
|
|
566
|
|
96.1%
|
|
96.9%
|
|
20
|
|
396
|
|
1,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
City
Parc at Fry Street
|
|
2004
|
|
Mar-05
|
|
University
of North Texas
|
|
12
|
|
2,923
|
|
566
|
|
98.6%
|
|
98.3%
|
|
8
|
|
136
|
|
418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entrada
Real
|
|
2000
|
|
Mar-06
|
|
University
of Arizona
|
|
12
|
|
2,420
|
|
526
|
|
99.0%
|
|
99.2%
|
|
8
|
|
98
|
|
363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royal
Oaks (5)
|
|
1990
|
|
Mar-06
|
|
Florida
State University
|
|
12
|
|
1,222
|
|
434
|
|
97.7%
|
|
99.1%
|
|
4
|
|
82
|
|
224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royal
Pavilion (5)
|
|
1991
|
|
Mar-06
|
|
Florida
State University
|
|
12
|
|
1,113
|
|
427
|
|
99.3%
|
|
99.5%
|
|
4
|
|
60
|
|
204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royal
Village Tallahassee (5)
|
|
1992
|
|
Mar-06
|
|
Florida
State University
|
|
12
|
|
1,571
|
|
432
|
|
98.1%
|
|
98.3%
|
|
4
|
|
75
|
|
288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royal
Village Gainesville
|
|
1996
|
|
Mar-06
|
|
University
of Florida
|
|
12
|
|
2,838
|
|
507
|
|
97.8%
|
|
97.8%
|
|
8
|
|
118
|
|
448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northgate
Lakes
|
|
1997/98
|
|
Mar-06
|
|
The
University of Central Florida
|
|
12
|
|
4,881
|
|
551
|
|
98.7%
|
|
98.5%
|
|
13
|
|
194
|
|
710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royal
Lexington
|
|
1994
|
|
Mar-06
|
|
The
University of Kentucky
|
|
12
|
|
1,884
|
|
399
|
|
97.9%
|
|
95.9%
|
|
4
|
|
94
|
|
364
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Woods at Greenland
|
|
2001
|
|
Mar-06
|
|
Middle
Tennessee State University
|
|
12
|
|
1,344
|
|
402
|
|
97.4%
|
|
96.0%
|
|
3
|
|
78
|
|
276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raider’s
Crossing
|
|
2002
|
|
Mar-06
|
|
Middle
Tennessee State University
|
|
12
|
|
1,438
|
|
423
|
|
98.2%
|
|
98.2%
|
|
4
|
|
96
|
|
276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raider’s
Pass
|
|
2002/03
|
|
Mar-06
|
|
Texas
Tech University
|
|
12
|
|
4,556
|
|
443
|
|
99.1%
|
|
98.9%
|
|
12
|
|
264
|
|
828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggie
Station
|
|
2003
|
|
Mar-06
|
|
Texas
A&M University
|
|
12
|
|
2,696
|
|
488
|
|
99.7%
|
|
99.8%
|
|
5
|
|
156
|
|
450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Outpost San Marcos
|
|
2003/04
|
|
Mar-06
|
|
Texas
State University – San Marcos
|
|
12
|
|
2,761
|
|
456
|
|
99.1%
|
|
98.8%
|
|
5
|
|
162
|
|
486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Outpost San Antonio
|
|
2005
|
|
Mar-06
|
|
University
of Texas – San Antonio
|
|
12
|
|
5,563
|
|
517
|
|
99.6%
|
|
100.0%
|
|
10
|
|
276
|
|
828
|
Property
|
|
Year Built
|
|
Date Acquired/ Developed
|
|
Primary
University Served
|
|
Typical Lease Term
(Mos)
|
|
Year
Ended December 31, 2009 Revenue
|
|
Average Monthly Revenue/ Bed
(1)
|
|
2009
Average Occupancy (1)
|
|
Occupancy as
of 12/31/09
|
|
#
of Buildings
|
|
#
of Units
|
|
#
of Beds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Callaway
Villas
|
|
2006
|
|
Aug-06
|
|
Texas
A&M University
|
|
12
|
|
5,357
|
|
646
|
|
92.8%
|
|
83.9%
|
|
20
|
|
236
|
|
704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Village
on Sixth
|
|
2000/
2006
|
|
Jan-07
|
|
Marshall
University
|
|
12
|
|
3,827
|
|
430
|
|
95.6%
|
|
97.5%
|
|
14
|
|
248
|
|
752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Newtown
Crossing
|
|
2005/
2007
|
|
Feb-07
|
|
University
of Kentucky
|
|
12
|
|
5,637
|
|
539
|
|
88.8%
|
|
88.5%
|
|
7
|
|
356
|
|
942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Olde
Town University Square
|
|
2005
|
|
Feb-07
|
|
University
of Toledo
|
|
12
|
|
3,691
|
|
533
|
|
98.3%
|
|
97.3%
|
|
4
|
|
224
|
|
550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peninsular
Place
|
|
2005
|
|
Feb-07
|
|
Eastern
Michigan University
|
|
12
|
|
2,743
|
|
479
|
|
92.6%
|
|
94.8%
|
|
2
|
|
183
|
|
478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Centre
|
|
2007
|
|
Aug-07
|
|
Rutgers
University, NJIT, Essex CCC
|
|
9/12
|
|
6,585
|
|
753
|
|
81.2%
|
|
89.4%
|
|
2
|
|
234
|
|
838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
– Same Store Wholly-Owned Properties (6)
|
130,479
|
|
515
|
|
96.1%
|
|
96.5%
|
|
349
|
|
6,246
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sunnyside
Commons
|
|
1925-2001
|
|
Feb-08
|
|
West
Virginia University
|
|
12
|
|
791
|
|
404
|
|
98.7%
|
|
98.8%
|
|
9
|
|
68
|
|
161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pirate’s
Place
|
|
1996
|
|
Feb-08
|
|
East
Carolina University
|
|
12
|
|
1,727
|
|
265
|
|
87.7%
|
|
83.0%
|
|
12
|
|
144
|
|
528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Highlands
|
|
2004
|
|
June-08
|
|
University
of Nevada at Reno
|
|
12
|
|
3,121
|
|
426
|
|
80.0%
|
|
98.8%
|
|
17
|
|
216
|
|
732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jacob
Heights I (5)
|
|
2004
|
|
June-08
|
|
Minnesota
State University
|
|
12
|
|
816
|
|
548
|
|
74.0%
|
|
72.8%
|
|
11
|
|
42
|
|
162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jacob
Heights III (5)
|
|
2006
|
|
June-08
|
|
Minnesota
State University
|
|
12
|
|
484
|
|
505
|
|
80.3%
|
|
72.9%
|
|
14
|
|
24
|
|
96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Summit (5)
|
|
2003
|
|
June-08
|
|
Minnesota
State University
|
|
12
|
|
3,386
|
|
421
|
|
96.3%
|
|
98.2%
|
|
9
|
|
192
|
|
672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GrandMarc
– Seven Corners
|
|
2000
|
|
June-08
|
|
University
of Minnesota
|
|
12
|
|
4,284
|
|
745
|
|
93.6%
|
|
110.0%
|
|
1
|
|
186
|
|
440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Village – Sacramento
|
|
1979
|
|
June-08
|
|
California
State University –
Sacramento
|
|
12
|
|
2,509
|
|
571
|
|
90.3%
|
|
90.1%
|
|
41
|
|
250
|
|
394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aztec
Corner
|
|
1995
|
|
June-08
|
|
San
Diego State University
|
|
12
|
|
4,855
|
|
650
|
|
99.3%
|
|
99.3%
|
|
3
|
|
180
|
|
606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Crossings
|
|
1926/
2003
|
|
June-08
|
|
University
of Pennsylvania / Drexel
|
|
12
|
|
7,627
|
|
523
|
|
97.7%
|
|
98.7%
|
|
1
|
|
260
|
|
1,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Campus
Corner
|
|
1997
|
|
June-08
|
|
Indiana
University
|
|
12
|
|
3,189
|
|
400
|
|
80.0%
|
|
97.4%
|
|
23
|
|
254
|
|
796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tower at 3rd
|
|
1973
|
|
June-08
|
|
University
of Illinois
|
|
12
|
|
2,719
|
|
655
|
|
97.5%
|
|
99.0%
|
|
1
|
|
147
|
|
295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Mills
|
|
2002
|
|
June-08
|
|
University
of Northern Iowa
|
|
12
|
|
2,132
|
|
369
|
|
95.5%
|
|
98.8%
|
|
11
|
|
121
|
|
481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pirates
Cove
|
|
2000
|
|
June-08
|
|
East
Carolina University
|
|
12
|
|
3,653
|
|
321
|
|
83.3%
|
|
95.8%
|
|
26
|
|
264
|
|
1,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Manor
|
|
2002
|
|
June-08
|
|
East
Carolina University
|
|
12
|
|
2,544
|
|
351
|
|
92.7%
|
|
99.3%
|
|
18
|
|
168
|
|
600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brookstone
Village
|
|
1993
|
|
June-08
|
|
UNC
– Wilmington
|
|
12
|
|
1,248
|
|
429
|
|
94.8%
|
|
100.4%
|
|
12
|
|
124
|
|
238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Campus
Walk – Wilmington
|
|
1989
|
|
June-08
|
|
UNC
– Wilmington
|
|
12
|
|
1,875
|
|
545
|
|
93.2%
|
|
86.2%
|
|
12
|
|
289
|
|
290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cambridge
at Southern
|
|
2006
|
|
June-08
|
|
Georgia
Southern University
|
|
12
|
|
3,139
|
|
508
|
|
88.4%
|
|
96.1%
|
|
13
|
|
228
|
|
564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Campus
Club – Statesboro
|
|
2003
|
|
June-08
|
|
Georgia
Southern University
|
|
12
|
|
4,704
|
|
411
|
|
90.7%
|
|
95.2%
|
|
26
|
|
276
|
|
984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Pines
|
|
2001
|
|
June-08
|
|
Georgia
Southern University
|
|
12
|
|
2,685
|
|
415
|
|
92.1%
|
|
97.1%
|
|
13
|
|
144
|
|
552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lakeside
|
|
1991
|
|
June-08
|
|
University
of Georgia
|
|
12
|
|
3,478
|
|
384
|
|
92.9%
|
|
92.7%
|
|
20
|
|
244
|
|
776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Club
|
|
1989
|
|
June-08
|
|
University
of Georgia
|
|
12
|
|
1,696
|
|
306
|
|
93.4%
|
|
98.3%
|
|
17
|
|
120
|
|
480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Edge
|
|
1999
|
|
June-08
|
|
Central
Florida
|
|
12
|
|
6,358
|
|
554
|
|
96.1%
|
|
99.5%
|
|
21
|
|
306
|
|
930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Place
|
|
2003
|
|
June-08
|
|
University
of Virginia
|
|
12
|
|
2,161
|
|
400
|
|
83.1%
|
|
89.0%
|
|
12
|
|
144
|
|
528
|
Property
|
|
Year Built
|
|
Date Acquired/ Developed
|
|
Primary
University Served
|
|
Typical Lease Term (Mos)
|
|
Year
Ended December 31,
2009 Revenue
|
|
Average
Monthly Revenue/ Bed (1)
|
|
2009
Average Occupancy (1)
|
|
Occupancy as
of 12/31/09
|
|
#
of Buildings
|
|
#
of Units
|
|
#
of Beds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southview
|
|
1998
|
|
June-08
|
|
James
Madison University
|
|
12
|
|
5,092
|
|
436
|
|
98.2%
|
|
96.5%
|
|
21
|
|
240
|
|
960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stonegate
|
|
2000
|
|
June-08
|
|
James
Madison University
|
|
12
|
|
3,645
|
|
447
|
|
98.9%
|
|
97.9%
|
|
15
|
|
168
|
|
672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Commons
|
|
1991
|
|
June-08
|
|
James
Madison University
|
|
12
|
|
2,352
|
|
389
|
|
91.7%
|
|
84.8%
|
|
11
|
|
132
|
|
528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Gables
|
|
2001
|
|
June-08
|
|
Middle
Tennessee State University
|
|
12
|
|
2,659
|
|
351
|
|
88.7%
|
|
96.1%
|
|
15
|
|
168
|
|
648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Campus
Ridge
|
|
2003
|
|
June-08
|
|
East
Tennessee State University
|
|
12
|
|
2,204
|
|
361
|
|
90.7%
|
|
90.0%
|
|
10
|
|
132
|
|
528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Enclave I
|
|
2002
|
|
June-08
|
|
Bowling
Green State University
|
|
12
|
|
1,337
|
|
280
|
|
78.8%
|
|
99.2%
|
|
11
|
|
120
|
|
480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hawks
Landing
|
|
1994
|
|
June-08
|
|
Miami
University of Ohio
|
|
12
|
|
1,780
|
|
449
|
|
66.6%
|
|
83.3%
|
|
13
|
|
122
|
|
484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Willowtree
Apartments (5)
|
|
1968
|
|
June-08
|
|
University
of Michigan
|
|
12
|
|
3,003
|
|
480
|
|
89.7%
|
|
84.9%
|
|
13
|
|
310
|
|
568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Willowtree
Towers (5)
|
|
1974
|
|
June-08
|
|
University
of Michigan
|
|
12
|
|
1,496
|
|
480
|
|
89.6%
|
|
84.8%
|
|
3
|
|
163
|
|
283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Abbott
Place
|
|
1999
|
|
June-08
|
|
Michigan
State University
|
|
12
|
|
3,085
|
|
400
|
|
94.3%
|
|
99.4%
|
|
9
|
|
222
|
|
654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Centre – Kalamazoo
|
|
2004
|
|
June-08
|
|
Western
Michigan University
|
|
12
|
|
2,516
|
|
366
|
|
78.1%
|
|
98.4%
|
|
23
|
|
232
|
|
700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Meadows
|
|
2001
|
|
June-08
|
|
Central
Michigan University
|
|
12
|
|
2,340
|
|
355
|
|
83.8%
|
|
96.6%
|
|
23
|
|
184
|
|
616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Campus
Way
|
|
1993
|
|
June-08
|
|
University
of Alabama
|
|
12
|
|
3,293
|
|
400
|
|
96.3%
|
|
98.5%
|
|
9
|
|
196
|
|
684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Campus
Walk – Oxford
|
|
2001
|
|
June-08
|
|
University
of Mississippi
|
|
12
|
|
1,505
|
|
366
|
|
75.6%
|
|
91.9%
|
|
10
|
|
108
|
|
432
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Campus
Trails
|
|
1991
|
|
June-08
|
|
Mississippi
State University
|
|
12
|
|
2,038
|
|
350
|
|
96.9%
|
|
98.5%
|
|
14
|
|
156
|
|
480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Pointe
|
|
2004
|
|
June-08
|
|
Texas
Tech University
|
|
12
|
|
4,210
|
|
506
|
|
97.4%
|
|
98.8%
|
|
11
|
|
204
|
|
682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Trails
|
|
2003
|
|
June-08
|
|
Texas
Tech University
|
|
12
|
|
3,930
|
|
465
|
|
97.9%
|
|
98.4%
|
|
20
|
|
240
|
|
684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vista
del Sol (7)
|
|
2008
|
|
Aug-08
|
|
Arizona
State University
|
|
12
|
|
14,921
|
|
602
|
|
97.5%
|
|
95.2%
|
|
12
|
|
613
|
|
1,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Villas
at Chestnut Ridge
|
|
2008
|
|
Aug-08
|
|
State
University of New York – Buffalo
|
|
12
|
|
4,449
|
|
670
|
|
98.6%
|
|
99.3%
|
|
12
|
|
196
|
|
552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barrett
Honors College (7)(8)
|
|
2009
|
|
Aug-09
|
|
Arizona
State University
|
|
12
|
|
5,538
|
|
716
|
|
95.3%
|
|
95.5%
|
|
7
|
|
602
|
|
1,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
– New Wholly- Owned Properties
|
|
|
|
|
|
142,574
|
|
465
|
|
91.
3%
|
|
95.6%
|
|
605
|
|
8,899
|
|
27,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
– Wholly-Owned Properties
|
|
|
|
|
|
273,053
|
|
486
|
|
93.3%
|
|
96.0%
|
|
954
|
|
15,145
|
|
47,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ON-CAMPUS
PARTICIPATING PROPERTIES (9) (10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Village – PVAMU
|
|
1996/
97/98
|
|
Aug-96
Aug-98
|
|
Prairie
View A&M University
|
|
9
|
|
8,744
|
|
502
|
|
72.5%
|
|
97.7%
|
|
30
|
|
612
|
|
1,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
College – PVAMU
|
|
2000/ 2003
|
|
Aug-00
Aug-03
|
|
Prairie
View A&M University
|
|
9
|
|
6,398
|
|
489
|
|
69.6%
|
|
99.7%
|
|
14
|
|
756
|
|
1,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Village – TAMIU
|
|
1997
|
|
Aug-97
|
|
Texas
A&M International University
|
|
9
|
|
1,253
|
|
489
|
|
85.1%
|
|
93.2%
|
|
4
|
|
84
|
|
250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cullen
Oaks
|
|
2001/ 2005
|
|
Aug-01
Aug-05
|
|
The
University of Houston
|
|
9
|
|
6,332
|
|
684
|
|
85.3%
|
|
98.0%
|
|
4
|
|
411
|
|
879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
- On-Campus Participating Properties
|
|
|
|
|
|
22,727
|
|
533
|
|
74.7%
|
|
98.1%
|
|
52
|
|
1,863
|
|
4,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grand
Total- All Properties
|
|
|
|
|
|
$
295,780
|
|
$ 490
|
(11)
|
91.7%
|
|
96.2%
|
|
1,006
|
|
17,008
|
|
52,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Average
monthly revenue per bed is calculated based upon our base rental revenue
earned during typical lease terms for the year ended December 31, 2009
divided by average occupied beds over the typical lease
term. Average occupancy is calculated based on the average
number of occupied beds during
typical lease terms for the year ended December 31, 2009 divided by total
beds.
|
(2)
|
Although
we hold an 80% interest in the property, because of our preferred
distribution rights, we currently receive substantially all of the
property’s net cash flow.
|
(3)
|
As
rent at this property includes food services, revenue is not comparable to
the other properties in this chart.
|
(4)
|
Subject
to a 75-year ground lease with Temple
University.
|
(5)
|
For
lease administration purposes, University Club Tallahassee and The Grove
at University Club are reported combined, College Club Tallahassee and The
Greens at College Club are reported combined, Royal Oaks, Royal Pavilion,
and Royal Village Tallahassee are reported combined, Jacob Heights I,
Jacob Heights III, and The Summit are reported combined, and Willowtree
Apartments and Willowtree Towers are reported combined. As a
result, revenue for the year ended December 31, 2009 is allocated to the
respective properties based on relative bed
count.
|
(6)
|
Our
same store wholly-owned portfolio represents properties that were owned by
us for both of the full years ended December 31, 2009 and
2008.
|
(7)
|
Subject
to a 65-year ground/facility lease with Arizona State
University.
|
(8)
|
This
property completed construction and opened in the Fall 2009
semester. Average occupancy is calculated based on the period
this property was operating in
2009.
|
(9)
|
Although
our on-campus participating properties accounted for 11.0% of our units,
8.7% of our beds and 7.7% of our revenues for the year ended December 31,
2009, because of the structure of their ownership and financing we have
only received approximately $1.0 million in distributions of excess cash
flow during the year ended December 31, 2009. The ground/facility leases
through which we own our on-campus participating properties provide that
the university lessor may purchase our interest in and assume the
management of the facility.
|
(10)
|
Subject
to ground/facility leases with their primary university
systems. Average occupancy is calculated based on the nine
month academic year (excluding the summer
months).
|
(11)
|
Does
not include revenues from The Callaway House because of its food service
component.
|
Item
3. Legal Proceedings
From time
to time, we are subject to various lawsuits, claims and proceedings arising in
the ordinary course of business. As of December 31, 2009, none of
these were expected to have a material adverse effect on our cash flows,
financial condition, or results of operations.
Item 4. Submission of Matters
to a Vote of Security Holders
No
matters were submitted to a vote of our stockholders during the quarter ended
December 31, 2009.
PART
II
Item
5. Market for the Registrant’s Common Equity and Related Stockholder
Matters
Market
Information
The
Company’s common stock has been listed and is traded on the New York Stock
Exchange (“NYSE”) under the symbol “ACC”. The following table sets
forth, for the periods indicated, the high and low sale prices in dollars on the
NYSE for our common stock and the distributions we declared with respect to the
periods indicated.
|
|
High
|
|
|
Low
|
|
|
Distributions Declared
|
|
Quarter
ended March 31, 2008
|
|
$ |
29.50 |
|
|
$ |
24.84 |
|
|
$ |
0.3375 |
|
Quarter
ended June 30, 2008
|
|
$ |
32.08 |
|
|
$ |
26.53 |
|
|
$ |
0.3375 |
|
Quarter
ended September 30, 2008
|
|
$ |
34.75 |
|
|
$ |
27.28 |
|
|
$ |
0.3375 |
|
Quarter
ended December 31, 2008
|
|
$ |
37.00 |
|
|
$ |
15.05 |
|
|
$ |
0.3375 |
|
Quarter
ended March 31, 2009
|
|
$ |
23.43 |
|
|
$ |
14.88 |
|
|
$ |
0.3375 |
|
Quarter
ended June 30, 2009
|
|
$ |
24.17 |
|
|
$ |
16.65 |
|
|
$ |
0.3375 |
|
Quarter
ended September 30, 2009
|
|
$ |
29.09 |
|
|
$ |
19.33 |
|
|
$ |
0.3375 |
|
Quarter
ended December 31, 2009
|
|
$ |
28.86 |
|
|
$ |
25.62 |
|
|
$ |
0.3375 |
|
Holders
As of
January 31, 2010, there were approximately 16,500 holders of record of the
Company’s common stock and 52,208,669 shares of common stock
outstanding.
Distributions
We intend
to continue to declare quarterly distributions on our common stock. The actual
amount, timing and form of payment of distributions, however, will be at the
discretion of our Board of Directors and will depend upon our financial
condition in addition to the requirements of the Code, and no assurance can be
given as to the amounts, timing or form of payment of future
distributions. The payment of distributions is subject to
restrictions under the Company’s corporate-level debt described in Note 11 to
the Consolidated Financial Statements in Item 8 and discussed in Management’s
Discussion and Analysis of Financial Condition and Results of Operations in Item
7 under Liquidity and Capital Resources.
Equity
Compensation Plans
We have
adopted the 2004 Incentive Award Plan (the “Plan”). The Plan provides for the
grant of various stock-based incentive awards to selected employees and
directors of the Company and the Company’s affiliates. The Company
has reserved a total of 1,210,000 shares of the Company’s common stock for
issuance pursuant to the Plan, subject to certain adjustments for changes in the
Company’s capital structure, as defined in the Plan. Refer to Note 12
in the accompanying Notes to Consolidated Financial Statements in Item 8 for a
more detailed description of the Plan. As of December 31, 2009, the
total units and shares issued under the Plan were as follows:
|
|
#
of Securities to be Issued Upon Exercise of Outstanding Options,
Warrants, and Rights
|
|
|
Weighted-Average Exercise
Price of Outstanding Options, Warrants,
and Rights
|
|
|
#
of Securities Remaining Available for Future Issuance
Under Equity Compensation Plans
|
|
Equity
Compensation Plans Approved by Security Holders
|
|
|
855,440 |
|
(1) |
$ |
-0- |
|
|
354,560 |
|
Equity
Compensation Plans Not Approved by Security Holders
|
|
|
n/a |
|
|
|
n/a |
|
|
n/a |
|
(1)
|
Consists
of restricted stock units granted to non-employee Board of Director
members, restricted stock awards granted to executive officers and certain
employees and common units of limited partnership interest in the
Operating Partnership.
|
Item
6. Selected Financial Data
The
following table sets forth selected financial and operating data on a
consolidated historical basis for the Company.
The
following data should be read in conjunction with the Notes to Consolidated
Financial Statements in Item 8 and Management’s Discussion and Analysis of
Financial Condition and Results of Operations included in Item 7.
|
|
As
of and for the Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
Statements
of Operations Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
309,590 |
|
|
$ |
233,579 |
|
|
$ |
147,135 |
|
|
$ |
118,953 |
|
|
$ |
82,522 |
|
(Loss)
income from continuing operations
|
|
|
(2,392 |
) |
|
|
(12,474 |
) |
|
|
(1,431 |
) |
|
|
3,700 |
|
|
|
1,915 |
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
income attributable to discontinued operations
|
|
|
(710 |
) |
|
|
(345 |
) |
|
|
- |
|
|
|
2,287 |
|
|
|
2,028 |
|
(Loss)
gain from disposition of real estate
|
|
|
(9,358 |
) |
|
|
- |
|
|
|
- |
|
|
|
18,648 |
|
|
|
5,883 |
|
Net
(loss) income
|
|
|
(12,460 |
) |
|
|
(12,819 |
) |
|
|
(1,431 |
) |
|
|
24,635 |
|
|
|
9,826 |
|
Income
attributable to noncontrolling interests
|
|
|
(380 |
) |
|
|
(236 |
) |
|
|
(255 |
) |
|
|
(2,038 |
) |
|
|
(164 |
) |
Net
(loss) income attributable to common shareholders
|
|
|
(12,840 |
) |
|
|
(13,055 |
) |
|
|
(1,686 |
) |
|
|
22,597 |
|
|
|
9,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per
Share and Distribution Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per diluted share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
income from continuing operations
|
|
$ |
(0.08 |
) |
|
$ |
(0.35 |
) |
|
$ |
(0.08 |
) |
|
$ |
0.08 |
|
|
$ |
0.11 |
|
Discontinued
operations
|
|
|
(0.20 |
) |
|
|
(0.01 |
) |
|
|
- |
|
|
|
1.08 |
|
|
|
0.53 |
|
Net
(loss) income
|
|
|
(0.28 |
) |
|
|
(0.36 |
) |
|
|
(0.08 |
) |
|
|
1.16 |
|
|
|
0.64 |
|
Cash
distributions declared per share / unit
|
|
|
1.35 |
|
|
|
1.35 |
|
|
|
1.35 |
|
|
|
1.35 |
|
|
|
1.35 |
|
Cash
distributions declared
|
|
|
64,492 |
|
|
|
50,563 |
|
|
|
32,931 |
|
|
|
25,287 |
|
|
|
20,180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
2,234,981 |
|
|
$ |
2,183,909 |
|
|
$ |
1,076,296 |
|
|
$ |
884,381 |
|
|
$ |
550,862 |
|
Secured
mortgage, construction and bond debt
|
|
|
1,029,455 |
|
|
|
1,162,221 |
|
|
|
533,430 |
|
|
|
432,294 |
|
|
|
291,646 |
|
Senior
secured term loan
|
|
|
100,000 |
|
|
|
100,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Secured
revolving credit facilities
|
|
|
94,000 |
|
|
|
14,700 |
|
|
|
9,600 |
|
|
|
- |
|
|
|
- |
|
Capital
lease obligations
|
|
|
2,314 |
|
|
|
2,555 |
|
|
|
2,798 |
|
|
|
2,348 |
|
|
|
1,679 |
|
Stockholders’
equity
|
|
|
899,030 |
|
|
|
785,119 |
|
|
|
428,562 |
|
|
|
341,944 |
|
|
|
221,799 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
Owned Property Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned
properties
|
|
|
85 |
|
|
|
86 |
|
|
|
44 |
|
|
|
38 |
|
|
|
25 |
|
Units
|
|
|
17,008 |
|
|
|
17,212 |
|
|
|
9,519 |
|
|
|
7,711 |
|
|
|
5,620 |
|
Beds
|
|
|
52,118 |
|
|
|
52,817 |
|
|
|
28,657 |
|
|
|
23,663 |
|
|
|
17,109 |
|
Occupancy
as of December 31,
|
|
|
96.2 |
% |
|
|
92.4 |
% |
|
|
95.1 |
% |
|
|
96.2 |
% |
|
|
97.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by operating activities
|
|
$ |
79,562 |
|
|
$ |
32,887 |
|
|
$ |
29,047 |
|
|
$ |
35,237 |
|
|
$ |
20,429 |
|
Net
cash used in investing activities
|
|
|
(122,125 |
) |
|
|
(432,410 |
) |
|
|
(187,591 |
) |
|
|
(102,718 |
) |
|
|
(111,755 |
) |
Net
cash provided by financing activities
|
|
|
83,056 |
|
|
|
413,050 |
|
|
|
91,510 |
|
|
|
121,947 |
|
|
|
111,332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds
From Operations (“FFO”):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) income attributable to common shareholders
|
|
$ |
(12,840 |
) |
|
$ |
(13,055 |
) |
|
$ |
(1,686 |
) |
|
$ |
22,597 |
|
|
$ |
9,662 |
|
Noncontrolling
interests
|
|
|
380 |
|
|
|
236 |
|
|
|
255 |
|
|
|
2,038 |
|
|
|
164 |
|
Loss
(gain) from disposition of real estate
|
|
|
9,358 |
|
|
|
- |
|
|
|
- |
|
|
|
(18,648 |
) |
|
|
(5,883 |
) |
Loss
from unconsolidated joint ventures
|
|
|
2,073 |
|
|
|
1,619 |
|
|
|
108 |
|
|
|
- |
|
|
|
- |
|
FFO
from unconsolidated joint ventures
|
|
|
246 |
|
|
|
(487 |
) |
|
|
(108 |
) |
|
|
- |
|
|
|
- |
|
Real
estate related depreciation and amortization
|
|
|
75,814 |
|
|
|
56,459 |
|
|
|
29,824 |
|
|
|
24,956 |
|
|
|
16,032 |
|
Funds
from operations (1)
(2)
|
|
$ |
75,031 |
|
|
$ |
44,772 |
|
|
$ |
28,393 |
|
|
$ |
30,943 |
|
|
$ |
19,975 |
|
(1)
|
As
defined by the National Association of Real Estate Investment Trusts or
NAREIT, funds from operations or FFO represents income (loss) before
allocation to minority interests (computed in accordance with GAAP),
excluding gains (or losses) from sales of property, plus real estate
related depreciation and amortization (excluding amortization of loan
origination costs) 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, many of which present FFO when
reporting their results. FFO is intended to exclude GAAP historical cost
depreciation and amortization of real estate and related assets, which
assumes that the value of real estate diminishes ratably over time.
Historically, however, real estate values have risen or fallen with market
conditions. Because FFO excludes depreciation and amortization unique to
real estate, gains and losses from property dispositions and extraordinary
items, it provides a performance measure that, when compared year over
year, reflects the impact to operations from trends in occupancy rates,
rental rates, operating costs, development activities and interest costs,
providing perspective not immediately apparent from net
income.
|
We
compute FFO in accordance with standards established by the Board of Governors
of NAREIT in its March 1995 White Paper (as amended in November 1999 and April
2002), which may differ from the methodology for calculating FFO utilized by
other equity REITs and, accordingly, may not be comparable to such other REITs.
Further, FFO does not represent amounts available for management’s discretionary
use because of needed capital replacement or expansion, debt service obligations
or other commitments and uncertainties. FFO should not be considered as an
alternative to net income (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 is it
indicative of funds available to fund our cash needs, including our ability to
pay distributions.
(2)
|
When
considering our FFO, we believe it is also a meaningful measure of our
performance to make certain adjustments related to our
on-campus participating properties. See Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Funds from
Operations in Item 7 contained
herein.
|
Item
7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Our
Company and Our Business
Overview
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 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 24,939 beds located in
various markets throughout the country. Two of the acquired
properties totaling 1,468 beds were sold in the third quarter of 2008 and one
property totaling 700 beds was sold on December 31, 2009. The total
consideration paid for GMH was approximately $1,018.7 million, inclusive of
transaction costs.
Property
Portfolio
As of
December 31, 2009, our total property portfolio contained 85 student housing
properties with approximately 52,100 beds and 17,000 apartment units, all of
which we manage. Our communities contain modern housing units and are
supported by a resident assistant system and other student-oriented programming,
with many offering resort-style amenities.
As of
December 31, 2009, our property portfolio included 81 wholly-owned properties,
which consisted of 79 owned off-campus properties that are in close proximity to
59 colleges and universities in 23 states and two owned on-campus
properties. The net operating income of these student housing
communities, which is one of the financial measures that we use to evaluate
community performance, is affected by the demand and supply dynamics within our
markets, which drives our rental rates and occupancy levels and is affected by
our ability to control operating costs. Our overall operating
performance is also impacted by the general availability and cost of capital and
the performance of our newly developed and acquired student housing
communities. Our primary business objectives are to create long-term
stockholder value by accessing capital on cost effective terms, deploying that
capital to develop, redevelop and acquire student housing communities and
selling communities when they no longer meet our long-term investment strategy
and when market conditions are favorable.
The
construction of our two owned on-campus properties was funded with our equity
through the ACE program which enables colleges and universities to preserve
their credit capacity to fund core academic infrastructure. Each of
these properties operate under a ground/facility lease with a related university
system.
Additionally,
we participate with two university systems in the ownership of four on-campus
properties under long-term ground/facility leases; we refer to these properties
as our “on-campus participating properties.”
Third-Party
Development and Management Services
We also
provide development and construction management services for student housing
properties owned by universities, 501(c) 3 foundations and
others. Our clients have included some of the nation’s most prominent
systems of higher education, including the State University of New York System,
the University of California System, the University of Houston System, the Texas
A&M University System, the Texas State University System, the University of
Georgia System, the University of North Carolina System, the Purdue University
System, the University of Colorado System, and the West Virginia University
System. We have developed student housing properties for these
clients and a majority of the time have been retained to manage these properties
following their opening. Since 1996, we have developed and assisted
in securing financing for 35 third-party student housing
properties. As of December 31, 2009, we were under contract on three
projects that are currently in progress and whose fees range from $2.5 million
to $7.6 million. As of December 31, 2009, fees of approximately $2.8
million remained to be earned by us with respect to these projects, which have
scheduled completion dates of March 2010 through August 2011.
As of
December 31, 2009, we owned a noncontrolling interest in two joint ventures that
owned an aggregate of 20 student housing properties with approximately 11,300
beds in approximately 3,400 units. We also provided third-party
management and leasing services for 31 properties that represented approximately
23,300 beds in approximately 9,100 units, five of which we
developed. Our third-party management and leasing services are
typically provided pursuant to multi-year management contracts that have an
initial term that ranges from one to five years. As of December 31,
2009, our total owned, joint venture and third-party managed portfolio was
comprised of 136 properties that represented approximately 86,700 beds in
approximately 29,500 units.
We
believe that the ownership and operation of student housing communities in close
proximity to selected colleges and universities presents an attractive long-term
investment opportunity for our investors. We intend to continue to
execute our strategy of identifying existing differentiated, typically highly
amenitized, student housing communities or development opportunities in close
proximity to university campuses with high barriers to entry which are projected
to experience substantial increases in enrollment and/or are under-serviced in
terms of existing on and/or off-campus student housing. While fee
revenue from our third-party development, construction management and property
management services allows us to develop strong and key relationships with
colleges and universities, 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, close, and
successfully operate student housing properties.
Critical
Accounting Policies
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States (“GAAP”) requires management to make
estimates and assumptions in certain circumstances that affect amounts reported
in our consolidated and combined financial statements and related notes. In
preparing these financial statements, management has utilized all available
information, including its past history, industry standards and the current
economic environment, among other factors, in forming its estimates and
judgments of certain amounts included in the consolidated and combined financial
statements, giving due consideration to materiality. It is possible that the
ultimate outcome anticipated by management in formulating its estimates may not
be realized. Application of the critical accounting policies below involves the
exercise of judgment and use of assumptions as to future uncertainties and, as a
result, actual results could differ from these estimates. In addition, other
companies in similar businesses may utilize different estimation policies and
methodologies, which may impact the comparability of our results of operations
and financial condition to those companies.
Revenue
and Cost Recognition of Third-Party Development and Management
Services
Development
revenues are generally recognized based on a proportionate performance method
based on contract deliverables, while construction revenues are recognized using
the percentage of completion method, as determined by construction costs
incurred relative to total estimated construction costs. Costs
associated with such projects are deferred and recognized in relation to the
revenues earned on executed contracts. For projects where our fee is
based on a fixed price, any cost overruns incurred during construction, as
compared to the original budget, will reduce the net fee generated on those
projects. Incentive fees are generally recognized when the project is
complete and performance has been agreed upon by all parties, or when
performance has been verified by an independent third-party.
We also
evaluate the collectibility of fee income and expense reimbursements generated
through the provision of development and construction management services based
upon the individual facts and circumstances, including the contractual right to
receive such amounts in accordance with the terms of the various projects, and
reserve any amounts that are deemed to be uncollectible.
Pre-development
expenditures such as architectural fees, permits and deposits associated with
the pursuit of third-party and owned development projects are expensed as
incurred, until such time that management believes it is probable that the
contract will be executed and/or construction will commence. Because
we frequently incur these pre-development expenditures before a financing
commitment and/or required permits and authorizations have been obtained, we
bear the risk of loss of these pre-development expenditures if financing cannot
ultimately be arranged on acceptable terms or we are unable to successfully
obtain the required permits and authorizations. As such, management
evaluates the status of third-party and owned projects that have not yet
commenced construction on a periodic basis and expenses any deferred costs
related to projects whose current status indicates the commencement of
construction is unlikely and/or the costs may not provide future value to us in
the form of revenues. Such write-offs are included in third-party
development and management services expenses (in the case of third-party
development projects) or general and administrative expenses (in the case of
owned development projects) on the accompanying consolidated statements of
operations.
Third-party
management fees are generally received and recognized on a monthly basis and are
computed as a percentage of property receipts, revenues or a fixed monthly
amount, in accordance with the applicable management contract. Incentive
management fees are recognized when the contractual criteria have been
met.
Student
Housing Rental Revenue Recognition and Accounts Receivable
Student
housing rental revenue is recognized on a straight-line basis over the term of
the contract. Ancillary and other property related income is recognized in the
period earned. In estimating the collectibility of our accounts
receivable, we analyze the aging of resident receivables, historical bad debts,
and current economic trends. These estimates have a direct impact on our net
income, as an increase in our allowance for doubtful accounts reduces our net
income.
Allocation
of Fair Value to Acquired Properties
The price
that we pay to acquire a property is impacted by many factors, including the
condition of the buildings and improvements, the occupancy of the building,
favorable or unfavorable financing, and numerous other factors. Accordingly, we
are required to make subjective assessments to allocate the purchase price paid
to acquire investments in real estate among the assets acquired and liabilities
assumed based on our estimate of the fair values of such assets and liabilities.
This includes, among other items, determining the value of the buildings and
improvements, land, in-place tenant leases, and any debt assumed from the
seller. Each of these estimates requires a great deal of judgment and some of
the estimates involve complex calculations. Our calculation methodology is
summarized in Note 2 to our consolidated financial statements contained in Item
8 herein. These allocation assessments have a direct impact on our results of
operations because if we were to allocate more value to land there would be no
depreciation with respect to such amount or if we were to allocate more value to
the buildings as opposed to allocating to the value of in-place tenant leases,
this amount would be recognized as an expense over a much longer period of time,
since the amounts allocated to buildings are depreciated over the estimated
lives of the buildings whereas amounts allocated to in-place tenant leases are
amortized over the terms of the leases (generally less than one
year).
Long-Lived
Assets–Impairment
On a
periodic basis, management is required to assess whether there are any
indicators that the value of our real estate properties may be impaired. A
property’s value is considered impaired if management’s estimate of the
aggregate future undiscounted cash flows to be generated by the property are
less than the carrying value of the property. These estimates of cash flows
consider factors such as expected future operating income, trends and prospects,
as well as the effects of demand, competition and other factors. To the extent
impairment has occurred, the loss will be measured as the excess of the carrying
amount of the property over the fair value of the property, thereby reducing our
net income.
Outperformance
Bonus Plan
The
Outperformance Bonus Plan was adopted upon consummation of our IPO in August
2004, and consisted of awards to key employees equal to the value of 367,682
shares of our common stock. Compensation related to these awards was
not recorded until 2007 when management determined that certain of the required
performance measures were probable of achievement. Such awards vested
on the third anniversary of the IPO (August 2007), upon our achievement of
specified performance measures. Upon vesting, the Compensation
Committee of the Board of Directors exercised its permitted discretion and
granted 132,400 of the awards to selected recipients in the form of profits
interest units (“PIUs”), with the remainder of the awards paid in cash in the
amount of $6.7 million. A compensation charge of approximately $10.4
million was recorded during the year ended December 31, 2007, to reflect the
value of such awards.
We
distinguish between capital expenditures necessary for the ongoing operations of
our properties and acquisition-related improvements incurred within one to two
years of acquisition of the related property. (Acquisition-related
improvements are expenditures that have been identified at the time the property
is acquired, and which we intended to incur in order to position the property to
be consistent with our physical standards). We capitalize non-recurring
expenditures for additions and betterments to buildings and land
improvements. In addition, we generally capitalize expenditures for
exterior painting, roofing, and other major maintenance projects that
substantially extend the useful life of the existing assets. The cost
of ordinary repairs and maintenance that do not improve the value of an asset or
extend its useful life are charged to expense when incurred. Planned
major repair, maintenance and improvement projects are capitalized when
performed. In some circumstances, lenders require us to maintain a reserve
account for future repairs and capital expenditures. These amounts are
classified as restricted cash on the accompanying consolidated balance sheets,
as the funds are not available to us for current use.
Results
of Operations
Comparison
of the Years Ended December 31, 2009 and December 31, 2008
The
following table presents our results of operations for the years ended December
31, 2009 and 2008, including the amount and percentage change in these results
between the two periods.
|
|
Year
Ended December 31,
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Change
($)
|
|
|
Change
(%)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly-owned
properties
|
|
$ |
271,938 |
|
|
$ |
194,701 |
|
|
$ |
77,237 |
|
|
|
39.7 |
% |
On-campus
participating properties
|
|
|
22,727 |
|
|
|
22,042 |
|
|
|
685 |
|
|
|
3.1 |
% |
Third-party
development services
|
|
|
5,015 |
|
|
|
7,922 |
|
|
|
(2,907 |
) |
|
|
(36.7 |
%) |
Third-party
management services
|
|
|
8,795 |
|
|
|
6,578 |
|
|
|
2,217 |
|
|
|
33.7 |
% |
Resident
services
|
|
|
1,115 |
|
|
|
2,336 |
|
|
|
(1,221 |
) |
|
|
(52.3 |
%) |
Total
revenues
|
|
|
309,590 |
|
|
|
233,579 |
|
|
|
76,011 |
|
|
|
32.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly-owned
properties
|
|
|
132,965 |
|
|
|
101,804 |
|
|
|
31,161 |
|
|
|
30.6 |
% |
On-campus
participating properties
|
|
|
10,200 |
|
|
|
10,771 |
|
|
|
(571 |
) |
|
|
(5.3 |
%) |
Third-party
development and management services
|
|
|
11,250 |
|
|
|
11,123 |
|
|
|
127 |
|
|
|
1.1 |
% |
General
and administrative
|
|
|
10,955 |
|
|
|
11,274 |
|
|
|
(319 |
) |
|
|
(2.8 |
%) |
Depreciation
and amortization
|
|
|
76,201 |
|
|
|
56,853 |
|
|
|
19,348 |
|
|
|
34.0 |
% |
Ground/facility
leases
|
|
|
2,107 |
|
|
|
1,778 |
|
|
|
329 |
|
|
|
18.5 |
% |
Total
operating expenses
|
|
|
243,678 |
|
|
|
193,603 |
|
|
|
50,075 |
|
|
|
25.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
65,912 |
|
|
|
39,976 |
|
|
|
25,936 |
|
|
|
64.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating
income and (expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
120 |
|
|
|
1,131 |
|
|
|
(1,011 |
) |
|
|
(89.4 |
%) |
Interest
expense
|
|
|
(62,747 |
) |
|
|
(49,497 |
) |
|
|
(13,250 |
) |
|
|
26.8 |
% |
Amortization
of deferred financing costs
|
|
|
(3,466 |
) |
|
|
(2,563 |
) |
|
|
(903 |
) |
|
|
35.2 |
% |
Loss
from unconsolidated joint ventures
|
|
|
(2,073 |
) |
|
|
(1,619 |
) |
|
|
(454 |
) |
|
|
28.0 |
% |
Other
nonoperating income
|
|
|
402 |
|
|
|
486 |
|
|
|
(84 |
) |
|
|
(17.3 |
%) |
Total
nonoperating expenses
|
|
|
(67,764 |
) |
|
|
(52,062 |
) |
|
|
(15,702 |
) |
|
|
30.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before income taxes and discontinued operations
|
|
|
(1,852 |
) |
|
|
(12,086 |
) |
|
|
10,234 |
|
|
|
(84.7 |
%) |
Income
tax provision
|
|
|
(540 |
) |
|
|
(388 |
) |
|
|
(152 |
) |
|
|
39.2 |
% |
Loss
from continuing operations
|
|
|
(2,392 |
) |
|
|
(12,474 |
) |
|
|
10,082 |
|
|
|
(80.8 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
attributable to discontinued operations
|
|
|
(710 |
) |
|
|
(345 |
) |
|
|
(365 |
) |
|
|
105.8 |
% |
Loss
from disposition of real estate
|
|
|
(9,358 |
) |
|
|
- |
|
|
|
(9,358 |
) |
|
|
100.0 |
% |
Total
discontinued operations
|
|
|
(10,068 |
) |
|
|
(345 |
) |
|
|
(9,723 |
) |
|
|
2,818.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(12,460 |
) |
|
|
(12,819 |
) |
|
|
359 |
|
|
|
(2.8 |
%) |
Income
attributable to noncontrolling interests
|
|
|
(380 |
) |
|
|
(236 |
) |
|
|
(144 |
) |
|
|
61.0 |
% |
Net
loss attributable to common shareholders
|
|
$ |
(12,840 |
) |
|
$ |
(13,055 |
) |
|
$ |
215 |
|
|
|
(1.6 |
%) |
Wholly-Owned
Properties Operations
Revenues
from our wholly-owned properties for the year ended December 31, 2009 compared
to the year ended December 31, 2008 increased by $77.2 million primarily due to
the acquisition of GMH’s student housing business in June 2008, the completion
of construction and opening of Vista del Sol and Villas at Chestnut Ridge in
August 2008, and the completion of construction and opening of Barrett Honors
College in August 2009. Operating expenses increased approximately
$31.2 million for the year ended December 31, 2009 as compared to the prior
year, primarily due to the same factors which affected the increase in
revenues.
New Property
Operations. For the year ended December 31, 2009, the GMH
student housing properties contributed an additional $55.6 million of revenues
and an additional $24.6 million of operating expenses. In addition,
we acquired two properties in February 2008: Pirate’s Place, located near the
campus of East Carolina University in Greenville, North Carolina, and Sunnyside
Commons, located near the campus of West Virginia University in Morgantown, West
Virginia. In August 2008, we completed construction of and opened
Vista del Sol and Villas at Chestnut Ridge, and in August 2009 we completed
construction of and opened Barrett Honors College. These five non-GMH
new properties contributed an additional $18.1 million of revenues and an
additional $5.4 million of operating expenses during the year ended December 31,
2009 as compared to the year ended December 31, 2008.
Same Store Property Operations
(Excluding New Property Activity). We had 37 properties
containing 20,000 beds which were operating during both the years ended December
31, 2009 and 2008. These properties produced revenues of $130.5
million and $128.2 million during the years ended December 31, 2009 and 2008,
respectively, an increase of $2.3 million. This increase was
primarily due to an increase in average rental rates during the year ended
December 31, 2009 as compared to the prior year, in addition to an increase in
average occupancy from 95.1% during the year ended December 31, 2008 to 95.5%
during the year ended December 31, 2009. Future revenues will be
dependent on our ability to maintain our current leases in effect for the
2009/2010 academic year and our ability to obtain appropriate rental rates and
desired occupancy for the 2010/2011 academic year at our various properties
during our leasing period, which typically begins in January and ends in
August.
At these
existing same store properties, operating expenses increased from $60.1 million
for the year ended December 31, 2008 to $61.2 million for the year ended
December 31, 2009, an increase of $1.1 million. This increase was
primarily due to an increase in marketing costs incurred to stimulate leasing
velocity for the 2009/2010 academic year. We anticipate that
operating expenses for our same store property portfolio in 2010 will increase
slightly as compared with 2009 as a result of expected increases in utility
costs, employee benefit costs, property taxes and general
inflation.
On-Campus
Participating Properties (“OCPP”) Operations
We had
four participating properties containing 4,519 beds which were operating during
both the years ended December 31, 2009 and 2008. Revenues from our
participating properties increased to $22.7 million during the year ended
December 31, 2009 from $22.0 million for the year ended December 31, 2008, an
increase of $0.7 million. This increase was primarily a result of an
increase in average rental rates during the year ended December 31, 2009 as
compared to the prior year.
At these
properties, operating expenses decreased from $10.8 million for the year ended
December 31, 2008 to $10.2 million for the year ended December 31, 2009, a
decrease of $0.6 million. This decrease was primarily due to
hurricane costs incurred during the year ended December 31, 2008 that were not
incurred in the current year. We anticipate that operating expenses
in 2010 will increase slightly as compared with 2009 as a result of expected
increases in utility costs, employee benefit costs and general
inflation.
Third
Party Development Services Revenue
Third
party development services revenue decreased by $2.9 million, from $7.9 million
during the year ended December 31, 2008 to $5.0 million for the year ended
December 31, 2009. This decrease was primarily related to the closing
and commencement of construction of the University of California, Irvine Phase
III project in August 2008, which contributed an additional $2.2 million to
third party development services revenue during the year ended December 31, 2008
compared to the year ended December 31, 2009. In addition, the
University of Hawaii – Manoa and Concordia University projects were completed in
August 2008 and closing and commencement of construction occurred for The
Highlands at Edinboro University of Pennsylvania project in February
2008. These three projects combined contributed $2.4 million of
additional third party development services revenue during the year ended
December 31, 2008 as compared to the year ended December 31,
2009. These decreases were offset by the commencement of construction
of the Cleveland State University Phase II project in August 2009, which
resulted in $1.5 million in third party development services revenue recognized
during the year ended December 31, 2009. Closing of third-party
development services projects during 2010 will be dependent upon the Company’s
university clients obtaining project financing, which has been adversely
affected by current capital market conditions.
Development
services revenues are dependent on our ability to successfully be awarded such
projects, the amount of the contractual fee related to the project and the
timing and completion of the development and construction of the
project. In addition, to the extent projects are completed under
budget, we may be entitled to a portion of such savings, which are recognized as
revenue when performance has been agreed upon by all parties, or when
performance has been verified by an independent third-party. It is
possible that projects for which we have deferred pre-development costs will not
close and that we will not be reimbursed for such costs. The
pre-development costs associated therewith will ordinarily be charged against
income for the then-current period.
Third
Party Management Services Revenue
Third
party management services revenues increased by $2.2 million from $6.6 million
for the year ended December 31, 2008 to $8.8 million for the year ended December
31, 2009. This increase was primarily due to an additional $1.6
million in management fees recognized during the year ended December 31, 2009
from third party management contracts assumed as part of the GMH acquisition in
June 2008, including 20 properties owned in two joint ventures with Fidelity in
which we have a 10% interest. Additionally, we assumed management of
four properties located in Canada, which contributed an additional $0.2 million
of third party management services revenue for the year ended December 31,
2009. Finally, during 2008 and 2009 we assumed management of
additional phases at our Hampton Roads military housing project, which also
contributed an additional $0.2 million of third party management services
revenue during the year ended December 31, 2009. We
anticipate that third-party management services revenues in 2010 will increase
as compared with 2009 as a result of new contracts obtained during 2009 and
contracts anticipated to commence in 2010.
Resident
Services Revenue
Revenue
from resident services represents certain services and resident amenities deemed
to be noncustomary for a property’s geographic region that are required under
federal tax laws to be provided by our TRS entities. Resident services
revenues decreased approximately $1.2 million, from $2.3 million for the year
ended December 31, 2008 to $1.1 million for the year ended December 31,
2009. This decrease was primarily due to a decrease in the type and level
of such services provided during the year ended December 31, 2009 as compared to
the prior year.
Third
Party Development and Management Services Expenses
Third
party development and management services expenses increased by $0.1 million,
from $11.1 million during the year ended year ended December 31, 2008 to $11.2
million for the year ended December 31, 2009. This increase was
primarily due to an increase in payroll and related costs as a result of an
increase in activity for potential ACE projects and new management contracts
assumed from GMH. Third-party development and management services
expenses for 2010 will be dependent on the level of awards we pursue, the level
of new management contracts obtained, and as previously mentioned, any
pre-development costs charged against income for projects which do not
close.
General
and Administrative
General
and administrative expenses decreased approximately $0.3 million, from $11.3
million during the year ended December 31, 2008 to $11.0 million for the year
ended December 31, 2009. This decrease was primarily due to merger
costs incurred during the year ended year ended December 31, 2008 related to our
acquisition of GMH in June 2008. We anticipate general and
administrative expenses to increase in 2010 as a result of an increase in
employee benefit costs and general inflation.
Depreciation
and Amortization
Depreciation
and amortization increased by $19.3 million, from $56.9 million during the year
ended December 31, 2008 to $76.2 million for the year ended December 31,
2009. This increase was primarily due to the acquisition of the GMH
student housing business in June 2008, which contributed an additional $14.1
million to depreciation and amortization expense for the year ended December 31,
2009, of which $0.7 million related to the valuation assigned to in-place leases
for such properties. The increase was also due to the completion of
construction and opening of Vista del Sol and Villas at Chestnut Ridge in August
2008 and Barrett Honors College in August 2009, which contributed an additional
$4.5 million to depreciation and amortization expense for the year ended
December 31, 2009. We expect depreciation and amortization expense to
decrease in 2010 as a result of the value assigned to in-place leases at the
time of the GMH acquisition being fully amortized in 2009, which should be
slightly offset by increased depreciation on both Barrett Honors College, placed
in service during 2009, and renovations during 2009 at several GMH
properties.
Ground
Lease Expense
Ground
lease expense increased $0.3 million from $1.8 million during the year ended
December 31, 2008 to $2.1 million for the year ended December 31, 2009,
primarily due to ground/facility lease costs incurred for Vista del Sol and
Barrett Honors College, which completed construction and opened in August 2008
and August 2009, respectively. We expect ground lease expense in 2010
to increase slightly due to anticipated improved operating results of the
on-campus participating properties which should increase our portion of cash
flow available for distribution.
Interest
Income
Interest
income decreased by $1.0 million, from $1.1 million for the year ended December
31, 2008 to $0.1 million for the year ended December 31, 2009. This
decrease was primarily due to interest earned on proceeds from our April 2008
equity offering, which were not utilized until the closing of our acquisition of
GMH in June 2008, as well as a decrease in interest rates during the year ended
December 31, 2009 as compared to the prior year.
Interest
Expense
Interest
expense increased $13.2 million, from $49.5 million during the year ended
December 31, 2008 to $62.7 million for the year ended December 31,
2009. This increase was primarily due to $598.8 million of mortgage
debt assumed from GMH in June 2008, which contributed an additional $12.8
million of interest expense for the year ended December 31, 2009. We
also incurred an additional $0.9 million of interest expense during the year
ended December 31, 2009 related to the senior secured term loan entered into in
May 2008, as well as an additional $0.8 million of interest expense related to
the $125 million secured Freddie Mac revolving credit facility entered into in
September 2009. These increases were offset by a $1.8 million
decrease to interest expense related to the pay-off of $80.8 million of mortgage
loans during the year ended December 31, 2009. Assuming that variable interest
rates only increase slightly during 2010, we expect interest expense
in 2010 to be consistent with 2009 due to the pay-off of mortgage debt scheduled
to mature in 2010, which would be offset by additional interest expense incurred
on anticipated borrowings from our corporate-level debt.
Amortization
of Deferred Financing Costs
Amortization
of deferred financing costs increased approximately $0.9 million from $2.6
million during the year ended December 31, 2008 to $3.5 million for the year
ended December 31, 2009, primarily due to the amortization of additional finance
costs incurred to assume debt on properties acquired from GMH, the senior
secured term loan entered into in May 2008, and the Freddie Mac revolving credit
facility entered into in September 2009. We anticipate that
amortization of deferred financing costs will increase in 2010 due to the
refinancing of our existing secured revolving credit facility in August 2009,
and the secured agency facility entered into in September 2009.
Loss
from Unconsolidated Joint Ventures
Loss from
unconsolidated joint ventures represents our share of the net loss from the
Hampton Roads military housing joint venture in which we have a minimal economic
interest, as well as our 10% share of the loss from two joint ventures owning 20
properties formed or assumed as part of our acquisition of GMH in June
2008.
Loss from
unconsolidated joint ventures increased approximately $0.5 million from $1.6
million during the year ended December 31, 2008 to $2.1 million for the year
ended December 31, 2009. This increase was primarily due to the loss
from the two joint ventures formed or assumed as part of our acquisition of GMH
in June 2008.
Income Tax Provision
The
Company’s provision for income taxes increased by $0.1 million, from $0.4
million for the year ended December 31, 2008 to $0.5 million for the year ended
December 31, 2009. This increase was primarily a result of additional
state tax liabilities accrued related to the acquisition of the GMH portfolio in
June 2008.
Discontinued Operations
Riverside
Estates, a wholly-owned property, was sold in December 2009 for $18.2 million
and the resulting loss from disposition of $9.4 million is included in
discontinued operations for the year ended December 31, 2009. In
addition, as part of the acquisition of GMH on June 11, 2008, the Company
acquired two properties (The Courtyards and The Verge) that were under contract
to be sold as of such date. The Courtyards was sold in July 2008 for
approximately $17.4 million, and The Verge was sold in August 2008 for
approximately $36.4 million. There was no gain or loss recorded on
these dispositions for book purposes. The net loss attributable to
these three properties is included in discontinued operations for the years
ended December 31, 2009 and 2008. Refer to Note 6 in the accompanying
Notes to Consolidated Financial Statements contained in Item 8 herein for a
table summarizing the results of operations of the properties sold during the
years ended December 31, 2009 and 2008.
Noncontrolling
Interests
Noncontrolling
interests represent holders of common and preferred units in our Operating
Partnership as well as certain third-party partners in joint ventures
consolidated by us for financial reporting purposes. Accordingly,
these external partners are allocated their share of income/loss during the
respective reporting periods. See Note 9 in the accompanying Notes to
Consolidated Financial Statements contained in Item 8 herein for a detailed
discussion of noncontrolling interests.
Comparison
of the Years Ended December 31, 2008 and December 31, 2007
The
following table presents our results of operations for the years ended December
31, 2008 and 2007, including the amount and percentage change in these results
between the two periods.
|
|
Year
Ended December 31,
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Change($)
|
|
|
Change(%)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly-owned
properties
|
|
$ |
194,701 |
|
|
$ |
116,286 |
|
|
$ |
78,415 |
|
|
|
67.4 |
% |
On-campus
participating properties
|
|
|
22,042 |
|
|
|
20,966 |
|
|
|
1,076 |
|
|
|
5.1 |
% |
Third-party
development services
|
|
|
7,922 |
|
|
|
5,490 |
|
|
|
2,432 |
|
|
|
44.3 |
% |
Third-party
management services
|
|
|
6,578 |
|
|
|
2,821 |
|
|
|
3,757 |
|
|
|
133.2 |
% |
Resident
services
|
|
|
2,336 |
|
|
|
1,572 |
|
|
|
764 |
|
|
|
48.6 |
% |
Total
revenues
|
|
|
233,579 |
|
|
|
147,135 |
|
|
|
86,444 |
|
|
|
58.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly-owned
properties
|
|
|
101,804 |
|
|
|
55,155 |
|
|
|
46,649 |
|
|
|
84.6 |
% |
On-campus
participating properties
|
|
|
10,771 |
|
|
|
9,379 |
|
|
|
1,392 |
|
|
|
14.8 |
% |
Third-party
development and management services
|
|
|
11,123 |
|
|
|
5,708 |
|
|
|
5,415 |
|
|
|
94.9 |
% |
General
and administrative
|
|
|
11,274 |
|
|
|
17,660 |
|
|
|
(6,386 |
) |
|
|
(36.2 |
%) |
Depreciation
and amortization
|
|
|
56,853 |
|
|
|
30,444 |
|
|
|
26,409 |
|
|
|
86.7 |
% |
Ground/facility
lease
|
|
|
1,778 |
|
|
|
1,622 |
|
|
|
156 |
|
|
|
9.6 |
% |
Total
operating expenses
|
|
|
193,603 |
|
|
|
119,968 |
|
|
|
73,635 |
|
|
|
61.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
39,976 |
|
|
|
27,167 |
|
|
|
12,809 |
|
|
|
47.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating
income and (expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
1,131 |
|
|
|
1,477 |
|
|
|
(346 |
) |
|
|
(23.4 |
%) |
Interest
expense
|
|
|
(49,497 |
) |
|
|
(27,871 |
) |
|
|
(21,626 |
) |
|
|
77.6 |
% |
Amortization
of deferred financing costs
|
|
|
(2,563 |
) |
|
|
(1,340 |
) |
|
|
(1,223 |
) |
|
|
91.3 |
% |
Loss
from unconsolidated joint ventures
|
|
|
(1,619 |
) |
|
|
(108 |
) |
|
|
(1,511 |
) |
|
|
1,399.1 |
% |
Other
nonoperating income
|
|
|
486 |
|
|
|
- |
|
|
|
486 |
|
|
|
100.0 |
% |
Total
nonoperating expenses
|
|
|
(52,062 |
) |
|
|
(27,842 |
) |
|
|
(24,220 |
) |
|
|
87.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before income taxes and discontinued operations
|
|
|
(12,086 |
) |
|
|
(675 |
) |
|
|
(11,411 |
) |
|
|
1,690.5 |
% |
Income
tax provision
|
|
|
(388 |
) |
|
|
(756 |
) |
|
|
368 |
|
|
|
(48.7 |
%) |
Loss
from continuing operations
|
|
|
(12,474 |
) |
|
|
(1,431 |
) |
|
|
(11,043 |
) |
|
|
771.7 |
% |
Loss
from discontinued operations
|
|
|
(345 |
) |
|
|
- |
|
|
|
(345 |
) |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(12,819 |
) |
|
|
(1,431 |
) |
|
|
(11,388 |
) |
|
|
795.8 |
% |
Income
attributable to noncontrolling interests
|
|
|
(236 |
) |
|
|
(255 |
) |
|
|
19 |
|
|
|
(7.5 |
%) |
Net
loss attributable to common shareholders
|
|
$ |
(13,055 |
) |
|
$ |
(1,686 |
) |
|
$ |
(11,369 |
) |
|
|
674.3 |
% |
Wholly-Owned
Properties Operations
Revenues
from our wholly-owned properties increased by $78.4 million in 2008 as compared
to 2007 primarily due to the acquisition of GMH’s student housing business in
June 2008, the acquisition of two properties during the first quarter 2008, the
completion of construction and opening of Vista del Sol and Villas at Chestnut
Ridge in August 2008, and the completion of construction and opening of
University Centre in August 2007. Operating expenses increased by
approximately $46.6 million in 2008 compared to 2007, primarily due to the same
factors which affected the increase in revenues.
New Property
Operations. On June 11, 2008, we acquired GMH’s student
housing business, including 42 properties containing 24,939 beds located in
various markets throughout the country. Of the 42 properties
acquired, two were under contract to be sold on the acquisition date and were
sold in July and August 2008 and another property was sold on December 31,
2009. The sold properties’ net loss through the date of disposition
is reflected as discontinued operations for 2008. During 2008, the
remaining 39 properties acquired from GMH contributed an additional $59.5
million of revenues and an additional $38.3 million of operating
expenses. In addition, we acquired two properties in February 2008,
Pirate’s Place and Sunnyside Commons. In August 2008, we completed
construction of and opened Vista del Sol and Villas at Chestnut
Ridge. Additionally, in August 2007, we completed construction of and
opened University Centre, serving students attending Rutgers University, NJIT
and various surrounding educational institutions. These non-GMH new
properties contributed an additional $16.1 million of revenues and an additional
$6.2 million of operating expenses during 2008 as compared to 2007.
Same Store Property Operations
(Excluding New Property Activity). We had 32 properties
containing 16,440 beds which were operating during both 2008 and
2007. These properties produced revenues of $106.2 million and $102.6
million during 2008 and 2007, respectively, an increase of $3.6
million. This increase was primarily due to an increase in average
rental rates during 2008 as compared to 2007. The average occupancy
for this group of properties remained relatively flat at 96.9% for both 2008 and
2007.
At these
same store properties, operating expenses increased by $2.1 million, to $49.0
million in 2008 as compared to $46.9 million in 2007. This increase
was primarily due to marketing costs, costs associated with the 2008 hurricane
season, property taxes, and utilities.
On-Campus
Participating Properties (“OCPP”) Operations
Same Store OCPP
Operations. We had four participating properties containing
4,519 beds which were operating during both 2008 and 2007. Revenues
from our same store participating properties increased to $22.0 million in 2008
from $21.0 million in 2007, an increase of $1.0 million. This
increase was primarily due to an increase in average rental rates, offset by a
decrease in average occupancy from 78.2% in 2007 to 73.7% in 2008.
At these
properties, operating expenses increased to $10.8 million in 2008 from $9.4
million in 2007, an increase of $1.4 million. This increase was
primarily due to costs associated with the 2008 hurricane season and
utilities.
Third-Party
Development Services Revenue
Third-party
development services revenue increased by $2.4 million from $5.5 million in 2007
to $7.9 million in 2008. This increase was primarily due to projects
with larger fees in progress during 2008 as compared to 2007. We had
six projects in progress during 2008 with an average contractual fee of
approximately $3.1 million, as compared to 2007 during which we had seven
projects in progress with an average contractual fee of approximately $1.7
million.
Third-Party
Management Services Revenue
Third-party
management services revenues increased by $3.8 million from $2.8 million in 2007
to $6.6 million in 2008. This increase was primarily due to an
additional $2.5 million in management fees recognized during 2008 from third
party management contracts assumed as part of the GMH acquisition, including 21
properties owned in two joint ventures in which we have a 10%
interest. The remainder of the increase was primarily the result of
the commencement of five management contracts in the fourth quarter of 2007 and
the commencement of six management contracts in the second quarter of
2008.
Resident
Services
Revenue
from resident services increased approximately $0.7 million from $1.6 million in
2007 to $2.3 million in 2008. This increase was primarily due to
additional revenue earned during 2008 from the acquired properties discussed
above and the timing of completion of construction and opening of wholly-owned
properties.
Third
Party Development and Management Services Expenses
Third
party development and management services expenses increased by $5.4 million,
from $5.7 million in 2007 to $11.1 million in 2008. This increase was
primarily due to an increase in payroll and related costs as a result of an
increase in activity for potential ACE projects and new management contracts
assumed from GMH.
General
and Administrative
General
and administrative expenses decreased approximately $6.4 million, from $17.7
million in 2007 to $11.3 million in 2008. This decrease was primarily
due to a $10.4 million compensation charge recorded in 2007 related to the
Company’s 2004 Outperformance Bonus Plan. This decrease was offset by
additional transition and integration expenses related to the acquisition of GMH
and additional staffing, benefits, rent and public company costs related to both
the GMH acquisition and company growth experienced during 2008.
Depreciation
and Amortization
Depreciation
and amortization increased approximately $26.4 million from $30.4 million in
2007 to $56.8 million in 2008. This increase was primarily due to the
acquisition of the GMH student housing business in June 2008, the acquisition of
two properties during the first quarter 2008, the completion of construction and
opening of Vista del Sol and Villas at Chestnut Ridge in August 2008, and the
completion of construction and opening of University Centre in August
2007. The GMH properties contributed an additional $22.0 million to
depreciation expense in 2008, of which $8.7 million related to the valuation
assigned to in-place leases for such properties.
Amortization
of deferred financing costs increased approximately $1.2 million from $1.3
million in 2007 to $2.5 million in 2008, primarily due to the amortization of
additional finance costs incurred to assume debt on properties acquired from GMH
and the senior secured term loan entered into in May 2008.
Ground
Lease Expense
Ground
lease expense increased by $0.2 million, from $1.6 million in 2007 to $1.8
million in 2008, primarily due to ground/facility lease costs incurred for Vista
del Sol which completed construction and opened in August 2008.
Interest
Income
Interest
income decreased by approximately $0.4 million, from $1.5 million in 2007 to
$1.1 million in 2008. This decrease was primarily due to interest
earned during 2007 on the remaining proceeds from our September 2006 equity
offering and net proceeds from the disposition of an owned off-campus property
in December 2006, which was offset by interest earned during 2008 on proceeds
from our April 2008 equity offering.
Interest
Expense
Interest
expense increased approximately $21.6 million, from $27.9 million in 2007 to
$49.5 million in 2008. This increase was primarily due to $598.8
million of mortgage debt assumed from GMH in June 2008 at a weighted average
rate of 5.43% (including a net discount of $9.4 million to reflect the fair
market value of debt assumed.) The debt assumed for properties
acquired from GMH contributed an additional $17.4 million of interest expense in
2008. We also incurred an additional $2.4 million of interest expense
related to the senior secured term loan entered into in May 2008 to fund a
portion of the cash consideration paid in our acquisition of GMH. An
additional $1.9 million of interest expense was incurred during 2008 related to
the loans for Vista del Sol and Villas at Chestnut Ridge, which completed
construction and were placed into service in August
2008. Acquisitions during 2007 and 2008 also contributed an
additional $0.9 million of interest expense during 2008. These
increases were offset by a decrease in interest expense of approximately $0.4
million associated with the pay-down of the construction loan for University
Centre in October 2007, as well as a decrease of approximately $0.2 million
associated with a lower interest rate incurred on our variable rate revolving
credit facility.
Loss
from unconsolidated joint ventures
Loss from
unconsolidated joint ventures represents our share of the net income (loss) from
the Hampton Roads military housing joint venture in which we have a minimal
economic interest, as well as our 10 % share of the income (loss) from two joint
ventures owning 21 properties formed or assumed as part of our acquisition of
GMH in June 2008.
The loss
from unconsolidated joint ventures of $1.6 million for 2008 was primarily due to
the loss from a 15-property joint venture entered into in connection with our
acquisition of GMH. The joint venture recognized a net loss for 2008
primarily because of the amortization recorded on the value assigned to in-place
leases on the joint venture formation date. In addition, this
15-property joint venture includes two properties located in Louisiana that
incurred significant maintenance costs during 2008 associated with the hurricane
season.
Other
Nonoperating Income
Other
nonoperating income of $0.5 million for 2008 represents tax incentive amounts
received in cash during the period related to a property we acquired in February
2007 located in Ypsilanti, Michigan. Upon acquisition of this
property, any future potential benefit of such tax incentive was assumed from
the seller.
Income
Tax Provision
The
provision for income taxes decreased by $0.4 million, from $0.8 million in 2007
to $0.4 million in 2008. This decrease was primarily related to the
write-off of the Company’s deferred tax asset in the amount of $0.5 million
during 2007 in order to account for the tax impact of the 2004 Outperformance
Bonus Plan.
Cash
Flows
Comparison
of Years Ended December 31, 2009 and December 31, 2008
Operating
Activities
For the
year ended December 31, 2009, net cash provided by operating activities was
approximately $79.6 million, as compared to $32.9 million for the year ended
December 31, 2008, an increase of $46.7 million. This increase was
primarily due to operating cash flows provided from the timing of the
acquisition of the GMH student housing business on June 11, 2008 and the
completion of construction and opening of Vista del Sol and Villas at Chestnut
Ridge in August 2008 and Barrett Honors College in August 2009.
Investing
Activities
Investing
activities utilized $122.1 million and $432.4 million for the years ended
December 31, 2009 and 2008, respectively. The $310.3 million decrease
in cash utilized in investing activities during the year ended December 31, 2009
related primarily to a $276.5 million decrease in the use of cash to acquire
properties and undeveloped land. We acquired a total of 44 properties
during the year ended December 31, 2008 and no properties during the year ended
December 31, 2009. In June 2008, we used approximately $269.4 million
of cash to acquire the GMH student housing business, including 42 properties
containing 24,939 beds located in various markets throughout the
country. We also experienced a $50.5 million decrease in cash used to
fund the construction of our wholly-owned development
properties. During the year ended December 31, 2009, one wholly-owned
property was under development, which was completed and opened for occupancy in
August 2009, while three properties were under development during the year ended
December 31, 2008, two of which were completed and opened for occupancy in
August 2008. These decreases in cash utilized in investing activities
were offset by a $25.6 million increase in cash used for capital expenditures at
our wholly-owned properties during the year ended December 31, 2009, as we
continued with renovations at several GMH properties. For the years
ended December 31, 2009, 2008 and 2007, our cash utilized in investing
activities was comprised of the following:
|
|
Year
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Property
dispositions
|
|
$ |
1,485 |
|
|
$ |
4,418 |
|
|
$ |
- |
|
Property
and land acquisitions
|
|
|
(7,385 |
) |
|
|
(283,871 |
) |
|
|
(53,205 |
) |
Capital
expenditures for on-campus participating properties
|
|
|
(739 |
) |
|
|
(719 |
) |
|
|
(480 |
) |
Capital
expenditures for wholly-owned properties
|
|
|
(40,992 |
) |
|
|
(15,346 |
) |
|
|
(8,097 |
) |
Investments
in wholly-owned properties under development
|
|
|
(73,737 |
) |
|
|
(124,224 |
) |
|
|
(123,723 |
) |
Purchase
of corporate furniture, fixtures, and equipment
|
|
|
(606 |
) |
|
|
(2,178 |
) |
|
|
(486 |
) |
Investment
in unconsolidated joint ventures
|
|
|
(401 |
) |
|
|
(10,610 |
) |
|
|
(1,600 |
) |
Distributions
received from unconsolidated joint ventures
|
|
|
250 |
|
|
|
120 |
|
|
|
- |
|
Total
|
|
$ |
(122,125 |
) |
|
$ |
(432,410 |
) |
|
$ |
(187,591 |
) |
Financing
Activities
Cash
provided by financing activities totaled $83.1 million and $413.1 million for
the years ended December 31, 2009 and 2008, respectively. The $330.0
million decrease in cash provided by financing activities was primarily a result
of the following: (i) the May 2009 equity offering which raised $198.3 million,
net of offering costs, as compared to $252.2 million, net of offering costs,
raised in our April 2008 equity offering; (ii) the $100 million senior secured
term loan which was fully funded on June 11, 2008, the proceeds of which were
used to pay a portion of the cash consideration for the acquisition of GMH;
(iii) the contribution of 15 GMH student housing properties in 2008 to a joint
venture in which we received $74.4 million in proceeds and retained a 10% equity
interest in the joint venture; (iv) a $75.8 million decrease in proceeds from
construction loans used to fund the construction of Vista del Sol, an owned ACE
development property, and Villas at Chestnut Ridge, an owned off-campus
development property, which both opened for occupancy in August 2008; (v) the
pay-off of $110.9 million in mortgage and construction loan debt that matured
during the year ended December 31, 2009, as compared to the pay-off of $24.4
million in mortgage loan debt during the year ended December 31, 2008; (vi) a
$74.2 million increase in proceeds (net of paydowns) received from our secured
revolving credit facilities as a result of us closing a $125 million secured
agency facility in September 2009, of which we borrowed $94 million at closing;
and (vii) a $13.9 million increase in distributions to stockholders as a result
of issuances of common stock in our April 2008 and May 2009 equity offerings and
as partial consideration for the acquisition of GMH in 2008.
Comparison
of Years Ended December 31, 2008 and December 31, 2007
Operating
Activities
For the
year ended December 31, 2008, net cash provided by operating activities before
changes in working capital accounts provided $50.3 million, as compared to $34.5
million for the year ended December 31, 2007, an increase of $15.8
million. Changes in working capital accounts utilized $17.5 million and
$5.5 million for the years ended December 31, 2008 and 2007, respectively, an
increase of $12.0 million. This increase in cash utilized for
operating activities was primarily due to increased activity in accounts
payable, accrued expenses, and lender escrow accounts resulting from the
additional properties acquired from GMH and overall company growth.
Investing
Activities
Investing
activities utilized $432.4 million and $187.6 million for the years ended
December 31, 2008 and 2007, respectively. The $244.8 million increase
in cash utilized in investing activities during the year ended December 31, 2008
related primarily to a $230.7 million increase in the use of cash to acquire GMH
in 2008 compared to the acquisition of four properties during
2007. We experienced a $7.8 million increase in cash used in 2008 for
capital expenditures at our wholly-owned properties as we began renovations at
several GMH properties. Finally, in connection with the acquisition
of GMH, we contributed 15 GMH properties to a joint venture in exchange for cash
and a 10% minority interest in the joint venture, and assumed GMH’s 10% equity
interest in an existing joint venture that owns six properties. These
increases in cash utilized in investing activities were offset by proceeds
received from the disposition of two properties in July and August
2008.
Financing
Activities
Cash
provided by financing activities totaled $413.1 million and $91.5 million for
the years ended December 31, 2008 and 2007, respectively. The $321.6
million increase in cash provided by financing activities was a result of the
following: (i) the April 2008 equity offering which raised $252.2 million, net
of offering costs, as compared to $98.8 million, net of offering costs, raised
in our October 2007 equity offering; (ii) the pay-off of a construction loan
with $43.9 million of proceeds from our October 2007 equity offering; (iii) the
$100 million senior secured term loan which was fully funded on June 11, 2008,
the proceeds of which were used to pay a portion of the cash consideration for
the acquisition of GMH; (iv) the contribution of 15 GMH student housing
properties in 2008 to a joint venture in which we received $74.4 million in
proceeds and retained a 10% equity interest in the joint venture; and (v) the
$15.0 million increase in proceeds from construction loans used to fund the
construction of Vista del Sol, an owned ACE development property, and Villas at
Chestnut Ridge, an owned off-campus development property, which both opened for
occupancy in August 2008. These increases were partially offset by
the following: (i) the pay-off of $24.4 million in mortgage loan debt assumed in
connection with the acquisition of GMH; (ii) a $17.7 million increase in
distributions to stockholders as a result of our October 2007 and April 2008
equity offerings and the issuance of common stock as partial consideration for
the acquisition of GMH in 2008; (iii) a $12.7 million decrease in our
construction accounts payable balance as a result of the completion of Vista del
Sol and Villas at Chestnut Ridge in August 2008; (iv) a $4.5 million decrease in
proceeds (net of paydowns) received from our revolving credit facility; and (v)
a $4.2 million increase in debt issuance and assumption costs associated with
mortgage debt assumed in connection with acquisitions of properties and fees
paid to obtain the secured term loan in May 2008.
Structure
of Owned On-campus Properties
We have
entered into two 65-year ground/facility leases (each with two ten-year
extensions available) with a university system to finance, construct, and manage
two student housing facilities. Under the terms of these
ground/facility leases, the university system owns both the land and
improvements, and we make annual minimum rent payments to the university system
during the first five years of operation for one property and the first ten
years of operation for the other property. In addition, we pay the
university system variable rent payments based upon the operating performance of
the properties.
Structure
of On-campus Participating Properties
At our
on-campus participating properties, the subject universities own both the land
and improvements. We then have a leasehold interest under a
ground/facility lease. Under the lease, we receive an annual
distribution representing 50% of these properties’ net cash available for
distribution after payment of operating expenses (which includes our management
fees), debt service (which includes repayment of principal) and capital
expenditures. We also manage these properties under multi-year
management agreements and are paid a management fee representing 5% of
receipts.
We do not
have access to the cash flows and working capital of these participating
properties except for the annual net cash distribution as described
above. Additionally, a substantial portion of these properties’ cash
flow is dedicated to capital reserves required under the applicable property
indebtedness and to the amortization of such indebtedness. These
amounts do not increase our economic interest in these properties since our
interest, including our right to share in the net cash available for
distribution from the properties, terminates upon the amortization of their
indebtedness. Our economic interest in these properties is therefore
limited to our interest in the net cash flow and management and development fees
from these properties, as reflected in our calculation of Funds from Operations
modified for the operational performance of on-campus participating properties
(“FFOM”) contained herein. Accordingly, when considering these
properties’ contribution to our operations, we focus upon our share of these
properties’ net cash available for distribution and the management fees that we
receive from these properties, rather than upon their contribution to our gross
revenues and expenses for financial reporting purposes.
The
following table reflects the amounts related to our on-campus participating
properties included in our consolidated financial statements for the years ended
December 31, 2009, 2008, and 2007:
|
|
Year
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Revenues
|
|
$ |
22,727 |
|
|
$ |
22,042 |
|
|
$ |
20,966 |
|
Direct
operating expenses (1)
|
|
|
(9,650 |
) |
|
|
(10,073 |
) |
|
|
(8,701 |
) |
Amortization
|
|
|
(4,351 |
) |
|
|
(4,322 |
) |
|
|
(4,263 |
) |
Amortization
of deferred financing costs
|
|
|
(180 |
) |
|
|
(185 |
) |
|
|
(189 |
) |
Ground/facility
lease (2)
|
|
|
(1,086 |
) |
|
|
(1,401 |
) |
|
|
(1,622 |
) |
Net
operating income
|
|
|
7,460 |
|
|
|
6,061 |
|
|
|
6,191 |
|
Interest
income
|
|
|
42 |
|
|
|
206 |
|
|
|
359 |
|
Interest
expense (3)
|
|
|
(6,183 |
) |
|
|
(6,166 |
) |
|
|
(6,225 |
) |
Net
income
|
|
$ |
1,319 |
|
|
$ |
101 |
|
|
$ |
325 |
|
(1)
|
Excludes
property management fees of $1.0 million for each of the years ended
December 31, 2009, 2008, and 2007. This expense and the
corresponding fee revenue recognized by us have been eliminated in
consolidation. Also excludes allocation of expenses related to
corporate management and oversight.
|
(2)
|
Represents
the universities’ 50% share of the properties’ net cash available for
distribution after payment of operating expenses, debt service (including
payment of principal) and capital
expenditures.
|
(3)
|
Debt
service expenditures for these properties totaled $8.4 million for each of
the years ended December 31, 2009, 2008 and
2007.
|
Liquidity
and Capital Resources
Cash
Balances and Liquidity
As of
December 31, 2009, excluding our on-campus participating properties, we had
$87.5 million in cash and cash equivalents and restricted cash as compared to
$48.6 million in cash and cash equivalents and restricted cash as of December
31, 2008. Restricted cash primarily consists of escrow accounts held
by lenders and resident security deposits, as required by law in certain
states. This increase in cash and cash equivalents was primarily due
to the completion of our equity offering in May 2009 and the closing of a $125
million secured agency facility in September 2009. Our May 2009
equity offering generated net proceeds of approximately $198.3
million. We used approximately $102.6 million of the offering
proceeds to paydown the outstanding balance on our secured revolving credit
facility and an additional $81.1 million of cash proceeds to pay-off mortgage
and construction debt. In addition, we used these proceeds to fund
development costs on our recently completed ACE property serving students at
Arizona State University. Upon closing of our secured agency facility
in September, we borrowed $94 million and used $27.5 million to paydown the
outstanding balance on our secured revolving credit
facility. Additionally, restricted cash as of December 31, 2009 also
included $0.1 million of funds held in escrow in connection with potential
development opportunities.
As of
December 31, 2009, our short-term liquidity needs included, but were not limited
to, the following: (i) anticipated distribution payments to our common and
restricted stockholders totaling approximately $71.1 million based on an assumed
annual cash distribution of $1.35 per share based on the number of our shares
outstanding as of December 31, 2009, (ii) anticipated distribution payments to
our Operating Partnership unitholders totaling approximately $1.8 million based
on an assumed annual distribution of $1.35 per common unit of limited
partnership interest (“Common Unit”) and a cumulative preferential per annum
cash distribution rate of 5.99% on our preferred units of limited partnership
interest (“Series A Preferred Units”) based on the number of units outstanding
as of December 31, 2009, (iii) payments of approximately $83.6 million of
fixed-rate mortgage debt scheduled to mature during the next 12 months, and (iv)
funds for capital improvements at acquired properties and other potential
development projects. As of December 31, 2009, we had $100.0 million
of outstanding variable rate construction debt scheduled to mature in December
2010. We expect to extend the maturity date into December 2011 by
exercising the remaining 12-month extension option available to
us. In August 2009, we amended our existing $160 million revolving
credit facility to increase the size of the facility to $225 million, extend the
maturity date through August 2012 and currently secure the facility with seven
of our wholly-owned properties. In September 2009, we closed on a
$125 million secured revolving credit facility with Freddie Mac. The
facility has a five-year term and is currently secured by 11 of our wholly-owned
properties. We expect to meet our short-term liquidity requirements
by (i) borrowing under our existing secured revolving credit facilities
discussed above, (ii) potentially disposing of properties depending on market
conditions, and (iii) utilizing net cash provided by operations.
We may
seek additional funds to undertake initiatives not contemplated by our business
plan or obtain additional cushion against possible shortfalls. We
also may pursue additional financing as opportunities arise. Future
financings may include a range of different sizes or types of financing,
including the incurrence of additional secured debt and the sale of additional
debt or equity securities. These funds may not be available on
favorable terms or at all. Our ability to obtain additional financing
depends on several factors, including future market conditions, our success or
lack of success in penetrating our markets, our future creditworthiness, and
restrictions contained in agreements with our investors or lenders, including
the restrictions contained in the agreements governing our revolving credit
facilities and term loan. These financings could increase our level
of indebtedness or result in dilution to our equity holders.
2009
Equity Offering
On May
11, 2009, we completed an equity offering, consisting of the sale of 9,775,000
shares of our common stock at a price of $21.25 per share, including 1,275,000
shares issued as a result of the exercise of the underwriters’ overallotment
option in full at closing. The offering generated gross proceeds of
$207.7 million. The aggregate proceeds, net of the underwriting
discount and expenses of the offering, were approximately $198.3
million.
Secured
Revolving Credit Facility
In August
2009, the Operating Partnership renewed its revolving credit facility and
increased the size of the facility from $160 million to $225
million. The facility may be expanded by up to an additional $75
million upon the satisfaction of certain conditions. The maturity
date of the facility is August 14, 2012 and can be extended 12 months through
August 2013. The facility is currently secured by seven of our
wholly-owned properties.
Availability
under the revolving credit facility is limited to an “aggregate borrowing base
amount” equal to the lesser of (i) 50% to 65% of the value of certain
properties, calculated as set forth in the credit facility, and (ii) the
adjusted net operating income from these properties divided by a formula
amount. The facility bears interest at a variable rate, at our
option, based upon a base rate or one-, two-, or three-month LIBOR, with a LIBOR
floor of 2.0%, plus, in each case, a spread based upon our total
leverage. Additionally, we are required to pay an unused commitment
fee of 0.35% per annum. In September 2009, we paid off the entire
balance on the revolving credit facility using proceeds from the secured agency
facility discussed below. As of December 31, 2009, availability under
the facility totaled $155.0 million.
The terms
of the facility include certain restrictions and covenants, which limit, among
other items, the incurrence of additional indebtedness, liens, and the
disposition of assets. The facility contains customary affirmative and negative
covenants and also contains financial covenants that, among other things,
require us to maintain certain minimum ratios of “EBITDA” (earnings before
interest, taxes, depreciation and amortization) to fixed charges and total
indebtedness. We may not pay distributions that exceed a specified
percentage of funds from operations, as adjusted, for any four consecutive
quarters. The financial covenants also include consolidated net worth
and leverage ratio tests. As of December 31, 2009, we were in
compliance with all such covenants.
Secured
Agency Facility
In
September 2009, we closed a $125 million secured revolving credit facility with
a Freddie Mac lender. The facility has a five-year term and is
currently secured by 11 properties referred to as the “Collateral
Pool.” The facility bears interest at one- or three-month LIBOR plus
a spread that varies based on the debt service ratio of the Collateral
Pool. Additionally, we are required to pay an unused commitment fee
of 1.0% per annum. As of December 31, 2009, the balance outstanding
on the facility totaled $94.0 million, bearing interest at a weighted average
rate of 2.2%. The secured agency facility includes certain financial
covenants which are the same as are required for the secured revolving credit
facility, described above.
Senior
Secured Term Loan
On May
23, 2008, the Operating Partnership obtained a $100 million senior secured term
loan. The secured term loan has an initial term of 36 months and can
be extended through May 2012 through the exercise of a 12-month extension
period. The secured term loan bears interest at a variable rate, at
our option, based upon a base rate or one-, two-, three-, or six-month LIBOR
plus, in each case, a spread based upon our total leverage. On June
11, 2008, we borrowed in full from the secured term loan and used the proceeds
to fund a portion of the total cash consideration for the GMH
acquisition. As of December 31, 2009, the balance outstanding on the
secured term loan was $100 million.
On
February 23, 2009, we entered into two $50.0 million interest rate swap
agreements effective March 20, 2009 through February 20, 2012, which are both
used to hedge our exposure to fluctuations in interest payments on its
LIBOR-based senior secured term loan. Under the terms of the two interest
rate swap agreements, we pay an average fixed rate of 1.7925% and receive
one-month LIBOR floating rate. As a result of these two interest rate
swaps, we have effectively fixed the interest rate on our senior secured term
loan to 3.55% as of December 31, 2009 (1.7925% + 1.75% spread). In
the event that the swaps at any time have a negative fair value below a certain
threshold level, we could be required to post cash into a collateral account
pledged to the interest rate swap providers. As of December 31,
2009, we had deposited approximately $0.7 million into a collateral account
related to one of the interest rate swaps. Refer to Note 14 in the
accompanying Notes to Consolidated Financial Statements in Item 8 for a more
detailed discussion of our derivative instruments and hedging
activities.
Distributions
We are
required to distribute 90% of our REIT taxable income (excluding capital gains)
on an annual basis in order to qualify as a REIT for federal income tax
purposes. Distributions to common stockholders are at the discretion
of the Board of Directors. We may use borrowings under our secured revolving
credit facility to fund distributions. The Board of Directors
considers a number of factors when determining distribution levels, including
market factors and our Company’s performance in addition to REIT
requirements.
On
January 29, 2010, we declared a fourth quarter 2009 distribution per share of
$0.3375, which was paid on February 26, 2010 to all common stockholders of
record as of February 15, 2010. At the same time, the Operating
Partnership paid an equivalent amount per unit to holders of Common Units, as
well as the quarterly cumulative preferential distribution to holders of Series
A Preferred Units.
Recurring
Capital Expenditures
Our
properties require periodic investments of capital for general capital
expenditures and improvements. Our policy is to capitalize costs
related to the acquisition, development, rehabilitation, construction, and
improvement of properties, including interest and certain internal personnel
costs related to the communities under rehabilitation and construction.
Capital improvements are costs that increase the value and extend the useful
life of an asset. Ordinary repair and maintenance costs that do not extend
the useful life of the asset are expensed as incurred. Recurring capital
expenditures represent non-incremental building improvements required to
maintain current revenues and typically include: appliances, carpeting and
flooring, HVAC equipment, kitchen/bath cabinets, new roofs, site improvements
and various exterior building improvements. Non-recurring capital
expenditures include expenditures that were taken into consideration when
underwriting the purchase of a property which were considered necessary to bring
the property up to “operating standard,” and incremental improvements that
include, among other items: community centers, new windows, and kitchen/bath
apartment upgrades. Additionally, we are required by certain of our
lenders to contribute amounts to reserves for capital repairs and improvements
at their mortgaged properties. These annual contributions may exceed
the amount of capital expenditures actually incurred in such year at such
properties.
Our
historical recurring capital expenditures at our wholly-owned properties are set
forth below:
|
|
As
of and for the Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Average
beds
|
|
|
47,223 |
|
|
|
45,069 |
|
|
|
19,125 |
|
Total
recurring capital expenditures
|
|
$ |
9,190 |
|
|
$ |
8,032 |
|
|
$ |
3,390 |
|
Average
per bed
|
|
$ |
195 |
|
|
$ |
178 |
|
|
$ |
177 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Development
Expenditures
Our
third-party and owned development activities have historically required us to
fund pre-development expenditures such as architectural fees, permits and
deposits. The closing and/or commencement of construction of these
development projects is subject to a number of risks such as our inability to
obtain financing on favorable terms and delays or refusals in obtaining
necessary zoning, land use, building, and other required governmental permits
and authorizations As such, we cannot always predict accurately the
liquidity needs of these activities. We frequently incur these
pre-development expenditures before a financing commitment and/or required
permits and authorizations have been obtained. Accordingly, we bear
the risk of the loss of these pre-development expenditures if financing cannot
ultimately be arranged on acceptable terms or we are unable to successfully
obtain the required permits and authorizations. Historically, our
third-party and owned development projects have been successfully structured and
financed; however, these developments have at times been delayed beyond the
period initially scheduled, causing revenue to be recognized in later
periods. As of December 31, 2009, we have deferred approximately $7.5
million in pre-development costs related to third-party and owned development
projects that have not yet commenced construction.
Indebtedness
As of
December 31, 2009, we had approximately $1,228.2 million of outstanding
consolidated indebtedness (excluding net unamortized debt discounts and debt
premiums of approximately $8.5 million and $3.8 million, respectively),
comprised of a $100.0 million balance on our senior secured term loan, $94.0
million balance on our secured agency facility, $950.1 million in mortgage and
construction loans secured by our wholly-owned properties, $32.7 million in
mortgage loans secured by two phases of an on-campus participating property, and
$51.4 million in bond issuances secured by three of our on-campus participating
properties. The weighted average interest rate on our consolidated
indebtedness as of December 31, 2009 was 5.06% per annum. As of
December 31, 2009, approximately 15.9% of our total consolidated indebtedness
was variable rate debt, comprised of our secured agency facility and the Vista
del Sol construction loan discussed below.
Wholly-Owned
Properties
The
weighted average interest rate of the $950.1 million of wholly-owned mortgage
and construction debt was 5.31% per annum as of December 31,
2009. Each of the mortgage loans is a non-recourse obligation subject
to customary exceptions. Each of these mortgages has a 30-year
amortization, and none are cross-defaulted or cross-collateralized to any other
indebtedness. The loans generally may not be prepaid prior to maturity; in
certain cases prepayment is allowed, subject to prepayment
penalties.
In August
2008, we completed the final stages of construction on Vista del Sol, an ACE
property. The development and construction of Vista del Sol was
partially financed with a $100.0 million construction loan. For each
borrowing we had the option of choosing the Prime rate or one-, two-, or
three-month LIBOR plus 1.45%. The interest rate was reduced to LIBOR
plus 1.20% in October 2009 upon the satisfaction of certain operations
hurdles. The loan requires payments of interest only during the term
of the loan and any accrued interest and outstanding borrowings become due on
the maturity date. In October 2009, we elected to exercise the first
of two extension options available to us, which extended the maturity date to
December 2010. As of December 31, 2009, the balance outstanding on
the construction loan totaled $100.0 million, bearing interest at a rate of
1.45% per annum.
In August
2008, we completed the final stages of construction on Villas at Chestnut Ridge,
an owned off-campus property. The development and construction of
Villas at Chestnut was partially financed with a $31.6 million construction
loan. For each borrowing we had the option of choosing the Prime rate
or one-, two-, three-, or six-month LIBOR plus 1.25%. The loan
required payments of interest only during the term of the loan and any accrued
interest and outstanding borrowings became due on the maturity
date. We extended the term of the loan to August 4, 2009, at which
time we paid off the outstanding balance.
On-Campus
Participating Properties
Three of
our on-campus participating properties are 100% financed with $51.4 million of
outstanding project-based taxable bonds. Under the terms of these
financings, one of our special purpose subsidiaries publicly issued three series
of taxable bonds and loaned the proceeds to three special purpose subsidiaries
that each hold a separate leasehold interest. Although a default in
payment by these special purpose subsidiaries could result in a default under
one or more series of bonds, the indebtedness of any of these special purpose
subsidiaries is not cross-defaulted or cross-collateralized with indebtedness of
the Company, the Operating Partnership or other special purpose
subsidiaries. Repayment of principal and interest on these bonds is
insured by MBIA, Inc. The loans encumbering the leasehold interests
are non-recourse, subject to customary exceptions.
Cullen
Oaks Phase I and Phase II loans are currently encumbered by mortgage loans with
balances as of December 31, 2009 of approximately $16.3 million and $16.4
million, respectively. In February 2007, we extended the maturity
date of these loans to February 2014. The loans bear interest at a
rate of LIBOR plus 1.35% and required payments of interest only through May 2008
and monthly payments of principal and interest from May 2008 through the
maturity date. In connection with these loan extensions, we
terminated the existing interest rate swap agreement on the Cullen Oaks Phase I
loan and entered into a new interest rate swap agreement effective February 15,
2007 through February 15, 2014, that is designated to hedge our exposure to
fluctuations on interest payments attributed to changes in interest rates
associated with payments on the Cullen Oaks Phase I and Phase II
loans. Under the terms of the interest rate swap agreement, we pay a
fixed rate of 6.69% per annum and receive a floating rate of LIBOR plus
1.35%. Pursuant to the Leases, in the event the leasehold estate does
not achieve Financial Break Even (defined as revenues less operating expenses,
excluding management fees, less debt service), the applicable Lessor would be
required to make a rental payment, also known as the Contingent Payment,
sufficient to achieve Financial Break Even. The Contingent Payment
provision remains in effect until such time as any financing placed on the
facilities would receive an investment grade rating without the Contingent
Payment provision. In the event that the Lessor is required to make a
Contingent Payment, future net cash flow distributions would be first applied to
repay such Contingent Payments and then to unpaid management fees prior to
normal distributions. We have guaranteed payment of this property’s
indebtedness.
The
weighted average interest rate of the indebtedness encumbering our on-campus
participating properties was 7.18% at December 31, 2009.
Off
Balance Sheet Items
As
discussed in Note 17 in the accompanying Notes to Consolidated Financial
Statements contained in Item 1 herein, we hold a 10% equity interest in two
unconsolidated joint ventures with mortgage debt outstanding of approximately
$330.4 million as of December 31, 2009. Our Operating Partnership
serves as non-recourse, carve-out guarantor of this debt, which means we
are liable to the lender for any loss, damage, cost, expense, liability, claim
or other obligation incurred by the lender arising out of or in connection with
certain non-recourse exceptions in connection with the debt. Pursuant
to the limited liability company agreements of the joint ventures, the
joint ventures agreed to indemnify, defend and hold harmless the Operating
Partnership with respect to such obligations, except to the extent such
obligations were caused by the willful misconduct, gross negligence, fraud or
bad faith of the Operating Partnership or its employees, agents or
affiliates.
Contractual
Obligations
The
following table summarizes our contractual obligations as of December 31,
2009:
|
|
Total
|
|
|
2010
|
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
Thereafter
|
|
Long-term
debt (1)
|
|
$ |
1,469,074 |
|
|
$ |
254,498 |
(2) |
|
|
$ |
253,644 |
|
|
$ |
124,243 |
|
|
$ |
118,870 |
|
|
$ |
249,258 |
|
|
$ |
468,561 |
|
Operating
leases
(3)
|
|
|
45,239 |
|
|
|
1,902 |
|
|
|
|
1,530 |
|
|
|
1,531 |
|
|
|
771 |
|
|
|
661 |
|
|
|
38,844 |
|
Capital
leases
|
|
|
2,565 |
|
|
|
1,053 |
|
|
|
|
826 |
|
|
|
439 |
|
|
|
148 |
|
|
|
99 |
|
|
|
- |
|
|
|
$ |
1,516,878 |
|
|
$ |
257,453 |
|
|
|
$ |
256,000 |
|
|
$ |
126,213 |
|
|
$ |
119,789 |
|
|
$ |
250,018 |
|
|
$ |
507,405 |
|
(1)
|
Long-term
debt obligations reflect the payment of both principal and
interest. For long-term obligations with a variable interest
rate, the rate in effect at December 31, 2009 was assumed to remain
constant over all periods
presented.
|
(2)
|
Assumes
we do not exercise the extension option available to us on our $100
million Vista del Sol construction loan, which is more fully discussed in
Note 11 in the accompanying Notes to Consolidated Financial Statements
contained in Item 8 herein.
|
(3)
|
Includes
minimum annual lease payments under the ground/facility leases for
University Village at TU, University Centre, Vista del Sol and Barrett
Honors College.
|
Funds
From Operations
As
defined by NAREIT, FFO represents income (loss) before allocation to
noncontrolling interests (computed in accordance with GAAP), excluding gains (or
losses) from sales of property, plus real estate related depreciation and
amortization (excluding amortization of loan origination costs) 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, many of which present
FFO when reporting their results. FFO is intended to exclude GAAP historical
cost depreciation and amortization of real estate and related assets, which
assumes that the value of real estate diminishes ratably over time.
Historically, however, real estate values have risen or fallen with market
conditions. Because FFO excludes depreciation and amortization unique to real
estate, gains and losses from property dispositions and extraordinary items, it
provides a performance measure that, when compared year over year, reflects the
impact to operations from trends in occupancy rates, rental rates, operating
costs, development activities and interest costs, providing perspective not
immediately apparent from net income.
We
compute FFO in accordance with standards established by the Board of Governors
of NAREIT in its March 1995 White Paper (as amended in November 1999 and April
2002), which may differ from the methodology for calculating FFO utilized by
other equity REITs and, accordingly, may not be comparable to such other REITs.
Further, FFO does not represent amounts available for management’s discretionary
use because of needed capital replacement or expansion, debt service obligations
or other commitments and uncertainties. FFO should not be considered as an
alternative to net income (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 is it
indicative of funds available to fund our cash needs, including our ability to
pay dividends or make distributions.
The
following table presents a reconciliation of our FFO to our net loss
attributable to common shareholders:
|
|
Year
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Net
loss attributable to common shareholders
|
|
$ |
(12,840 |
) |
|
$ |
(13,055 |
) |
|
$ |
(1,686 |
) |
Noncontrolling
interests
|
|
|
380 |
|
|
|
236 |
|
|
|
255 |
|
Loss
from disposition of real estate
|
|
|
9,358 |
|
|
|
- |
|
|
|
- |
|
Loss
from unconsolidated joint ventures
|
|
|
2,073 |
|
|
|
1,619 |
|
|
|
108 |
|
FFO
from unconsolidated joint ventures (1)
|
|
|
246 |
|
|
|
(487 |
) |
|
|
(108 |
) |
Real
estate related depreciation and amortization
|
|
|
75,814 |
|
|
|
56,459 |
|
|
|
29,824 |
|
Funds
from operations (“FFO”) (2)
|
|
$ |
75,031 |
|
|
$ |
44,772 |
|
|
$ |
28,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO
per share – diluted (2)
|
|
$ |
1.49 |
|
|
$ |
1.16 |
|
|
$ |
1.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding - diluted
|
|
|
50,451,767 |
|
|
|
38,595,230 |
|
|
|
26,266,836 |
|
|
(1)
|
Represents
our share of the FFO from three joint ventures in which we are a
noncontrolling partner. Includes the Hampton Roads Military
Housing joint venture in which we have a minimal economic interest as well
as our 10% noncontrolling interest in two joint ventures formed or assumed
as part of the company’s acquisition of
GMH.
|
|
(2)
|
During
the year ended December 31, 2007, we recorded a compensation charge and
related tax impact of approximately $10.9 million, or $0.42 per fully
diluted share, related to the 2004 Outperformance Bonus
Plan. Excluding this compensation charge and related tax
impact, FFO for the year ended December 31, 2007 would have been $39.3
million, or $1.50 per fully diluted share. For a detailed
discussion of the 2004 Outperformance Bonus Plan, refer to Note 12 in the
accompanying Notes to Consolidated Financial Statements contained in Item
8 herein.
|
While our
on-campus participating properties contributed $22.7 million, $22.0 million and
$21.0 million to our revenues for the years ended December 31, 2009, 2008, and
2007, respectively, under our participating ground leases, we and the
participating university systems each receive 50% of the properties’ net cash
available for distribution after payment of operating expenses, debt service
(which includes significant amounts towards repayment of principal) and capital
expenditures. A substantial portion of our revenues attributable to these
properties is reflective of cash that is required to be used for capital
expenditures and for the amortization of applicable property indebtedness. These
amounts do not increase our economic interest in these properties or otherwise
benefit us since our interest in the properties terminates upon the repayment of
the applicable property indebtedness.
As noted
above, FFO excludes GAAP historical cost depreciation and amortization of real
estate and related assets because these GAAP items assume that the value of real
estate diminishes over time. However, unlike the ownership of our owned
off-campus properties, the unique features of our ownership interest in our
on-campus participating properties cause the value of these properties to
diminish over time. For example, since the ground/facility leases under which we
operate the participating properties require the reinvestment from operations of
specified amounts for capital expenditures and for the repayment of debt while
our interest in these properties terminates upon the repayment of the debt, such
capital expenditures do not increase the value of the property to us and
mortgage debt amortization only increases the equity of the ground lessor.
Accordingly, when considering our FFO, we believe it is also a meaningful
measure of our performance to modify FFO to exclude the operations of our
on-campus participating properties and to consider their impact on performance
by including only that portion of our revenues from those properties that are
reflective of our share of net cash flow and the management fees that we
receive, both of which increase and decrease with the operating measure of the
properties, a measure referred to herein as FFOM.
Funds
From Operations—Modified (“FFOM”):
|
|
Year
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Funds
from operations
|
|
$ |
75,031 |
|
|
$ |
44,772 |
|
|
$ |
28,393 |
|
Elimination
of operations of on-campus participating properties and
unconsolidated joint venture:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income from on-campus participating properties
|
|
|
(1,319 |
) |
|
|
(101 |
) |
|
|
(325 |
) |
Amortization
of investment in on-campus participating Properties
|
|
|
(4,350 |
) |
|
|
(4,322 |
) |
|
|
(4,263 |
) |
FFO
from Hampton Roads unconsolidated joint venture (1)
|
|
|
(288 |
) |
|
|
419 |
|
|
|
108 |
|
|
|
|
69,074 |
|
|
|
40,768 |
|
|
|
23,913 |
|
Modifications
to reflect operational performance of on-campus participating
properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
Our
share of net cash flow (2)
|
|
|
979 |
|
|
|
1,409 |
|
|
|
1,398 |
|
Management
fees
|
|
|
1,042 |
|
|
|
1,006 |
|
|
|
973 |
|
Impact
of on-campus participating properties
|
|
|
2,021 |
|
|
|
2,415 |
|
|
|
2,371 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elimination
of our share of impairment charges recorded for unconsolidated
joint ventures (3)
|
|
|
464 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds
from operations – modified (“FFOM”) (4)
|
|
$ |
71,559 |
|
|
$ |
43,183 |
|
|
$ |
26,284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFOM per share –
diluted (4)
|
|
$ |
1.42 |
|
|
$ |
1.12 |
|
|
$ |
1.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding - diluted
|
|
|
50,451,767 |
|
|
|
38,595,230 |
|
|
|
26,266,836 |
|
(1)
|
Our
share of the FFO from the Hampton Roads Military Housing unconsolidated
joint venture is excluded from the calculation of the FFOM, as management
believes this amount does not accurately reflect the company’s
participation in the economics of this
transaction.
|
(2)
|
50%
of the properties’ net cash available for distribution after payment of
operating expenses, debt service (including repayment of principal) and
capital expenditures. Amounts represent actual cash received
for the year-to-date periods and amounts accrued for the interim
periods. As a result of using accrual-based results in interim
periods and cash-based results for year-to-date periods, the sum of
reported interim results may not agree to annual cash
received.
|
(3)
|
Represents
our share of impairment charges recorded in the third quarter 2009 for two
properties owned through our unconsolidated Fidelity Joint
Ventures.
|
(4)
|
During
the year ended December 31, 2007, we recorded a compensation charge and
related tax impact of approximately $10.9 million, or $0.42 per fully
diluted share, related to the 2004 Outperformance Bonus
Plan. Excluding this compensation charge and related tax
impact, FFOM for the year ended December 31, 2007 would have been $37.2
million, or $1.42 per fully diluted share. For a detailed
discussion of the 2004 Outperformance Bonus Plan, refer to Note 12 in the
accompanying Notes to Consolidated Financial Statements contained in Item
8 herein.
|
This
narrower measure of performance measures our profitability for these properties
in a manner that is similar to the measure of our profitability from our
services business where we similarly incur no initial or ongoing capital
investment in a property and derive only consequential benefits from capital
expenditures and debt amortization. We believe, however, that this narrower
measure of performance is inappropriate in traditional real estate ownership
structures where debt amortization and capital expenditures enhance the property
owner’s long-term profitability from its investment.
Our FFOM
may have limitations as an analytical tool because it reflects the unique
contractual calculation of net cash flow from our on-campus participating
properties, which is different from that of our off campus owned
properties. Additionally, FFOM reflects features of our ownership
interests in our on-campus participating properties that are unique to us.
Companies that are considered to be in our industry may not have similar
ownership structures; and therefore those companies may not calculate a FFOM in
the same manner that we do, or at all, limiting its usefulness as a comparative
measure. We compensate for these limitations by relying primarily on our GAAP
and FFO results and using our modified FFO only supplementally.
Inflation
Our
leases do not typically provide for rent escalations. However, they typically do
not have terms that extend beyond 12 months. Accordingly, although on a short
term basis we would be required to bear the impact of rising costs resulting
from inflation, we have the opportunity to raise rental rates at least annually
to offset such rising costs. However, a weak economic environment or declining
student enrollment at our principal universities may limit our ability to raise
rental rates.
Item
7A. Quantitative and Qualitative Disclosures About Market
Risk
We use
fixed and floating rate debt to finance acquisitions, developments and maturing
debt. These borrowings expose us to market risk related to changes in
interest rates. For fixed rate debt, interest rate changes affect the
fair market value but do not impact net income to common stockholders or cash
flows. Conversely, for floating rate debt, interest rate changes generally do
not affect the fair market value but do impact net income to common stockholders
and cash flows, assuming other factors are held constant.
At
December 31, 2009 and 2008 we had fixed rate debt of $882.8 million and $988.8
million, respectively (excluding net unamortized debt discounts and debt
premiums). Holding other variables constant (such as debt levels), a
one percentage point increase in interest rates (100 basis points) would cause a
$32.5 million and $39.5 million decline in the fair value of our fixed rate debt
as of December 31, 2009 and 2008, respectively. Conversely, a one
percentage point decrease in interest rates would cause a $34.2 million and
$41.8 million increase in the fair value of our fixed rate debt as of December
31, 2009 and 2008, respectively. Due to the structure of our floating
rate debt and interest rate protection instruments, the impact of a one
percentage point increase or decrease in interest rates on our net income to
common stockholders and cash flows would not be significant at December 31, 2009
or 2008.
All of
our outstanding indebtedness is effectively fixed rate except for our secured
revolving credit facilities and our Vista del Sol construction
loan. Our secured agency facility had an outstanding balance of $94.0
million at December 31, 2009 and bears interest at one- or three-month LIBOR
plus a spread that varies based on the debt service ratio of the Collateral
Pool. The Vista del Sol construction loan had an outstanding balance
of $100.0 million at December 31, 2009 and bears interest at the lender’s Prime
rate or LIBOR plus 1.20%, at our election. We have in place two $50.0
million interest rate swap agreements, designated as cash flow hedges, which
effectively fix the interest rate on the outstanding balance of the senior
secured term loan at 3.55% through maturity in May 2011. In addition,
we have in place an interest rate swap agreement, designated as a cash flow
hedge, which effectively fixes the interest rate on the outstanding balance of
the Cullen Oaks Phase I and Phase II mortgage loans at 6.69% through maturity in
2014. We anticipate incurring additional variable rate indebtedness
in the future, including draws under our secured revolving credit
facilities. We may in the future use derivative financial instruments
to manage, or hedge, interest rate risks related to such variable rate
borrowings. We do not, and do not expect to, use derivatives for
trading or speculative purposes, and we expect to enter into contracts only with
major financial institutions.
Item
8. Financial Statements and Supplementary Data
The
information required herein is included as set forth in Item 15 (a) – Financial
Statements.
Item
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not
applicable.
Item
9A. Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
We have
adopted and maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our Exchange Act reports is
recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission’s rules and forms and that
such information is accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate, to
allow for timely decisions regarding required disclosure. In designing and
evaluating the disclosure controls and procedures, management recognizes that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management is required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
As
required by SEC Rule 13a-15(b), we have carried out an evaluation, under
the supervision of and with the participation of management, including our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures as of the end of
the period covered by this report. Based on the foregoing, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures for the period covered by this report were effective.
There has
been no change in our internal control over financial reporting during our most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
Management’s
Annual Report on Internal Control over Financial Reporting
The
management of American Campus Communities, Inc. is responsible for establishing
and maintaining adequate internal control over financial reporting. We have
designed our internal control over financial reporting to provide reasonable
assurance that our published financial statements are fairly presented, in all
material respects, in conformity with generally accepted accounting
principles.
Our
management is required by paragraph (c) of Rule 13a-15 of the
Securities Exchange Act of 1934, as amended, to assess the effectiveness of our
internal control over financial reporting as of the end of each fiscal year. In
making this assessment, our management used the Internal Control — Integrated
Framework issued in July 1994 by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”).
Our
management conducted the required assessment of the effectiveness of our
internal control over financial reporting as of December 31, 2009. Based upon
this assessment, our management believes that our internal control over
financial reporting is effective as of December 31, 2009. Ernst &
Young LLP, an independent registered public accounting firm, has issued an
attestation report regarding the effectiveness of our internal control over
financial reporting, which is included herein.
PART
III
Item
10. Directors, Executive Officers and Corporate
Governance
Information
with respect to this Item 10 is incorporated by reference from our Proxy
Statement, which we intend to file on or before March 26, 2010 in
connection with the Annual Meeting of Stockholders to be held May 6,
2010.
Item
11. Executive Compensation
Information
with respect to this Item 11 is incorporated by reference from our Proxy
Statement, which we intend to file on or before March 26, 2010 in
connection with the Annual Meeting of Stockholders to be held May 6,
2010.
Item
12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
Information
with respect to this Item 12 is incorporated by reference from our Proxy
Statement, which we intend to file on or before March 26, 2010 in
connection with the Annual Meeting of Stockholders to be held May 6,
2010.
Item
13. Certain Relationships, Related Transactions and Director
Independence
Information
with respect to this Item 13 is incorporated by reference from our Proxy
Statement, which we intend to file on or before March 26, 2010 in
connection with the Annual Meeting of Stockholders to be held May 6,
2010.
Item
14. Principal Accounting Fees and Services
Information
with respect to this Item 14 is incorporated by reference from our Proxy
Statement, which we intend to file on or before March 26, 2010 in
connection with the Annual Meeting of Stockholders to be held May 6,
2010.
PART
IV
Item
15. Exhibits and Financial Statement Schedules
(a) Financial
Statements
The
following consolidated financial information is included as a separate section
of this Annual Report on Form 10-K:
|
Page
No.
|
Report
of Independent Registered Public Accounting Firm – Internal Control over
Financial Reporting
|
F-1
|
Report
of Independent Registered Public Accounting Firm - Audit
|
F-2
|
Consolidated
Balance Sheets as of December 31, 2009 and December 31,
2008
|
F-3
|
Consolidated
Statements of Operations for the years ended December 31, 2009, 2008 and
2007
|
F-4
|
Consolidated
Statements of Changes in Equity for the years ended December 31, 2009,
2008 and 2007
|
F-5
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2009, 2008 and
2007
|
F-6
|
Notes
to Consolidated Financial Statements
|
F-7
|
(b) Exhibits
Exhibit
Number
|
|
Description
of Document
|
|
2.1
|
|
Agreement
and Plan of Merger, dated as of February 11, 2008, among GMH Communities
Trust, GMH Communities, Inc., GMH Communities, LP, American Campus
Communities, Inc., American Campus Communities Operating Partnership LP,
American Campus Communities Acquisition LLC and American Campus
Communities Acquisition Limited Partnership. Incorporated by
reference to Exhibit 99.1 to Current Report on Form 8-K of American Campus
Communities, Inc. (File No. 001-32265) filed on February 14,
2008.
|
|
|
|
3.1
|
|
Articles
of Amendment and Restatement of American Campus Communities,
Inc. Incorporated by reference to Exhibit 3.1 to the
Registration Statement on Form S-11 (Registration No. 333-114813) of
American Campus Communities, Inc.
|
|
|
|
3.2
|
|
Bylaws
of American Campus Communities, Inc. Incorporated by reference
to Exhibit 3.2 to the Registration Statement on Form S-11 (Registration
No. 333-114813) of American Campus Communities, Inc.
|
|
|
|
4.1
|
|
Form
of Certificate for Common Stock of American Campus Communities,
Inc. Incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-11 (Registration No. 333-114813) of
American Campus Communities, Inc.
|
|
|
|
10.1
|
|
Form
of Amended and Restated Partnership Agreement of American Campus
Communities Operating Partnership LP. Incorporated by reference
to Exhibit 10.1 to the Registration Statement on Form S-11 (Registration
No. 333-114813) of American Campus Communities, Inc.
|
|
|
|
10.2
|
|
Form
of First Amendment to Amended and Restated Agreement of Limited
Partnership of American Campus Communities Operating Partnership LP, dated
as of March 1, 2006, between American Campus Communities Holdings LLC and
those persons who have executed such amendment as limited
partners. Incorporated by reference to Exhibit 99.2 to Current
Report on Form 8-K of American Campus Communities, Inc. (File No.
001-32265) filed on March 7, 2006.
|
|
|
|
10.3*
|
|
American
Campus Communities, Inc. 2004 Incentive Award
Plan. Incorporated by reference to Exhibit 10.2 to the
Registration Statement on Form S-11 (Registration No. 333-114813) of
American Campus Communities, Inc.
|
|
|
|
10.4*
|
|
Amendment
No. 1 to American Campus Communities, Inc. 2004 Incentive Award
Plan. Incorporated by reference to Exhibit 99.7 to Current
Report on Form 8-K of American Campus Communities, Inc. (File No.
001-32265) filed on November 5, 2007.
|
|
|
|
10.5*
|
|
Amendment
No. 2 to American Campus Communities, Inc. 2004 Incentive Award
Plan. Incorporated by reference to Exhibit 99.1 to Current
Report on Form 8-K of American Campus Communities, Inc. (File No.
001-32265) filed on March 11, 2008.
|
10.6
|
|
American
Campus Communities, Inc. 2004 Outperformance Bonus
Plan. Incorporated by reference to Exhibit 10.3 to the
Registration Statement on Form S-11 (Registration No. 333-114813) of
American Campus Communities, Inc.
|
|
|
|
10.7
|
|
Form
of PIU Grant Notice (including Registration
Rights). Incorporated by reference to Exhibit 10.4 to the
Registration Statement on Form S-11 (Registration No. 333-114813) of
American Campus Communities, Inc.
|
|
|
|
10.8
|
|
Form
of PIU Grant Notice (including Registration Rights), dated as of August
20, 2007. Incorporated by reference to Exhibit 99.1 to Current
Report on Form 8-K of American Campus Communities, Inc. (File No.
001-32265) filed on August 23, 2007.
|
|
|
|
10.9
|
|
Form
of Indemnification Agreement between American Campus Communities, Inc. and
certain of its directors and officers. Incorporated by
reference to Exhibit 10.5 to the Registration Statement on Form S-11
(Registration No. 333-114813) of American Campus Communities,
Inc.
|
|
|
|
10.10
|
|
Form
of Employment Agreement between American Campus Communities, Inc. and
William C. Bayless, Jr. Incorporated by reference to Exhibit
10.6 to the Registration Statement on Form S-11 (Registration No.
333-114813) of American Campus Communities, Inc.
|
|
|
|
10.11
|
|
Amendment
No. 1 to Employment Agreement, dated as of April 28, 2005, between
American Campus Communities, Inc. and William C. Bayless,
Jr. Incorporated by reference to Exhibit 99.6 to Current Report
on Form 8-K of American Campus Communities, Inc. (File No. 001-32265)
filed on May 3, 2005.
|
|
|
|
10.12
|
|
Amendment
No. 2 to Employment Agreement, dated as of November 1, 2007, between
American Campus Communities, Inc. and William C. Bayless,
Jr. Incorporated by reference to Exhibit 99.3 to Current Report
on Form 8-K of American Campus Communities, Inc. (File No. 001-32265)
filed on November 5, 2007.
|
|
|
|
10.13
|
|
Form
of Employment Agreement between American Campus Communities, Inc. and
Brian B. Nickel. Incorporated by reference to Exhibit 10.7 to
the Registration Statement on Form S-11 (Registration No. 333-114813) of
American Campus Communities, Inc.
|
|
|
|
10.14
|
|
Amendment
No. 1 to Employment Agreement, dated as of April 28, 2005, between
American Campus Communities, Inc. and Brian B.
Nickel. Incorporated by reference to Exhibit 99.7 to Current
Report on Form 8-K of American Campus Communities, Inc. (File No.
001-32265) filed on May 3, 2005.
|
|
|
|
10.15
|
|
Amendment
No. 2 to Employment Agreement, dated as of November 1, 2007, between
American Campus Communities, Inc. and Brian B.
Nickel. Incorporated by reference to Exhibit 99.4 to Current
Report on Form 8-K of American Campus Communities, Inc. (File No.
001-32265) filed on November 5, 2007.
|
|
|
|
10.16
|
|
Separation
Agreement, dated as of November 5, 2009, between American Campus
Communities, Inc. and Brian B. Nickel. Incorporated by
reference to Exhibit 99.41to Current Report on Form 8-K of American Campus
Communities, Inc. (File No. 001-32265) filed on November 5,
2009.
|
|
|
|
10.17
|
|
Employment
Agreement, dated as of April 18, 2005, between American Campus
Communities, Inc. and James C. Hopke. Incorporated by reference
to Exhibit 99.1 to Current Report on Form 8-K of American Campus
Communities, Inc. (File No. 001-32265) filed on May 3,
2005.
|
|
|
|
10.18
|
|
Amendment
No. 1 to Employment Agreement, dated as of November 1, 2007, between
American Campus Communities, Inc. and James C.
Hopke. Incorporated by reference to Exhibit 99.6 to Current
Report on Form 8-K of American Campus Communities, Inc. (File No.
001-32265) filed on November 5, 2007.
|
|
|
|
10.19
|
|
Employment
Agreement, dated as of April 28, 2005, between American Campus
Communities, Inc. and Greg A. Dowell. Incorporated by reference
to Exhibit 99.2 to Current Report on Form 8-K of American Campus
Communities, Inc. (File No. 001-32265) filed on May 3,
2005.
|
|
|
|
10.20
|
|
Amendment
No. 1 to Employment Agreement, dated as of November 1, 2007, between
American Campus Communities, Inc. and Greg A.
Dowell. Incorporated by reference to Exhibit 99.5 to Current
Report on Form 8-K of American Campus Communities, Inc. (File No.
001-32265) filed on November 5, 2007.
|
10.21
|
|
Employment
Agreement, dated as of November 1, 2007, between American Campus
Communities, Inc. and Jonathan A. Graf. Incorporated by
reference to Exhibit 99.1 to Current Report on Form 8-K of American Campus
Communities, Inc. (File No. 001-32265) filed on November 5,
2007.
|
|
|
|
10.22
|
|
Form
of Confidentiality and Noncompetition Agreement. Incorporated
by reference to Exhibit 10.9 to the Registration Statement on Form S-11
(Registration No. 333-114813) of American Campus Communities,
Inc.
|
|
|
|
10.23
|
|
Form
of Second Amended and Restated Credit Agreement, dated as of August 14,
2009, among American Campus Communities Operating Partnership LP, as
Borrower, American Campus Communities, Inc., as Parent
Guarantor, the
Subsidiary Guarantors listed on
the signature pages thereto, the banks,
financial institutions and other institutional lenders listed on the
signature pages thereto as Initial Lenders, KeyBank
National Association, as the initial issuer of
Letters of Credit, Swing Line Bank and Administrative Agent,
JPMorgan Chase Bank, N.A. and Bank of America, N.A., as Co-Syndication
Agents, Deutsche Bank Trust Company Americas and U.S. Bank National
Association, as Co-Documentation Agents, and KeyBank Capital Markets Inc.,
as Lead Arranger. Incorporated by reference to Exhibit 99.1 to
Current Report on Form 8-K of American Campus Communities, Inc. (File No.
001-32265) filed on August 14, 2009.
|
|
|
|
10.24
|
|
Form
of Senior Secured Term Loan Agreement among American Campus Communities,
Inc., as Parent Guarantor, American Campus Communities Operating
Partnership LP, as Borrower, the Subsidiary Guarantors named therein, the
Initial Lenders named therein, KeyBank National Association, as
Administrative Agent, and KeyBanc Capital Markets Inc., as Lead
Arranger. Incorporated by reference to Exhibit 99.1 to Current
Report on Form 8-K of American Campus Communities, Inc. (File No.
001-32265) filed on May 29, 2008.
|
|
|
|
10.25
|
|
Form
of Contribution and Sale Agreement, dated as of December 2, 2005, among
Royal Tallahassee Partnership, Royal Tallahassee Partnership II Limited
Partnership, Royal Tallahassee III Partnership, Royal Gainesville Limited
Partnership, Royal Orlando Limited Partnership, Royal Lexington Limited
Partnership, Royal Tucson Entrada Real Limited Partnership, Royal
Texas-Tennessee Limited Partnership, Royal Texas-Tennessee II Limited
Partnership, Raiders Pass Phase II Limited Partnership, Royal San Marcos
Limited Partnership and Royal San Antonio Limited Partnership, on the one
hand, and American Campus Communities, Inc. and American Campus
Communities Operating Partnership LP, on the other
hand. Incorporated by reference to Exhibit 99.1 to Current
Report on Form 8-K of American Campus Communities, Inc. (File No.
001-32265) filed on February 13, 2006.
|
|
|
|
10.26
|
|
Form
of First Amendment to Contribution and Sale Agreement, dated as of
December 16, 2005, among Royal Tallahassee Partnership, Royal Tallahassee
Partnership II Limited Partnership, Royal Tallahassee III Partnership,
Royal Gainesville Limited Partnership, Royal Orlando Limited Partnership,
Royal Lexington Limited Partnership, Royal Tucson Entrada Real Limited
Partnership, Royal Texas-Tennessee Limited Partnership, Royal
Texas-Tennessee II Limited Partnership, Raiders Pass Phase II Limited
Partnership, Royal San Marcos Limited Partnership and Royal San Antonio
Limited Partnership, on the one hand, and American Campus Communities,
Inc. and American Campus Communities Operating Partnership LP, on the
other hand. Incorporated by reference to Exhibit 99.2 to
Current Report on Form 8-K of American Campus Communities, Inc. (File No.
001-32265) filed on February 13, 2006.
|
|
|
|
10.27
|
|
Form
of Second Amendment to Contribution and Sale Agreement, dated as of
January 30, 2006, among Royal Tallahassee Partnership, Royal Tallahassee
Partnership II Limited Partnership, Royal Tallahassee III Partnership,
Royal Gainesville Limited Partnership, Royal Orlando Limited Partnership,
Royal Lexington Limited Partnership, Royal Tucson Entrada Real Limited
Partnership, Royal Texas-Tennessee Limited Partnership, Royal
Texas-Tennessee II Limited Partnership, Raiders Pass Phase II Limited
Partnership, Royal San Marcos Limited Partnership and Royal San Antonio
Limited Partnership, on the one hand, and American Campus Communities,
Inc. and American Campus Communities Operating Partnership LP, on the
other hand. Incorporated by reference to Exhibit 99.3 to
Current Report on Form 8-K of American Campus Communities, Inc. (File No.
001-32265) filed on February 13, 2006.
|
|
|
|
10.28
|
|
Form
of Third Amendment to Contribution and Sale Agreement, dated as of
February 7, 2006, among Royal Tallahassee Partnership, Royal Tallahassee
Partnership II Limited Partnership, Royal Tallahassee III Partnership,
Royal Gainesville Limited Partnership, Royal Orlando Limited Partnership,
Royal Lexington Limited Partnership, Royal Tucson Entrada Real Limited
Partnership, Royal Texas-Tennessee Limited Partnership, Royal
Texas-Tennessee II Limited Partnership, Raiders Pass Phase II Limited
Partnership, Royal San Marcos Limited Partnership and Royal San Antonio
Limited Partnership, on the one hand, and American Campus Communities,
Inc. and American Campus Communities Operating Partnership LP, on the
other hand. Incorporated by reference to Exhibit 99.4 to
Current Report on Form 8-K of American Campus Communities, Inc. (File No.
001-32265) filed on February 13, 2006.
|
10.29
|
|
Form
of Fourth Amendment to Contribution and Sale Agreement, dated as of
February 8, 2006, among Royal Tallahassee Partnership, Royal Tallahassee
Partnership II Limited Partnership, Royal Tallahassee III Partnership,
Royal Gainesville Limited Partnership, Royal Orlando Limited Partnership,
Royal Lexington Limited Partnership, Royal Tucson Entrada Real Limited
Partnership, Royal Texas-Tennessee Limited Partnership, Royal
Texas-Tennessee II Limited Partnership, Raiders Pass Phase II Limited
Partnership, Royal San Marcos Limited Partnership and Royal San Antonio
Limited Partnership, on the one hand, and American Campus Communities,
Inc. and American Campus Communities Operating Partnership LP, on the
other hand. Incorporated by reference to Exhibit 99.5 to
Current Report on Form 8-K of American Campus Communities, Inc. (File No.
001-32265) filed on February 13, 2006.
|
|
|
|
10.30
|
|
Form
of Registration Rights and Lock-Up Agreement, dated as of March 1, 2006,
between American Campus Communities, Inc. and each of the persons who are
signatory thereto. Incorporated by reference to Exhibit 99.3 to
Current Report on Form 8-K of American Campus Communities, Inc. (File No.
001-32265) filed on March 7, 2006.
|
|
|
|
10.31
|
|
Form
of Tax Matters Agreement, dated as of March 1, 2006, among American Campus
Communities Operating Partnership LP, American Campus Communities, Inc.,
American Campus Communities Holdings LLC and each of the limited partners
of American Campus Communities Operating Partnership LP who have executed
a signature page thereto. Incorporated by reference to Exhibit
99.4 to Current Report on Form 8-K of American Campus Communities, Inc.
(File No. 001-32265) filed on March 7, 2006.
|
|
|
|
21.1
|
|
List
of Subsidiaries of the Registrant.
|
|
|
|
23.2
|
|
Consent
of Ernst & Young LLP.
|
|
|
|
31.1
|
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
|
|
31.2
|
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
|
|
32.1
|
|
Certification
of Chief Executive Officer Pursuant to 18 U. S. C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
|
|
32.2
|
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
* Indicates
management compensation plan.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
March
1, 2010 |
AMERICAN
CAMPUS COMMUNITIES, INC. |
|
|
|
|
|
By:
|
/s/
William C. Bayless, Jr. |
|
|
President
and Chief Executive Officer |
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
|
Name
|
|
|
|
Title
|
|
|
|
Date
|
|
|
|
|
|
|
/s/
William C. Bayless, Jr.
|
|
President,
Chief Executive Officer and Director (Principal Executive
Officer)
|
|
March
1, 2010
|
William
C. Bayless, Jr.
|
|
|
|
|
|
|
|
|
/s/
Brian B. Nickel
|
|
Senior
Executive Vice President, Chief Investment Officer, Secretary and
Director
|
|
March
1, 2010
|
Brian
B. Nickel
|
|
|
|
|
|
|
|
|
/s/
Jonathan A. Graf
|
|
Executive
Vice President, Chief Financial Officer and Treasurer (Principal Financial
Officer)
|
|
March
1, 2010
|
Jonathan
A. Graf
|
|
|
|
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|
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|
|
/s/
R.D. Burck
|
|
Chairman
of the Board of Directors
|
|
March
1, 2010
|
R.D.
Burck
|
|
|
|
|
|
|
|
|
|
/s/
G. Steven Dawson
|
|
Director
|
|
|
G.
Steven Dawson
|
|
|
|
March
1, 2010
|
|
|
|
|
|
/s/
Cydney Donnell
|
|
Director
|
|
|
Cydney
Donnell
|
|
|
|
March
1, 2010
|
|
|
|
|
|
/s/
Edward Lowenthal
|
|
Director
|
|
|
Edward
Lowenthal
|
|
|
|
March
1, 2010
|
|
|
|
|
|
/s/
Joseph Macchione
|
|
Director
|
|
|
Joseph
Macchione
|
|
|
|
March
1, 2010
|
|
|
|
|
|
/s/
Winston W. Walker
|
|
Director
|
|
|
Winston
W. Walker
|
|
|
|
March
1, 2010
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board
of Directors and Shareholders of
American
Campus Communities, Inc.
We have
audited American Campus Communities Inc.’s internal control over financial
reporting as of December 31, 2009, based on criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (the COSO criteria). American Campus Communities
Inc.’s management is responsible for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal
control over financial reporting included in the accompanying Management’s
Report on Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the company’s internal control over financial reporting
based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing
and evaluating the design and operating effectiveness of internal control based
on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial
statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
In our
opinion, American Campus Communities, Inc. and Subsidiaries maintained, in all
material respects, effective internal control over financial reporting as of
December 31, 2009, based on the COSO criteria.
We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of American
Campus Communities, Inc. and Subsidiaries as of December 31, 2009 and 2008,
and the related consolidated statements of operations, equity, and cash flows
for each of the three years in the period ended December 31, 2009 of
American Campus Communities, Inc. and Subsidiaries and our report dated March 1,
2010 expressed an unqualified opinion thereon.
/s/
Ernst & Young LLP
Austin,
Texas
March 1,
2010
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
Board of Directors and Shareholders of
American
Campus Communities, Inc.
We have
audited the accompanying consolidated balance sheets of American Campus
Communities, Inc. and Subsidiaries (the Company) as of December 31, 2009
and 2008, and the related consolidated statements of operations, equity and cash
flows for each of the three years in the period ended December 31, 2009.
These financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of American Campus
Communities, Inc. and Subsidiaries at December 31, 2009 and 2008 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2009, in conformity with U.S.
generally accepted accounting principles.
As
discussed in Note 3 to the consolidated financial statements, during 2009 the
Company changed its method of calculating and disclosing earnings per share as a
result of adopting new guidance applicable to the allocation of undistributed
earnings to participating securities. Additionally, as discussed in Note 9 to
the consolidated financial statements, during 2009 the Company changed its
method of disclosing noncontrolling interests as a result of adopting new
guidance requiring the disclosure of noncontrolling interests as a component of
shareholders’ equity.
We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the Company’s internal control over financial
reporting as of December 31, 2009, based on criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated March 1, 2010
expressed an unqualified opinion thereon.
/s/
Ernst & Young LLP
Austin,
Texas
March 1,
2010
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(in
thousands, except share and per share data)
|
|
December
31, 2009
|
|
|
December
31, 2008
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
in real estate:
|
|
|
|
|
|
|
Wholly-owned
properties, net
|
|
$ |
2,014,970 |
|
|
$ |
1,986,833 |
|
On-campus
participating properties, net
|
|
|
65,690 |
|
|
|
69,302 |
|
Investments
in real estate, net
|
|
|
2,080,660 |
|
|
|
2,056,135 |
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
66,093 |
|
|
|
25,600 |
|
Restricted
cash
|
|
|
29,899 |
|
|
|
32,558 |
|
Student
contracts receivable, net
|
|
|
5,381 |
|
|
|
5,185 |
|
Other
assets
|
|
|
52,948 |
|
|
|
64,431 |
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
2,234,981 |
|
|
$ |
2,183,909 |
|
|
|
|
|
|
|
|
|
|
Liabilities
and equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Secured
mortgage, construction and bond debt
|
|
$ |
1,029,455 |
|
|
$ |
1,162,221 |
|
Senior
secured term loan
|
|
|
100,000 |
|
|
|
100,000 |
|
Secured
revolving credit facility
|
|
|
- |
|
|
|
14,700 |
|
Secured
agency facility
|
|
|
94,000 |
|
|
|
- |
|
Accounts
payable and accrued expenses
|
|
|
26,543 |
|
|
|
35,440 |
|
Other
liabilities
|
|
|
45,487 |
|
|
|
56,052 |
|
Total
liabilities
|
|
|
1,295,485 |
|
|
|
1,368,413 |
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
|
|
36,722 |
|
|
|
26,286 |
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
American
Campus Communities, Inc. stockholders’ equity:
Common
stock, $.01 par value, 800,000,000 shares authorized, 52,203,893
and 42,354,283 shares issued and outstanding at December
31, 2009 and 2008, respectively
|
|
|
521 |
|
|
|
423 |
|
Additional
paid in capital
|
|
|
1,092,030 |
|
|
|
901,641 |
|
Accumulated
earnings and dividends
|
|
|
(189,165 |
) |
|
|
(111,828 |
) |
Accumulated
comprehensive loss
|
|
|
(4,356 |
) |
|
|
(5,117 |
) |
Total
American Campus Communities, Inc. stockholders’ equity
|
|
|
899,030 |
|
|
|
785,119 |
|
Noncontrolling
interests
|
|
|
3,744 |
|
|
|
4,091 |
|
Total
equity
|
|
|
902,774 |
|
|
|
789,210 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities and equity
|
|
$ |
2,234,981 |
|
|
$ |
2,183,909 |
|
See
accompanying notes to consolidated financial statements.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
(in
thousands, except share and per share data)
|
|
Year Ended December
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Wholly-owned
properties
|
|
$ |
271,938 |
|
|
$ |
194,701 |
|
|
$ |
116,286 |
|
On-campus
participating properties
|
|
|
22,727 |
|
|
|
22,042 |
|
|
|
20,966 |
|
Third-party
development services
|
|
|
5,015 |
|
|
|
7,922 |
|
|
|
5,490 |
|
Third-party
management services
|
|
|
8,795 |
|
|
|
6,578 |
|
|
|
2,821 |
|
Resident
services
|
|
|
1,115 |
|
|
|
2,336 |
|
|
|
1,572 |
|
Total
revenues
|
|
|
309,590 |
|
|
|
233,579 |
|
|
|
147,135 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly-owned
properties
|
|
|
132,965 |
|
|
|
101,804 |
|
|
|
55,155 |
|
On-campus
participating properties
|
|
|
10,200 |
|
|
|
10,771 |
|
|
|
9,379 |
|
Third-party
development and management services
|
|
|
11,250 |
|
|
|
11,123 |
|
|
|
5,708 |
|
General
and administrative
|
|
|
10,955 |
|
|
|
11,274 |
|
|
|
17,660 |
|
Depreciation
and amortization
|
|
|
76,201 |
|
|
|
56,853 |
|
|
|
30,444 |
|
Ground/facility
leases
|
|
|
2,107 |
|
|
|
1,778 |
|
|
|
1,622 |
|
Total
operating expenses
|
|
|
243,678 |
|
|
|
193,603 |
|
|
|
119,968 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
65,912 |
|
|
|
39,976 |
|
|
|
27,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating
income and (expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
120 |
|
|
|
1,131 |
|
|
|
1,477 |
|
Interest
expense
|
|
|
(62,747 |
) |
|
|
(49,497 |
) |
|
|
(27,871 |
) |
Amortization
of deferred financing costs
|
|
|
(3,466 |
) |
|
|
(2,563 |
) |
|
|
(1,340 |
) |
Loss
from unconsolidated joint ventures
|
|
|
(2,073 |
) |
|
|
(1,619 |
) |
|
|
(108 |
) |
Other
nonoperating income
|
|
|
402 |
|
|
|
486 |
|
|
|
- |
|
Total
nonoperating expenses
|
|
|
(67,764 |
) |
|
|
(52,062 |
) |
|
|
(27,842 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before income taxes and discontinued operations
|
|
|
(1,852 |
) |
|
|
(12,086 |
) |
|
|
(675 |
) |
Income
tax provision
|
|
|
(540 |
) |
|
|
(388 |
) |
|
|
(756 |
) |
Loss
from continuing operations
|
|
|
(2,392 |
) |
|
|
(12,474 |
) |
|
|
(1,431 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
attributable to discontinued operations
|
|
|
(710 |
) |
|
|
(345 |
) |
|
|
- |
|
Loss
from disposition of real estate
|
|
|
(9,358 |
) |
|
|
- |
|
|
|
- |
|
Total
discontinued operations
|
|
|
(10,068 |
) |
|
|
(345 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(12,460 |
) |
|
|
(12,819 |
) |
|
|
(1,431 |
) |
Income
attributable to noncontrolling interests
|
|
|
(380 |
) |
|
|
(236 |
) |
|
|
(255 |
) |
Net
loss attributable to common shareholders
|
|
$ |
(12,840 |
) |
|
$ |
(13,055 |
) |
|
$ |
(1,686 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share attributable to common shareholders –
Basic
and diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from continuing operations per share
|
|
$ |
(0.08 |
) |
|
$ |
(0.35 |
) |
|
$ |
(0.08 |
) |
Net
loss per share
|
|
$ |
(0.28 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
|
48,706,480 |
|
|
|
36,947,656 |
|
|
|
24,186,213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
declared per common share
|
|
$ |
1.35 |
|
|
$ |
1.35 |
|
|
$ |
1.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to consolidated financial statements.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY
(in
thousands, except share data)
|
|
Preferred Stock
|
|
|
Common Shares
|
|
|
Par
Value of
Common Shares
|
|
|
Additional Paid
in Capital
|
|
|
Accumulated Earnings
and Distributions
|
|
|
Accumulated Other Comprehensive Income
(Loss)
|
|
|
Noncontrolling Interests
|
|
|
Total
|
|
Equity,
December 31, 2006
|
|
$ |
- |
|
|
|
22,903,073 |
|
|
$ |
229 |
|
|
$ |
382,367 |
|
|
$ |
(13,533 |
) |
|
$ |
411 |
|
|
$ |
1,208 |
|
|
$ |
370,682 |
|
Net
proceeds from sale of common stock
|
|
|
- |
|
|
|
3,500,000 |
|
|
|
35 |
|
|
|
98,593 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
98,628 |
|
Issuance
of fully vested restricted stock units
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
160 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
160 |
|
Reclassification
of noncontrolling interests
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(22,292 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(22,292 |
) |
Amortization
of restricted stock awards
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,095 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,095 |
|
Vesting
of restricted stock awards
|
|
|
- |
|
|
|
22,102 |
|
|
|
- |
|
|
|
(262 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(262 |
) |
Distributions
to common and restricted stockholders
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(32,962 |
) |
|
|
- |
|
|
|
- |
|
|
|
(32,962 |
) |
Land
contribution by joint venture partner
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,756 |
|
|
|
2,756 |
|
Distributions
to joint venture partners
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(126 |
) |
|
|
(126 |
) |
Conversion
of common units to common stock
|
|
|
- |
|
|
|
850,316 |
|
|
|
9 |
|
|
|
18,684 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
18,693 |
|
Amortization
of gain on swap termination to earnings
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(211 |
) |
|
|
- |
|
|
|
(211 |
) |
Comprehensive
loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in fair value of interest rate swaps
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,075 |
) |
|
|
- |
|
|
|
(2,075 |
) |
Net
loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,686 |
) |
|
|
- |
|
|
|
303 |
|
|
|
(1,383 |
) |
Total
comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,458 |
) |
Equity,
December 31, 2007
|
|
|
- |
|
|
|
27,275,491 |
|
|
|
273 |
|
|
|
478,345 |
|
|
|
(48,181 |
) |
|
|
(1,875 |
) |
|
|
4,141 |
|
|
|
432,703 |
|
Net
proceeds from sale of common stock
|
|
|
- |
|
|
|
9,200,000 |
|
|
|
92 |
|
|
|
251,994 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
252,086 |
|
Common
stock consideration for GMH
|
|
|
- |
|
|
|
5,442,801 |
|
|
|
54 |
|
|
|
154,643 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
154,697 |
|
Issuance
of preferred stock
|
|
|
131 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
131 |
|
Redemption
of preferred stock
|
|
|
(131 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(131 |
) |
Reclassification
of noncontrolling interests
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,201 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,201 |
|
Amortization
of restricted stock awards
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,908 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,908 |
|
Vesting
of restricted stock awards
|
|
|
- |
|
|
|
44,409 |
|
|
|
- |
|
|
|
(147 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(147 |
) |
Distributions
to common, preferred and restricted stockholders
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(50,592 |
) |
|
|
- |
|
|
|
- |
|
|
|
(50,592 |
) |
Distributions
to joint venture partners
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(316 |
) |
|
|
(316 |
) |
Conversion
of common units to common stock
|
|
|
- |
|
|
|
391,582 |
|
|
|
4 |
|
|
|
7,697 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,701 |
|
Amortization
of gain on swap termination to earnings
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(211 |
) |
|
|
- |
|
|
|
(211 |
) |
Comprehensive
loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in fair value of interest rate swaps
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,031 |
) |
|
|
- |
|
|
|
(3,031 |
) |
Net
loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(13,055 |
) |
|
|
- |
|
|
|
266 |
|
|
|
(12,789 |
) |
Total
comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,820 |
) |
Equity,
December 31, 2008
|
|
|
- |
|
|
|
42,354,283 |
|
|
|
423 |
|
|
|
901,641 |
|
|
|
(111,828 |
) |
|
|
(5,117 |
) |
|
|
4,091 |
|
|
|
789,210 |
|
Net
proceeds from sale of common stock
|
|
|
- |
|
|
|
9,775,000 |
|
|
|
98 |
|
|
|
198,252 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
198,350 |
|
Reclassification
of noncontrolling interests
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(10,676 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(10,676 |
) |
Amortization
of restricted stock awards
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,709 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,709 |
|
Vesting
of restricted stock awards
|
|
|
- |
|
|
|
59,210 |
|
|
|
- |
|
|
|
(257 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(257 |
) |
Distributions
to common and restricted stockholders
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(64,497 |
) |
|
|
- |
|
|
|
- |
|
|
|
(64,497 |
) |
Distributions
to joint venture partners
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(840 |
) |
|
|
(840 |
) |
Conversion
of common units to common stock
|
|
|
- |
|
|
|
15,400 |
|
|
|
- |
|
|
|
361 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
361 |
|
Comprehensive
loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in fair value of interest rate swaps
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
761 |
|
|
|
- |
|
|
|
761 |
|
Net
loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(12,840 |
) |
|
|
- |
|
|
|
493 |
|
|
|
(12,347 |
) |
Total
comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,586 |
) |
Equity,
December 31, 2009
|
|
$ |
- |
|
|
|
52,203,893 |
|
|
$ |
521 |
|
|
$ |
1,092,030 |
|
|
$ |
(189,165 |
) |
|
$ |
(4,356 |
) |
|
$ |
3,744 |
|
|
$ |
902,774 |
|
See
accompanying notes to consolidated financial statements.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in
thousands)
|
|
Year Ended December
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Operating
activities
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to common shareholders
|
|
$ |
(12,840 |
) |
|
$ |
(13,055 |
) |
|
$ |
(1,686 |
) |
Adjustments
to reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from disposition of real estate
|
|
|
9,358 |
|
|
|
- |
|
|
|
- |
|
Income
attributable to noncontrolling interests
|
|
|
380 |
|
|
|
236 |
|
|
|
255 |
|
Depreciation
and amortization
|
|
|
77,348 |
|
|
|
57,555 |
|
|
|
30,444 |
|
Amortization
of deferred financing costs and debt premiums/discounts
|
|
|
3,430 |
|
|
|
1,734 |
|
|
|
(127 |
) |
Share-based
compensation
|
|
|
2,811 |
|
|
|
2,099 |
|
|
|
4,962 |
|
Loss
from unconsolidated joint ventures
|
|
|
2,073 |
|
|
|
1,619 |
|
|
|
108 |
|
Amortization
of gain on interest rate swap termination
|
|
|
- |
|
|
|
(211 |
) |
|
|
(211 |
) |
Income
tax provision
|
|
|
540 |
|
|
|
375 |
|
|
|
756 |
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
cash
|
|
|
2,561 |
|
|
|
(4,433 |
) |
|
|
(1,946 |
) |
Student
contracts receivable, net
|
|
|
(290 |
) |
|
|
(34 |
) |
|
|
(478 |
) |
Other
assets
|
|
|
3,359 |
|
|
|
(6,998 |
) |
|
|
(5,386 |
) |
Accounts
payable and accrued expenses
|
|
|
(9,387 |
) |
|
|
(3,177 |
) |
|
|
(222 |
) |
Other
liabilities
|
|
|
219 |
|
|
|
(2,823 |
) |
|
|
2,578 |
|
Net
cash provided by operating activities
|
|
|
79,562 |
|
|
|
32,887 |
|
|
|
29,047 |
|
Investing
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
proceeds from disposition of real estate
|
|
|
1,485 |
|
|
|
4,418 |
|
|
|
- |
|
Cash
paid for GMH acquisition
|
|
|
- |
|
|
|
(269,358 |
) |
|
|
- |
|
Cash
paid for property acquisitions
|
|
|
- |
|
|
|
(11,287 |
) |
|
|
(42,760 |
) |
Cash
paid for land acquisitions
|
|
|
(7,385 |
) |
|
|
(3,226 |
) |
|
|
(10,445 |
) |
Investments
in wholly-owned properties
|
|
|
(114,729 |
) |
|
|
(139,570 |
) |
|
|
(131,820 |
) |
Investments
in on-campus participating properties
|
|
|
(739 |
) |
|
|
(719 |
) |
|
|
(480 |
) |
Investments
in unconsolidated joint ventures
|
|
|
(401 |
) |
|
|
(10,610 |
) |
|
|
(1,600 |
) |
Purchase
of corporate furniture, fixtures and equipment
|
|
|
(606 |
) |
|
|
(2,178 |
) |
|
|
(486 |
) |
Distributions
received from unconsolidated joint ventures
|
|
|
250 |
|
|
|
120 |
|
|
|
- |
|
Net
cash used in investing activities
|
|
|
(122,125 |
) |
|
|
(432,410 |
) |
|
|
(187,591 |
) |
Financing
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from sale of common stock
|
|
|
207,719 |
|
|
|
264,500 |
|
|
|
99,015 |
|
Offering
costs
|
|
|
(9,369 |
) |
|
|
(12,249 |
) |
|
|
(243 |
) |
Proceeds
from sale of preferred stock
|
|
|
- |
|
|
|
131 |
|
|
|
- |
|
Redemption
of preferred stock
|
|
|
- |
|
|
|
(131 |
) |
|
|
- |
|
Pay-off
of mortgage and construction loans
|
|
|
(110,949 |
) |
|
|
(24,362 |
) |
|
|
(43,862 |
) |
Proceeds
from contribution of properties to joint venture
|
|
|
- |
|
|
|
74,368 |
|
|
|
- |
|
Proceeds
from secured term loan
|
|
|
- |
|
|
|
100,000 |
|
|
|
- |
|
Proceeds
from secured agency facility
|
|
|
94,000 |
|
|
|
- |
|
|
|
- |
|
Secured
revolving credit facility, net
|
|
|
(14,700 |
) |
|
|
5,100 |
|
|
|
9,600 |
|
Proceeds
from construction loans
|
|
|
5,334 |
|
|
|
81,167 |
|
|
|
66,128 |
|
Principal
payments on debt
|
|
|
(10,963 |
) |
|
|
(10,243 |
) |
|
|
(7,792 |
) |
Change
in construction accounts payable
|
|
|
(2,747 |
) |
|
|
(6,591 |
) |
|
|
6,077 |
|
Debt
issuance and assumption costs
|
|
|
(8,094 |
) |
|
|
(5,808 |
) |
|
|
(1,638 |
) |
Distributions
to common and restricted stockholders
|
|
|
(64,565 |
) |
|
|
(50,637 |
) |
|
|
(32,985 |
) |
Distributions
to noncontrolling partners
|
|
|
(2,610 |
) |
|
|
(2,195 |
) |
|
|
(2,790 |
) |
Net
cash provided by financing activities
|
|
|
83,056 |
|
|
|
413,050 |
|
|
|
91,510 |
|
Net
change in cash and cash equivalents
|
|
|
40,493 |
|
|
|
13,527 |
|
|
|
(67,034 |
) |
Cash
and cash equivalents at beginning of period
|
|
|
25,600 |
|
|
|
12,073 |
|
|
|
79,107 |
|
Cash
and cash equivalents at end of period
|
|
$ |
66,093 |
|
|
$ |
25,600 |
|
|
$ |
12,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of non-cash investing and financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
assumed in connection with company and property
acquisitions
|
|
$ |
- |
|
|
$ |
(615,175 |
) |
|
$ |
(88,307 |
) |
Issuance
of common stock in connection with company acquisition
|
|
$ |
- |
|
|
$ |
(154,697 |
) |
|
$ |
- |
|
Issuance
of Common Units in connection with company acquisition
|
|
$ |
- |
|
|
$ |
(199 |
) |
|
$ |
- |
|
Issuance
of Common Units in connection with land acquisition
|
|
$ |
(2,005 |
) |
|
$ |
- |
|
|
$ |
- |
|
Financing
of equipment through capital lease obligations
|
|
$ |
629 |
|
|
$ |
- |
|
|
$ |
1,491 |
|
Change
in fair value of derivative instruments, net
|
|
$ |
761 |
|
|
$ |
(3,031 |
) |
|
$ |
(2,075 |
) |
Contribution
of land from noncontrolling partner in development joint
venture
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
2,756 |
|
Supplemental
disclosure of cash flow information
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$ |
62,263 |
|
|
$ |
52,108 |
|
|
$ |
31,222 |
|
Income
taxes paid
|
|
$ |
642 |
|
|
$ |
282 |
|
|
$ |
64 |
|
See
accompanying notes to consolidated financial statements.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization
and Description of Business
American
Campus Communities, Inc. (the “Company”) is a real estate investment trust
(“REIT”) that was incorporated on March 9, 2004 and commenced operations
effective with the completion of an initial public offering (“IPO”) on August
17, 2004. Through the Company’s controlling interest in American
Campus Communities Operating Partnership LP (the “Operating Partnership”), the
Company is 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. The Company is 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.
As of
December 31, 2009, the Company’s property portfolio contained 85 student housing
properties with approximately 52,100 beds and approximately 17,000 apartment
units, including 39 properties containing approximately 22,800 beds and
approximately 7,300 units added as a result of the Company’s acquisition on June
11, 2008 of the student housing business of GMH Communities Trust (“GMH”), as
more fully discussed in Note 5 herein. The Company’s property
portfolio consisted of 79 owned off-campus properties that are in close
proximity to colleges and universities, two American Campus Equity (“ACETM”)
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
December 31, 2009, the Company also owned a noncontrolling interest in two joint
ventures that owned an aggregate of 20 student housing properties with
approximately 11,300 beds in approximately 3,400 units. The Company’s
communities contain modern housing units and are supported by a resident
assistant system and other student-oriented programming, with many offering
resort-style amenities.
Through
the Company’s taxable REIT subsidiaries (“TRS”), it also provides construction
management and development services, primarily for student housing properties
owned by colleges and universities, charitable foundations, and
others. As of December 31, 2009, the Company provided third-party
management and leasing services for 31 properties (five of which the Company
served as the third-party developer and construction manager) that represented
approximately 23,300 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 December 31, 2009, the Company’s total owned, joint
venture and third-party managed portfolio included 136 properties with
approximately 86,700 beds in approximately 29,500 units.
2. Summary of Significant Accounting
Policies
Basis
of Presentation
The
accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States (“GAAP”) and
include the financial position, results of operations and cash flows of the
Company, the Operating Partnership and subsidiaries of the Operating
Partnership, including joint ventures in which the Company has a controlling
interest. Third-party equity interests in the Operating Partnership
and consolidated joint ventures are reflected as noncontrolling interests in the
consolidated financial statements. The Company also has a
noncontrolling interest in three unconsolidated joint ventures, which are
accounted for under the equity method. All intercompany amounts have
been eliminated. All dollar amounts in the tables herein, except
share and per share amounts, are stated in thousands unless otherwise
indicated. Certain prior period amounts have been reclassified to
conform to the current period presentation.
Recent
Accounting Pronouncements
In June
2009, the Financial Accounting Standards Board (“FASB”) issued the Accounting
Standards Codification (the “Codification”). Effective July 1, 2009,
the Codification is the single source of authoritative accounting principles
recognized by the FASB to be applied by non-governmental entities in the
preparation of financial statements in accordance with GAAP. The
guidance explicitly recognizes rules and interpretive releases of the Securities
and Exchange Commission (“SEC”) under federal securities laws as authoritative
GAAP for SEC registrants. Adoption of the Codification did not
materially impact the Company’s consolidated financial statements.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
In
December 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-17,
“Consolidations (Topic 810) –
Improvements to Financial Reporting by Enterprises Involved with Variable
Interest Entities,” which codified the previously issued SFAS No. 167,
“Amendments to FASB
Interpretation No. 46(R).” ASU 2009-17 changes the
consolidation analysis for Variable Interest Entities (“VIE’s”) and requires a
qualitative analysis to determine the primary beneficiary. The
determination of the primary beneficiary of a VIE is based on whether the entity
has the power to direct matters which most significantly impact the activities
of the VIE and has the obligation to absorb losses, or the right to receive
benefits, of the VIE which could potentially be significant to the
VIE. The ASU requires an ongoing reconsideration of the primary
beneficiary and also amends the event triggering a reassessment of whether an
entity is a VIE. ASU 2009-17 requires additional disclosures for
VIE’s, including disclosures about a reporting entity’s involvement with VIE’s,
how a reporting entity’s involvement with a VIE affects the reporting entity’s
financial statements, and significant judgments and assumptions made by the
reporting entity to determine whether it must consolidate the
VIE. ASU 2009-17 is effective for the Company beginning on January 1,
2010. The Company is currently evaluating what impact, if any, the
adoption of ASU 2009-17 will have on its consolidated financial
statements.
Effective
June 30, 2009, the Company adopted a policy related to subsequent events which
involves accounting for and disclosure of events that occur after the balance
sheet date but before financial statements are issued or available to be
issued. The adoption of this new accounting guidance did not have any
impact on the Company’s consolidated financial statements.
Effective
January 1, 2009, the Company adopted policies related to disclosures about
derivative instruments and hedging activities, which provides enhanced
disclosures about (a) how and why the Company uses derivative instruments,
(b) how derivative instruments and related hedged items are accounted for
under the Company’s accounting policy, and (c) how derivative instruments
and related hedged items affect the Company’s financial position, financial
performance and cash flows. This adoption did not have a material effect on the
Company’s consolidated financial statements.
Effective
January 1, 2009, the Company retrospectively adopted newly issued accounting and
reporting policies related to noncontrolling interests in consolidated financial
statements (previously referred to as minority interests). See Note 9
herein for a more detailed discussion of noncontrolling interests and the effect
of the new accounting guidance on the Company’s consolidated financial
statements.
Effective
January 1, 2009, the Company adopted policies related to accounting for
business combinations, which changes the accounting for business combinations
including the measurement of acquirer shares issued in consideration for a
business combination, the recognition of contingent consideration, the
accounting for pre-acquisition gain and loss contingencies, the accounting for
acquisition-related restructuring cost accruals, the treatment of
acquisition-related transaction costs and the recognition of changes in the
acquirer’s income tax valuation allowance. This adoption did not have a material
effect on the Company’s financial statements.
Effective
January 1, 2009, the Company adopted a policy which clarifies that
share-based payment awards that entitle their holders to receive nonforfeitable
dividends before vesting should be considered participating
securities. As participating securities, these instruments should be
included in the computation of earnings per share (“EPS”) using the two-class
method. Pursuant to this adoption, the Company’s computation of EPS has been
retrospectively adjusted in Note 3 for the years ended December 31, 2008 and
2007 and in Note 19 for the quarters ended March 31, 2009, December 31, 2008,
September 30, 2008, June 30, 2008 and March 31, 2008.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosures of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
Investments in Real
Estate
Investments
in real estate are recorded at historical cost. Major improvements
that extend the life of an asset are capitalized and depreciated over the
remaining useful life of the asset. The cost of ordinary repairs and
maintenance are charged to expense when incurred. Depreciation and
amortization are recorded on a straight-line basis over the estimated useful
lives of the assets as follows:
Buildings
and improvements
|
|
7-40
years
|
Leasehold
interest - on-campus participating
properties
|
|
25-34
years (shorter of useful life or respective lease term)
|
Furniture,
fixtures and equipment
|
|
3-7
years
|
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Project
costs directly associated with the development and construction of an owned real
estate project, which include interest, property taxes, and amortization of
deferred finance costs, are capitalized as construction in
progress. Upon completion of the project, costs are transferred into
the applicable asset category and depreciation commences. Interest
totaling approximately $2.9 million, $5.5 million and $5.4 million was
capitalized during the years ended December 31, 2009, 2008 and 2007,
respectively. Amortization of deferred financing costs totaling
approximately $0.2 million and $0.4 million was capitalized during the years
ended December 31, 2008 and 2007, respectively.
Management
assesses whether there has been an impairment in the value of the Company’s
investments in real estate whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be
recoverable. Impairment is recognized when estimated expected future
undiscounted cash flows are less than the carrying value of the
property. The estimation of expected future net cash flows is
inherently uncertain and relies on assumptions regarding current and future
economics and market conditions. If such conditions change, then an
adjustment to the carrying value of the Company’s long-lived assets could occur
in the future period in which the conditions change. To the extent
that a property is impaired, the excess of the carrying amount of the property
over its estimated fair value is charged to earnings. The Company
believes that there were no impairments of the carrying values of its
investments in real estate as of December 31, 2009.
The
Company allocates the purchase price of acquired properties to net tangible and
identified intangible assets based on relative fair values. Fair
value estimates are based on information obtained from a number of sources,
including independent appraisals that may be obtained in connection with the
acquisition or financing of the respective property and other market
data. Information obtained about each property as a result of due
diligence, marketing and leasing activities is also considered. The
value of in-place leases is based on the difference between (i) the property
valued with existing in-place leases adjusted to market rental rates and (ii)
the property valued “as-if” vacant. As lease terms are typically one
year or less, rates on in-place leases generally approximate market rental
rates. Factors considered in the valuation of in-place leases include
an estimate of the carrying costs during the expected lease-up period
considering current market conditions, nature of the tenancy, and costs to
execute similar leases. Carrying costs include estimates of lost
rentals at market rates during the expected lease-up period, as well as
marketing and other operating expenses. The value of in-place leases
is amortized over the remaining initial term of the respective leases, generally
less than one year. The purchase price of property acquisitions is
not expected to be allocated to tenant relationships, considering the terms of
the leases and the expected levels of renewals.
Long-Lived
Assets–Held for Sale
Long-lived
assets to be disposed of are classified as held for sale in the period in which
all of the following criteria are met:
|
a.
|
Management,
having the authority to approve the action, commits to a plan to sell the
asset.
|
|
b.
|
The
asset is available for immediate sale in its present condition subject
only to terms that are usual and customary for sales of such
assets.
|
|
c.
|
An
active program to locate a buyer and other actions required to complete
the plan to sell the asset have been
initiated.
|
|
d.
|
The
sale of the asset is probable, and transfer of the asset is expected to
qualify for recognition as a completed sale, within one
year.
|
|
e.
|
The
asset is being actively marketed for sale at a price that is reasonable in
relation to its current fair value.
|
|
f.
|
Actions
required to complete the plan indicate that it is unlikely that
significant changes to the plan will be made or that the plan will be
withdrawn.
|
Concurrent
with this classification, the asset is recorded at the lower of cost or fair
value, and depreciation ceases.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Owned
On-Campus Properties
Under its
ACE program, the Company as lessee, entered into two 65-year ground and facility
leases with a university system to finance, construct, and manage two student
housing facilities. One property was completed in August 2008 and the
other property was completed in August 2009. Both leases include the
option to extend the lease term for two additional terms of ten years each, and
the lessor has title to the land and any improvements placed
thereon. The Company’s involvement in construction requires the
lessor’s post construction ownership of the improvements to be treated as a sale
with a subsequent leaseback by the Company. However, these
sale-leaseback transactions do not qualify for sale-leaseback accounting because
of the Company’s continuing involvement in the constructed assets. As
a result of the Company’s continuing involvement, these leases are accounted for
by the deposit method, in which the assets subject to the ground and facility
leases are reflected at historical cost, less amortization, and the financing
obligations are reflected at the terms of the underlying financing.
On-Campus
Participating Properties
The
Company entered into ground and facility leases with two university systems and
colleges to finance, construct, and manage four on-campus student housing
facilities. Under the terms of the leases, the lessor has title to
the land and any improvements placed thereon. Each lease terminates
upon final repayment of the construction related financing, the amortization
period of which is contractually stipulated. The Company’s
involvement in construction requires the lessor’s post construction ownership of
the improvements to be treated as a sale with a subsequent leaseback by the
Company. The sale-leaseback transaction has been accounted for as a
financing, and as a result, any fee earned during construction is deferred and
recognized over the term of the lease. The resulting financing
obligation is reflected at the terms of the underlying financing, i.e., interest
is accrued at the contractual rates and principal reduces in accordance with the
contractual principal repayment schedules.
The
Company reflects these assets subject to ground/facility leases at historical
cost, less amortization. Costs are amortized, and deferred fee
revenue in excess of the cost of providing the service are recognized, over the
lease term.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with a maturity of three months
or less when purchased to be cash equivalents. The Company maintains
cash balances in various banks. At times the Company’s balances may
exceed the amount insured by the FDIC. As the Company only uses
money-centered financial institutions, the Company does not believe it is
exposed to any significant credit risk related to its cash and cash
equivalents.
Restricted
Cash
Restricted
cash consists of funds held in trust and invested in low risk investments,
generally consisting of government backed securities, as permitted by the
indentures of trusts, which were established in connection with three bond
issues. Additionally, restricted cash includes escrow accounts held
by lenders and resident security deposits, as required by law in certain
states. Certain funds held by a trustee in a required escrow account
are being invested under a forward delivery agreement in government backed
securities that have a remaining maturity when purchased of six
months. Restricted cash also consists of escrow deposits made in
connection with potential property acquisitions and development
opportunities. These escrow deposits are invested in an
interest-bearing account at a federally-insured bank. Realized and
unrealized gains and losses are not material for the periods
presented.
Intangible
Assets
In
connection with property acquisitions completed during 2008 and 2007, the
Company capitalized approximately $19.0 million and $1.2 million, respectively,
related to management’s estimate of the fair value of the in-place leases
assumed. These intangible assets were amortized on a straight-line
basis over the average remaining term of the underlying
leases. Amortization expense was approximately $9.7 million, $9.1
million and $1.2 million for the years ended December 31, 2009, 2008 and 2007,
respectively. The Company also capitalized $1.5 million related to
management’s estimate of the fair value of third-party management contracts
acquired from GMH in June 2008. These intangible assets are amortized
on a straight-line basis over a period of three years. Amortization
expense related to these acquired management contracts was approximately $0.5
million and $0.3 million for the years ended December 31, 2009 and 2008,
respectively. The amortization of intangible assets is included in
depreciation and amortization expense in the accompanying consolidated
statements of operations. See Note 5 herein for a detailed discussion
of the property acquisitions completed during 2008 and 2007.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred
Financing Costs
The
Company defers financing costs and amortizes the costs over the terms of the
related debt using the effective interest method. Upon repayment of
or in conjunction with a material change in the terms of the underlying debt
agreement, any unamortized costs are charged to earnings. Amortization
expense, net of amounts capitalized, was approximately $3.5 million, $2.5
million and $1.3 million for the years ended December 31, 2009, 2008 and 2007,
respectively. Accumulated amortization at December 31, 2009 and 2008
approximated $9.0 million and $8.9 million, respectively. Deferred
financing costs, net of amortization, are included in other assets on the
accompanying consolidated balance sheets.
Joint
Ventures
The
Company holds interests in both consolidated and unconsolidated joint
ventures. The Company consolidates
joint ventures when it exhibits financial or operational control, which is
determined using accounting standards related to the consolidation of joint
ventures and VIE’s. For joint
ventures that are defined as VIE’s, the
primary beneficiary consolidates the entity. In instances where the
Company is not the primary beneficiary, it does not consolidate the joint
venture for financial reporting purposes. For joint ventures that are not
defined as variable interest entities, management first considers whether the
Company is the general partner or a limited partner (or the equivalent in such
investments which are not structured as partnerships). The Company
consolidates joint ventures where it is the general partner (or the equivalent)
and the limited partners (or the equivalent) in such investments do not have
rights which would preclude control and, therefore, consolidation for financial
reporting purposes. For joint ventures where the Company is the
general partner (or the equivalent), but does not control the joint venture as
the other partners (or the equivalent) hold substantive participating rights,
the Company uses the equity method of accounting. For joint ventures
where the Company is a limited partner (or the equivalent), management considers
factors such as ownership interest, voting control, authority to make decisions,
and contractual and substantive participating rights of the partners (or the
equivalent) to determine if the presumption that the general partner controls
the entity is overcome. In instances where these factors indicate the
Company controls the joint venture, the Company consolidates the joint venture;
otherwise it uses the equity method of accounting.
Debt
Premiums and Discounts
Debt
premiums and discounts represent fair value adjustments to account for the
difference between the stated rates and market rates of debt assumed in
connection with the Company’s property acquisitions. The debt
premiums and discounts are amortized to interest expense over the term of the
related loans using the effective-interest method. As of December 31,
2009 and 2008, net unamortized debt premiums were approximately $3.8 million and
$5.7 million, respectively, and net unamortized debt discounts were
approximately $8.5 million and $10.4 million, respectively. Debt
premiums and discounts are included in secured mortgage debt on the accompanying
consolidated balance sheets.
Rental
Revenues and Related Receivables
Students
are required to execute lease contracts with payment schedules that vary from
single to monthly payments. Receivables are recorded when billed, revenues and
related lease incentives are recognized on a straight-line basis over the term
of the contracts, and balances are considered past due when payment is not
received on the contractual due date. Generally, the Company requires each
executed contract to be accompanied by a refundable security deposit and a
signed parental guaranty. Security deposits are refundable, net of any
outstanding charges, upon expiration of the underlying contract.
Allowances
for receivables are established when management determines that collection of
such receivables are doubtful. When management has determined receivables to be
uncollectible, they are removed as an asset with a corresponding reduction in
the allowance for doubtful accounts.
The
allowance for doubtful accounts is summarized as follows:
|
|
Balance,
Beginning of Period
|
|
|
Charged
to Expense
|
|
|
Write-Offs
|
|
|
Balance,
End of Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
ended December 31, 2007
|
|
$ |
2,158 |
|
|
$ |
1,919 |
|
|
$ |
(1,077 |
) |
|
$ |
3,000 |
|
Year
ended December 31, 2008
|
|
$ |
3,000 |
|
|
$ |
2,955 |
|
|
$ |
(2,106 |
) |
|
$ |
3,849 |
|
Year
ended December 31, 2009
|
|
$ |
3,849 |
|
|
$ |
4,327 |
|
|
$ |
(2,066 |
) |
|
$ |
6,110 |
|
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Third-Party
Development Services Revenue and Costs
Development
revenues are generally recognized based on a proportionate performance method
based on contract deliverables, while construction revenues are recognized using
the percentage of completion method, as determined by construction costs
incurred relative to total estimated construction costs. Costs
associated with such projects are deferred and recognized in relation to the
revenues earned on executed contracts. For projects where the
Company’s fee is based on a fixed price, any cost overruns incurred during
construction, as compared to the original budget, will reduce the net fee
generated on those projects. Incentive fees are generally recognized
when the project is complete and performance has been agreed upon by all
parties, or when performance has been verified by an
independent third-party. The Company also evaluates the
collectibility of fee income and expense reimbursements generated through the
provision of development and construction management services based upon the
individual facts and circumstances, including the contractual right to receive
such amounts in accordance with the terms of the various projects, and reserves
any amounts that are deemed to be uncollectible.
Pre-development
expenditures such as architectural fees, permits and deposits associated with
the pursuit of third-party and owned development projects are expensed as
incurred, until such time that management believes it is probable that the
contract will be executed and/or construction will commence. Because
the Company frequently incurs these pre-development expenditures before a
financing commitment and/or required permits and authorizations have been
obtained, the Company bears the risk of loss of these pre-development
expenditures if financing cannot ultimately be arranged on acceptable terms or
the Company is unable to successfully obtain the required permits and
authorizations. As such, management evaluates the status of
third-party and owned projects that have not yet commenced construction on a
periodic basis and expenses any deferred costs related to projects whose current
status indicates the commencement of construction is unlikely and/or the costs
may not provide future value to the Company in the form of
revenues. Such write-offs are included in third-party development and
management services expenses (in the case of third-party development projects)
or general and administrative expenses (in the case of owned development
projects) on the accompanying consolidated statements of
operations. As of December 31, 2009, the Company has deferred
approximately $7.5 million in pre-development costs related to third-party and
owned development projects that have not yet commenced
construction. Such costs are included in other assets on the
accompanying consolidated balance sheets.
Third-Party
Management Services Revenue
Management
fees are recognized when earned in accordance with each management
contract. Incentive management fees are recognized when the incentive
criteria have been met.
Advertising
Costs
Advertising
costs are expensed during the period incurred. The Company uses no
direct response advertising. Advertising expense approximated $9.5
million, $5.2 million and $2.6 million for the years ended December 31, 2009,
2008 and 2007, respectively.
Derivative
Instruments and Hedging Activities
The
Company records all derivative financial instruments on the balance sheet at
fair value. Changes in fair value are recognized either in earnings
or as other comprehensive income, depending on whether the derivative has been
designated as a fair value or cash flow hedge and whether it qualifies as part
of a hedging relationship, the nature of the exposure being hedged, and how
effective the derivative is at offsetting movements in underlying
exposure. The Company discontinues hedge accounting when: (i) it
determines that the derivative is no longer effective in offsetting changes in
the fair value or cash flows of a hedged item; (ii) the derivative expires or is
sold, terminated, or exercised; (iii) it is no longer probable that the
forecasted transaction will occur; or (iv) management determines that
designating the derivative as a hedging instrument is no longer
appropriate. In all situations in which hedge accounting is
discontinued and the derivative remains outstanding, the Company will carry the
derivative at its fair value on the balance sheet, recognizing changes in the
fair value in current-period earnings. The Company uses interest rate
swaps to effectively convert a portion of its floating rate debt to fixed rate,
thus reducing the impact of rising interest rates on interest
payments. These instruments are designated as cash flow hedges and
the interest differential to be paid or received is accrued as interest expense.
The Company’s counter-parties are major financial institutions. See
Note 14 herein for an expanded discussion on derivative instruments and hedging
activities.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Common
Stock Issuances and Costs
Specific
incremental costs directly attributable to the Company’s equity offerings were
deferred and charged against the gross proceeds of the offering. As
such, underwriting commissions and other common stock issuance costs are
reflected as a reduction of additional paid in capital.
On May
11, 2009, the Company completed an equity offering, consisting of the sale of
9,775,000 shares of the Company’s common stock at a price of $21.25 per share,
including 1,275,000 shares issued as a result of the exercise of the
underwriters’ overallotment option in full at closing. The offering
generated gross proceeds of $207.7 million. The aggregate proceeds to
the Company, net of the underwriting discount and expenses of the offering, were
approximately $198.3 million.
On April
23, 2008, the Company completed an equity offering, consisting of the sale of
9,200,000 shares of the Company’s 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 to the Company, net of the underwriting discount, structuring fee and
expenses of the offering, was approximately $252.1 million.
On
October 10, 2007, the Company completed an equity offering, consisting of the
sale of 3,500,000 shares of the Company’s common stock at a price of $28.29 per
share, resulting in gross proceeds of approximately $99.0
million. The company received approximately $98.7 million in net
proceeds after deducting estimated expenses of approximately $0.3
million.
Comprehensive
Income (Loss)
Comprehensive
income (loss) includes net income (loss) and other comprehensive income (loss),
consisting of unrealized gains (losses) on derivative
instruments. Comprehensive income (loss) is presented in the
accompanying consolidated statements of changes in equity, and accumulated other
comprehensive loss is displayed as a separate component of stockholders’
equity.
Stock-Based
Compensation
The
Company has recognized compensation expense related to certain stock-based
awards (see Note 12) over the underlying vesting periods, which amounted to
approximately $3.0 million, $2.1 million and $1.3 million for the years ended
December 31, 2009, 2008 and 2007, respectively.
The
Company’s Outperformance Bonus Plan vested on August 17, 2007 and the
Compensation Committee of the Board of Directors elected to pay a portion of the
awards to selected recipients in the form of profits interest units (“PIUs”),
which are discussed in more detail in Note 12. Approximately $3.7
million of the compensation charge recorded during the year ended December 31,
2007 reflects the settlement of the Outperformance Bonus Plan through the
issuance of PIUs.
Income
Taxes
The
Company has elected to be taxed as a REIT under the Internal Revenue Code of
1986, as amended (the “Code”). To qualify as a REIT, the Company must
meet a number of organizational and operational requirements, including a
requirement that it currently distribute at least 90% of its adjusted taxable
income to its stockholders. As a REIT, the Company will generally not
be subject to corporate level federal income tax on taxable income it currently
distributes to its stockholders. If the Company fails to qualify as a REIT in
any taxable year, it will be subject to federal income taxes at regular
corporate rates (including any applicable alternative minimum tax) and may not
be able to qualify as a REIT for the subsequent four taxable
years. Even if the Company qualifies for taxation as a REIT, the
Company may be subject to certain state and local income and excise taxes on its
income and property, and to federal income and excise taxes on its undistributed
income.
The
Company owns two TRS entities that manage the Company’s non-REIT activities and
each is subject to federal, state and local income taxes.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Other
Nonoperating Income
Other
nonoperating income of $0.4 million and $0.5 million was recognized for the
years ended December 31, 2009 and 2008, respectively, related to tax incentive
amounts received in cash during the periods related to a property we acquired in
February 2007 located in Ypsilanti, Michigan. Upon acquisition of
this property, any future potential benefit of such tax incentive was assumed
from the seller.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Basic
earnings per share is computed using net loss attributable to common
shareholders and the weighted average number of shares of the Company’s common
stock outstanding during the period. Diluted earnings per share
reflects common shares issuable from the assumed conversion of common and
preferred Operating Partnership units and common share awards
granted. Only those items having a dilutive impact on basic earnings
per share are included in diluted earnings per share. On January 1,
2009, the Company adopted newly issued guidance relating to share-based payment
transactions and participating securities and, as a result, the Company’s
unvested share-based payment awards are considered participating securities and
are included in the basic and diluted earnings per share
calculations. The Company’s computation of earnings per share has
been retrospectively adjusted for the years ended December 31, 2008 and 2007 to
conform to this new guidance.
A
reconciliation of the numerators and denominators for basic and diluted earnings
per share computations is not required as the Company reported a loss from
continuing operations for all periods presented, and therefore the effect of the
inclusion of all potentially dilutive securities would be anti-dilutive when
computing diluted earnings per share. Thus, the computation for both
basic and diluted earnings per share is the same. The following
potentially dilutive securities were outstanding for the years ended December
31, 2009, 2008 and 2007 but were not included in the computation of diluted
earnings per share because the effects of their inclusion would be
anti-dilutive.
|
|
Year
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Common
Operating Partnership units (Note 12)
|
|
|
1,170,469 |
|
|
|
1,253,650 |
|
|
|
1,797,964 |
|
Preferred
Operating Partnership units (Note 12)
|
|
|
114,963 |
|
|
|
114,963 |
|
|
|
114,963 |
|
Restricted
Stock Awards (Note 9)
|
|
|
459,855 |
|
|
|
278,961 |
|
|
|
167,696 |
|
Total
potentially dilutive securities
|
|
|
1,745,287 |
|
|
|
1,647,574 |
|
|
|
2,080,623 |
|
The
following is a summary of the elements used in calculating basic earnings per
share:
|
|
Year
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Basic
earnings per share calculation:
|
|
|
|
|
|
|
|
|
|
Loss
from continuing operations
|
|
$ |
(2,392 |
) |
|
$ |
(12,474 |
) |
|
$ |
(1,431 |
) |
Income
from continuing operations attributable to
noncontrolling
interests
|
|
|
(630 |
) |
|
|
(248 |
) |
|
|
(255 |
) |
Loss
from continuing operations attributable to common
shareholders
|
|
|
(3,022 |
) |
|
|
(12,722 |
) |
|
|
(1,686 |
) |
Amount
allocated to participating securities
|
|
|
(652 |
) |
|
|
(398 |
) |
|
|
(232 |
) |
Loss
from continuing operations attributable to common
shareholders,
net of amount allocated to participating
securities
|
|
|
(3,674 |
) |
|
|
(13,120 |
) |
|
|
(1,918 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from discontinued operations
|
|
|
(10,068 |
) |
|
|
(345 |
) |
|
|
- |
|
Loss
from discontinued operations attributable to
noncontrolling
interests
|
|
|
250 |
|
|
|
12 |
|
|
|
- |
|
Loss
from discontinued operations attributable to
common
shareholders
|
|
|
(9,818 |
) |
|
|
(333 |
) |
|
|
- |
|
Net
loss attributable to common shareholders, as
adjusted
– basic
|
|
$ |
(13,492 |
) |
|
$ |
(13,453 |
) |
|
$ |
(1,918 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations attributable to common
shareholders,
as adjusted – per share
|
|
$ |
(0.08 |
) |
|
$ |
(0.35 |
) |
|
$ |
(0.08 |
) |
Loss
from discontinued operations attributable to
common
shareholders – per share
|
|
$ |
(0.20 |
) |
|
$ |
(0.01 |
) |
|
$ |
- |
|
Net
loss attributable to common shareholders, as
adjusted
– per share
|
|
$ |
(0.28 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
weighted average common shares outstanding
|
|
|
48,706,480 |
|
|
|
36,947,656 |
|
|
|
24,186,213 |
|
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
As
mentioned in Note 2, the Company qualifies as a REIT under the Internal Revenue
Code of 1986, as amended (the “Code”). As a REIT, the Company is not
subject to federal income tax as long as it distributes at least 90% of its
taxable income to its shareholders each year. Therefore, no provision
for federal income taxes for the REIT has been included in the accompanying
consolidated financial statements. If the Company fails to qualify as
a REIT, the Company will be subject to federal income tax (including any
applicable alternative minimum tax) on its taxable income and to federal income
and excise taxes on its undistributed income.
The
Company’s TRSs are subject to federal, state, and local income
taxes. As such, deferred income taxes result from temporary
differences between the carrying amounts of assets and liabilities of the TRSs
for financial reporting purposes and the amounts used for income tax
purposes. Deferred tax assets and liabilities are measured using
enacted tax rates in effect in the years in which those temporary differences
are expected to reverse. Significant components of the deferred tax
assets and liabilities of the TRSs are as follows:
|
|
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
Deferred
tax assets:
|
|
|
|
|
|
|
Fixed
and intangible assets
|
|
$ |
7,760 |
|
|
$ |
7,674 |
|
Net
operating loss carryforwards
|
|
|
3,246 |
|
|
|
3,961 |
|
Prepaid
and deferred rent
|
|
|
2,313 |
|
|
|
2,212 |
|
Bad
debt reserves
|
|
|
240 |
|
|
|
365 |
|
Accrued
expenses and other
|
|
|
1,049 |
|
|
|
92 |
|
Stock
compensation
|
|
|
933 |
|
|
|
340 |
|
Total
deferred tax assets
|
|
|
15,541 |
|
|
|
14,644 |
|
Valuation
allowance for deferred tax assets
|
|
|
(15,053 |
) |
|
|
(14,103 |
) |
Deferred
tax assets, net of valuation allowance
|
|
|
488 |
|
|
|
541 |
|
|
|
|
|
|
|
|
|
|
Deferred
tax liability:
|
|
|
|
|
|
|
|
|
Deferred
financing costs
|
|
|
488 |
|
|
|
541 |
|
|
|
|
|
|
|
|
|
|
Net
deferred tax liabilities
|
|
$ |
- |
|
|
$ |
- |
|
Significant
components of the Company’s income tax provision are as follows:
|
|
Year
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Current:
|
|
|
|
|
|
|
|
|
|
State
|
|
$ |
(540 |
) |
|
$ |
(388 |
) |
|
$ |
(240 |
) |
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
- |
|
|
|
- |
|
|
|
(493 |
) |
State
|
|
|
- |
|
|
|
- |
|
|
|
(23 |
) |
Total
provision — continuing
operations
|
|
$ |
(540 |
) |
|
$ |
(388 |
) |
|
$ |
(756 |
) |
TRS
earnings subject to tax consisted of an approximate $2.7 million loss, $2.0
million loss and $4.0 million loss for the years ended December 31, 2009, 2008
and 2007, respectively. The reconciliation of income tax attributable
to continuing operations for the TRSs computed at the U.S. statutory rate to
income tax provision is as follows:
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Tax
benefit at U.S. statutory rates on TRS income subject to
tax
|
|
$ |
908 |
|
|
$ |
673 |
|
|
$ |
1,361 |
|
State
income tax, net of federal income tax benefit
|
|
|
33 |
|
|
|
(8 |
) |
|
|
(144 |
) |
Effect
of permanent differences and other
|
|
|
217 |
|
|
|
(23 |
) |
|
|
(8 |
) |
Increase
in valuation allowance
|
|
|
(1,158 |
) |
|
|
(665 |
) |
|
|
(1,743 |
) |
TRS
income tax provision
|
|
$ |
- |
|
|
$ |
(23 |
) |
|
$ |
(534 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
At
December 31, 2009, the TRSs had net operating loss carryforwards (“NOLs”)
of approximately $9.1 million for income tax purposes that begin to expire in
2025. These NOLs may be used to offset future taxable income
generated by each of the respective TRSs. Due to the various
limitations to which the use of NOLs are subject, the Company has applied a
valuation allowance to the NOLs given the likelihood that the NOLs will expire
unused. The Company and its subsidiaries file income tax returns in
the U.S. federal jurisdiction and various states’ jurisdictions as required and,
as of December 31, 2009, the 2006, 2007 and 2008 calendar tax years are subject
to examination by the tax authorities.
Beginning
on January 1, 2007, the Company adopted accounting guidance related to
uncertainty in income taxes, which clarifies the accounting and disclosure for
uncertainty in tax positions and seeks to reduce the diversity of practice
associated with certain aspects of the recognition and measurement related to
accounting for income taxes. The Company had no unrecognized tax benefits
for the years ended December 31, 2009, 2008, or 2007, and as of December 31,
2009, the Company does not expect to record any unrecognized tax benefits.
Because no unrecognized tax benefits have been recorded, no related interest or
penalties have been calculated and this guidance had no impact on the Company’s
consolidated financial statements.
5. Property
Acquisitions
2008
Acquisitions
On June
11, 2008, the Company completed the acquisition of GMH’s student housing
business pursuant to an Agreement and Plan of Merger dated as of February 11,
2008 (the “Merger Agreement”). Concurrent with the closing of the GMH
acquisition, the Company formed a joint venture with a wholly-owned subsidiary
of Fidelity Real Estate Growth Fund III, LP (“Fidelity”) and contributed 15 GMH
student housing properties to the venture with an estimated value of $325.9
million. The Company also assumed GMH’s equity interest in an existing
joint venture with Fidelity that owns six properties. At the time of
closing, the GMH student housing portfolio consisted of 42 wholly-owned
properties containing 24,939 beds located in various markets throughout the
country. Two of the acquired wholly-owned properties totaling 1,468
beds were sold during the third quarter of 2008 and one property totaling 700
beds was sold on December 31, 2009 (see Note 6).
The total
consideration paid for the GMH student housing portfolio (exclusive of 15
properties contributed to the Fidelity joint venture) was approximately $1,018.7
million, inclusive of transaction costs. Under the terms of the
Merger Agreement, each GMH common share and each unit in GMH Communities, LP
(the “GMH Operating Partnership”) issued and outstanding as of the date of
closing, received cash consideration of $3.36 and 0.07642 of a share of the
Company’s common stock, or at the election of the GMH Operating Partnership
unitholder, 0.07642 of a unit in the Operating Partnership. The value
of the Company’s common stock and Common Operating Partnership units issued was
based on the closing price of the Company’s common stock on February 11,
2008. The Company issued 5.4 million shares of common stock and 7,004
Common Operating Partnership units, each valued at $28.43 per share or
unit.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
following summarizes our allocation of total consideration to the assets and
liabilities acquired from GMH, excluding the 15 properties contributed to the
joint venture with Fidelity:
Land
|
|
$ |
130,164 |
|
Buildings
|
|
|
799,667 |
|
Furniture,
fixtures and equipment
|
|
|
32,160 |
|
In-place
leases and other intangible assets
|
|
|
20,283 |
|
Investments
in unconsolidated joint ventures
|
|
|
10,610 |
|
Debt
discounts, net of debt premiums
|
|
|
9,464 |
|
Undeveloped
land parcels
|
|
|
5,000 |
|
Deferred
financing costs
|
|
|
4,126 |
|
Working
capital assets, net of liabilities
|
|
|
7,270 |
|
Total
consideration
|
|
$ |
1,018,744 |
|
In
February 2008, the Company 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. As part of the transaction, the Company 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, the Company 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. The Company did not assume any debt as part of this
transaction.
2007
Acquisitions
In
January 2007, the Company acquired a 248-unit, 752-bed property (Village on
Sixth) located near the campus of Marshall University in Huntington, West
Virginia, for a purchase price of $25.6 million, which excludes $1.7 million of
transaction costs, initial integration expenses and capital expenditures
necessary to bring this property up to the Company’s operating
standards. As part of the transaction, the Company assumed two
fixed-rate mortgage loans, which includes one for $16.2 million with an annual
interest rate of 5.5% and remaining term to maturity of 7.5 years and a second
loan for $1.4 million with an annual interest rate of 6.6% and remaining term to
maturity of 9.9 years.
In
February 2007, the Company acquired a three property portfolio (the “Edwards
Portfolio”) for a purchase price of $102.0 million, which excludes $3.7 million
of transaction costs, initial integration expenses and capital expenditures
necessary to bring these properties up to the Company’s operating
standards. As part of the transaction, the Company assumed $70.7
million in fixed-rate mortgage debt with a weighted average annual interest rate
of 5.7% and an average remaining term to maturity of 8.5 years. In
August 2007, construction was completed on an additional phase at one of these
properties. As contemplated in the original transaction, concurrent
with the completion of construction in August 2007, the Company purchased this
additional phase consisting of 24 units and 84 beds, for approximately $4.6
million.
The
Edwards Portfolio consists of one property in Lexington, Kentucky located near
the campus of the University of Kentucky, one property in Toledo, Ohio located
near the campus of the University of Toledo and one property in Ypsilanti,
Michigan located near the campus of Eastern Michigan
University. Including the purchase of the additional phase discussed
above, these three properties contain 763 units and 1,970 beds.
The
acquired properties’ results of operations have been included in the
accompanying consolidated statements of operations since their respective
acquisition closing dates. The following pro forma information for
the years ended December 31, 2008 and 2007, present consolidated financial
information for the Company as if the property acquisitions discussed above, the
$100 million senior secured term loan borrowing, and the April 2008 and October
2007 equity offerings had occurred at the beginning of the earliest period
presented. The unaudited pro forma information is provided for
informational purposes only and is not indicative of results that would have
occurred or which may occur in the future:
|
|
Year
Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
Total
revenues
|
|
$ |
289,435 |
|
|
$ |
275,359 |
|
Net
loss attributable to common shareholders
|
|
$ |
(10,576 |
) |
|
$ |
(3,679 |
) |
Net
loss per share attributable to common shareholders, as adjusted – basic
and diluted
|
|
$ |
(0.26 |
) |
|
$ |
(0.09 |
) |
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
6. Property
Dispositions and Discontinued Operations
On
December 31, 2009, the Company sold Riverside Estates for a purchase price of
$18.2 million, including the assumption of the existing $16.2 million mortgage
loan, resulting in net proceeds of approximately $1.3 million. The
resulting loss on disposition of approximately $9.4 million is included in
discontinued operations in the accompanying consolidated statement of operations
for the year ended December 31, 2009.
As part
of the acquisition of GMH on June 11, 2008, the Company acquired two properties
(The Courtyards and The Verge) that were under contract to be sold as of such
date. The Courtyards was sold in July 2008 for approximately $17.4
million, including the assumption of the existing $16.9 million mortgage loan,
resulting in net cash proceeds of approximately $0.4 million. The
Verge was sold in August 2008 for approximately $36.4 million, including the
assumption of the existing $31.4 million mortgage loan, resulting in net
proceeds of approximately $3.6 million. There was no gain or loss
recorded on these dispositions for book purposes.
The
related net loss for the afore-mentioned properties is reflected in the
accompanying consolidated statements of operations as discontinued operations
for the periods presented. Below is a summary of the results of
operations for the properties sold through their respective disposition
dates:
|
|
Year
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
Total
revenues
|
|
$ |
3,408 |
|
|
$ |
2,729 |
|
Total
operating expenses
|
|
|
3,141 |
|
|
|
2,160 |
|
Operating
income
|
|
|
267 |
|
|
|
569 |
|
Total
nonoperating expenses
|
|
|
(977 |
) |
|
|
(914 |
) |
Net loss
|
|
$ |
(710 |
) |
|
$ |
(345 |
) |
7. Investments
in Wholly-Owned Properties
Wholly-owned
properties consisted of the following:
|
|
December
31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Land
(1)
|
|
$ |
250,044 |
|
|
$ |
242,653 |
|
|
Buildings
and improvements
|
|
|
1,825,915 |
|
|
|
1,706,184 |
|
|
Furniture,
fixtures and equipment
|
|
|
112,831 |
|
|
|
87,633 |
|
|
Construction
in progress
|
|
|
- |
|
|
|
63,715 |
|
|
|
|
|
2,188,790 |
|
|
|
2,100,185 |
|
|
Less
accumulated depreciation
|
|
|
(173,820 |
) |
|
|
(113,352 |
) |
|
Wholly-owned
properties, net
|
|
$ |
2,014,970 |
|
|
$ |
1,986,833 |
|
|
(1)
|
The
land balance above includes undeveloped land parcels with book values of
$27.6 million and $18.2 million as of December 31, 2009 and December 31,
2008, respectively.
|
8. On-Campus
Participating Properties
The
Company is a party to ground/facility lease agreements (“Leases”) with certain
state university systems and colleges (each, a “Lessor”) for the purpose of
developing, constructing, and operating student housing facilities on university
campuses. Under the terms of the Leases, title to the constructed facilities is
held by the applicable Lessor and such Lessor receives a de minimus base rent
paid at inception and 50% of defined net cash flows on an annual basis through
the term of the lease. The Leases terminate upon the earlier to occur
of the final repayment of the related debt, the amortization period of which is
contractually stipulated, or the end of the lease term.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Pursuant
to the Leases, in the event the leasehold estates do not achieve Financial Break
Even (defined as revenues less operating expenses, excluding management fees,
less debt service), the applicable Lessor would be required to make a rental
payment, also known as the Contingent Payment, sufficient to achieve Financial
Break Even. The Contingent Payment provision remains in effect until
such time as any financing placed on the facilities would receive an investment
grade rating without the Contingent Payment provision. In the event
that the Lessor is required to make a Contingent Payment, future net cash flow
distributions would be first applied to repay such Contingent Payments and then
to unpaid management fees prior to normal distributions. Beginning in
November 1999 and December 2002, as a result of the debt financing on the
facilities achieving investment grade ratings without the Contingent Payment
provision, the Texas A&M University System is no longer required to make
Contingent Payments under either the Prairie View A&M University Village or
University College Leases. The Contingent Payment obligation
continues to be in effect for the Texas A&M International University and
University of Houston leases.
In the
event the Company seeks to sell its leasehold interest, the Leases provide the
applicable Lessor the right of first refusal of a bona fide purchase offer and
an option to purchase the lessee’s rights under the applicable
Lease.
In
conjunction with the execution of each Lease, the Company has entered into
separate five-year agreements to manage the related facilities for 5% of defined
gross receipts. The five-year terms of the management agreements are not
contingent upon the continuation of the Leases. Upon expiration of the initial
five year terms, the agreements continue on a month-to-month basis.
On-campus
participating properties are as follows:
|
|
|
|
|
|
Historical
Cost – December 31,
|
|
Lessor/University
|
|
Lease Commencement
|
|
Required
Debt Repayment
(1)
|
|
2009
|
|
|
2008
|
|
Texas
A&M University System / Prairie
View A&M University (2)
|
|
2/1/96
|
|
9/1/23
|
|
$ |
38,918 |
|
|
$ |
38,732 |
|
Texas
A&M University System / Texas
A&M International
|
|
2/1/96
|
|
9/1/23
|
|
|
6,216 |
|
|
|
6,163 |
|
Texas
A&M University System / Prairie
View A&M University (3)
|
|
10/1/99
|
|
8/31/25 / 8/31/28
|
|
|
24,398 |
|
|
|
24,191 |
|
University
of Houston System / University
of Houston (4)
|
|
9/27/00
|
|
8/31/35
|
|
|
35,192 |
|
|
|
34,899 |
|
|
|
|
|
|
|
|
104,724 |
|
|
|
103,985 |
|
Less
accumulated amortization
|
|
|
|
|
|
|
(39,034 |
) |
|
|
(34,683 |
) |
On-campus
participating properties, net
|
|
|
|
|
|
$ |
65,690 |
|
|
$ |
69,302 |
|
(1)
|
Represents
the effective lease termination date. The Leases terminate upon
the earlier to occur of the final repayment of the related debt or the end
of the contractual lease term.
|
(2)
|
Consists
of three phases placed in service between 1996 and
1998.
|
(3)
|
Consists
of two phases placed in service in 2000 and
2003.
|
(4)
|
Consists
of two phases placed in service in 2001 and
2005.
|
9.
Noncontrolling Interests
Third-party joint venture
partners: Effective January 1, 2009, the Company adopted
accounting guidance governing the portions of equity (net assets) in
subsidiaries that are held by owners other than the parent, referred to as
noncontrolling interests (formerly minority interests). The Company
consolidates four joint ventures that own and operate the Callaway House,
University Village at Sweet Home, University Centre and Villas at Chestnut Ridge
owned-off campus properties. The portion of net assets attributable
to the third-party partners in these joint ventures is classified as
“noncontrolling interests” within equity on the accompanying consolidated
balance sheets. Accordingly, the third-party partners’ share of the
income or loss of the joint ventures is reported on the consolidated statements
of operations as “noncontrolling interests share of net income /
loss.”
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Operating Partnership
units: Certain partners in the Operating Partnership hold
their ownership through common and preferred units of limited partnership
interest, hereinafter referred to as “Common Units” or “Series A Preferred
Units.” Common Units and Series A Preferred Units are exchangeable
into an equal number of shares of the Company’s common stock, or, at the
Company’s election, cash. A Common Unit and a share of the Company’s
common stock have essentially the same economic characteristics, as they
effectively participate equally in the net income and distributions of the
Operating Partnership. Series A Preferred Units have a cumulative
preferential per annum cash distribution rate of 5.99%, payable quarterly
concurrently with the payment of dividends on the Company’s common
stock.
The
Company follows accounting guidance stipulating that securities that are
redeemable for cash or other assets at a fixed or determinable price on a fixed
or determinable date, at the option of the holder, or upon the occurrence of an
event that is not solely within the control of the issuer, must be classified
outside of permanent equity in the mezzanine section of the consolidated balance
sheets. In accordance with such guidance, management evaluates
whether the Company controls the actions or events necessary to issue the
maximum number of shares that could be required to be delivered under share
settlement of the contract. Based on this assessment, which includes
evaluating terms in the applicable agreements related to redemption provisions,
the Company has determined that Common Units and Series A Preferred Units in the
Operating Partnership should be classified as “redeemable noncontrolling
interests” in the mezzanine section of the consolidated balance
sheets. The value of redeemable noncontrolling interests on the
consolidated balance sheets is reported at the greater of fair value or
historical cost at the end of each reporting period. Accordingly,
income or loss allocated to these redeemable noncontrolling interests on the
Company’s consolidated statements of operations includes the Series A Preferred
Unit distributions as well as the pro rata share of the Operating Partnership’s
net income or loss allocated to Common Units.
During
the years ended December 31, 2009 and 2008, 15,400 and 391,582 Common Units,
respectively, were converted into shares of the Company’s common
stock. As of December 31, 2009 and December 31, 2008, approximately
2% and 3%, respectively, of the equity interests of the Operating Partnership
was held by owners of Common Units and Series A Preferred Units.
10. Investment
in Unconsolidated Joint Ventures
Investments in unconsolidated joint ventures are
accounted for utilizing the equity method. As discussed in Note 2
herein, the equity method is used when the Company has the ability to exercise
significant influence over operating and financial policies of the joint venture
but does not have control of the joint venture. Under the equity
method, these investments are initially recognized in the balance sheet at cost
and are subsequently adjusted to reflect the Company’s proportionate share of net earnings or losses of the
joint venture, distributions received, contributions, and certain other
adjustments, as appropriate. When circumstances indicate there
may have been a loss in value of an equity method investment, the Company
evaluates the investment for impairment by estimating the Company’s ability to recover its investment from future expected
discounted cash flows. If the Company determines the loss in value is
other than temporary, the Company recognizes an impairment charge to reflect the
investment at fair value. The Company believes that there were no
impairments of the carrying values of its equity method investments as of
December 31, 2009.
Fidelity Joint
Ventures: Concurrent with the closing of the GMH acquisition,
a wholly-owned subsidiary of the Company formed a joint venture with a
subsidiary of Fidelity and transferred 15 GMH student housing properties to the
venture with an estimated value of $325.9 million. One property owned
by this joint venture was sold in November 2009, resulting in the joint venture
owning 14 properties as of December 31, 2009. The Company also
assumed GMH’s equity interest in an existing joint venture with Fidelity that
owns six properties. The Company serves as property manager for all
of the joint venture properties and owns a 10% equity interest in these joint
ventures (hereinafter referred to collectively as the “Fidelity Joint
Ventures”).
The
Fidelity Joint Ventures are funded in part with secured third party debt in the
amount of $330.4 million. The Operating Partnership serves as
non-recourse, carve-out guarantor of this debt, which means the Operating
Partnership is liable to the lender for any loss, damage, cost, expense,
liability, claim or other obligation incurred by the lender arising out of or in
connection with certain non-recourse exceptions in connection with the
debt. Pursuant to the respective limited liability company
agreements, the Fidelity Joint Ventures agreed to indemnify, defend and hold
harmless the Operating Partnership with respect to such obligations, except to
the extent such obligations were caused by the willful misconduct, gross
negligence, fraud or bad faith of the Operating Partnership or its employees,
agents or affiliates. Therefore, the Operating Partnership’s exposure
under the guarantees for obligations not caused by the willful misconduct, gross
negligence, fraud or bad faith of the Operating Partnership or its employees,
agents or affiliates is not expected to exceed the Company’s 10% proportionate
interest in the related mortgage debt.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
Company’s $8.0 million and $9.4 million investment in these two joint ventures
at December 31, 2009 and 2008, respectively, is included in other assets in the
accompanying consolidated balance sheets, and the Company’s $1.6 million and
$1.1 million share in the loss from these two joint ventures for the years
December 31, 2009 and 2008, respectively, is included in loss from
unconsolidated joint ventures in the accompanying consolidated statements of
operations. For the years ended December 31, 2009 and 2008, the
Company earned $2.3 million and $1.3 million, respectively, in property
management fees from these joint ventures. Due to the respective
limited liability company agreements not providing for maximum capital
commitments from the members, the Company’s maximum exposure to loss stemming
from its investment in the Fidelity Joint Ventures could be
unlimited.
Hampton Roads Joint
Venture: The Company also holds
a noncontrolling equity interest in a joint venture that owns a military housing
privatization project with the United States Navy to design, develop, construct,
renovate, and manage unaccompanied soldier housing located on naval bases
in Norfolk and Newport News, Virginia. The project is financed
through taxable revenue bonds. The Company’s $0.5 million and $1.0
million investment in this joint venture at December 31, 2009 and 2008,
respectively, is included in other assets in the accompanying consolidated
balance sheets, and the Company’s share in the loss from this joint venture of
$0.5 million, $0.5 million and $0.1 million for the years ended December 31,
2009, 2008 and 2007, respectively, is included in loss from unconsolidated joint
ventures in the accompanying consolidated statements of
operations. The Company earned combined development and management
fees from this joint venture of $1.2 million, $0.8 million and $2.4 million for
the years ended December 31, 2009, 2008 and 2007, respectively.
11. Debt
A summary
of the Company’s outstanding consolidated indebtedness, including unamortized
debt premiums and discounts, is as follows:
|
|
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
Debt
secured by wholly-owned properties:
|
|
|
|
|
|
|
Mortgage
loans payable
|
|
$ |
850,046 |
|
|
$ |
955,847 |
|
Construction
loans payable
|
|
|
100,000 |
|
|
|
124,819 |
|
|
|
|
950,046 |
|
|
|
1,080,666 |
|
Debt
secured by on-campus participating properties:
|
|
|
|
|
|
|
|
|
Mortgage
loan payable
|
|
|
32,718 |
|
|
|
32,991 |
|
Bonds
payable
|
|
|
51,390 |
|
|
|
53,275 |
|
|
|
|
84,108 |
|
|
|
86,266 |
|
Senior
secured term loan
|
|
|
100,000 |
|
|
|
100,000 |
|
Secured
revolving credit facility
|
|
|
- |
|
|
|
14,700 |
|
Secured
agency facility
|
|
|
94,000 |
|
|
|
- |
|
Unamortized
debt premiums
|
|
|
3,765 |
|
|
|
5,682 |
|
Unamortized
debt discounts
|
|
|
(8,464 |
) |
|
|
(10,393 |
) |
Total
debt
|
|
$ |
1,223,455 |
|
|
$ |
1,276,921 |
|
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
During
the twelve months ended December 31, 2009, the following transactions
occurred:
|
|
Year
Ended December
31, 2009
|
|
Balance,
beginning of period
|
|
$ |
1,276,921 |
|
Additions:
|
|
|
|
|
Draws
on secured revolving credit facility
|
|
|
115,405 |
|
Draws
on secured agency facility
|
|
|
94,000 |
|
Draws
under advancing construction loans
|
|
|
5,334 |
|
Deductions:
|
|
|
|
|
Pay
down of secured revolving credit facility
|
|
|
(130,105 |
) |
Pay
off of maturing mortgage and construction loans
|
|
|
(110,949 |
) |
Pay
off of mortgage loan in connection with property
disposition
|
|
|
(16,140 |
) |
Scheduled
repayments of principal
|
|
|
(10,963 |
) |
Amortization
of debt premiums and discounts
|
|
|
(48 |
) |
|
|
$ |
1,223,455 |
|
Loans
Assumed or Entered Into in Conjunction with Property Acquisitions
In
connection with the June 11, 2008 acquisition of GMH’s student housing business
(see Note 5), the Company assumed approximately $608.2 million of fixed-rate
mortgage debt. At the time of assumption, the debt had a weighted
average annual interest rate of 5.43% and an average term to maturity of 6.2
years. Upon assumption of this debt, the Company recorded debt
discounts and debt premiums of approximately $11.8 million and $2.3 million,
respectively, to reflect the estimated fair value of the debt
assumed. These mortgage loans are secured by liens on the related
properties.
In
connection with the February 2008 acquisition of Pirate’s Place (see Note 5), a
wholly-owned property, the Company assumed approximately $7.0 million of
fixed-rate mortgage debt with an annual interest rate of 7.15% and January 2023
maturity date. Upon assumption of this debt, the Company recorded a
debt premium of approximately $0.3 million, to reflect the estimated fair value
of the debt assumed. This mortgage loan is secured by a lien on the
related property.
In
connection with the January 2007 acquisition of Village on Sixth (see Note 5), a
wholly-owned property, the Company assumed approximately $17.6 million of
fixed-rate mortgage debt, which is comprised of one $16.2 million mortgage loan
with an annual interest rate of 5.5% and May 2014 maturity date, and a second
mortgage loan for $1.4 million with an annual interest rate of 6.6% and October
2016 maturity date. Upon assumption of this debt, the Company
recorded a debt discount of approximately $0.3 million on the $16.2 million
mortgage loan and a debt premium of approximately $0.1 million on the $1.4
million mortgage loan, in each case to reflect the estimated fair value of the
debt assumed. These mortgage loans are secured by liens on the
related properties.
In
connection with the February 2007 acquisition of the Edwards Portfolio (see Note
5), the Company assumed approximately $70.7 million in fixed-rate mortgage
debt. At the time of assumption, the debt had a weighted average
annual interest rate of 5.7% and an average remaining term to maturity of 8.3
years. Upon assumption of these three loans, the Company recorded
debt premiums of approximately $0.1 million to reflect the estimated fair value
of the debt assumed. These three mortgage loans are secured by liens
on the related properties.
Secured
Revolving Credit Facility
In August
2009, the Operating Partnership renewed its revolving credit facility and
increased the size of the facility from $160 million to $225
million. The facility may be expanded by up to an additional $75
million upon the satisfaction of certain conditions. The maturity
date of the facility is August 14, 2012 and can be extended 12 months through
August 2013. The facility is currently secured by seven of the
Company’s wholly-owned properties.
Availability
under the revolving credit facility is limited to an “aggregate borrowing base
amount” equal to the lesser of (i) 50% to 65% of the value of certain
properties, calculated as set forth in the credit facility, and (ii) the
adjusted net operating income from these properties divided by a formula
amount. The facility bears interest at a variable rate, at the
Company’s option, based upon a base rate or one-, two-, or three-month LIBOR,
with a LIBOR floor of 2.0%, plus, in each case, a spread based upon the
Company’s total leverage. Additionally, the Company is required to
pay an unused commitment fee of 0.35% per annum. In September 2009,
the Company paid off the entire balance on the revolving credit facility using
proceeds from the secured agency facility discussed below. As of
December 31, 2009, availability under the facility totaled $155.0
million.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The terms
of the facility include certain restrictions and covenants, which limit, among
other items, the incurrence of additional indebtedness, liens, and the
disposition of assets. The facility contains customary affirmative and negative
covenants and also contains financial covenants that, among other things,
require the Company to maintain certain minimum ratios of “EBITDA” (earnings
before interest, taxes, depreciation and amortization) to fixed charges and
total indebtedness. The Company may not pay distributions that exceed
a specified percentage of funds from operations, as adjusted, for any four
consecutive quarters. The financial covenants also include
consolidated net worth and leverage ratio tests. As of December 31,
2009, the Company was in compliance with all such covenants.
Secured
Agency Facility
In
September 2009, the Company closed a $125 million secured revolving credit
facility with a Freddie Mac lender. The facility has a five-year term
and is currently secured by 11 properties referred to as the “Collateral
Pool.” The facility bears interest at one- or three-month LIBOR plus
a spread that varies based on the debt service ratio of the Collateral
Pool. Additionally, the Company is required to pay an unused
commitment fee of 1.0% per annum. As of December 31, 2009, the
balance outstanding on the secured agency facility totaled $94.0 million,
bearing interest at a weighted average rate of 2.2%. The secured
agency facility includes certain financial covenants which are the same as are
required for the secured revolving credit facility, described
above.
Senior
Secured Term Loan
On May
23, 2008, the Operating Partnership obtained a $100 million senior secured term
loan. The secured term loan has an initial term of 36 months and can
be extended through May 2012 through the exercise of a 12-month extension
period. The secured term loan bears interest at a variable rate, at
the Company’s option, based upon a base rate or one-, two-, three-, or six-month
LIBOR plus, in each case, a spread based upon the Company’s total
leverage. On June 11, 2008, the Operating Partnership borrowed in
full from the secured term loan and used the proceeds to fund a portion of the
total cash consideration for the GMH acquisition. As of December 31,
2009, the balance outstanding on the secured term loan was $100
million. The Company guarantees the Operating Partnership’s
obligations under the secured term loan. The secured term loan
includes the same restrictions and covenants as the secured revolving credit
facility, described above.
On
February 23, 2009, the Company entered into two $50.0 million interest rate swap
agreements effective March 20, 2009 through February 20, 2012, which are both
used to hedge the Company’s exposure to fluctuations in interest payments on its
LIBOR-based senior secured term loan. Under the terms of the two interest
rate swap agreements, the Company pays an average fixed rate of 1.7925% and
receives a one-month LIBOR floating rate. As a result of these two
interest rate swaps, the Company effectively fixed the interest rate on its
senior secured term loan to 3.55% as of December 31, 2009 (1.7925% + 1.75%
spread). In the event that the swaps at any time have a negative fair
value below a certain threshold level, the Company is required to post cash into
a collateral account pledged to the interest rate swap providers. As
of December 31, 2009, the Company had deposited approximately $0.7 million into
a collateral account related to one of the interest rate swaps. See
Note 14 herein for a more detailed discussion of the Company’s derivative
instruments and hedging activities.
Construction
Loans and Mortgage Notes Payable
Construction
loans and mortgage notes payable at December 31, 2009, excluding debt premiums
and discounts, consisted of 62 loans secured by wholly-owned properties and
on-campus participating properties consisting of:
Property
|
|
Principal Outstanding
(1)
|
|
|
|
|
|
Interest
Rate at
December
31, 2009
|
|
|
Maturity
Date
|
|
|
|
Amortization
|
Cullen
Oaks – Phase I (2)
|
|
$ |
16,275 |
|
|
|
|
|
|
6.69 |
% |
(3) |
|
February
2014
|
|
|
|
30
years
|
|
Cullen
Oaks – Phase II (2)
|
|
|
16,443 |
|
|
|
|
|
|
6.69 |
% |
(3) |
|
February
2014
|
|
|
|
30
years
|
|
University
Village at Boulder Creek
|
|
|
15,248 |
|
|
|
|
|
|
5.71 |
% |
|
|
November
2012
|
|
|
|
30
years
|
|
River
Club Apartments
|
|
|
17,430 |
|
|
|
|
|
|
8.18 |
% |
|
|
August
2010
|
|
|
|
30
years
|
|
The
Village at Alafaya Club
|
|
|
19,237 |
|
|
|
|
|
|
8.16 |
% |
|
|
August
2010 (4)
|
|
|
|
30
years
|
|
University
Club Tallahassee
|
|
|
12,867 |
|
|
|
|
|
|
7.99 |
% |
|
|
October
2010
|
|
|
|
30
years
|
|
The
Grove at University Club Tallahassee
|
|
|
4,068 |
|
|
|
|
|
|
5.75 |
% |
|
|
March
2013
|
|
|
|
30
years
|
|
College
Club Tallahassee
|
|
|
8,327 |
|
|
|
|
|
|
6.74 |
% |
|
|
December
2011
|
|
|
|
30
years
|
|
The
Estates
|
|
|
36,218 |
|
|
|
|
|
|
5.20 |
% |
|
|
June
2015
|
|
|
|
30
years
|
|
The
Village at Blacksburg
|
|
|
19,926 |
|
|
|
|
|
|
7.50 |
% |
|
|
January
2011
|
|
|
|
30
years
|
|
The
Woods at Greenland
|
|
|
5,819 |
|
|
|
|
|
|
5.69 |
% |
|
|
October
2012
|
|
|
|
30
years
|
|
Raiders
Crossing
|
|
|
6,248 |
|
|
|
|
|
|
6.18 |
% |
|
|
December
2012
|
|
|
|
30
years
|
|
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Property
|
|
Principal Outstanding(1)
|
|
|
|
|
|
Interest
Rate at December 31, 2009
|
|
|
Maturity
Date
|
|
|
|
Amoritzation
|
Entrada
Real
|
|
|
9,143 |
|
|
|
|
|
|
5.61 |
% |
|
|
November
2012
|
|
|
|
30
years
|
|
The
Outpost San Marcos
|
|
|
13,013 |
|
|
|
|
|
|
5.74 |
% |
|
|
October
2013
|
|
|
|
30
years
|
|
The
Outpost San Antonio
|
|
|
22,945 |
|
|
|
|
|
|
4.99 |
% |
|
|
October
2014
|
|
|
|
30
years
|
|
City
Parc at Fry Street
|
|
|
10,957 |
|
|
|
|
|
|
5.96 |
% |
|
|
September
2014
|
|
|
|
30
years
|
|
Raiders
Pass - Phase I
|
|
|
14,838 |
|
|
|
|
|
|
5.91 |
% |
|
|
October
2012
|
|
|
|
30
years
|
|
Raiders
Pass – Phase II
|
|
|
3,649 |
|
|
|
|
|
|
5.66 |
% |
|
|
October
2012
|
|
|
|
30
years
|
|
The
Callaway House
|
|
|
18,340 |
|
|
|
|
|
|
7.10 |
% |
|
|
April
2011
|
|
|
|
30
years
|
|
Aggie
Station
|
|
|
10,988 |
|
|
|
|
|
|
5.96 |
% |
|
|
October
2012
|
|
|
|
30
years
|
|
Village
on Sixth – Phase I
|
|
|
15,444 |
|
|
|
|
|
|
5.48 |
% |
|
|
May
2014
|
|
|
|
30
years
|
|
Village
on Sixth – Annex
|
|
|
1,376 |
|
|
|
|
|
|
6.63 |
% |
|
|
October
2016
|
|
|
|
30
years
|
|
Newtown
Crossing
|
|
|
31,138 |
|
|
|
|
|
|
5.65 |
% |
|
|
June
2015
|
|
|
|
30
years
|
|
Olde
Town University Square
|
|
|
20,159 |
|
|
|
|
|
|
5.65 |
% |
|
|
June
2015
|
|
|
|
30
years
|
|
Peninsular
Place
|
|
|
16,563 |
|
|
|
|
|
|
5.65 |
% |
|
|
June
2015
|
|
|
|
30
years
|
|
Vista
del Sol
|
|
|
100,000 |
|
(5) |
|
|
|
|
|
1.45 |
% |
|
|
December
2010
|
|
|
|
n/a |
|
Pirate’s
Place
|
|
|
6,495 |
|
|
|
|
|
|
|
7.15 |
% |
|
|
January
2023
|
|
|
|
30
years
|
|
Jacob
Heights I
|
|
|
3,850 |
|
|
|
|
|
|
|
5.54 |
% |
|
|
February
2016
|
|
|
|
Interest
only
|
|
Jacob
Heights III
|
|
|
2,948 |
|
|
|
|
|
|
|
6.19 |
% |
|
|
August
2016
|
|
|
|
Interest
only
|
|
The
Summit
|
|
|
23,825 |
|
|
|
|
|
|
|
5.60 |
% |
|
|
March
2017
|
|
|
|
Interest
only
|
|
GrandMarc
– Seven Corners
|
|
|
18,020 |
|
|
|
|
|
|
|
5.19 |
% |
|
|
June
2014
|
|
|
|
30
years
|
|
University
Village – Sacramento
|
|
|
14,740 |
|
|
|
|
|
|
|
5.32 |
% |
|
|
February
2016
|
|
|
|
Interest
only
|
|
Aztec
Corner
|
|
|
28,600 |
|
|
|
|
|
|
|
5.97 |
% |
|
|
August
2016
|
|
|
|
30
years
|
|
University
Crossings
|
|
|
33,201 |
|
|
|
|
|
|
|
5.42 |
% |
|
|
November
2013
|
|
|
|
30
years
|
|
University
Crossings - Annex
|
|
|
8,108 |
|
|
|
|
|
|
|
5.90 |
% |
|
|
November
2013
|
|
|
|
30
years
|
|
Campus
Corner
|
|
|
22,266 |
|
|
|
|
|
|
|
5.84 |
% |
|
|
November
2016
|
|
|
|
Interest
only
|
|
Tower
at 3rd
|
|
|
14,491 |
|
|
|
|
|
|
|
4.96 |
% |
|
|
September
2015
|
|
|
|
Interest
only
|
|
University
Mills
|
|
|
8,806 |
|
|
|
|
|
|
|
4.92 |
% |
|
|
August
2014
|
|
|
|
30
years
|
|
University
Manor
|
|
|
14,233 |
|
|
|
|
|
|
|
4.92 |
% |
|
|
August
2014
|
|
|
|
30
years
|
|
Brookstone
Village
|
|
|
4,141 |
|
|
|
|
|
|
|
5.38 |
% |
|
|
February
2016
|
|
|
|
Interest
only
|
|
Campus
Walk – Wilmington
|
|
|
6,700 |
|
|
|
|
|
|
|
5.00 |
% |
|
|
September
2015
|
|
|
|
Interest
only
|
|
Cambridge
at Southern
|
|
|
18,388 |
|
|
|
|
|
|
|
5.78 |
% |
|
|
December
2016
|
|
|
|
Interest
only
|
|
Campus
Club – Statesboro
|
|
|
18,811 |
|
|
|
|
|
|
|
4.24 |
% |
|
|
March
2010
|
|
|
|
Interest
only
|
|
University
Pines
|
|
|
11,036 |
|
|
|
|
|
|
|
6.95 |
% |
|
|
June
2013
|
|
|
|
30
years
|
|
Lakeside
|
|
|
14,100 |
|
|
|
|
|
|
|
5.84 |
% |
|
|
November
2016
|
|
|
|
Interest
only
|
|
The
Edge
|
|
|
29,914 |
|
|
|
|
|
|
|
5.22 |
% |
|
|
January
2011
|
|
|
|
Interest
only
|
|
Southview
|
|
|
18,918 |
|
|
|
|
|
|
|
4.56 |
% |
|
|
June
2015
|
|
|
|
Interest
only
|
|
Stonegate
|
|
|
14,264 |
|
|
|
|
|
|
|
4.56 |
% |
|
|
June
2015
|
|
|
|
Interest
only
|
|
The
Commons
|
|
|
5,569 |
|
|
|
|
|
|
|
5.60 |
% |
|
|
April
2024
|
|
|
|
30
years
|
|
University
Gables
|
|
|
13,925 |
|
|
|
|
|
|
|
6.95 |
% |
|
|
June
2013
|
|
|
|
30
years
|
|
The
Enclave I
|
|
|
9,762 |
|
|
|
|
|
|
|
4.92 |
% |
|
|
August
2014
|
|
|
|
30
years
|
|
Hawks
Landing
|
|
|
15,600 |
|
|
|
|
|
|
|
5.84 |
% |
|
|
November
2016
|
|
|
|
Interest
only
|
|
Willowtree
Apartments
|
|
|
13,441 |
|
|
|
|
|
|
|
7.09 |
% |
|
|
October
2011
|
|
|
|
30
years
|
|
Willowtree
Towers
|
|
|
6,576 |
|
|
|
|
|
|
|
7.09 |
% |
|
|
October
2011
|
|
|
|
30
years
|
|
Abbott
Place
|
|
|
17,850 |
|
|
|
|
|
|
|
5.84 |
% |
|
|
November
2016
|
|
|
|
Interest
only
|
|
University
Centre – Kalamazoo
|
|
|
19,875 |
|
|
|
|
|
|
|
5.60 |
% |
|
|
March
2017
|
|
|
|
Interest
only
|
|
University
Meadows
|
|
|
9,633 |
|
|
|
|
|
|
|
4.92 |
% |
|
|
October
2015
|
|
|
|
Interest
only
|
|
Campus
Way
|
|
|
15,375 |
|
|
|
|
|
|
|
5.84 |
% |
|
|
November
2016
|
|
|
|
Interest
only
|
|
Campus
Walk – Oxford
|
|
|
8,133 |
|
|
|
|
|
|
|
4.70 |
% |
|
|
March
2012
|
|
|
|
Interest
only
|
|
Campus
Trails
|
|
|
7,486 |
|
|
|
|
|
|
|
5.84 |
% |
|
|
November
2016
|
|
|
|
Interest
only
|
|
University
Pointe
|
|
|
21,300 |
|
|
|
|
|
|
|
5.28 |
% |
|
|
October
2015
|
|
|
|
Interest
only
|
|
University
Trails
|
|
|
15,725 |
|
|
|
|
|
|
|
4.24 |
% |
|
|
March
2010
|
|
|
|
Interest
only
|
|
Total
|
|
$ |
982,764 |
|
|
Wtd
Avg Rate
|
|
|
|
5.36 |
% |
|
|
|
|
|
|
|
|
(1)
|
For
federal income tax purposes, the aggregate cost of the loans is equal to
the carrying amount.
|
(2)
|
Both
loans bear interest at a rate of LIBOR plus
1.35%.
|
(3)
|
The
floating rate on both loans was swapped to a fixed rate of
6.69%. This interest rate swap terminates in February 2014, at
which time the interest rate will revert back to a variable
rate. The TRS has guaranteed payment of the indebtedness of the
Phase I loan and the indebtedness of the Phase II loan, up to a limit of
$4.0 million of loan principal plus interest and litigation fees
potentially incurred by the lender. This guaranty will remain
in effect until the balance on the loan is paid in
full.
|
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(4)
|
Represents
the Anticipated Repayment Date, as defined in the loan
agreement. If the loan is not repaid on the Anticipated
Repayment Date, then certain monthly payments including excess cash flow,
as defined, become due through the maturity date of August
2030.
|
(5)
|
For
each borrowing on the construction loan, the Company has the option of
choosing Prime rate or one-, two-, or three-month LIBOR plus
1.20%. The loan can be extended through December 2011 through
the exercise of a 12-month extension
period.
|
Bonds
Payable
Bonds
payable consist of three issues secured by student housing ground/facility
leases, with interest and principal paid semi-annually and annually,
respectively, through maturity. Covenants include, among other items, budgeted
and actual debt service coverage ratios. The bonds are nonrecourse to the
Company. Payment of regularly scheduled principal payments is guaranteed by MBIA
Insurance Corporation. Bonds payable at December 31, 2009 consisted of the
following:
|
|
|
|
|
|
|
Principal
|
|
|
Weighted
|
|
|
|
|
Required
|
|
Series
|
|
Mortgaged
Facilities
Subject
to Leases
|
|
Original
|
|
|
December
31, 2009
|
|
|
Average Rate
|
|
|
Maturity
Date
|
|
Monthly Debt
Service
|
|
1999
|
|
University
Village-
PVAMU/TAMIU
|
|
$ |
39,270 |
|
|
$ |
30,345 |
|
|
|
7.70 |
% |
|
September
2023
|
|
$ |
302 |
|
2001
|
|
University
College–PVAMU
|
|
|
20,995 |
|
|
|
17,320 |
|
|
|
7.45 |
% |
|
August
2025
|
|
|
158 |
|
2003
|
|
University
College–PVAMU
|
|
|
4,325 |
|
|
|
3,725 |
|
|
|
5.97 |
% |
|
August
2028
|
|
|
28 |
|
|
|
Total/weighted
average rate
|
|
$ |
64,590 |
|
|
$ |
51,390 |
|
|
|
7.49 |
% |
|
|
|
$ |
488 |
|
Schedule
of Debt Maturities
Scheduled
debt maturities (reflecting automatic extensions where applicable) for each of
the five years subsequent to December 31, 2009 and thereafter, are as
follows:
|
|
Scheduled Principal
|
|
|
Due
at
Maturity
|
|
|
Total
|
|
2010
|
|
$ |
10,975 |
|
|
$ |
183,577 |
|
|
$ |
194,552 |
|
2011
|
|
|
10,409 |
|
|
|
194,875 |
|
|
|
205,284 |
|
2012
|
|
|
10,398 |
|
|
|
70,242 |
|
|
|
80,640 |
|
2013
|
|
|
9,302 |
|
|
|
77,509 |
|
|
|
86,811 |
|
2014
|
|
|
7,217 |
|
|
|
216,283 |
|
|
|
223,500 |
|
Thereafter
|
|
|
49,804 |
|
|
|
387,563 |
|
|
|
437,367 |
|
|
|
$ |
98,105 |
|
|
$ |
1,130,049 |
|
|
$ |
1,228,154 |
|
The
$183.6 million of debt scheduled to mature in 2010 is comprised of a $100.0
million construction loan which can be extended through December 2011 through
the exercise of a 12-month extension, and $83.6 million of fixed-rate mortgage
debt that we expect to pay-off on or before their respective maturity
dates.
Payment
of principal and interest were current at December 31, 2009. Mortgage
notes and bonds payable are subject to prepayment penalties.
12. Incentive
Award Plan
The
Company has adopted the 2004 Incentive Award Plan (the “Plan”). The
Plan provides for the grant of various stock-based incentive awards to selected
employees and directors of the Company and the Company’s
affiliates. The Company has reserved a total of 1,210,000 shares of
the Company’s common stock for issuance pursuant to the Plan, subject to certain
adjustments for changes in the Company’s capital structure, as defined in the
Plan. As of December 31, 2009, 354,560 shares were available for
issuance under the Plan.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Restricted
Stock Units
Upon
initial appointment to the Board of Directors and reelection to the Board of
Directors at each Annual Meeting of Stockholders, each outside member of the
Board of Directors is granted restricted stock units (“RSUs”). For
all 2006 and 2007 RSU grants, no shares of stock were issued at the time of the
RSU awards, and the Company was not required to set aside a fund for the payment
of any such award; however, the stock was deemed to be awarded on the date of
grant. Upon the Settlement Date, which is three years from the date
of grant, the Company will deliver to the recipients a number of shares of
common stock or cash, as determined by the Compensation Committee of the Board
of Directors, equal to the number of RSUs held by the recipients. In
addition, recipients of RSUs are entitled to dividend equivalents equal to the
cash distributions paid by the Company on one share of common stock for each RSU
issued, payable currently or on the Settlement Date, as determined by the
Compensation Committee of the Board of Directors.
Upon
reelection to the Board of Directors in May 2009, the Chairman of the Board of
Directors was granted RSUs valued at $51,500 and the remaining outside members
were each granted RSUs valued at $41,500. The number of RSUs was
determined based on the fair market value of the Company’s stock on the date of
grant, as defined in the Plan. All awards vested and settled
immediately on the date of grant, and the Company delivered shares of common
stock and cash, as determined by the Compensation Committee of the Board of
Directors.
A summary
of the Company’s RSUs under the Plan for the three years ended December 31, 2009
and changes during the two years ended December 31, 2009, are presented
below:
|
|
Number
of RSUs
|
|
|
Weighted-Average Grant
Date Fair Value Per RSU
|
|
Outstanding
at December 31, 2007
|
|
|
18,786 |
|
|
$ |
24.50 |
|
Granted
|
|
|
7,831 |
|
|
|
30.34 |
|
Settled
in common shares
|
|
|
(11,897 |
) |
|
|
25.82 |
|
Settled
in cash
|
|
|
(3,164 |
) |
|
|
25.43 |
|
Outstanding
at December 31, 2008
|
|
|
11,556 |
|
|
|
26.83 |
|
Granted
|
|
|
11,870 |
|
|
|
21.82 |
|
Settled
in common shares
|
|
|
(8,594 |
) |
|
|
22.89 |
|
Settled
in cash
|
|
|
(9,456 |
) |
|
|
22.46 |
|
Outstanding
at December 31, 2009
|
|
|
5,376 |
|
|
$ |
29.77 |
|
The RSUs
are fully vested on the date of grant. Accordingly, the Company
recognized expense of approximately $0.3 million for the year ended December 31,
2009 and $0.2 million for each of the years ended December 31, 2008 and 2007,
respectively, reflecting the fair value of the RSUs issued on the date of
grant. The weighted-average grant-date fair value for each RSU
granted during the year ended December 31, 2007 was $29.77.
Restricted
Stock Awards
The
Company awards restricted stock awards (“RSAs”) to its executive officers and
certain employees that vest in equal annual installments over a five year
period. Unvested awards are forfeited upon the termination of an
individual’s employment with the Company under specified
circumstances. Recipients of RSAs receive dividends, as declared by
the Company’s Board of Directors, on unvested shares, provided that the
recipient continues to be employed by the Company. A summary of the
Company’s RSAs under the Plan for the three years ended December 31, 2009 and
changes during the two years ended December 31, 2009, are presented
below:
|
|
Number
of RSAs
|
|
|
Weighted-Average Grant
Date Fair Value Per RSA
|
|
Nonvested
balance at December 31, 2007
|
|
|
178,921 |
|
|
$ |
27.64 |
|
Granted
|
|
|
151,492 |
|
|
|
27.62 |
|
Vested
|
|
|
(32,353 |
) |
|
|
26.54 |
|
Forfeited
|
|
|
(15,652 |
) |
|
|
26.97 |
|
Nonvested
balance at December 31, 2008
|
|
|
282,408 |
|
|
|
27.79 |
|
Granted
|
|
|
256,650 |
|
|
|
21.13 |
|
Vested
|
|
|
(50,210 |
) |
|
|
27.46 |
|
Forfeited
|
|
|
(26,913 |
) |
|
|
26.28 |
|
Nonvested
balance at December 31, 2009
|
|
|
461,935 |
|
|
$ |
24.21 |
|
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
weighted-average grant date fair value for each RSA granted and forfeited during
the year ended December 31, 2007 was $30.21 and $25.68,
respectively. The Company recognizes the value of these awards as an
expense over the vesting periods, which amounted to approximately $2.7 million,
$1.9 million and $1.1 million for the years ended December 31, 2009, 2008 and
2007, respectively.
The total
fair value of RSAs vested during the year ended December 31, 2009, was
approximately $0.9 million. Additionally, as of December 31, 2009,
the Company had approximately $8.6 million of total unrecognized compensation
cost related to these RSAs, which is expected to be recognized over a remaining
weighted-average period of 3.5 years.
Common
Units
The
Outperformance Bonus Plan was adopted upon consummation of the Company’s IPO in
August 2004, and consisted of awards to key employees equal to the value of
367,682 shares of the Company’s common stock. Such awards vested on
the third anniversary of the IPO (August 2007), upon the Company’s achievement
of specified performance measures. Upon vesting, the Compensation
Committee of the Board of Directors exercised its permitted discretion and
granted 132,400 of the awards to selected recipients in the form of profits
interest units (“PIUs”) of the Operating Partnership, with the remainder of the
awards paid in cash in the amount of $6.7 million. During the year
ended December 31, 2007, the Company recorded a compensation charge of
approximately $10.4 million to reflect the value of such awards. As a
result of the October 2007 equity offering discussed in Note 2, a book-up event
occurred for tax purposes, resulting in the 132,400 PIUs being converted to
Common Units.
Each
common unit is deemed equivalent to one share of the Company’s common
stock. Common units receive the same quarterly per unit distribution
as the per share distributions on the Company’s common stock.
13. Preferred
Stock
As part
of the Company’s acquisition of GMH’s student housing business, the Company
acquired the GMH REIT, an entity that elected to be taxed as a REIT under the
Code. In order to ensure that the entity met certain organizational
requirements, on the Merger date the entity issued 131 shares of 15% Series A
Cumulative Non-voting Preferred Stock. Holders of Series A Preferred
Stock were entitled to receive, when and as authorized by the Company’s Board of
Directors, cumulative preferential cash dividends at the rate of 15% per annum
of the total of $1,000 per share plus all accumulated and unpaid dividends
thereon. On December 31, 2008, as contemplated as part of the merger
transactions, the Company converted the GMH REIT into a Delaware limited
liability company, at which time the preferred shares were redeemed at a
redemption price of $1,200 per share, including a redemption premium of $200 per
share.
14. Derivatives Instruments and Hedging
Activities
The
Company is exposed to certain risk arising from both its business operations and
economic conditions. The Company principally manages its exposures to
a wide variety of business and operational risks through management of its core
business activities. The Company manages economic risks, including
interest rate, liquidity, and credit risk primarily by managing the amount,
sources, and duration of its debt funding and the use of derivative financial
instruments. Specifically, the Company enters into derivative
financial instruments to manage exposures that arise from business activities
that result in the receipt or payment of future known and uncertain cash
amounts, the value of which are determined by interest rates. The
Company’s derivative financial instruments are used to manage differences in the
amount, timing, and duration of the Company’s known or expected cash receipts
and its known or expected cash payments principally related to the Company’s
investments and borrowings.
Cash
Flow Hedges of Interest Rate Risk
The
Company’s objectives in using interest rate derivatives are to add stability to
interest expense and to manage its exposure to interest rate
movements. To accomplish this objective, the Company primarily uses
interest rate swaps as part of its interest rate risk management
strategy. Interest rate swaps designated as cash flow hedges involve
the receipt of variable-rate amounts from a counterparty in exchange for the
Company making fixed-rate payments over the life of the agreements without
exchange of the underlying notional amount.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
effective portion of changes in the fair value of derivatives designated and
that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive
Income (Loss) and is subsequently reclassified into earnings in the period that
the hedged forecasted transaction affects earnings. During the year
ended December 31, 2009, such derivatives were used to hedge the variable cash
flows associated with the Company’s $100 million senior secured term loan and
the Cullen Oaks Phase I and Phase II loans.
The
following table summarizes the Company’s outstanding interest rate swap
contracts as of December 31, 2009:
Date
Entered
|
Effective
Date
|
Maturity Date
|
Pay
Fixed Rate
|
Receive
Floating
Rate
Index
|
Notional Amount
|
Fair
Value
|
Feb.
12, 2007
|
Feb.
15, 2007
|
Feb.
15, 2014
|
6.689%
|
LIBOR
– 1 mo. plus 1.35%
|
$ 33,156
|
$ (3,504)
|
Feb.
23, 2009
|
March
20, 2009
|
Feb.
20, 2012
|
1.785%
|
LIBOR
– 1 month
|
50,000
|
(419)
|
Feb.
23, 2009
|
March
20, 2009
|
Feb.
20, 2012
|
1.800%
|
LIBOR
– 1 month
|
50,000
|
(433)
|
The table
below presents the fair value of the Company’s derivative financial instruments
as well as their classification on the consolidated balance sheets as of
December 31, 2009 and December 31, 2008:
|
Derivative
Liabilities as of
|
|
|
December
31, 2009
|
|
|
December
31, 2008
|
|
|
Balance
Sheet
Location
|
|
Fair
Value
|
|
|
Balance
Sheet
Location
|
|
|
Fair
Value
|
|
Interest
rate swap contracts
|
Other
liabilities
|
|
$ |
4,356 |
|
|
Other
Liabilities
|
|
|
$ |
5,117 |
|
Total
derivatives designated as hedging instruments
|
|
|
$ |
4,356 |
|
|
|
|
|
$ |
5,117 |
|
The
tables below present the effects of the Company’s derivative financial
instruments on other comprehensive income (“OCI”) and the consolidated
statements of operations for the years ended December 31, 2009, 2008 and
2007:
|
|
|
Amount
of Income (Loss) Recognized in OCI on Derivative
(Effective
Portion)
|
|
|
|
|
Year
Ended December 31,
|
|
Cash
Flow Hedging Relationships |
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Interest
rate swap contracts
|
|
|
$ |
761 |
|
|
$ |
(3,031 |
) |
|
$ |
(2,075 |
) |
Total
|
|
|
$ |
761 |
|
|
$ |
(3,031 |
) |
|
$ |
(2,075 |
) |
Location
of Gain Reclassified from Accumulated OCI
Into Income |
|
|
Amount
of Gain Reclassified from Accumulated OCI Into Income (Effective
Portion)
|
|
|
|
Year
Ended December 31, |
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Interest expense
|
|
|
$ |
- |
|
|
$ |
211 |
|
|
$ |
211 |
|
Total
|
|
|
$ |
- |
|
|
$ |
211 |
|
|
$ |
211 |
|
15. Fair
Value Disclosures
The
following table presents information about the Company’s liabilities measured at
fair value on a recurring basis as of December 31, 2009, and indicates the fair
value hierarchy of the valuation techniques utilized by the Company to determine
such fair value. In general, fair values determined by Level 1 inputs
utilize quoted prices (unadjusted) in active markets for identical assets or
liabilities the Company has the ability to access. Fair values
determined by Level 2 inputs utilize inputs other than quoted prices included in
Level 1 that are observable for the asset or liability, either directly or
indirectly. Level 2 inputs include quoted prices for similar assets
and liabilities in active markets and inputs other than quoted prices observable
for the asset or liability, such as interest rates and yield curves observable
at commonly quoted intervals. Level 3 inputs are unobservable inputs
for the asset or liability, and include situations where there is little, if
any, market activity for the asset or liability.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
In
instances in which the inputs used to measure fair value may fall into different
levels of the fair value hierarchy, the level in the fair value hierarchy within
which the fair value measurement in its entirety has been determined is based on
the lowest level input significant to the fair value measurement in its
entirety. The Company’s assessment of the significance of a
particular input to the fair value measurement in its entirety requires
judgment, and considers factors specific to the asset or liability.
Disclosures
concerning assets and liabilities measured at fair value are as
follows:
|
|
Liabilities
Measured at Fair Value on a Recurring Basis
|
|
|
|
Quoted
Prices in Active Markets for Identical Assets and
Liabilities (Level 1)
|
|
|
Significant
Other Observable Inputs (Level 2)
|
|
|
Significant Unobservable Inputs
(Level 3)
|
|
|
Balance
at December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
financial instruments
|
|
$ |
- |
|
|
$ |
4,356 |
|
|
$ |
- |
|
|
$ |
4,356 |
|
The
Company uses derivative financial instruments, specifically interest rate swaps,
for nontrading purposes. The Company uses interest rate swaps to
manage interest rate risk arising from previously unhedged interest payments
associated with variable rate debt. Through December 31, 2009,
derivative financial instruments were designated and qualified as cash flow
hedges. Derivative contracts with positive net fair values inclusive
of net accrued interest receipts or payments, are recorded in other
assets. Derivative contracts with negative net fair values, inclusive
of net accrued interest payments or receipts, are recorded in other
liabilities. The valuation of these instruments is determined using
widely accepted valuation techniques including discounted cash flow analysis on
the expected cash flows of each derivative. This analysis reflects
the contractual terms of the derivatives, including the period to maturity, and
uses observable market-based inputs, including interest rate
curves. The fair values of interest rate swaps are determined using
the market standard methodology of netting the discounted future fixed cash
receipts (or payments) and the discounted expected variable cash payments (or
receipts). The variable cash payments (or receipts) are based on an expectation
of future interest rates (forward curves) derived from observable market
interest rate curves.
The
Company incorporates credit valuation adjustments to appropriately reflect its
own nonperformance risk and the respective counterparty’s nonperformance risk in
the fair value measurements. In adjusting the fair value of its
derivative contracts for the effect of nonperformance risk, the Company has
considered the impact of netting and any applicable credit enhancements, such as
collateral postings, thresholds and guarantees.
Although
the Company has determined the majority of the inputs used to value its
derivative fall within Level 2 of the fair value hierarchy, the credit valuation
adjustment associated with its derivative utilizes Level 3 inputs, such as
estimates of current credit spreads to evaluate the likelihood of default by the
Company and its counterparty. However, as of December 31, 2009, the
Company has assessed the significance of the impact of the credit valuation
adjustment on the overall valuation of its derivative position and has
determined that the credit valuation adjustment is not significant to the
overall valuation of the Company’s derivative. As a result, the
Company has determined its derivative valuation in its entirety is classified in
Level 2 of the fair value hierarchy.
Other
Fair Value Disclosures
Cash and Cash Equivalents,
Restricted Cash, Student Contracts Receivable, Other Assets, Account Payable and
Accrued Expenses and Other Liabilities: The Company estimates
that the carrying amount approximates fair value, due to the short maturity of
these instruments.
Derivative Instruments: These
instruments are reported on the balance sheet at fair value, which is based on
calculations provided by independent, third-party financial institutions and
represent the discounted future cash flows expected, based on the projected
future interest rate curves over the life of the instrument.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Senior Secured Term Loan, Secured
Credit Facilities and Construction Loans: the fair value of the Company’s
secured term loan, secured credit facilities and construction loans approximate
carrying values due to the variable interest rate feature of these
instruments.
Mortgage Loans: the fair
value of mortgage loans is based on the present value of the cash flows at
current rates through maturity.
Bonds Payable: the fair value
of bonds payable is based on market quotes for bonds outstanding.
The table
below contains the estimated fair value and related carrying amounts for the
Company’s mortgage loans and bonds payable as of December 31, 2009 and December
31, 2008:
|
|
December
31, 2009
|
|
|
December
31, 2008
|
|
|
|
Fair
Value
|
|
|
Carrying
Amount
|
|
|
Fair
Value
|
|
|
Carrying
Amount
|
|
Mortgage
loans
|
|
$ |
912,332 |
|
|
$ |
878,065 |
|
|
$ |
1,000,105 |
|
|
$ |
984,127 |
|
Bonds
payable
|
|
|
49,865 |
|
|
|
51,390 |
|
|
|
52,814 |
|
|
|
53,275 |
|
16. Lease
Commitments
The
Company entered into a 65-year ground/facility lease agreement on October 30,
2007 for the purpose of constructing Barrett Honors College, a student housing
facility on the campus of Arizona State University in Tempe,
Arizona. The agreement will terminate on the 65th
anniversary date of the opening date (August 2074) and has two ten year
extensions available. During the first ten years, under the terms of
the ground lease, the lessor will receive annual minimum rents of approximately
$0.3 million. For the remaining years of the lease, the lessor will
receive variable rent payments based upon the operating performance of the
property. Straight-lined rental amounts were capitalized during the
construction period and expensed upon the commencement of operations in August
2009. Rent expense under this agreement was approximately $14,000 for
the year ended December 31, 2009.
The
Company entered into a 65-year ground/facility lease agreement on December 22,
2006 for the purpose of constructing Vista del Sol, a student housing facility
on the campus of Arizona State University in Tempe, Arizona. The
agreement will terminate on the 65th
anniversary date of the opening date (August 2073) and has two ten year
extensions available. During the first five years, under the terms of
the ground lease, the lessor will receive annual minimum rents of approximately
$0.7 million and variable rent payments based upon the operating performance of
the property. For the remaining years of the lease, the lessor will
receive variable rent payments based upon the operating performance of the
property. Straight-lined rental amounts were capitalized during the
construction period and expensed upon the commencement of operations in August
2008. Rent expense under this agreement was approximately $1.0
million and $0.4 million for the years ended December 31, 2009 and 2008,
respectively.
The
Company entered into a 95-year ground lease agreement on August 3, 2005 for the
purpose of constructing University Centre, a student housing facility near the
campuses of Rutgers University and the New Jersey Institute of Technology in
Newark, New Jersey. The agreement terminates in July 2102 with no
extensions or renewals available. Under the terms of the ground
lease, the lessor receives escalating annual rents ranging from $0.1 million to
$0.4 million and contingent rental payments based upon the operating performance
of the property. Straight-lined rental amounts were capitalized
during the construction period and expensed upon the commencement of operations
in August 2007. Rent expense under the ground lease agreement was
approximately $0.3 million for each of the years ended December 31, 2009 and
2008 and $0.1 million for the year ended December 31, 2007.
The
Company entered into a ground lease agreement on October 2, 2003 for the purpose
of constructing a student housing facility near the campus of Temple University
in Philadelphia, Pennsylvania. The agreement terminates June 30, 2079
and has four six year extensions available. Under the terms of the
ground lease, the lessor receives annual minimum rents of $0.1 million and
contingent rental payments which are based upon the operating performance of the
property. The contingent rental payment was approximately $0.1
million for each of the years ended December 31, 2009, 2008 and
2007.
The
Company is a party to a sublease for corporate office space beginning August 15,
2002, and expiring December 31, 2010. The Company is also party to a lease for
corporate office space beginning June 19, 2008, and expiring July 31, 2013. The
terms of the sublease and lease provide for a period of free rent and scheduled
rental rate increases and common area maintenance charges upon expiration of the
free rent period.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
Company also has various operating and capital leases for furniture, office and
technology equipment, which expire through 2014. Rental expense under
the operating lease agreements approximated $2.2 million, $1.4 million and $0.8
million for the years ended December 31, 2009, 2008 and 2007,
respectively.
Wholly-owned
properties, net at December 31, 2009 included approximately $3.5 million related
to capital leases of furniture, net of approximately $1.8 million of accumulated
amortization. Other assets at December 31, 2009 included
approximately $150,000 related to corporate assets under capital leases, net of
approximately $130,000 of accumulated amortization.
Future
minimum commitments over the life of all leases subsequent to December 31,
2009, are as follows:
|
|
Operating
|
|
|
Capital
|
|
2010
|
|
$ |
1,902 |
|
|
$ |
1,053 |
|
2011
|
|
|
1,530 |
|
|
|
826 |
|
2012
|
|
|
1,531 |
|
|
|
439 |
|
2013
|
|
|
771 |
|
|
|
148 |
|
2014
|
|
|
661 |
|
|
|
99 |
|
Thereafter
|
|
|
38,844 |
|
|
|
- |
|
Total
minimum lease payments
|
|
|
45,239 |
|
|
|
2,565 |
|
Amount
representing interest
|
|
|
- |
|
|
|
(251 |
) |
Balance
of minimum lease payments
|
|
$ |
45,239 |
|
|
$ |
2,314 |
|
The
capital lease obligations are reflected in other liabilities in the accompanying
consolidated balance sheets and amortization of assets recorded under capital
leases is included in depreciation expense.
17. Commitments
and Contingencies
Commitments
Development-related
guarantees: For
its third-party development projects, the Company commonly provides alternate
housing and project cost guarantees, subject to force majeure. These
guarantees are typically limited, on an aggregate basis, to the amount of the
projects’ related development fees or a contractually agreed-upon maximum
exposure amount. Alternate housing guarantees typically expire five
days after construction is complete and generally require the Company to provide
substitute living quarters and transportation for students to and from the
university if the project is not complete by an agreed-upon completion
date. Under project cost guarantees, the Company is responsible for
the construction cost of a project in excess of an approved
budget. The budget consists primarily of costs included in the
general contractors’ guaranteed maximum price contract (“GMP”). In
most cases, the GMP obligates the general contractor, subject to force majeure
and approved change orders, to provide completion date guarantees and to cover
cost overruns and liquidated damages. In addition, the GMP is
typically secured with payment and performance bonds. Project cost
guarantees expire upon completion of certain developer obligations, which are
normally satisfied within one year after completion of the project.
In the
normal course of business, the Company enters into various development-related
purchase commitments with parties that provide development-related goods and
services. In the event that the Company was to terminate development
services prior to the completion of projects under construction, the Company
could potentially be committed to satisfy outstanding purchase orders with such
parties. At December 31, 2009, management did not anticipate any material
deviations from schedule or budget related to third-party development projects
currently in progress.
Guaranty of Joint Venture Mortgage
Debt: As mentioned in Note 10, the Fidelity Joint Ventures are funded in
part with secured third party debt in the amount of $330.4 million. The
Operating Partnership serves as non-recourse, carve-out guarantor of this
debt, which means the Operating Partnership is liable to the lender for any
loss, damage, cost, expense, liability, claim or other obligation incurred by
the lender arising out of or in connection with certain non-recourse exceptions
in connection with the debt. Pursuant to the respective limited
liability company agreements, the Fidelity Joint Ventures agreed to indemnify,
defend and hold harmless the Operating Partnership with respect to such
obligations, except to the extent such obligations were caused by the willful
misconduct, gross negligence, fraud or bad faith of the Operating Partnership or
its employees, agents or affiliates. Therefore, the Operating
Partnership’s exposure under the guarantees for obligations not caused by the
willful misconduct, gross negligence, fraud or bad faith of the Operating
Partnership or its employees, agents or affiliates is not expected to exceed the
Company’s 10% proportionate interest in the related mortgage debt.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
Company has estimated the fair value of guarantees entered into to be
immaterial. The Company’s estimated maximum exposure amount under the
above guarantees is approximately $340.0 million.
Contingencies
Litigation: In the
normal course of business, the Company is subject to claims, lawsuits, and legal
proceedings. While it is not possible to ascertain the ultimate outcome of
such matters, management believes that the aggregate amount of such liabilities,
if any, in excess of amounts provided or covered by insurance, will not have a
material adverse effect on the consolidated financial position or results of
operations of the Company.
Letters of
Intent: In the ordinary course of the Company’s business, the
Company enters into letters of intent indicating a willingness to negotiate
for acquisitions, dispositions or joint ventures. Such letters of
intent are non-binding, and neither party to the letter of intent is obligated
to pursue negotiations unless and until a definitive contract is entered into by
the parties. Even if definitive contracts are entered into, the
letters of intent relating to the acquisition and disposition of real property
and resulting contracts generally contemplate that such contracts will provide
the acquirer with time to evaluate the property and conduct due diligence,
during which periods the acquiror will have the ability to terminate the
contracts without penalty or forfeiture of any deposit or earnest
money. There can be no assurance that definitive contracts will be
entered into with respect to any matter covered by letters of intent or that the
Company will consummate any transaction contemplated by any definitive
contract. Furthermore, due diligence periods for real property are
frequently extended as needed. Once the due diligence period expires,
the Company is then at risk under a real property acquisition contract, but only
to the extent of any earnest money deposits associated with the
contract.
Environmental
Matters: The Company is not aware of any environmental
liability with respect to the properties that would have a material adverse
effect on the Company’s business, assets or results of operations. However,
there can be no assurance that such a material environmental liability does not
exist. The existence of any such material environmental liability could have an
adverse effect on the Company’s results of operations and cash
flows.
18. Segments
The
Company defines business segments by their distinct customer base and service
provided. The Company has identified four reportable segments:
Wholly-Owned Properties, On-Campus Participating Properties, Development
Services, and Property Management Services. Management evaluates each
segment’s performance based on operating income before depreciation,
amortization, minority interests and allocation of corporate
overhead. Intercompany fees are reflected at the contractually
stipulated amounts.
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Wholly-Owned
Properties
|
|
|
|
|
|
|
|
|
|
Rental
revenues
|
|
$ |
273,053 |
|
|
$ |
197,037 |
|
|
$ |
117,858 |
|
Interest
and other income
|
|
|
42 |
|
|
|
113 |
|
|
|
324 |
|
Total
revenues from external customers
|
|
|
273,095 |
|
|
|
197,150 |
|
|
|
118,182 |
|
Operating
expenses before depreciation, amortization, ground/facility
lease,
and allocation of corporate overhead
|
|
|
134,267 |
|
|
|
101,246 |
|
|
|
54,411 |
|
Ground/facility
leases
|
|
|
1,021 |
|
|
|
376 |
|
|
|
- |
|
Interest
expense
|
|
|
53,990 |
|
|
|
43,741 |
|
|
|
24,226 |
|
Other
nonoperating income
|
|
|
402 |
|
|
|
486 |
|
|
|
- |
|
Operating
income before depreciation, amortization and allocation of
corporate
overhead
|
|
$ |
84,219 |
|
|
$ |
52,273 |
|
|
$ |
39,545 |
|
Depreciation
and amortization
|
|
$ |
70,479 |
|
|
$ |
51,558 |
|
|
$ |
25,648 |
|
Capital
expenditures
|
|
$ |
114,729 |
|
|
$ |
142,796 |
|
|
$ |
142,265 |
|
Total
segment assets at December 31,
|
|
$ |
2,093,638 |
|
|
$ |
2,060,591 |
|
|
$ |
978,275 |
|
On-Campus
Participating Properties
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental
revenues
|
|
$ |
22,727 |
|
|
$ |
22,042 |
|
|
$ |
20,966 |
|
Interest
and other income
|
|
|
42 |
|
|
|
206 |
|
|
|
359 |
|
Total
revenues from external customers
|
|
|
22,769 |
|
|
|
22,248 |
|
|
|
21,325 |
|
Operating
expenses before depreciation, amortization,
ground/facility
lease, and allocation of corporate overhead
|
|
|
9,650 |
|
|
|
10,073 |
|
|
|
8,701 |
|
Ground/facility
lease
|
|
|
1,086 |
|
|
|
1,402 |
|
|
|
1,622 |
|
Interest
expense
|
|
|
6,183 |
|
|
|
6,166 |
|
|
|
6,226 |
|
Operating
income before depreciation, amortization
and
allocation of corporate overhead
|
|
$ |
5,850 |
|
|
$ |
4,607 |
|
|
$ |
4,776 |
|
Depreciation
and amortization
|
|
$ |
4,350 |
|
|
$ |
4,322 |
|
|
$ |
4,263 |
|
Capital
expenditures
|
|
$ |
739 |
|
|
$ |
719 |
|
|
$ |
480 |
|
Total
segment assets at December 31,
|
|
$ |
78,718 |
|
|
$ |
83,946 |
|
|
$ |
85,708 |
|
Development
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
and construction management fees from
external
customers
|
|
$ |
5,015 |
|
|
$ |
7,922 |
|
|
$ |
5,490 |
|
Intersegment
revenues
|
|
|
- |
|
|
|
2,502 |
|
|
|
- |
|
Total
revenues
|
|
|
5,015 |
|
|
|
10,424 |
|
|
|
5,490 |
|
Operating
expenses
|
|
|
8,590 |
|
|
|
9,471 |
|
|
|
5,588 |
|
Operating
(loss) income before depreciation, amortization
and
allocation of corporate overhead
|
|
$ |
(3,575 |
) |
|
$ |
953 |
|
|
$ |
(98 |
) |
Total
segment assets at December 31,
|
|
$ |
4,338 |
|
|
$ |
7,196 |
|
|
$ |
7,624 |
|
Property
Management Services
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
management fees from external customers
|
|
$ |
8,795 |
|
|
$ |
6,578 |
|
|
$ |
2,821 |
|
Intersegment
revenues
|
|
|
10,730 |
|
|
|
7,532 |
|
|
|
4,289 |
|
Total
revenues
|
|
|
19,525 |
|
|
|
14,110 |
|
|
|
7,110 |
|
Operating
expenses
|
|
|
7,406 |
|
|
|
6,485 |
|
|
|
3,102 |
|
Operating
income before depreciation, amortization
and
allocation of corporate overhead
|
|
$ |
12,119 |
|
|
$ |
7,625 |
|
|
$ |
4,008 |
|
Total
segment assets at December 31,
|
|
$ |
4,545 |
|
|
$ |
7,258 |
|
|
$ |
2,220 |
|
Reconciliations
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
segment revenues
|
|
$ |
320,404 |
|
|
$ |
243,932 |
|
|
$ |
152,107 |
|
Unallocated
interest income earned on corporate cash
|
|
|
36 |
|
|
|
812 |
|
|
|
794 |
|
Elimination
of intersegment revenues
|
|
|
(10,730 |
) |
|
|
(10,034 |
) |
|
|
(4,289 |
) |
Total
consolidated revenues, including interest income
|
|
$ |
309,710 |
|
|
$ |
234,710 |
|
|
$ |
148,612 |
|
Segment
operating income before depreciation, amortization and
allocation
of corporate overhead
|
|
$ |
98,613 |
|
|
$ |
65,458 |
|
|
$ |
48,231 |
|
Depreciation
and amortization
|
|
|
(79,667 |
) |
|
|
(59,416 |
) |
|
|
(31,784 |
) |
Net
unallocated expenses relating to corporate overhead
|
|
|
(18,725 |
) |
|
|
(16,509 |
) |
|
|
(17,014 |
) |
Loss
from unconsolidated joint ventures
|
|
|
(2,073 |
) |
|
|
(1,619 |
) |
|
|
(108 |
) |
Income
tax provision
|
|
|
(540 |
) |
|
|
(388 |
) |
|
|
(756 |
) |
Loss
from continuing operations
|
|
$ |
(2,392 |
) |
|
$ |
(12,474 |
) |
|
$ |
(1,431 |
) |
Total
segment assets
|
|
$ |
2,181,239 |
|
|
$ |
2,158,991 |
|
|
$ |
1,073,827 |
|
Unallocated
corporate assets
|
|
|
53,742 |
|
|
|
24,918 |
|
|
|
2,469 |
|
Total
assets
|
|
$ |
2,234,981 |
|
|
$ |
2,183,909 |
|
|
$ |
1,076,296 |
|
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
19. Quarterly
Financial Information (Unaudited)
The
information presented below represents the consolidated financial results of the
Company for the years ended December 31, 2009 and 2008.
|
|
2009
|
|
|
|
1PstP Quarter
|
|
|
2PndP Quarter
|
|
|
3PrdP Quarter
|
|
|
4PthP Quarter
|
|
|
Total
|
|
Total
revenues
|
|
$ |
77,740 |
|
|
$ |
73,270 |
|
|
$ |
78,445 |
|
|
$ |
83,543 |
|
|
$ |
312,998 |
(1)
|
Net
income (loss)
|
|
$ |
277 |
|
|
$ |
(5,310 |
) |
|
$ |
(5,804 |
) |
|
$ |
(2,003 |
) |
|
$ |
(12,840 |
) |
Net
income (loss) per
share-
basic
|
|
$ |
0.00 |
|
|
$ |
(0.11 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.28 |
) |
Net
income (loss) per
share-
diluted
|
|
$ |
0.00 |
|
|
$ |
(0.11 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.28 |
) |
|
|
2008
|
|
|
|
1PstP Quarter
|
|
|
2PndP Quarter
|
|
|
3PrdP Quarter
|
|
|
4PthP Quarter
|
|
|
Total
|
|
Total
revenues
|
|
$ |
41,441 |
|
|
$ |
43,889 |
|
|
$ |
72,688 |
|
|
$ |
78,290 |
|
|
$ |
236,308 |
(1)
|
Net
income (loss)
|
|
$ |
4,909 |
|
|
$ |
(1,450 |
) |
|
$ |
(13,094 |
) |
|
$ |
(3,420 |
) |
|
$ |
(13,055 |
) |
Net
income (loss) per
share-
basic
|
|
$ |
0.18 |
|
|
$ |
(0.04 |
) |
|
$ |
(0.31 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.36 |
) |
Net
income (loss) per
share-
diluted
|
|
$ |
0.18 |
|
|
$ |
(0.04 |
) |
|
$ |
(0.31 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.36 |
) |
(1) Includes
revenues from discontinued operations of $3.4 million and $2.7 million for the
years ended December 31, 2009 and 2008,
respectively.
20. Subsequent
Events
Distributions: On
January 29, 2010, the Company declared a fourth quarter 2009 distribution per
share of $0.3375 which was paid on February 26, 2010 to all common stockholders
of record as of February 15, 2010. At the same time, the Operating
Partnership paid an equivalent amount per unit to holders of Common Units, as
well as the quarterly cumulative preferential distribution to holders of Series
A Preferred Units (see Note 9).
Pay-off of mortgage
debt: On the scheduled maturity date of March 1, 2010, the
Company paid off approximately $34.5 million of fixed-rate mortgage debt secured
by two of our wholly-owned properties (Campus Club – Statesboro and University
Trails).
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
21.
Schedule of Real Estate and Accumulated Depreciation
|
|
|
|
|
|
|
|
Initial
Cost
|
|
|
Basis
Step-Up
|
|
|
|
|
|
Total
Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
|
Beds
|
|
|
Land
|
|
|
Buildings
and Improvements and
Furniture,
Fixtures and Equipment
|
|
|
Land
|
|
|
Buildings
and Improvements and
Furniture,
Fixtures and Equipment
|
|
|
Costs
Capitalized Subsequent to Acquisition
|
|
|
Land
|
|
|
Buildings
and Improvements and
Furniture, Fixtures
and Equipment
|
|
|
Total
(1)
|
|
|
Accumulated
Depreciation
(2)
|
|
|
Encumbrances
(3)
|
|
|
Year
Built
|
|
Wholly-Owned
Properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Villas
on
Apache
|
|
|
111 |
|
|
|
288 |
|
|
$ |
1,465 |
|
|
$ |
8,071 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
3,151 |
|
|
$ |
1,465 |
|
|
$ |
11,222 |
|
|
$ |
12,687 |
|
|
$ |
4,423 |
|
|
$ |
- |
|
|
|
1987 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Village at
Blacksburg
|
|
|
288 |
|
|
|
1,056 |
|
|
|
3,826 |
|
|
|
22,155 |
|
|
|
- |
|
|
|
- |
|
|
|
3,640 |
|
|
|
3,826 |
|
|
|
25,795 |
|
|
|
29,621 |
|
|
|
7,229 |
|
|
|
19,926 |
|
|
|
1990/
1998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
River
Club
Apartments
|
|
|
266 |
|
|
|
792 |
|
|
|
3,478 |
|
|
|
19,655 |
|
|
|
- |
|
|
|
- |
|
|
|
1,736 |
|
|
|
3,478 |
|
|
|
21,391 |
|
|
|
24,869 |
|
|
|
6,440 |
|
|
|
17,430 |
|
|
|
1996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
River
Walk
Townhomes
|
|
|
100 |
|
|
|
336 |
|
|
|
1,442 |
|
|
|
8,194 |
|
|
|
- |
|
|
|
- |
|
|
|
698 |
|
|
|
1,442 |
|
|
|
8,892 |
|
|
|
10,334 |
|
|
|
2,647 |
|
|
|
- |
|
|
|
1998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Callaway
House
|
|
|
173 |
|
|
|
538 |
|
|
|
5,081 |
|
|
|
20,499 |
|
|
|
- |
|
|
|
- |
|
|
|
1,592 |
|
|
|
5,081 |
|
|
|
22,091 |
|
|
|
27,172 |
|
|
|
6,301 |
|
|
|
18,340 |
|
|
|
1999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Village at
Alafaya
Club
|
|
|
228 |
|
|
|
839 |
|
|
|
3,788 |
|
|
|
21,851 |
|
|
|
- |
|
|
|
- |
|
|
|
1,562 |
|
|
|
3,788 |
|
|
|
23,414 |
|
|
|
27,201 |
|
|
|
6,386 |
|
|
|
19,237 |
|
|
|
1999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Village at
Science
Drive
|
|
|
192 |
|
|
|
732 |
|
|
|
4,673 |
|
|
|
19,021 |
|
|
|
- |
|
|
|
- |
|
|
|
971 |
|
|
|
4,673 |
|
|
|
19,992 |
|
|
|
24,665 |
|
|
|
4,607 |
|
|
|
- |
|
|
|
2000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Village
at
Boulder
Creek
|
|
|
82 |
|
|
|
309 |
|
|
|
939 |
|
|
|
14,887 |
|
|
|
96 |
|
|
|
1,506 |
|
|
|
831 |
|
|
|
1,035 |
|
|
|
17,224 |
|
|
|
18,259 |
|
|
|
4,068 |
|
|
|
15,248 |
|
|
|
2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Village
at
Fresno
|
|
|
105 |
|
|
|
406 |
|
|
|
900 |
|
|
|
15,070 |
|
|
|
29 |
|
|
|
483 |
|
|
|
248 |
|
|
|
929 |
|
|
|
15,801 |
|
|
|
16,730 |
|
|
|
2,938 |
|
|
|
- |
|
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Village
at TU
|
|
|
220 |
|
|
|
749 |
|
|
|
- |
|
|
|
38,739 |
|
|
|
- |
|
|
|
2,380 |
|
|
|
516 |
|
|
|
- |
|
|
|
41,635 |
|
|
|
41,635 |
|
|
|
6,842 |
|
|
|
- |
|
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Village
at
Sweet
Home
|
|
|
269 |
|
|
|
828 |
|
|
|
2,473 |
|
|
|
34,626 |
|
|
|
- |
|
|
|
- |
|
|
|
278 |
|
|
|
2,473 |
|
|
|
34,904 |
|
|
|
37,377 |
|
|
|
5,146 |
|
|
|
- |
|
|
|
2005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Club
Tallahassee
(4)
|
|
|
152 |
|
|
|
608 |
|
|
|
4,065 |
|
|
|
17,368 |
|
|
|
- |
|
|
|
- |
|
|
|
2,348 |
|
|
|
4,065 |
|
|
|
19,716 |
|
|
|
23,781 |
|
|
|
4,228 |
|
|
|
12,867 |
|
|
|
2000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Grove at
University
Club
(4)
|
|
|
64 |
|
|
|
128 |
|
|
|
600 |
|
|
|
5,735 |
|
|
|
- |
|
|
|
- |
|
|
|
458 |
|
|
|
600 |
|
|
|
6,193 |
|
|
|
6,793 |
|
|
|
930 |
|
|
|
4,068 |
|
|
|
2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
College
Club
Tallahassee
(5)
|
|
|
96 |
|
|
|
384 |
|
|
|
1,498 |
|
|
|
11,156 |
|
|
|
- |
|
|
|
- |
|
|
|
1,285 |
|
|
|
1,498 |
|
|
|
12,441 |
|
|
|
13,939 |
|
|
|
2,412 |
|
|
|
8,327 |
|
|
|
2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Greens at
College
Club
(5)
|
|
|
40 |
|
|
|
160 |
|
|
|
601 |
|
|
|
4,893 |
|
|
|
- |
|
|
|
- |
|
|
|
536 |
|
|
|
601 |
|
|
|
5,429 |
|
|
|
6,030 |
|
|
|
980 |
|
|
|
- |
|
|
|
2004 |
|
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
Initial
Cost
|
|
|
Basis
Step-Up
|
|
|
|
|
|
Total
Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
|
Beds
|
|
|
Land
|
|
|
Buildings
and Improvements and
Furniture,
Fixtures and Equipment
|
|
|
Land
|
|
|
Buildings
and Improvements and
Furniture,
Fixtures and Equipment
|
|
|
Costs
Capitalized Subsequent to Acquisition
|
|
|
Land
|
|
|
Buildings
and Improvements and
Furniture, Fixtures
and Equipment
|
|
|
Total
(1)
|
|
|
Accumulated
Depreciation
(2)
|
|
|
Encumbrances
(3)
|
|
|
Year
Built
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Club
Gainesville
|
|
|
94 |
|
|
|
376 |
|
|
$ |
1,416 |
|
|
$ |
11,848 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,219 |
|
|
$ |
1,416 |
|
|
$ |
13,067 |
|
|
$ |
14,483 |
|
|
$ |
2,005 |
|
|
$ |
- |
|
|
|
1999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Estates
|
|
|
396 |
|
|
|
1,044 |
|
|
|
4,254 |
|
|
|
43,164 |
|
|
|
- |
|
|
|
- |
|
|
|
1,742 |
|
|
|
4,254 |
|
|
|
44,906 |
|
|
|
49,160 |
|
|
|
6,402 |
|
|
|
36,218 |
|
|
|
2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
City
Parc at Fry
Street
|
|
|
136 |
|
|
|
418 |
|
|
|
1,902 |
|
|
|
17,678 |
|
|
|
- |
|
|
|
- |
|
|
|
717 |
|
|
|
1,902 |
|
|
|
18,395 |
|
|
|
20,297 |
|
|
|
2,870 |
|
|
|
10,957 |
|
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entrada
Real
|
|
|
98 |
|
|
|
363 |
|
|
|
1,475 |
|
|
|
15,859 |
|
|
|
- |
|
|
|
- |
|
|
|
509 |
|
|
|
1,475 |
|
|
|
16,368 |
|
|
|
17,843 |
|
|
|
1,878 |
|
|
|
9,143 |
|
|
|
2000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royal
Oaks (6)
|
|
|
82 |
|
|
|
224 |
|
|
|
1,346 |
|
|
|
8,153 |
|
|
|
- |
|
|
|
- |
|
|
|
483 |
|
|
|
1,346 |
|
|
|
8,636 |
|
|
|
9,982 |
|
|
|
1,031 |
|
|
|
- |
|
|
|
1990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royal
Pavilion
(6)
|
|
|
60 |
|
|
|
204 |
|
|
|
1,212 |
|
|
|
7,304 |
|
|
|
- |
|
|
|
- |
|
|
|
439 |
|
|
|
1,212 |
|
|
|
7,743 |
|
|
|
8,955 |
|
|
|
939 |
|
|
|
- |
|
|
|
1991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royal
Village
Tallahassee
(6)
|
|
|
75 |
|
|
|
288 |
|
|
|
1,764 |
|
|
|
10,768 |
|
|
|
- |
|
|
|
- |
|
|
|
620 |
|
|
|
1,764 |
|
|
|
11,388 |
|
|
|
13,152 |
|
|
|
1,326 |
|
|
|
- |
|
|
|
1992 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royal
Village
Gainesville
|
|
|
118 |
|
|
|
448 |
|
|
|
2,484 |
|
|
|
15,153 |
|
|
|
- |
|
|
|
- |
|
|
|
806 |
|
|
|
2,484 |
|
|
|
15,959 |
|
|
|
18,443 |
|
|
|
2,025 |
|
|
|
- |
|
|
|
1996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northgate
Lakes
|
|
|
194 |
|
|
|
710 |
|
|
|
4,807 |
|
|
|
27,284 |
|
|
|
- |
|
|
|
- |
|
|
|
1,146 |
|
|
|
4,807 |
|
|
|
28,430 |
|
|
|
33,237 |
|
|
|
3,401 |
|
|
|
- |
|
|
|
1997/
1998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royal
Lexington
|
|
|
94 |
|
|
|
364 |
|
|
|
2,848 |
|
|
|
12,783 |
|
|
|
- |
|
|
|
- |
|
|
|
817 |
|
|
|
2,848 |
|
|
|
13,600 |
|
|
|
16,448 |
|
|
|
1,707 |
|
|
|
- |
|
|
|
1994 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Woods at
Greenland
|
|
|
78 |
|
|
|
276 |
|
|
|
1,050 |
|
|
|
7,286 |
|
|
|
- |
|
|
|
- |
|
|
|
505 |
|
|
|
1,050 |
|
|
|
7,791 |
|
|
|
8,841 |
|
|
|
987 |
|
|
|
5,819 |
|
|
|
2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raider’s
Crossing
|
|
|
96 |
|
|
|
276 |
|
|
|
1,089 |
|
|
|
8,404 |
|
|
|
- |
|
|
|
- |
|
|
|
532 |
|
|
|
1,089 |
|
|
|
8,936 |
|
|
|
10,025 |
|
|
|
1,100 |
|
|
|
6,248 |
|
|
|
2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raider’s
Pass
|
|
|
264 |
|
|
|
828 |
|
|
|
3,877 |
|
|
|
32,445 |
|
|
|
- |
|
|
|
- |
|
|
|
1,184 |
|
|
|
3,877 |
|
|
|
33,629 |
|
|
|
37,506 |
|
|
|
3,918 |
|
|
|
18,487 |
|
|
|
2002/
2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggie
Station
|
|
|
156 |
|
|
|
450 |
|
|
|
1,634 |
|
|
|
18,821 |
|
|
|
- |
|
|
|
- |
|
|
|
577 |
|
|
|
1,634 |
|
|
|
19,398 |
|
|
|
21,032 |
|
|
|
2,180 |
|
|
|
10,988 |
|
|
|
2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Outpost San
Marcos
|
|
|
162 |
|
|
|
486 |
|
|
|
1,987 |
|
|
|
18,973 |
|
|
|
- |
|
|
|
- |
|
|
|
451 |
|
|
|
1,987 |
|
|
|
19,424 |
|
|
|
21,411 |
|
|
|
2,149 |
|
|
|
13,013 |
|
|
|
2003/
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Outpost San
Antonio
|
|
|
276 |
|
|
|
828 |
|
|
|
3,262 |
|
|
|
36,252 |
|
|
|
|
|
|
|
|
|
|
|
444 |
|
|
|
3,262 |
|
|
|
36,696 |
|
|
|
39,958 |
|
|
|
3,997 |
|
|
|
22,945 |
|
|
|
2005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Callaway
Villas
|
|
|
236 |
|
|
|
704 |
|
|
|
3,903 |
|
|
|
32,286 |
|
|
|
- |
|
|
|
- |
|
|
|
262 |
|
|
|
3,903 |
|
|
|
32,548 |
|
|
|
36,451 |
|
|
|
3,674 |
|
|
|
- |
|
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Village
on Sixth
|
|
|
248 |
|
|
|
752 |
|
|
|
2,763 |
|
|
|
22,480 |
|
|
|
- |
|
|
|
- |
|
|
|
2,083 |
|
|
|
2,763 |
|
|
|
24,563 |
|
|
|
27,326 |
|
|
|
2,354 |
|
|
|
16,820 |
|
|
|
2000/
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Newtown
Crossing
|
|
|
356 |
|
|
|
942 |
|
|
|
6,763 |
|
|
|
53,597 |
|
|
|
- |
|
|
|
- |
|
|
|
729 |
|
|
|
6,763 |
|
|
|
54,326 |
|
|
|
61,089 |
|
|
|
4,988 |
|
|
|
31,138 |
|
|
|
2005/
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Olde
Town
University
Square
|
|
|
224 |
|
|
|
550 |
|
|
|
2,277 |
|
|
|
24,614 |
|
|
|
- |
|
|
|
- |
|
|
|
703 |
|
|
|
2,277 |
|
|
|
25,317 |
|
|
|
27,594 |
|
|
|
2,521 |
|
|
|
20,159 |
|
|
|
2005 |
|
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial
Cost
|
|
|
Basis
Step-Up
|
|
|
|
|
|
Total
Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
|
Beds
|
|
|
Land
|
|
|
Buildings
and Improvements and
Furniture,
Fixtures and Equipment
|
|
|
Land
|
|
|
Buildings
and Improvements and
Furniture,
Fixtures and Equipment
|
|
|
Costs
Capitalized Subsequent to Acquisition
|
|
|
Land
|
|
|
Buildings
and Improvements and
Furniture, Fixtures
and Equipment
|
|
|
Total
(1)
|
|
|
Accumulated
Depreciation (2)
|
|
|
Encumbrances
(3)
|
|
|
Year
Built
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peninsular
Place
|
|
|
183 |
|
|
|
478 |
|
|
$ |
2,306 |
|
|
$ |
16,559 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
369 |
|
|
$ |
2,306 |
|
|
$ |
16,928 |
|
|
$ |
19,234 |
|
|
$ |
1,803 |
|
|
$ |
16,563 |
|
|
|
2005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Centre
|
|
|
234 |
|
|
|
838 |
|
|
|
- |
|
|
|
77,378 |
|
|
|
- |
|
|
|
- |
|
|
|
1,713 |
|
|
|
- |
|
|
|
79,091 |
|
|
|
79,091 |
|
|
|
5,614 |
|
|
|
- |
|
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sunnyside
Commons
|
|
|
68 |
|
|
|
161 |
|
|
|
6,933 |
|
|
|
768 |
|
|
|
- |
|
|
|
- |
|
|
|
57 |
|
|
|
6,933 |
|
|
|
825 |
|
|
|
7,758 |
|
|
|
51 |
|
|
|
- |
|
|
|
1925-2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pirate’s
Place
|
|
|
144 |
|
|
|
528 |
|
|
|
1,159 |
|
|
|
9,652 |
|
|
|
- |
|
|
|
- |
|
|
|
950 |
|
|
|
1,159 |
|
|
|
10,602 |
|
|
|
11,761 |
|
|
|
609 |
|
|
|
6,495 |
|
|
|
1996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Highlands
|
|
|
216 |
|
|
|
732 |
|
|
|
4,821 |
|
|
|
24,822 |
|
|
|
- |
|
|
|
- |
|
|
|
988 |
|
|
|
4,821 |
|
|
|
25,810 |
|
|
|
30,631 |
|
|
|
1,322 |
|
|
|
- |
|
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jacob
Heights
I (7)
|
|
|
42 |
|
|
|
162 |
|
|
|
407 |
|
|
|
5,888 |
|
|
|
- |
|
|
|
- |
|
|
|
103 |
|
|
|
407 |
|
|
|
5,991 |
|
|
|
6,398 |
|
|
|
295 |
|
|
|
3,850 |
|
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jacob
Heights
III (7)
|
|
|
24 |
|
|
|
96 |
|
|
|
233 |
|
|
|
3,637 |
|
|
|
- |
|
|
|
- |
|
|
|
61 |
|
|
|
233 |
|
|
|
3,698 |
|
|
|
3,931 |
|
|
|
175 |
|
|
|
2,948 |
|
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Summit (7)
|
|
|
192 |
|
|
|
672 |
|
|
|
1,678 |
|
|
|
26,939 |
|
|
|
- |
|
|
|
- |
|
|
|
427 |
|
|
|
1,678 |
|
|
|
27,366 |
|
|
|
29,044 |
|
|
|
1,227 |
|
|
|
23,825 |
|
|
|
2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GrandMarc
–
Seven
Corners
|
|
|
186 |
|
|
|
440 |
|
|
|
4,491 |
|
|
|
28,807 |
|
|
|
- |
|
|
|
- |
|
|
|
787 |
|
|
|
4,491 |
|
|
|
29,594 |
|
|
|
34,085 |
|
|
|
1,311 |
|
|
|
18,020 |
|
|
|
2000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Village
–
Sacramento
|
|
|
250 |
|
|
|
394 |
|
|
|
7,275 |
|
|
|
12,639 |
|
|
|
- |
|
|
|
- |
|
|
|
375 |
|
|
|
7,275 |
|
|
|
13,014 |
|
|
|
20,289 |
|
|
|
638 |
|
|
|
14,740 |
|
|
|
1979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aztec
Corner
|
|
|
180 |
|
|
|
606 |
|
|
|
17,460 |
|
|
|
32,209 |
|
|
|
- |
|
|
|
- |
|
|
|
308 |
|
|
|
17,460 |
|
|
|
32,517 |
|
|
|
49,977 |
|
|
|
1,471 |
|
|
|
28,600 |
|
|
|
1995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Crossings
|
|
|
260 |
|
|
|
1,016 |
|
|
|
20,622 |
|
|
|
47,830 |
|
|
|
- |
|
|
|
- |
|
|
|
2,011 |
|
|
|
20,622 |
|
|
|
49,841 |
|
|
|
70,463 |
|
|
|
2,197 |
|
|
|
41,309 |
|
|
|
1926/
2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Campus
Corner
|
|
|
254 |
|
|
|
796 |
|
|
|
1,591 |
|
|
|
20,928 |
|
|
|
- |
|
|
|
- |
|
|
|
473 |
|
|
|
1,591 |
|
|
|
21,401 |
|
|
|
22,992 |
|
|
|
1,066 |
|
|
|
22,266 |
|
|
|
1997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tower
at 3rd
|
|
|
147 |
|
|
|
295 |
|
|
|
1,145 |
|
|
|
19,128 |
|
|
|
- |
|
|
|
- |
|
|
|
2,000 |
|
|
|
1,145 |
|
|
|
21,128 |
|
|
|
22,273 |
|
|
|
951 |
|
|
|
14,491 |
|
|
|
1973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Mills
|
|
|
121 |
|
|
|
481 |
|
|
|
524 |
|
|
|
12,334 |
|
|
|
- |
|
|
|
- |
|
|
|
485 |
|
|
|
524 |
|
|
|
12,819 |
|
|
|
13,343 |
|
|
|
671 |
|
|
|
8,806 |
|
|
|
2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pirates
Cove
|
|
|
264 |
|
|
|
1,056 |
|
|
|
2,173 |
|
|
|
26,704 |
|
|
|
- |
|
|
|
- |
|
|
|
2,784 |
|
|
|
2,173 |
|
|
|
29,488 |
|
|
|
31,661 |
|
|
|
1,639 |
|
|
|
- |
|
|
|
2000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Manor
|
|
|
168 |
|
|
|
600 |
|
|
|
1,387 |
|
|
|
14,889 |
|
|
|
- |
|
|
|
- |
|
|
|
1,614 |
|
|
|
1,387 |
|
|
|
16,503 |
|
|
|
17,890 |
|
|
|
909 |
|
|
|
14,233 |
|
|
|
2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brookstone
Village
|
|
|
124 |
|
|
|
238 |
|
|
|
1,203 |
|
|
|
7,024 |
|
|
|
- |
|
|
|
- |
|
|
|
793 |
|
|
|
1,203 |
|
|
|
7,817 |
|
|
|
9,020 |
|
|
|
347 |
|
|
|
4,141 |
|
|
|
1993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Campus
Walk –
Wilmington
|
|
|
289 |
|
|
|
290 |
|
|
|
2,794 |
|
|
|
11,718 |
|
|
|
- |
|
|
|
- |
|
|
|
530 |
|
|
|
2,794 |
|
|
|
12,248 |
|
|
|
15,042 |
|
|
|
512 |
|
|
|
6,700 |
|
|
|
1989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cambridge
at
Southern
|
|
|
228 |
|
|
|
564 |
|
|
|
3,317 |
|
|
|
20,301 |
|
|
|
- |
|
|
|
- |
|
|
|
444 |
|
|
|
3,317 |
|
|
|
20,745 |
|
|
|
24,062 |
|
|
|
1,084 |
|
|
|
18,388 |
|
|
|
2006 |
|
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial
Cost
|
|
|
Basic
Step-Up
|
|
|
|
|
|
Total
Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
|
Beds
|
|
|
Land
|
|
|
Buildings
and Improvements and
Furniture,
Fixtures and Equipment
|
|
|
Land
|
|
|
Buildings
and Improvements and
Furniture,
Fixtures and Equipment
|
|
|
Costs
Capitalized Subsequent to Acquisition
|
|
|
Land
|
|
|
Buildings
and Improvements and Furniture, Fixtures
and Equipment
|
|
|
Total
(1)
|
|
|
Accumulated
Depreciation (2)
|
|
|
Encumbrances
(3)
|
|
|
Year
Built
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Campus
Club –
Statesboro
|
|
|
276 |
|
|
|
984 |
|
|
$ |
3,075 |
|
|
$ |
31,100 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
3,067 |
|
|
$ |
3,075 |
|
|
$ |
34,167 |
|
|
$ |
37,242 |
|
|
$ |
1,847 |
|
|
$ |
18,811 |
|
|
|
2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Pines
|
|
|
144 |
|
|
|
552 |
|
|
|
1,707 |
|
|
|
17,527 |
|
|
|
- |
|
|
|
- |
|
|
|
654 |
|
|
|
1,707 |
|
|
|
18,181 |
|
|
|
19,888 |
|
|
|
862 |
|
|
|
11,036 |
|
|
|
2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lakeside
|
|
|
244 |
|
|
|
776 |
|
|
|
2,347 |
|
|
|
22,999 |
|
|
|
- |
|
|
|
- |
|
|
|
1,811 |
|
|
|
2,347 |
|
|
|
24,810 |
|
|
|
27,157 |
|
|
|
1,299 |
|
|
|
14,100 |
|
|
|
1991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Club
|
|
|
120 |
|
|
|
480 |
|
|
|
1,164 |
|
|
|
11,979 |
|
|
|
- |
|
|
|
- |
|
|
|
1,509 |
|
|
|
1,164 |
|
|
|
13,488 |
|
|
|
14,652 |
|
|
|
722 |
|
|
|
- |
|
|
|
1989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Edge
|
|
|
306 |
|
|
|
930 |
|
|
|
6,053 |
|
|
|
37,802 |
|
|
|
- |
|
|
|
- |
|
|
|
1,493 |
|
|
|
6,053 |
|
|
|
39,295 |
|
|
|
45,348 |
|
|
|
1,836 |
|
|
|
29,914 |
|
|
|
1999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Place
|
|
|
144 |
|
|
|
528 |
|
|
|
2,794 |
|
|
|
15,639 |
|
|
|
- |
|
|
|
- |
|
|
|
433 |
|
|
|
2,794 |
|
|
|
16,072 |
|
|
|
18,866 |
|
|
|
799 |
|
|
|
- |
|
|
|
2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southview
|
|
|
240 |
|
|
|
960 |
|
|
|
3,492 |
|
|
|
41,760 |
|
|
|
- |
|
|
|
- |
|
|
|
1,143 |
|
|
|
3,492 |
|
|
|
42,903 |
|
|
|
46,395 |
|
|
|
2,051 |
|
|
|
18,918 |
|
|
|
1998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stonegate
|
|
|
168 |
|
|
|
672 |
|
|
|
2,929 |
|
|
|
28,164 |
|
|
|
- |
|
|
|
- |
|
|
|
933 |
|
|
|
2,929 |
|
|
|
29,097 |
|
|
|
32,026 |
|
|
|
1,407 |
|
|
|
14,264 |
|
|
|
2000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Commons
|
|
|
132 |
|
|
|
528 |
|
|
|
2,173 |
|
|
|
17,786 |
|
|
|
- |
|
|
|
- |
|
|
|
1,125 |
|
|
|
2,173 |
|
|
|
18,911 |
|
|
|
21,084 |
|
|
|
959 |
|
|
|
5,569 |
|
|
|
1991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Gables
|
|
|
168 |
|
|
|
648 |
|
|
|
1,309 |
|
|
|
13,148 |
|
|
|
- |
|
|
|
- |
|
|
|
1,661 |
|
|
|
1,309 |
|
|
|
14,809 |
|
|
|
16,118 |
|
|
|
882 |
|
|
|
13,925 |
|
|
|
2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Campus
Ridge
|
|
|
132 |
|
|
|
528 |
|
|
|
960 |
|
|
|
12,831 |
|
|
|
- |
|
|
|
- |
|
|
|
305 |
|
|
|
960 |
|
|
|
13,136 |
|
|
|
14,096 |
|
|
|
668 |
|
|
|
- |
|
|
|
2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Enclave I
|
|
|
120 |
|
|
|
480 |
|
|
|
582 |
|
|
|
9,205 |
|
|
|
- |
|
|
|
- |
|
|
|
784 |
|
|
|
582 |
|
|
|
9,989 |
|
|
|
10,571 |
|
|
|
514 |
|
|
|
9,762 |
|
|
|
2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hawks
Landing
|
|
|
122 |
|
|
|
484 |
|
|
|
1,445 |
|
|
|
13,735 |
|
|
|
- |
|
|
|
- |
|
|
|
2,596 |
|
|
|
1,445 |
|
|
|
16,331 |
|
|
|
17,776 |
|
|
|
878 |
|
|
|
15,600 |
|
|
|
1994 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Willowtree
Apartments
(8)
|
|
|
310 |
|
|
|
568 |
|
|
|
6,014 |
|
|
|
15,135 |
|
|
|
- |
|
|
|
- |
|
|
|
369 |
|
|
|
6,014 |
|
|
|
15,504 |
|
|
|
21,518 |
|
|
|
754 |
|
|
|
13,441 |
|
|
|
1968 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Willowtree
Towers
(8)
|
|
|
163 |
|
|
|
283 |
|
|
|
3,793 |
|
|
|
6,745 |
|
|
|
- |
|
|
|
- |
|
|
|
183 |
|
|
|
3,793 |
|
|
|
6,928 |
|
|
|
10,721 |
|
|
|
376 |
|
|
|
6,576 |
|
|
|
1974 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Abbott
Place
|
|
|
222 |
|
|
|
654 |
|
|
|
1,833 |
|
|
|
18,313 |
|
|
|
- |
|
|
|
- |
|
|
|
1,775 |
|
|
|
1,833 |
|
|
|
20,088 |
|
|
|
21,921 |
|
|
|
1,118 |
|
|
|
17,850 |
|
|
|
1999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Centre
–-
Kalamazoo
|
|
|
232 |
|
|
|
700 |
|
|
|
1,804 |
|
|
|
19,395 |
|
|
|
- |
|
|
|
- |
|
|
|
807 |
|
|
|
1,804 |
|
|
|
20,202 |
|
|
|
22,006 |
|
|
|
1,068 |
|
|
|
19,875 |
|
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Meadows
|
|
|
184 |
|
|
|
616 |
|
|
|
1,426 |
|
|
|
14,870 |
|
|
|
- |
|
|
|
- |
|
|
|
1,091 |
|
|
|
1,426 |
|
|
|
15,961 |
|
|
|
17,387 |
|
|
|
847 |
|
|
|
9,633 |
|
|
|
2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Campus
Way
|
|
|
196 |
|
|
|
684 |
|
|
|
1,581 |
|
|
|
21,845 |
|
|
|
- |
|
|
|
- |
|
|
|
1,545 |
|
|
|
1,581 |
|
|
|
23,390 |
|
|
|
24,971 |
|
|
|
1,176 |
|
|
|
15,375 |
|
|
|
1993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Campus
Walk –
Oxford
|
|
|
108 |
|
|
|
432 |
|
|
|
1,096 |
|
|
|
11,271 |
|
|
|
- |
|
|
|
- |
|
|
|
1,681 |
|
|
|
1,096 |
|
|
|
12,952 |
|
|
|
14,048 |
|
|
|
760 |
|
|
|
8,133 |
|
|
|
2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Campus
Trails
|
|
|
156 |
|
|
|
480 |
|
|
|
1,358 |
|
|
|
11,291 |
|
|
|
- |
|
|
|
- |
|
|
|
1,129 |
|
|
|
1,358 |
|
|
|
12,420 |
|
|
|
13,778 |
|
|
|
650 |
|
|
|
7,486 |
|
|
|
1991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Pointe
|
|
|
204 |
|
|
|
682 |
|
|
|
989 |
|
|
|
27,576 |
|
|
|
- |
|
|
|
- |
|
|
|
610 |
|
|
|
989 |
|
|
|
28,186 |
|
|
|
29,175 |
|
|
|
1,334 |
|
|
|
21,300 |
|
|
|
2004 |
|
University
Trails
|
|
|
240 |
|
|
|
684 |
|
|
|
1,183 |
|
|
|
25,173 |
|
|
|
- |
|
|
|
- |
|
|
|
812 |
|
|
|
1,183 |
|
|
|
25,985 |
|
|
|
27,168 |
|
|
|
1,263 |
|
|
|
15,725 |
|
|
|
2003 |
|
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
Initial
Cost
|
|
|
Basis
Step-Up
|
|
|
|
|
|
Total
Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
|
Beds
|
|
|
Land
|
|
|
Buildings
and Improvements and Furniture, Fixtures
and Equipment
|
|
|
Land
|
|
|
Buildings
and Improvements and Furniture, Fixtures
and Equipment
|
|
|
Costs Capitalized Subsequent to Acquisition
|
|
|
Land
|
|
|
Buildings
and Improvements and Furniture, Fixtures
and Equipment
|
|
|
Total
(1)
|
|
|
Accumulated Depreciation (2)
|
|
|
Encumbrances (3)
|
|
|
Year Built
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vista
del Sol
|
|
|
613 |
|
|
|
1,866 |
|
|
$ |
- |
|
|
$ |
136,144 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
572 |
|
|
$ |
- |
|
|
$ |
136,716 |
|
|
$ |
136,716 |
|
|
$ |
5,859 |
|
|
$ |
100,000 |
|
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Villas
at
Chestnut
Ridge
|
|
|
196 |
|
|
|
552 |
|
|
|
2,756 |
|
|
|
33,510 |
|
|
|
- |
|
|
|
- |
|
|
|
55 |
|
|
|
2,756 |
|
|
|
33,565 |
|
|
|
36,321 |
|
|
|
1,498 |
|
|
|
- |
|
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barrett
Honors
College
|
|
|
602 |
|
|
|
1,721 |
|
|
|
- |
|
|
|
130,953 |
|
|
|
- |
|
|
|
- |
|
|
|
20 |
|
|
|
- |
|
|
|
130,973 |
|
|
|
130,973 |
|
|
|
1,471 |
|
|
|
- |
|
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
15,145 |
|
|
|
47,599 |
|
|
$ |
222,322 |
|
|
$ |
1,853,124 |
|
|
$ |
125 |
|
|
$ |
4,369 |
|
|
$ |
81,253 |
|
|
$ |
222,447 |
|
|
$ |
1,938,746 |
|
|
$ |
2,161,193 |
|
|
$ |
173,820 |
|
|
$ |
950,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On-Campus
Participating Properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Village –
PVAMU
|
|
|
612 |
|
|
|
1,920 |
|
|
$ |
- |
|
|
$ |
36,506 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
2,412 |
|
|
$ |
- |
|
|
$ |
38,918 |
|
|
$ |
38,918 |
|
|
$ |
18,784 |
|
|
$ |
26,319 |
|
|
1996/
97/98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
College
–
PVAMU
|
|
|
756 |
|
|
|
1,470 |
|
|
|
- |
|
|
|
22,650 |
|
|
|
- |
|
|
|
- |
|
|
|
1,748 |
|
|
|
- |
|
|
|
24,398 |
|
|
|
24,398 |
|
|
|
9,143 |
|
|
|
21,045 |
|
|
|
2000/
2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
University
Village
–
TAMIU
|
|
|
84 |
|
|
|
250 |
|
|
|
- |
|
|
|
5,844 |
|
|
|
- |
|
|
|
- |
|
|
|
372 |
|
|
|
- |
|
|
|
6,216 |
|
|
|
6,216 |
|
|
|
2,944 |
|
|
|
4,026 |
|
|
|
1997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cullen
Oaks
Phase
I and II
|
|
|
411 |
|
|
|
879 |
|
|
|
- |
|
|
|
33,910 |
|
|
|
- |
|
|
|
- |
|
|
|
1,282 |
|
|
|
- |
|
|
|
35,192 |
|
|
|
35,192 |
|
|
|
8,163 |
|
|
|
32,718 |
|
|
|
2001/
2005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
1,863 |
|
|
|
4,519 |
|
|
|
- |
|
|
|
98,910 |
|
|
|
- |
|
|
|
- |
|
|
|
5,814 |
|
|
|
- |
|
|
|
104,724 |
|
|
|
104,724 |
|
|
|
39,034 |
|
|
|
84,108 |
|
|
|
|
|
Total-all
properties
|
|
|
17,008 |
|
|
|
52,118 |
|
|
$ |
222,322 |
|
|
$ |
1,952,034 |
|
|
$ |
125 |
|
|
$ |
4,369 |
|
|
$ |
87,067 |
|
|
$ |
224,447 |
|
|
$ |
2,043,470 |
|
|
$ |
2,265,917 |
|
|
$ |
212,854 |
|
|
$ |
1,034,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Total
aggregate costs for Federal income tax purposes is $2,337.1
million.
|
(2)
|
The
depreciable lives for buildings and improvements and furniture, fixtures
and equipment range from three to forty
years.
|
(3)
|
Total
encumbrances exclude net unamortized debt premiums of $3.8 million and net
unamortized debt discounts of $8.5 million as of December 31,
2009.
|
(4)
|
For
lease administration purposes, University Club Tallahassee and The Grove
at University Club are reported combined. As a result, costs
capitalized subsequent to acquisition and accumulated depreciation are
allocated to the respective properties based on relative bed
count.
|
(5)
|
For
lease administration purposes, College Club Tallahassee and The Greens at
College Club are reported combined. As a result, costs
capitalized subsequent to acquisition and accumulated depreciation are
allocated to the respective properties based on relative bed
count.
|
(6)
|
For
lease administration purposes, Royal Oaks, Royal Pavilion, and Royal
Village Tallahassee are reported combined. As a result, costs
capitalized subsequent to acquisition and accumulated depreciation are
allocated to the respective properties based on relative bed
count.
|
(7)
|
For
lease administration purposes, Jacob Heights I, Jacob Heights III and The
Summit are reported combined. As a result, costs capitalized
subsequent to acquisition and accumulated depreciation are allocated to
the respective properties based on relative bed
count.
|
(8)
|
For lease administration
purposes, Willowtree Apartments and Willowtree Towers are reported
combined. As a result, costs capitalized subsequent to
acquisition and accumulated depreciation are allocated to the respective
properties based on relative bed count.
|
AMERICAN
CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
changes in the Company’s investments in real estate and related accumulated
depreciation for each of the years ended December 31, 2009, 2008, and 2007 are
as follows:
|
|
For
the Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
Wholly-
Owned
(1)
|
|
|
On-Campus
(2)
|
|
|
Wholly-
Owned
(1)
|
|
|
On-Campus
(2)
|
|
|
Wholly-
Owned
(1)
|
|
|
On-Campus
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
in Real Estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
beginning of year
|
|
$ |
2,100,185 |
|
|
$ |
103,985 |
|
|
$ |
1,017,425 |
|
|
$ |
103,266 |
|
|
$ |
740,238 |
|
|
$ |
102,786 |
|
Acquisition
of land for development
|
|
|
9,390 |
|
|
|
- |
|
|
|
8,226 |
|
|
|
- |
|
|
|
10,022 |
|
|
|
- |
|
Acquisition
of properties
|
|
|
- |
|
|
|
- |
|
|
|
980,504 |
|
|
|
- |
|
|
|
131,319 |
|
|
|
- |
|
Improvements
and development expenditures
|
|
|
107,647 |
|
|
|
739 |
|
|
|
145,011 |
|
|
|
719 |
|
|
|
133,090 |
|
|
|
480 |
|
Contribution
of land from minority partner
in
development joint venture
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,756 |
|
|
|
- |
|
Disposition
of properties
|
|
|
(28,432 |
) |
|
|
- |
|
|
|
(50,981 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Balance,
end of year
|
|
$ |
2,188,790 |
|
|
$ |
104,724 |
|
|
$ |
2,100,185 |
|
|
$ |
103,985 |
|
|
$ |
1,017,425 |
|
|
$ |
103,266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
Depreciation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
beginning of year
|
|
$ |
(113,352 |
) |
|
$ |
(34,683 |
) |
|
$ |
(70,363 |
) |
|
$ |
(30,361 |
) |
|
$ |
(46,041 |
) |
|
$ |
(26,098 |
) |
Depreciation
for the year
|
|
|
(61,765 |
) |
|
|
(4,351 |
) |
|
|
(42,989 |
) |
|
|
(4,322 |
) |
|
|
(24,322 |
) |
|
|
(4,263 |
) |
Disposition
of properties
|
|
|
1,297 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Balance,
end of year
|
|
$ |
(173,820 |
) |
|
$ |
(39,034 |
) |
|
$ |
(113,352 |
) |
|
$ |
(34,683 |
) |
|
$ |
(70,363 |
) |
|
$ |
(30,361 |
) |
|
Owned
off-campus properties and owned on-campus
properties
|
|
On-campus
participating properties
|
F-41