Research Desk Line-up: Equity Residential Post Earnings Coverage
LONDON, UK / ACCESSWIRE / October 31, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on American Campus Communities, Inc. (NYSE: ACC) ("ACC"), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=ACC, following the Company's release of its third quarter fiscal 2017 operating results on October 23, 2017. The Austin, Texas-based real estate investment trust (REIT) reported a marginal gain in revenue on a y-o-y basis and updated its funds from operations (FFO) and FFO-Modified (FFOM) guidance for the fiscal year. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Get more of our free earnings reports coverage from other constituents of the REIT - Residential industry. Pro-TD has currently selected Equity Residential (NYSE: EQR) for due-diligence and potential coverage as the Company reported on October 24, 2017, its financial results for Q3 2017 which ended on September 30, 2017. Register for a free membership today, and be among the early birds that get access to our report on Equity Residential when we publish it.
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Earnings Reviewed
For the quarter ended September 30, 2017, ACC's revenue totaled $196.9 million versus $196.4 million in Q3 2016. The Company's revenue beat analysts' expectations of $180.43 million.
During Q3 2017, ACC's operating income came in at $17.6 million versus $29.3 million in Q3 2016. The decrease in operating income was primarily due to a $9.1 million increase in depreciation and amortization, $2.9 million in property acquisition costs related to the Core Spaces Portfolio acquisition, and $1.9 million in expenses associated with Hurricanes Harvey and Irma.
ACC's net loss totaled $1.3 million, or $0.01 per diluted share, for Q3 2017 compared to net income of $9.6 million, or $0.07 per diluted share, for Q3 2016. The Company's FFO was $59.0 million, or $0.43 per fully diluted share, for the reported quarter compared to $61.1 million, or $0.46 per fully diluted share, for the year-ago same period.
For Q3 2017, ACC's FFOM was $61.2 million, or $0.44 per fully diluted share, compared to $60.4 million, or $0.45 per fully diluted share, for Q3 2016. The Company's reported number fell short of Wall Street's estimates of $0.46 per diluted share.
Operating Results
During Q3 2017, ACC's net operating income (NOI) for same store wholly-owned properties was $74.9 million, reflecting a decrease of 0.8% from $75.5 million in Q3 2016. The Company's same store wholly-owned property revenues increased by 1.3% on a y-o-y basis due primarily to an increase in average rental rates for the 2017-2018 academic year.
For Q3 2017, ACC's same store wholly-owned property operating expenses increased by 3.3% on a y-o-y basis. NOI for the total wholly-owned portfolio decreased 1.2% to $84.9 million in the reported quarter from $85.9 million in the year-earlier same quarter, primarily due to the sale of 20 non-core properties since Q2 2016.
Portfolio Update
Developments - During Q3 2017, ACC completed construction and delivered $609.2 million of owned development assets into service. As of September 30, 2017, these properties were 83.2% occupied. The Company also progressed with the construction of its $603.3 million development and $282.6 million presale development pipeline with expected delivery in Fall 2018 and Fall 2019.
American Campus Equity (ACE) - During the reported quarter, the Company made further advancements in its ACE development program, executing a pre-development agreement for a second phase project on the University of Southern California Health Sciences campus in Los Angeles. The proposed $42.0 million second-phase project includes approximately 300 beds, expanding on the highly successful initial ACE development which was 99.6% occupied as of September 30, 2017, and is currently over 100% applied for the academic year 2018-2019.
Acquisitions - During Q3 2017, ACC entered into an agreement to recapitalize and ultimately acquire seven select student housing properties totaling 3,776 beds for $590.6 million from affiliates of Core Spaces and DRW Real Estate Investments. The transaction included the acquisition of two existing communities, two communities opened in Fall 2017 and three presale development projects scheduled for completion in Fall 2018.
Third-Party Services - During Q3 2017, ACC completed construction and commenced management of Momentum Village Phase II and Esperanza Hall, 560-bed and 382-bed third-party development projects located on the campuses of Texas A&M University. Also during the reported quarter, the Company closed on financing and commenced construction on a third-party on-campus development project with the University of California, Irvine. The 1,441-bed student housing development project represents the fourth phase of the Company's partnership with the university, including more than 6,500 modern student beds in purpose-built, academically oriented student communities totaling more than $550 million of total project cost.
Capital Markets - In September 2017, ACC entered into a $300 million senior unsecured term loan, which matures in September 2018. The loan contains two one-year extension options and an accordion feature that allows the Company to expand the facility by up to an additional $100 million. Proceeds were used to pay down the outstanding balance on the company's revolving credit facility.
At-The-Market (ATM) Share Offering Program - In July 2017, ACC sold 24,000 shares of common stock at a weighted average price of $48.09 per share for net proceeds of approximately $1.1 million. The Company has raised total gross proceeds of $267 million under the ATM program in 2016 and 2017 leaving approximately $233 million of capacity under the current program.
2017 Outlook
ACC management is forecasting 2017 FFO to be in the range of $2.39 to $2.43 and FFOM will be in the range of $2.28 to $2.32 per fully diluted share, respectively.
Stock Performance
On Monday, October 30, 2017, American Campus Communities' stock closed the trading session at $41.44, slipping 1.52% from its previous closing price of $42.08. A total volume of 769.96 thousand shares were exchanged during the session, which was above the 3-month average volume of 657.43 thousand shares. Shares of the Company have a PE ratio of 85.62 and have a dividend yield of 4.25%. The stock currently has a market cap of $5.65 billion.
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