American Campus Communities, Inc. (ACC - Snapshot Report), a real estate investment trust (REIT), reported third quarter 2012 FFOM (funds from operations- modified) of 32 cents per share, missing the Zacks Consensus Estimate of 37 cents. Moreover, the quarterly FFOM also missed the year-ago level of 34 cents per share.
Reported FFOM stood at $29.4 million compared with $24.0 million in the year-ago quarter. Adjusted FFOM, which excludes the acquisition expenses worth $4.7 million, stood at $34.1 million during the quarter. However, FFO for the quarter stood at $28.9 million, compared to $23.7 million in the year- earlier quarter.
Total revenue during the quarter increased 24.8% year over year to $118.8 million. The increase was mainly attributable to a surge in property acquisitions, completion of development of properties and hike in rental rates for the 2012-2013 academic year. However, revenue missed the Zacks Consensus Estimate of $121.0 million.
Comparable wholly-owned portfolio occupancy stood at 97.4% compared to 98.2% in the prior-year quarter. Same store net operating income climbed up 4.1% and average rental rate surged 3.4% on a year over year basis.
Acquisitions & Dispositions
Continuing with its portfolio repositioning program, American Campus acquired 17 properties comprising 8,914 beds for $844.0 million during the quarter. Of the acquired properties, 15 assets are of the student housing portfolio, for which the company plans to invest around $13.7 million for renovation purpose to drive rental rate and revenue growth going forward.
American Campus sold an asset subsequent to quarter end. The company disposed a combined 528-bed community - Brookstone Village and Campus Walk - situated in Wilmington, North Carolina, for a total cost of $26.6 million.
During the quarter, the company completed the construction of 11 owned properties and put those into service for the upcoming 2012-2013 school year. As of September 30, 2012, the new properties comprising of 6,703 beds are 95.2% occupied.
In addition, the company started the construction on a seven-phase project at Prairie View A&M University in Texas. Once this $15.6 million project is completed, it will comprise of 336 beds.
Subsequent to the end of the third quarter, the company initiated the construction on a mixed-use development project located in Orlando, Florida. The construction is scheduled to be completed by August, 2014 and will feature 60,000 square-feet of retail space along with four storeys of residential units.
At the end of the third quarter 2012, the company had cash and cash equivalents of $18.0 million and $206.0 million remaining under its unsecured revolving credit facility.
Austin, Texas-based American Campus tweaked its 2012 FFO and adjusted FFOM guidance. The FFO is now projected to be between $2.04 and $2.08 per share, compared to the previous guidance range of $1.99 to $2.10 per share. Adjusted FFOM is now expected to be in the range of $1.99 to $2.03 per share, compared to the previous guidance range of $1.94 to $2.05 per share.
Based on American Campus’s strong internal growth, ongoing portfolio repositioning activity and high portfolio occupancy, we expect analysts to raise their estimates in the coming days. Currently, the Zacks Consensus Estimate for 2012 and 2013 are pegged at $2.00 and $2.33, respectively.
American Campus, which competes with the likes of Education Realty Trust, Inc. (EDR - Snapshot Report), currently carries a Zacks #3 Rank, implying a short-term Hold rating. We also reiterate our long-term Neutral recommendation on the stock.
Note: FFO, a widely accepted and reported measure of the performance of REITs, is derived by adding depreciation, amortization and other non-cash expenses to net income.