AUSTIN: Executives summed up American Campus Communities Inc.'s Q1 2012 financial numbers in one word during the REIT's April 25 conference call: Solid. With FFOM at $41.4 million – an increase of 11% year over year and exceeding international expectations -- ACC executives had reason to be pleased.
"In the months ahead, we'll complete the fall 2012-2013 lease-up with the goal of improving our NOI in 2013," noted William C. Bayless Jr., the company's president and CEO. Added senior executive vice president and COO Greg A. Dowell: "Operationally, this was another solid quarter; operations met internal expectations." The executives pointed out that the 2012 FFO guidance of $1.75-$2.10 is certainly achievable with help from upcoming activities during the remainder of the year, not the least of which include groundbreakings, asset sales and pending lease-ups. Also on the upward trend were wholly owned net operating income (up 3.8% year over year); and revenue at $111.8 million, an increase from $99.3 million during Q1 2011.
This is not to suggest, however, that the entire call focused on positives. With ACC's wholly owned portfolio for the upcoming academic year standing at 73.5% occupancy, analysts expressed their concern about the low figures, wondering when velocity would improve, especially in comparison to where it was in earlier years.
But Bayless pointed out that leasing is on a par with previous years, with anticipated rental increases projected at 3.5% for the 2012-2013 school year. He also noted that, while velocity is important, ACC's main goal is maximization of revenue and net operating income rather than pushing occupancy. In short, he continued, the leasing numbers change regularly, and he was confident that the portfolio will stabilize well before the beginning of the next school year, as it has in previous years.
Bayless also quashed higher education enrollment concerns. "There's a high demand for entr
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