AUSTIN, Texas--(BUSINESS WIRE)--
American Campus Communities, Inc. (ACC), the nation’s largest owner and manager of high-quality student housing properties, today provided an interim leasing update for the 2017-2018 academic year on Form 8-K in conjunction with the company’s participation in the 2017 National Multifamily Housing Council (NMHC) Student Housing Conference. With several universities commencing their fall class term in late September, the company continues to work toward completion of 2017-2018 academic year leasing. Additionally, the company is providing an update on projected expenses associated with Hurricanes Harvey and Irma. The company will provide final leasing results and an update to the company’s fiscal year 2017 financial guidance in its third quarter 2017 earnings release after the market close on Monday, October 23, 2017.
Academic Year 2017-2018 Preleasing Update
As of September 24, 2017, the company’s 2018 same store wholly-owned portfolio was 96.6 percent leased compared to 97.2 percent leased as of September 30, 2016, with a 2.9 percent projected rental rate increase over in-place rents. The company’s new wholly-owned properties are 86.7 percent leased, including the 10 wholly-owned development projects opened this fall, which are 83.4 percent leased.
“While the results for 57 of our 60 same store markets exceeded our expectations, softness in three markets caused us to fall short of our leasing expectations,” said Bill Bayless, American Campus Communities CEO. “Challenging conditions at Texas Tech, the University of Illinois and the Rochester Institute of Technology had a negative impact on overall leasing results. Excluding these three markets, the company’s 2018 same store portfolio was 98.0 percent leased compared to 97.5 percent leased in the prior year with projected rental rate growth of 3.2 percent, demonstrating the strong fundamentals that continue nationally for the sector. Our same store properties at Texas Tech, the University of Illinois and RIT are currently leased to 83.4 percent compared to 95.2 percent in the prior year. Based on the current leasing results, we estimate rental revenue for the remainder of calendar year 2017 to be approximately $4.9 million below the midpoint of our rental revenue assumptions included in 2017 guidance, which excludes properties acquired to-date in 2017. These estimates represent approximately 4.5 of the 12 months of the overall academic year lease term. When also including the expenses associated with Hurricanes Harvey and Irma discussed below, we now believe we are trending around the low end of our current FFOM per-share guidance range and will provide a full update of our 2017 guidance on our upcoming earnings call. Looking forward, we see a healthy environment for student housing nationally and expect that diminished levels of new supply expected for 2018 and continued enrollment growth will create a favorable backdrop for the 2018-2019 lease up.”
Update on Projected Hurricane Expenses
The company currently expects to incur approximately $2.0 to $2.5 million of expenses during 2017 as a result of Hurricanes Harvey and Irma. While the company is finalizing its assessment of the impact of Hurricane Irma, the projected expenses primarily relate to cleanup and repairs for water intrusion, roofing and landscaping at the company’s communities located in Texas and Florida.
About American Campus Communities
American Campus Communities, Inc. is the largest owner, manager and developer of high-quality student housing communities in the United States. The company is a fully integrated, self-managed and self-administered equity real estate investment trust (REIT) with expertise in the design, finance, development, construction management and operational management of student housing properties. As of June 30, 2017, American Campus Communities owned 160 student housing properties containing approximately 99,000 beds. Including its owned and third-party managed properties, ACC's total managed portfolio consisted of 197 properties with approximately 128,700 beds. Visit www.americancampus.com.
In addition to historical information, this press release contains forward-looking statements under the federal securities law. These statements are based on current expectations, estimates and projections about the industry and markets in which American Campus operates management's beliefs, and assumptions made by management. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict.