ACC
#Sure.
<UNK>, this is <UNK>.
As we have talked about historically, certainly our asset management platform and the cost containment efforts that we have through that have been a big driver of the progress we have made to date.
We continue to expect to make progress in certain areas there.
We have talked about recently our efforts with regards to multi-asset market efficiencies, which we see in both payroll, marketing, and repairs and maintenance.
We see efficiencies there.
Obviously also as we bring online, and the development pipeline, which tends to have a higher margin, that will be an additional benefit to help us get there.
From a timing perspective, I think it's been a year or so ago that we said we thought it would be within two to four years.
Right now, as you can see for the total portfolio, as of the end of this quarter we're at 54.7%.
We're getting pretty close, and we think it's something certainly we're on track to get to that 55%, potentially eclipse it in the near future.
Yes, and if you go back to what we have been talking about the last several quarters from a capital allocation perspective is that nothing at this point in time is more accretive than the development pipeline that we're bringing in on place.
And so in that regard, that is our focus in terms of the highest and best use of the capacity that we have.
However, as we talked about when we see the acquisition opportunities that have outsized performance, especially in existing markets where we're already operating in and have that additional comfort in terms of knowledge and due diligence and the ability to execute on creating that value, we're going to undertake that.
And as we talked about in this case, we're able to completely match fund that via the ATM, preserving that capacity for development.
And so we continue to be focused, priority number one on development.
We will continue to look at acquisitions on a one-off basis, and when the opportunities exist to produce upside and match fund and preserving that capacity, we'll undertake it.
And if such time there's a larger acquisition or M&A opportunities that arise, we'll do what we have always done if it makes sense for us and come tell the market the story and talk about that together.
So at this point in time it's still very focused on the course that we have set over the last 18 months in developments first and foremost and acquisitions when they make sense.
Yes, absolutely.
And that in addition to finishing the disposition of the non-core assets, we do expect to continue to be a capital recycler, always looking at the bottom 1% to 3% of your future performance and attempting to predict when that's going to occur and harvest value.
I would say that it will come in two fronts, one will be situations where based on agers, again, further proximity to campus, between ---+ they may be bicycle properties, things of that nature, but we'll look at refining and honing in.
The other thing that you have seen us do in markets like ASU and Tallahassee is in markets where we have a presence as we do a good job in harvesting and maximizing value, is trading assets and reinvesting in the same markets.
And so on an ongoing basis, those are things that we will continue to do as part of that long-term capital recycling activity.
Again, benchmarking those funds first and the highest priority to go back in the development pipeline that are typically either on campus or right across the street.
Sure.
<UNK>, this is <UNK>.
Remember at the beginning of the year we talked about that we wanted to dispose of a significant portion of our non-core assets, and we said that in terms of our target for the year we were looking at about $600 million.
Obviously we were looking at a selection of potential assets in the non-core group that we could sell.
And so it wasn't that we were setting out with a specific group that was making up that $600 million.
We wanted to put together a portfolio that we thought would transact well, and so we worked through that throughout the year.
Remember we sold $74 million in two assets early in 2016.
So the $526 million was really just the difference between the $600 million and that $74 million that we had already sold.
Not that we were tying a specific valuation to a specific group of assets.
So we feel good about the 19 we have been able to put together for the current disposition, and the $508 million valuation we got on those.
As you see on the sources and uses page, we lay out $508 million to $530 million of potential dispositions, which at the $530 million would include the two additional assets that we are currently marketing and expect to potentially transact on in early 2017.
In terms of the cap rate, the economic cap rate of 6.1% that we achieved is very much in line with our expectations.
We're very happy with that, and on a nominal basis that was in the mid-6%s which again was in line with our expectations going into the process.
Yes, so we're going to be transitioning management with the buyer to a new third-party manager.
They're going to take on ---+ their new third-party manager is going to take on all but 11 of the assets, and then we will phase those to the new manager over the coming months into early 2017.
Based on the timing, it's about $140,000 a month in management fees that we would make on the 11.
I would say you should expect about $350,000 in management fees in 2017, first part of 2017 before we completely roll those over to the new manager.
Good morning, Alex.
Yes, so like any sale they're going out and financing the assets with new debt.
We will be prepaying the loans, the $197 million of debt that's currently outstanding on the portfolio and they're putting new loans in place.
They're halfway through the process of getting all their loan approvals and expect the rest of it to come within the coming weeks, and very much still expect to be online with our targeted date that we laid out and guidance in November.
No, they're using the GSEs and very much in line with what they do in the 70%, 75% range.
Yes, and Alex, this is something that you will see, and it's not a situation where you see more 10-month leases at 12-month properties.
That is pretty consistent from year to year with what we have seen.
What we're referring to here is really directly related to ACE.
And if you look at the ACE awards about 50% to 70% of those on an emerging trend are first-year residence hall products.
And so by design and by pro forma those properties operate on an academic year fall and spring versus the apartments off campus which operate on a 12-month basis.
And so we're seeing a higher percentage of our revenue come from those residence hall properties where by design you're getting the full-year investment in that 10-month period.
And that's where <UNK>'s comment is that is what you will see a little variation, seasonality in growth rates as those May-ending leases, which again are not short-term leases on a 12-month property, but rather by design that product type how they lease.
And so my guess would be over time as we see more ACE transactions coming into the pipeline, and remember a large majority of ACE is replacing the 1940 and 1950 residence halls products on these campuses, you'll see that become a larger portion of the portfolio.
No, in 2017 it will probably be 30 to 40 basis points post May when you see those residence halls move off, just in terms of same-store comparison numbers.
And remember, Alex, that you always noted that those summer months are mixed between Q2 and Q3.
And so it gets mixed with the normal part of the academic year, the spring semester and then the fall semester in Q3.
So you don't see the full impact in any one quarter, but to the extent it is a little bit noticeable, we wanted to make sure that people understand with a little bit more of those residence-hall style beds coming in through the ACE program that if we are seeing some of that seasonality you understood what was going on.
And so the biggest impact, again, it's not an economic in that you're achieving the full yield in that academic year on those assets by design, but you will see the annualized occupancy over time as that portion, and also by the way eliminating the 19 sale properties, which were all 12-month off campus, just by virtue of the dispo is also you have a higher percentage of those assets that are in the portfolio.
So just something that we want to point out and make folks aware of, and we certainly will continue to talk about that over time as it becomes a larger segment of our portfolio.
I think maybe in the lower end of that, 3% to 3.3%.
It's very much, even with the dispos in it would be very much within the midpoint of our original guidance range for the year, which was 2% to 3.8%.
So of course as you would expect we have a slight improvement in the same-store NOI expectations when you're looking at just the core assets given the improved rental rate increase at those assets.
Probably low 3% because we have had a little bit of outperformance to date.
So a little above the midpoint.
Yes, they're certainly one of the systems that are looking at privatizations as one of the main methods of delivery.
And at the system level they are drawing out some guidelines in terms of how they want to go about it as a system, what type of deals they want to do.
Obviously we have an excellent rapport with the University of California system in that UC Irvine has been our largest third-party client for more than a decade, where we've done about $0.5 billion of development on that campus.
Also we have the ACE transaction at Cal Berkeley that is under way.
And so certainly as that system looks at the success that has been taking place with P3s by individual colleges, they've recognized that it's probably a method that could be utilized throughout the system and are looking at broader initiatives of how to approach it.
And so certainly something that we're well aware of in that we already do business within that system, and would earmark it as a place that there's great future opportunity.
Yes, we talk about there's a vibrant pipeline of about 20 to 30 potential transactions in total over the ---+ in terms of active procurements, recently completed procurements where decisions haven't been made, and direct negotiations.
So we're in direct negotiations with clients on about just under a half dozen schools that could bring something to fruition in the next six to 18 months.
There's 18 active procurements that are out there that we are in the process of responding to.
There's another seven that are a little further along in broader initiatives like the UC system question that you brought up.
And so a very sold pipeline.
As we've always talked about the procurement process of universities, think of it more like the entitlement process on off-campus deals.
It does take time.
Some move at the speed of light, others move at the pace of a snail and a little harder to predict, but we will keep you up to speed quarter by quarter.
And as you saw in 2015 when all of a sudden a bunch of them popped at once, that you can have a little bit of a lull, but then all of the sudden the flood gates can open, bake on windows, university decision making comes into play.
No, we'll continue to always prune the bottom 2% to 3% of what we think is the slower growth in the portfolio or again, trading out in markets where we may be investing in different assets.
So we would continue to think of ourselves always as a capital recycler in the bottom 2% to 3% of the portfolio, including 2017.
Thank you.
Yes, it would have been, sorry <UNK>, this is <UNK>.
It would have been 4.4%.
Honestly we're not going to comment on the performance of any of the 19 that are currently under contract out of courtesy to the seller there.
We'll wait until those close.
Buyer, I'm sorry.
Not a courtesy to ourselves.
But I will comment on our new asset in Missouri.
As <UNK> mentioned in his script, and that's a market again, to talk about the asset or recycling strategy there we're disposing of the drive asset that we have in Missouri that were part of previously larger M&A transactions.
And we are developing right across the street from the campus with the new community we're bringing online next fall.
That particular asset is already 46% pre-leased, it's number two in our portfolio right now.
We feel very good about our future investment at the University of Missouri.
Thanks, <UNK>.
<UNK>, this is <UNK>.
Yes, it will be included as an early extinguishment of debt in 4Q.
Don't really want to quote what we think it will be yet, because obviously it's going to move around significantly with movements in treasury rates and where the final quote on that comment, there's some assets that are defeasances, some that are prepayment, yield maintenance.
And also you will have an offset against that for the debt premium that will be written off.
So we will have a charge for it, it will show up as an early extinguishment of debt, but don't think it's appropriate for us to comment on it yet just because of how much that moves around.
Yes, <UNK>, and I have answered that question the same since we went public in 2004.
And I think you can never become complacent and take for granted that at the end of the day you win and perform with people.
And American Campus has always been based on having the best team in the business, and our future success is predicated on maintaining that.
We started a program called Inside Track in 2003.
And Inside Track is where we identify the best talent in our Company, starting at the student worker level and then migrating that into your first managerial positions, leasing managers, and AGMs and putting them in a mentoring program.
We attended our National Managers Conference last week, and of the 200 folks that are managers and first-time corporate employees in managerial positions, 91 of them were Inside Track graduates.
And so the program has really been the heart and soul of the Company's scalability.
Also last year we really hit a pinnacle in that five people were promoted to the ranks of Senior Vice President and joined the 23 other folks in Senior Management that were part of that Inside Track class of 2003 and 2004.
And so that is something that has been the backbone of our scalability, that our culture and employee development department continue to focus on, and again, something we'll never take for granted and will always be the thing that keeps me up at night for the years to come.
Thanks, <UNK>.
I want to thank you for joining us.
Again, I want to echo the sentiments that <UNK> and I expressed earlier in thanking the team for just excellent operational, financial, and leasing results.
And we look forward to seeing you all out in NAREIT.
We have an investor tour that <UNK> has worked on out at ASU, for those of you that want to see first hand what that ACE partnership has done in helping President Crow realize his vision of making Arizona State University the new American university.
I'd also point out in that regard that ASU was just recently named by US News and World Report as America's Most Innovative University.
And so we're proud to have been part of his strategic vision, and look forward to showing you that in Phoenix.
