CCG Reports 2012 FFOA at Top of Guidance Range at $0.75/Dil. Share Wholly-Owned Y-o-Y: Occupancy Up

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CCG Reports 2012 FFOA at Top of Guidance Range at $0.75/Dil. Share

Wholly-Owned Y-o-Y: Occupancy Up 290 bps, Total Student Housing Revenue Up 39.1% and Net Operating Income Up 43.6%

- Same Store Quarterly Occupancy up 380bps -


- Same Store NOI up 7.0% for the Quarter and 6.2% for the Year -

- Continued Growth with Progress on Six Projects for Delivery in 2013 & Solid Pipeline -

- Provides 2013 Outlook -

CHARLOTTE, N.C.--(BUSINESS WIRE)-- Campus Crest Communities, Inc. (NYS: CCG) (the "Company"), a leading developer, builder, owner and manager of high-quality, residence life focused student housing, today announced results for the three and twelve months ended December, 31 2012.

Highlights

  • 14.1% and 16.8% increase in year-over-year quarterly and annual total Funds from Operations Adjusted ("FFOA"), respectively
    • $0.20 and $0.75 FFOA per diluted share for the fourth quarter and year, respectively
  • 38.3% and 39.1% increase in year-over-year quarterly and annual student housing rental and services revenue, respectively
  • Solid gains in wholly-owned same store results through continued operational focus:
    • 6.2% increase in annual Net Operating Income ("NOI")
    • 7.0% increase in quarterly NOI
    • 380bps increase in average quarterly occupancy to 92.2%
  • 3.1% dividend increase in January 2013 from $0.64 to $0.66 per common share
  • 46.2% pre-leased at the wholly-owned operating portfolio for the 2013/2014 academic year as of February 22, 2013, representing a 350 basis point increase year-over-year
    • 2013 delivery (wholly-owned and joint venture) portfolio was 34.0% pre-leased
  • Six new Grove properties on-schedule for opening in 2013/2014 academic year for a total cost of $162.7 million ($82.8 million for wholly-owned and $79.9 million for joint ventures)
  • Adds new urban market concept with commencement of construction in January 2013 of 33-story, 850-bed student housing tower, called The Grove at Cira Centre South, for 2014/2015 academic year delivery
    • $158.5 million project in Philadelphia, PA is a joint venture with Brandywine Realty Trust (NYS: BDN) and Harrison Street Real Estate Capital ("HSRE")
  • In January 2013, increased unsecured credit facility from $200 million to $300 million while lowering borrowing costs and setting the stage for further growth by adding:
    • $50 million term loan component
    • Four year term with a one-year extension option
    • Development financing capability

Financial Results for the Three and Twelve Months Ended December 31, 2012

For the three and twelve months ended December 31, 2012, Funds from Operations ("FFO") and FFOA are shown in the table below.

FFO/FFOA 
Three Months Ended December 31,

Per share -
diluted

Per share -
diluted

($mm, except per share)2012

 

 2011 
FFO$7.7$0.20$6.8$0.22
Write-Off of Unamortized Deferred Financing Fees

0.01

---
Elimination of Change in Fair Value of Int. Rate Derivatives - - -  - 
FFOA$7.7$0.20$6.8 $0.22 
     
 
Twelve Months Ended December 31,

Per share -
diluted

Per share -
diluted

($mm, except per share)2012  2011 
FFO$25.4$0.72$22.9$0.73
Write-Off of Unamortized Deferred Financing Fees0.90.03--
Elimination of Change in Fair Value of Int. Rate Derivatives - - (0.3) (0.01)
FFOA$26.3$0.75$22.6 $0.72 

A reconciliation of net income attributable to common shareholders to FFO and FFOA can be found at the end of this release.

For the quarter ended December 31, 2012, the Company reported total revenues of $34.6 million and net income attributable to common stockholders of $1.1 million, compared to $25.6 million and $4.4 million, respectively, in the same period in 2011. For the year ended December 31, 2012, the Company reported total revenues of $137.4 million and net income attributable to common stockholders of $6.6 million, compared to $94.8 million and $3.7 million, respectively, in the same period in 2011.

"We have had a solid year of progress. Not only have we been able to continue to grow our revenue in our same store properties, but our margins have continued to widen due to our focus on expense management," commented Ted W. Rollins, Co-Chairman and Chief Executive Officer of Campus Crest. "This is the 5th consecutive quarter of improved results, since we began our operational excellence initiatives. Our teams are engaged as we continue to build our brand across the country. Moreover, our pipeline of projects is the strongest in the Company's history, as illustrated by the recent announcement of our Philadelphia project. In 2013, we will again continue to focus on leveraging our people-focused investments to strengthen operations and grow our footprint, while prudently managing the balance sheet."

Operating Results

For the three and twelve months ended December 31, 2012, results for wholly-owned same store properties were as follows:

Same Store Results      
Three Months Ended December 31,Twelve Months Ended December 31,

($mm)

 

  2012   2011  Change  2012   2011  Change
 
Number of Assets25252121
Number of Beds12,84412,84410,52810,528
Occupancy92.2%88.4%380 bps91.7%89.6%210 bps
Total Revenues$17.3$16.92.2%$57.0$55.13.5%
NOI$9.5$8.97.0%$30.4$28.66.2%
NOI Margin  54.9%  52.4% 250 bps  53.3%  51.9% 140 bps
 

The improvement in same-store NOI for three months was driven by higher occupancy and a decrease of operating expenses, and the improvement in same-store NOI for twelve months was driven by higher occupancy.

NOI margin is calculated by dividing NOI for the period by total student housing rental and services revenues for the period. A reconciliation of net income attributable to common stockholders to NOI can be found at the end of this release. In addition, details regarding same store NOI and calculations thereof may be found in the Supplemental Analyst Package.

Portfolio & Leasing Update

As of December 31, 2012, the Company owned interests in 39 operating properties totaling 20,884 beds. The portfolio overview and 2012/2013 academic year occupancy status as of December 31, 2012 is outlined in the table below. In addition, the table includes 2013/2014 academic year pre-leasing status for the 39 operating properties and 6 developments as of February 22, 2013 and 2012.

PORTFOLIO LEASING & OCCUPANCY STATUS     
 
 
Pre-leasing Summary

 

Pre-leasingOccupancy
Property 

# of
Properties

 Units Beds 

02/22/13

 

02/22/12

  12/31/12 12/31/11 
 
Wholly-Owned - Operating275,15613,88443.4%42.2%92.4%89.6%
Wholly-Owned - Operating Acquisitions in 201224081,08840.4%45.6%92.6%97.9%
Wholly-Owned - 2012 Deliveries3 684 1,964 69.0%44.7% 98.2%n/a 
Sub Total Operating Wholly-Owned326,24816,93646.2%42.7%93.1%90.2%
 
Joint Venture - Operating47602,09232.0%30.8%81.4%81.6%
Joint Venture - 2012 Deliveries3 662 1,856 30.2%26.7% 75.9%n/a 
Sub Total Operating Joint Venture71,4223,94831.2%28.9%78.8%81.6%
 
Wholly-Owned - 2013 Deliveries36501,78037.0%n/an/an/a
Joint Venture - 2013 Deliveries3 664 1,784 30.9%n/a  n/a n/a 
Sub Total 2013 Deliveries61,3143,56434.0%n/an/an/a
             
Total Leasing Portfolio 45 8,984 24,448 42.0%40.1% 90.4%89.1%
 
Philadelphia Joint Venture1344850n/an/an/an/a
             
Total Portfolio 46 9,328 25,298 42.0%40.1% 90.4%89.1%
 

All 46 properties were built, renovated or are being built by the Company or its predecessor. The median distance to campus of the portfolio is 0.5 miles with an average age of 2.9 years as of December 31, 2012.

Development and Acquisition Activity

Wholly-Owned and Joint Venture Development

The Company continues to maintain a robust pipeline of development opportunities. It currently is conducting due diligence in 80 markets, with developments identified and under control in 30 of these markets. At an approximate cost of $25 million each, this represents a total pipeline under control of approximately $750 million.

The Company is scheduled to deliver six 2013/2014 academic year projects in the third quarter of 2013. Development on these six projects has commenced and is progressing according to plan. The total investment in these projects is approximately $162.7 million. This investment is split between wholly-owned and joint ventures with HSRE as follows:

-- 3 wholly-owned projects with total estimated project costs of approximately $82.8 million

  • 3 joint venture projects with total estimated project costs of $79.9 million. The Company will own 20.0% of the joint venture projects being developed, with HSRE owning the balance

In addition to the six 2013/2014 academic year projects, the Company has formed a joint venture partnership with Brandywine Realty Trust and HSRE to develop a 33-story, 850-bed student housing tower on a site leased from the University of Pennsylvania. The project, called The Grove at Cira Centre South, has an estimated total cost of $158.5 million and will be financed with a $97.8 million loan from PNC Bank and Capital One Bank. Campus Crest and Brandywine will each own 30.0% of the joint venture, while HSRE will own 40.0%.

The project is being developed at 30th and Chestnut Streets where it expects to attract graduate and undergraduate student residents from the surrounding area, including students from the University of Pennsylvania, Drexel University and other colleges and universities located in the University City and Center City Philadelphia.

Construction commenced this January with a targeted completion date for the fall 2014 academic year; leasing is expected to begin in fall 2013.

Details of the Company's developments are as follows:

 

      

2013/2014 Academic Year Deliveries

 

Project Ownership Primary University Served Total Enrollment1 

Miles to
Campus

 Units 

Total Beds

 

Est. Cost
($mm)

 

Wholly-Owned  On Campus
The Grove at Ft. Collins100.0%Colorado State University26,769218612

$

31.8

 

 

 
The Grove at Muncie100.0%Ball State University18,2410.1216584

24.3

 

 
The Grove at Pullman100.0%Washington State University19,9890.0216584

26.7

 

               
Average/Median/Sub Total221,6660.0650

1,780

$

82.8

 

 

 
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