American Campus Communities Inc

Thank you. Good morning and thank you for joining the American Campus Community's full year 2021 and fourth quarter conference call. The press release was furnished on Form 8K to provide access to the widest possible audience. In the release, the company has reconciled the non-GAAP financial measures to those directly comparable GAAP measures in accordance with Reg G requirements. Also posted on the company website in the investor relations section, you will find an earnings materials package, which includes both the press release and a supplemental financial package. We are hosting a live webcast for today's call, which you can access on the website with the replay available for one month. Our supplemental analyst package and our webcast presentation are one and the same. Webcast slides may be advanced by you to facilitate following along. Management will be making forward-looking statements today as referenced in the disclosure and the press release, in the supplemental financial package, and in SEC filings. Management would like to inform you that certain statements made during this conference call, which are not historical fact, may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Although the company believes the expectations reflected in any forward-looking statement are based on reasonable assumptions, they are subject to economic risks and uncertainties. The company can provide no assurance that its expectations will be achieved and actual results may vary. Factors and risks that could cause actual results to differ materially from expectations are detailed in the press release and from time to time in the company's periodic filings with the SEC. The company undertakes no obligation to advise or update any forward-looking statements to reflect the events or circumstances after the date of this release. Having said that, our Chief Executive Officer, Bill Bayless, will be providing our opening comments today. He's joined by the following members of senior management for the call. Jennifer Beast, President and Chief Operating Officer, William Talbot, Chief Investment Officer, Daniel Perry, Chief Financial Officer, Kim Voss, Chief Accounting Officer, Brian Winger, General Counsel, and Jamie Wilhelm, EVP of Public-Private Partnerships. With that, I'll turn the call over to Bill for his opening remarks.

Bill? Thank you, Ryan. Good morning and thank all of you for joining us as we discuss our Q4 and full year 2021 financial and operating results. 2021 was an outstanding year for the company and our shareholders. The ACC team executed and successfully advanced our long-term strategy on many fronts. We signed more spring and summer term leases than any prior period in our history. employing the enhanced capabilities of our next-gen operational systems. We also outperformed the high end of our expectations for fall leasing, achieving 95.8% opening occupancy and 3.8% average rental rate growth. We delivered nearly 4,000 beds at our development serving the Disney College program, on schedule and within budget, despite the national labor shortage and widespread supply chain constraints. bringing our total bids delivered at Disney to more than 6,000. We expect to achieve originally targeted yields beginning in 2022 and to hit our 6.8% stabilized yield in 2023. With regard to our current portfolio, the company's performance eclipsed expectations. In addition to our total portfolios NOI returning to pre-pandemic levels, during the fourth quarter, Property NOI for our 2021 same-store property grouping also surpassed pre-pandemic levels, both of which occurred a full year earlier than expected. With regard to capital allocation activities, we successfully executed a well-timed $400 million bond offering, issuing seven-year senior unsecured notes at a yield of 2.26. And to cap the year off, We formed a joint venture with Harrison Street's social infrastructure platform to recapitalize a 45% interest in our existing eight-property Arizona State University student housing portfolio. The transaction represented a 3.75 economic cap rate based on in-place rental revenue, escalated trailing operating expenses including ground rent, and historic average capital expenditures. The transaction produced an unlevered IRR of approximately 16%. It also provided price discovery for our on-campus ACE portfolio and demonstrates that on-campus assets developed via properly structured public-private partnerships can be valued on par with private off-campus assets that reflect comparable market and product attributes. Importantly, The transaction exemplifies our ability to capitalize on our ACE investments while simultaneously maintaining the spirit of our university partnerships, illustrating the net asset value creation opportunity in both our existing ACE portfolio and our future pipeline of on-campus transactions. The two-phase closing of the transaction is also beneficial, as it mitigates earnings dilution, satisfies our 2022 capital need, and provides additional proceeds moving into 2023, further positioning us to execute on our value-enhancing development pipeline. Our solid operational execution and prudent capital allocation activities resulted in earnings per share cumulatively exceeding quarterly expectations throughout the year by 18 cents per share, or almost 10%, and full-year FFOM per share of $2.14 exceeded the high end of our most recent guidance by two cents. In addition, our stock ended the year at an all-time closing high of $57.29. As we look forward, our optimism continues, given our current momentum and the strong fundamentals the sector is experiencing. In stark contrast to the media's headlines, pointing out that college enrollment has been decreasing with regard to the broadest universe of institutions of higher education. Student demand to attend America's tier one flagship universities, the ones we currently serve and target to do business, continues to experience growth and to set record levels of enrollment. This includes first year student enrollment growth at the highest levels in over 30 years. The strong enrollment demographics coupled with new supply for fall 22 being at the lowest levels in over a decade provides a highly attractive supply-demand environment. As Jennifer commented in our release, industry-wide pre-leasing is tracking in a manner more consistent with the sector's traditional pre-pandemic fall leasing velocity, and we are targeting normalized occupancy levels and attractive rent growth for the 2022-2023 academic year. With our guidance including same-store rental revenue growth of 3.2 to 4.6% for the fourth quarter of 2022. Touching briefly on our on-campus public-private partnership business, our prior statements that opportunities for on-campus transactions may well be greater in a post-COVID environment appear to be coming to fruition. Since the end of Q3, we have commenced the third-party development of four university projects, MIT, Princeton, UC Irvine, and Drexel University. And we were awarded a new development with Purdue Research Foundation. As the recognized leader, ACC remains uniquely positioned to capitalize on this expanding opportunity. As we moved into 2022, the company is firing on all cylinders with accelerating momentum as represented by our 2022 guidance. which represents earning per share growth in the range of 12 to 16%. This is even more impressive when considering that our guidance includes the effect of the $270 million first phase closing of the ASU transaction and the fact that this growth is coming off of earnings for 2021 that exceeded the high end of our expectations. In closing, I'd like to reiterate my remarks from the beginning of this call. 2021 was an outstanding year for the company and its shareholders. As we turn to the question and answer portion of today's call, we'll not be answering any questions regarding our recent disclosures regarding land and buildings. But instead, we'll focus on the strong performance of the company, our 2022 outlook, industry fundamentals, and our business strategy. With that, I'll turn it back to the operator to begin the Q&A.

Thank you. As a reminder, if you would like to ask a question, please press star followed by the number one on your telephone keypad. We now have our first question on the phone lines from Alexander Goldfarb of Piper Sandler. So, Alexander, please go ahead.