Earnings season is underway and multifamily REITs began hosting conference calls this week to discuss Q1 2012 earnings. Just as the rental market has continued to be strong, so too should the majority of first quarter financial results. With rental rates still being pushed in core markets, it shouldn’t be a big surprise if revenue and net operating income increases for the majority of REITs.
Student housing REIT American Campus Communities (ACC) reported its first quarter earnings for 2012 on Wednesday and the numbers were in line with analyst expectations. Revenue came in at $111.8 million, or 12.6 percent higher than the $99.2 it generated during the first quarter of 2011. And the Austin, Texas-based company raised rental rates at most of its property across its portfolio. According to the company’s CEO, Bill Bayliss, ACC has been seeing solid increases in rates beyond what they were initially set at thanks to strong enrollment growth.
“There were originally 73 of our 97 same-store assets where we set rates above 3 percent. At that particular group of properties where we were most aggressive, we have since raised rates at 47 of them beyond what we initially did” he added, mentioning that rates are often adjusted on a day-to-day basis to keep up with competition in individual markets. Currently, ACC has 11 projects under construction with deliveries scheduled for the fall of 2012 and three that are scheduled for delivery in the fall of 2013. Among those is a $97.6 million American Campus Equity (ACE) project at Drexel University containing 861 beds and retail space. The majority are in the Arizona and Texas markets.
In terms of new deals in the company’s development pipeline still being finalized, there are several significant awards. On-campus projects at Princeton University, USC, and Texas A&M are all on the horizon for ACC. And it has third-party development deals underway at The University of Wyoming, Illinois State University, Northern Illinois University, Arizona State University, CUNY Staten Island, and Southern Oregon University. The 2012/2013 leasing status for its wholly owned new developments is currently at an average of 73.5 percent.
The company discussed its outlook for the remainder of the year and was very optimistic that it would continue to be able to push rents, even in markets where private companies are starting to go down the concession path. The company expects rates to increase by an average of 3.5 percent across its portfolio this year.
“We feel really good about that 3.5 percent. And holding onto it is certainly our goal and objective and we will continue to daily monitor that data and push everywhere we can,” said Bayliss.
