UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
8-K
Current Report
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
Of Report (Date Of Earliest Event Reported): July
23, 2013
American
Campus Communities, Inc.
(Exact
Name of Registrant as Specified in its Charter)
Commission
File Number: 001-32265
MD |
|
760753089 |
(State or Other Jurisdiction Of Incorporation or Organization) |
|
(I.R.S. Employer Identification No.) |
12700 Hill Country Blvd., Suite T-200
Austin, Texas 78738
(Address
of Principal Executive Offices, Including Zip Code)
512-732-1000
(Registrant’s
Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On July 23, 2013, American Campus Communities, Inc. (the “Company”) issued a press release (the “Earnings Release”) announcing, among other things, earnings for the quarter ended June 30, 2013. The text of the Earnings Release is included as Exhibit 99.1 to this Current Report.
The Earnings Release is furnished pursuant to Item 2.02 and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), or subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
ITEM 7.01 REGULATION FD DISCLOSURE
On July 23, 2013, the Company disclosed a supplemental analyst package in connection with its earnings conference call for the quarter ended June 30, 2013 which took place on July 24, 2013. A copy of the supplemental analyst package is attached hereto as Exhibit 99.2.
The supplemental analyst package is furnished pursuant to Item 7.01 and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
The list of exhibits is incorporated herein by reference to the Exhibit Index.
Signature(s)
Pursuant to the Requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
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American Campus Communities, Inc. |
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Date: |
July 24, 2013 |
By: |
/s/ Jonathan A. Graf |
|
Jonathan A. Graf |
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Executive Vice President, Chief Financial |
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Officer, Secretary and Treasurer |
Exhibit Index
Exhibit No. |
Description |
|
EX-99.1 |
Earnings Release Dated July 23, 2013 |
|
EX-99.2 |
Supplemental Analyst Package –Second Quarter 2013 |
Exhibit 99.1
American Campus Communities, Inc. Reports Second Quarter 2013 Financial Results
Closes leasing gap, executes on dispositions, reduces guidance
AUSTIN, Texas--(BUSINESS WIRE)--July 23, 2013--American Campus Communities, Inc. (NYSE:ACC) today announced the following financial results for the quarter ended June 30, 2013.
Highlights
“We are pleased that our summer marketing efforts and previously announced rental rate adjustments have continued to accelerate our leasing velocity. We are now projecting a fall 2013 same store occupancy range of 95.5 to 98.5 percent, as compared to a fall 2012 occupancy of 96.8 percent, along with rental rate growth of 1.1 percent,” said Bill Bayless, American Campus CEO. “While the midpoint of our original Fall 2013 occupancy and rental rate guidance assumptions has only been reduced by approximately 200 basis points, or $5.0 million in 2013, we are revising our guidance range after taking into account the following additional variables: An increase in full year budgeted operating expenses of nearly $9.0 million, primarily in two areas - increased marketing expenditures as we attempt to facilitate a strong finish to this leasing season, and stimulate a strong start to our 2014-15 leasing. Secondly, we are increasing our budgeted integration costs including repairs and maintenance associated with our new store acquisition assets, as we position them for long-term value creation. Our new guidance range also reflects a reduction of NOI of nearly $5.5 million due to the timely execution of dispositions. While we are in the midst of a vibrant acquisitions market, the timing of potential acquisitions is likely to occur later in the year, and when coupled with associated acquisition costs, we would not expect a meaningful contribution to earnings in 2013. While these items have a short-term impact on our 2013 results, they set the stage in 2014 and beyond for long-term internal value creation and position us to be an accretive recycler of our own capital as we continue to execute on our vibrant growth strategy in a sector ripe with opportunity via development, acquisitions and consolidation. Bottom-line, our growth thesis remains well intact.”
Second Quarter Operating Results
Revenue for the 2013 second quarter totaled $154.4 million, up 53.0 percent from $100.9 million in the second quarter 2012. Operating income for the quarter increased $2.3 million or 9.8 percent over the prior year second quarter. The increase in revenues and operating income was primarily due to growth resulting from property acquisitions, recently completed development properties, and increased rental rates for the 2012-2013 academic year. Income from continuing operations decreased by $4.9 million or 45.4 percent over the prior year second quarter primarily due to an increase in interest expense related to loans assumed in connection with 2012 property acquisitions and our recent $400 million offering of senior unsecured notes. FFO for the 2013 second quarter totaled $55.6 million, or $0.52 per fully diluted share, as compared to $36.6 million, or $0.48 per fully diluted share for the same quarter in 2012. FFOM for the 2013 second quarter was $56.3 million, or $0.53 per fully diluted share as compared to $37.2 million, or $0.49 per fully diluted share for the same quarter in 2012. A reconciliation of FFO and FFOM to net income is shown in Table 3.
Portfolio Update
As of July 19, 2013, the company’s same store wholly-owned portfolio was 98.3 percent applied for and 90.8 percent leased for the upcoming academic year compared to 97.9 percent applied for and 91.8 percent leased for the same date prior year, with a 1.1 percent current rental rate increase projected over the in-place rent.
Developments
Owned
The company is progressing on the construction of its $516.3 million owned development pipeline with expected deliveries in Fall 2013 and 2014. The developments are all core Class A assets pedestrian to campus in their respective markets. The seven new owned development projects scheduled to open Fall 2013 totaling $305.4 million are preleased to an average of 98.2 percent for the upcoming academic year as of July 19, 2013.
The company commenced construction on the first phase of Stanworth Commons, a faculty and staff housing project for Princeton University structured via the ACE program. The project will open in a phased delivery with 127 units slated for summer 2014, followed by 198 units with occupancy expected to begin in the latter half of 2015, for a total project cost of approximately $78.3 million.
Construction commenced on the second phase of U Club on Frey, a $25.3 million owned off-campus community located 0.35 miles from the Kennesaw State University campus. The 408-bed community is scheduled for completion in August 2014 and is an expansion of the highly successful phase one U Club on Frey development, which is currently 99.1 percent preleased for Fall 2013.
Subsequent to the end of the quarter, construction commenced on the $37.5 million owned on-campus ACE project at Texas A&M University. The community will offer 784 beds through a mix of four bedroom/four bathroom flat units and four bedroom/four and one-half bathroom townhome units. The property will also include an 8,500 square-foot community center, a one-to-one parking ratio, popular outdoor amenities, and is targeting delivery in August 2014.
The company commenced construction subsequent to quarter end on a 567-bed, on-campus participating property project with West Virginia University. The community is targeted for delivery in Fall 2014 and will generate third-party development fees of approximately $2.4 million during construction followed by a 50/50 cash flow sharing arrangement initiating at delivery and continuing for an initial term of 40 years with two 10-year extension options.
Capital Markets
On April 2, the company issued $400 million of senior unsecured notes under its existing shelf registration. These 10-year notes were issued at 99.659 percent of par value with a coupon of 3.750 percent and a yield of 3.791 percent, and are fully and unconditionally guaranteed by the company. Interest on the notes is payable semi-annually on April 15 and October 15, with the first payment beginning on October 15, 2013. The notes will mature on April 15, 2023. Moody’s and S&P rated the notes Baa3 and BBB-, respectively, and Moody’s revised the company’s rating outlook to positive from stable. Net proceeds from the transaction totaled $394.4 million and were used to repay the outstanding balance of the company’s revolving credit facility, repay maturing mortgage debt, and fund the current development pipeline.
At-The-Market (ATM) Share Offering Program
The company did not sell any shares under the ATM Share Offering Program during the second quarter.
2013 Outlook
The company is updating its 2013 outlook primarily to reflect the impact of the following items as compared to management’s initial 2013 outlook: (1) dispositions totaling $157 million that have closed, or are expected to close this month, resulting in the loss of $5.5 million in anticipated net operating income for 2013 without offsetting closed acquisitions in 2013 to date; (2) additional annual marketing and leasing related costs of $6.5 million to stimulate leasing velocity; and (3) a decrease in initial projected rental rates from 2.1 to 1.1 percent, and a 100 basis point decrease in the midpoint of same store expected occupancy for the 2013-2014 academic year. Based upon these and other factors, management anticipates that both 2013 FFO and FFOM will be in the range of $2.20 to $2.26 per fully diluted share.
All guidance is based on the current expectations and judgment of the company's management team. A reconciliation of the range provided for projected net income to projected FFO and FFOM for the fiscal year ending December 31, 2013, and other assumptions utilized, is included in Table 4.
Supplemental Information and Earnings Conference Call
Supplemental financial and operating information, as well as this release, are available in the investor relations section of the American Campus Communities website, www.americancampus.com. In addition, the company will host a conference call to discuss second quarter results and the 2013 outlook on Wednesday, July 24, 2013 at 11 a.m. EDT (10:00 a.m. CDT). Participants from within the U.S. may dial 888-317-6003 passcode 8361759, and participants outside the U.S. may dial 412-317-6061 passcode 8361759 at least 10 minutes prior to the call.
To listen to the live broadcast, go to www.americancampus.com at least 15 minutes prior to the call so that required audio software can be downloaded. Informational slides in the form of the supplemental analyst package can be accessed via the website. A replay of the conference call will be available beginning one hour after the end of the call until August 1, 2013 by dialing 877-344-7529 or 412-317-0088 conference number 10030508. The replay also will be available for one year at www.americancampus.com. The call will also be available as a podcast on www.REITcafe.com and on the company’s website shortly after the call.
Non-GAAP Financial Measures
The National Association of Real Estate Investment Trusts ("NAREIT") currently defines Funds from Operations ("FFO") as net income or loss attributable to common shares computed in accordance with generally accepted accounting principles ("GAAP"), excluding gains or losses from depreciable operating property sales, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We present FFO because we consider it an important supplemental measure of our operating performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. We also believe it is meaningful to present a measure we refer to as FFO-Modified, or FFOM, which reflects certain adjustments related to the economic performance of our on-campus participating properties and excludes impairment and other non-cash charges. FFO and FFOM should not be considered as alternatives to net income or loss computed in accordance with GAAP as an indicator of our financial performance or to cash flow from operating activities computed in accordance with GAAP as an indicator of our liquidity, nor are these measures indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions.
The company defines property NOI as property revenues less direct property operating expenses, excluding depreciation, but including allocated corporate general and administrative expenses.
About American Campus Communities
American Campus Communities, Inc. is the largest owner and manager 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. American Campus Communities owns 161 student housing properties containing approximately 98,500 beds. Including its owned and third-party managed properties, ACC’s total managed portfolio consists of 194 properties with approximately 123,700 beds. Visit www.americancampus.com or www.studenthousing.com.
Forward-Looking Statements
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.
Table 1 | ||||||||
American Campus Communities, Inc. and Subsidiaries | ||||||||
Consolidated Balance Sheets | ||||||||
(dollars in thousands) | ||||||||
June 30, 2013 | December 31, 2012 | |||||||
Assets | (unaudited) | |||||||
Investments in real estate: | ||||||||
Wholly-owned properties, net | $ | 4,867,882 | $ | 4,871,376 | ||||
Wholly-owned properties held for sale | 114,940 | - | ||||||
On-campus participating properties, net | 55,698 | 57,346 | ||||||
Investments in real estate, net | 5,038,520 | 4,928,722 | ||||||
Cash and cash equivalents | 25,541 | 21,454 | ||||||
Restricted cash | 39,331 | 36,790 | ||||||
Student contracts receivable, net | 8,323 | 14,122 | ||||||
Other assets | 179,930 | 117,874 | ||||||
Total assets | $ | 5,291,645 | $ | 5,118,962 | ||||
Liabilities and equity | ||||||||
Liabilities: |
||||||||
Secured mortgage, construction and bond debt | $ | 1,500,412 | $ | 1,509,105 | ||||
Unsecured notes | 398,664 | - | ||||||
Unsecured term loan | 350,000 | 350,000 | ||||||
Unsecured revolving credit facility | 97,200 | 258,000 | ||||||
Secured agency facility | 104,000 | 104,000 | ||||||
Accounts payable and accrued expenses | 49,635 | 56,046 | ||||||
Other liabilities | 95,536 | 107,223 | ||||||
Total liabilities | 2,595,447 | 2,384,374 | ||||||
Redeemable noncontrolling interests | 52,331 | 57,534 | ||||||
Equity: | ||||||||
American Campus Communities, Inc. and Subsidiaries
stockholders’ equity: |
||||||||
Common stock | 1,043 | 1,043 | ||||||
Additional paid in capital | 3,006,518 | 3,001,520 | ||||||
Accumulated earnings and dividends | (391,468 | ) | (347,521 | ) | ||||
Accumulated other comprehensive loss | (1,047 | ) | (6,661 | ) | ||||
Total American Campus Communities, Inc. and Subsidiaries
stockholders’ equity |
2,615,046 | 2,648,381 | ||||||
Noncontrolling interests - partially owned properties | 28,821 | 28,673 | ||||||
Total equity | 2,643,867 | 2,677,054 | ||||||
Total liabilities and equity | $ | 5,291,645 | $ | 5,118,962 |
Table 2 | ||||||||||||||||
American Campus Communities, Inc. and Subsidiaries | ||||||||||||||||
Consolidated Statements of Comprehensive Income | ||||||||||||||||
(unaudited, dollars in thousands, except share and per share data) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenues | ||||||||||||||||
Wholly-owned properties | $ | 146,814 | $ | 90,510 | $ | 300,295 | $ | 184,076 | ||||||||
On-campus participating properties | 4,703 | 4,712 | 12,805 | 12,679 | ||||||||||||
Third-party development services | 555 | 3,866 | 1,034 | 5,960 | ||||||||||||
Third-party management services | 1,924 | 1,638 | 3,633 | 3,396 | ||||||||||||
Resident services | 432 | 185 | 1,029 | 528 | ||||||||||||
Total revenues | 154,428 | 100,911 | 318,796 | 206,639 | ||||||||||||
Operating expenses | ||||||||||||||||
Wholly-owned properties | 69,595 | 42,903 | 136,245 | 84,488 | ||||||||||||
On-campus participating properties | 2,929 | 2,801 | 5,433 | 5,296 | ||||||||||||
Third-party development and management services | 2,422 | 2,626 | 4,728 | 5,411 | ||||||||||||
General and administrative | 4,626 | 4,638 | 8,432 | 8,178 | ||||||||||||
Depreciation and amortization | 47,477 | 23,266 | 93,387 | 46,435 | ||||||||||||
Ground/facility leases | 1,160 | 804 | 2,363 | 1,768 | ||||||||||||
Total operating expenses | 128,209 | 77,038 | 250,588 | 151,576 | ||||||||||||
Operating income | 26,219 | 23,873 | 68,208 | 55,063 | ||||||||||||
Nonoperating income and (expenses) | ||||||||||||||||
Interest income | 947 | 413 | 1,373 | 927 | ||||||||||||
Interest expense | (19,603 | ) | (12,368 | ) | (37,244 | ) | (25,213 | ) | ||||||||
Amortization of deferred financing costs | (1,416 | ) | (967 | ) | (2,730 | ) | (1,954 | ) | ||||||||
Income from unconsolidated joint ventures | - | - | - | 444 | ||||||||||||
Other nonoperating income | - | - | (2,800 | ) | (122 | ) | ||||||||||
Total nonoperating expenses | (20,072 | ) | (12,922 | ) | (41,401 | ) | (25,918 | ) | ||||||||
Income before income taxes and discontinued operations | 6,147 | 10,951 | 26,807 | 29,145 | ||||||||||||
Income tax provision | (255 | ) | (156 | ) | (510 | ) | (312 | ) | ||||||||
Income from continuing operations | 5,892 | 10,795 | 26,297 | 28,833 | ||||||||||||
Discontinued operations | ||||||||||||||||
Income attributable to discontinued operations | 2,774 | 2,129 | 4,750 | 4,896 | ||||||||||||
Gain from disposition of real estate | - | 83 | - | 83 | ||||||||||||
Total discontinued operations | 2,774 | 2,212 | 4,750 | 4,979 | ||||||||||||
Net income | 8,666 | 13,007 | 31,047 | 33,812 | ||||||||||||
Net income attributable to noncontrolling interests | (617 | ) | (679 | ) | (1,408 | ) | (1,458 | ) | ||||||||
Net income attributable to American Campus
Communities, Inc. and Subsidiaries |
$ | 8,049 | $ | 12,328 | $ | 29,639 | $ | 32,354 | ||||||||
Other comprehensive income (loss) | ||||||||||||||||
Change in fair value of interest rate swaps | 4,801 | (5,209 | ) | 5,614 | (1,805 | ) | ||||||||||
Comprehensive income | $ | 12,850 | $ | 7,119 | $ | 35,253 | $ | 30,549 | ||||||||
Net income per share attributable to American
Campus Communities, Inc. and Subsidiaries common stockholders |
||||||||||||||||
Basic | $ | 0.07 | $ | 0.16 | $ | 0.28 | $ | 0.43 | ||||||||
Diluted | $ | 0.07 | $ | 0.16 | $ | 0.28 | $ | 0.42 | ||||||||
Weighted-average common shares outstanding | ||||||||||||||||
Basic | 104,779,159 | 74,718,934 | 104,738,522 | 74,467,893 | ||||||||||||
Diluted | 105,390,682 | 75,305,780 | 105,377,793 | 75,085,040 |
Table 3 | ||||||||||||||||
American Campus Communities, Inc. and Subsidiaries | ||||||||||||||||
Calculation of FFO and FFOM | ||||||||||||||||
(unaudited, dollars in thousands, except share and per share data) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net income attributable to American Campus Communities, Inc. and Subsidiaries1 | $ | 8,049 | $ | 12,328 | $ | 29,639 | $ | 32,354 | ||||||||
Noncontrolling interests2 | 235 | 287 | 617 | 669 | ||||||||||||
Gain from disposition of real estate | - | (83 | ) | - | (83 | ) | ||||||||||
Income from unconsolidated joint ventures | - | - | - | (444 | ) | |||||||||||
FFO from unconsolidated joint ventures3 | - | - | - | 429 | ||||||||||||
Real estate related depreciation and amortization | 47,269 | 24,074 | 93,799 | 48,079 | ||||||||||||
Funds from operations (“FFO”) | 55,553 | 36,606 | 124,055 | 81,004 | ||||||||||||
Elimination of operations of on-campus participating properties | ||||||||||||||||
Net loss (income) from on-campus participating
properties |
1,159 | 1,044 | (1,495 | ) | (1,454 | ) | ||||||||||
Amortization of investment in on-campus participating
properties |
(1,182 | ) | (1,159 | ) | (2,356 | ) | (2,314 | ) | ||||||||
55,530 | 36,491 | 120,204 | 77,236 | |||||||||||||
Modifications to reflect operational performance of
on-campus participating properties |
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Our share of net cash flow4 | 520 | 523 | 1,059 | 1,073 | ||||||||||||
Management fees | 214 | 216 | 590 | 578 | ||||||||||||
Impact of on-campus participating properties | 734 | 739 | 1,649 | 1,651 | ||||||||||||
Non-cash litigation settlement expense5 | - | - | 2,800 | - | ||||||||||||
Elimination of gain on debt restructuring - | ||||||||||||||||
unconsolidated joint venture6 | - | - | - | (424 | ) | |||||||||||
Loss on remeasurement of equity method investment7 | - | - | - | 122 | ||||||||||||
Funds from operations-modified ("FFOM”) | $ | 56,264 | $ | 37,230 | $ | 124,653 | $ | 78,585 | ||||||||
FFO per share – diluted | $ | 0.52 | $ | 0.48 | $ | 1.16 | $ | 1.06 | ||||||||
FFOM per share – diluted | $ | 0.53 | $ | 0.49 | $ | 1.17 | $ | 1.03 | ||||||||
Weighted average common shares outstanding –
diluted |
106,637,886 | 76,283,442 | 106,624,997 | 76,080,653 | ||||||||||||
1. Net income for the three and six months ended June 30, 2012 includes $1.3 million and $1.4 million, respectively, of acquisition-related costs such as broker fees, due diligence costs and legal and accounting fees.
2. Excludes $0.4 million and $0.8 million for the three and six months ended June 30, 2013, respectively, and $0.4 million and $0.8 million for the three and six months ended June 30, 2012, respectively, of income attributable to the noncontrolling partner in The Varsity, a property purchased in December 2011 from a seller that retained a 20.5% noncontrolling interest in the property.
3. Represents our 10% share of FFO from a joint venture with Fidelity (“Fund II”) in which we were a noncontrolling partner. In January 2012, we purchased the full ownership interest in the one remaining property owned by Fund II (University Heights). Subsequent to the acquisition, the property is now wholly-owned and is consolidated by the company.
4. 50% of the properties’ net cash available for distribution after payment of operating expenses, debt service (including repayment of principal) and capital expenditures. Represents amounts accrued for the interim periods.
5. On April 22, 2013, the company acquired a note and subrogation rights from National Public Finance Guarantee Corporation (formerly known as MBIA Insurance Corp. of Illinois) for an aggregate of $52.8 million, which are secured by a lien on, and the cash flows from, two student housing properties in close proximity to the University of Central Florida and currently under a ground lease with the UCF Foundation. The instruments carry an interest rate of 5.123 percent. The acquisition facilitated the settlement of litigation related to a third-party management agreement for the properties with a GMH entity that was acquired by the company’s 2008 merger with GMH. The acquisition resulted in a non-cash settlement charge of $2.8 million to reflect the fair market valuation of the instruments. Management believes it is appropriate to exclude this non-cash charge from FFOM in order to more accurately present the operating results of the company on a comparative basis during the periods presented.
6. In connection with our purchase of University Heights from Fund II (see Note 3), Fund II negotiated a Settlement Agreement with the lender of the property’s mortgage loan whereby the lender agreed to accept a discounted amount that was less than the original principal amount of the loan as payment in full. Accordingly, Fund II recorded a gain on debt restructuring to reflect the discounted payoff. Our 10% share of such gain is reflected above as an adjustment to FFOM.
7. Represents a non-cash loss recorded to remeasure our equity method investment in Fund II to fair value as a result of our purchase of the full ownership interest in University Heights from Fund II in January 2012.
Table 4 | ||||||||
American Campus Communities, Inc. and Subsidiaries | ||||||||
2013 Outlook1 |
||||||||
(unaudited, dollars in thousands, except share and per share data) | ||||||||
Low | High | |||||||
Net income | $ | 52,800 | $ | 58,500 | ||||
Noncontrolling interests | 950 | 1,100 | ||||||
Depreciation and amortization | 181,500 | 181,500 | ||||||
Funds from operations (“FFO”) | 235,250 | 241,100 | ||||||
Elimination of operations from on-campus participating properties | (8,100 | ) | (8,100 | ) | ||||
Non-cash litigation settlement expense | 2,800 | 2,800 | ||||||
Modifications to reflect operational performance of on-campus
participating properties |
4,300 | 5,000 | ||||||
Funds from operations – modified (“FFOM”) | $ | 234,250 | $ | 240,800 | ||||
Weighted average common shares outstanding – diluted | 106,700,000 | 106,700,000 | ||||||
Net income per share – diluted | $ | 0.49 | $ | 0.55 | ||||
FFO per share – diluted | $ | 2.20 | $ | 2.26 | ||||
FFOM per share – diluted | $ | 2.20 | $ | 2.26 |
1. Additional assumptions include: (1) the company will achieve property level net operating income (NOI) of $333.0 million to $338.8 million, which includes $2.5 million of additional maintenance and asset integration costs from our previous outlook; (2) same store property NOI change of (0.5)% - 1.5% with projected occupancy of 95.5% to 98.5%; (3) an additional $30 million of property dispositions at the low end of our outlook; (4) mid-point interest expense, excluding our on-campus participating properties, of $75.5 million; (5) additional interest income of $1.9 million; and (6) the company will achieve third-party fees of $10.5 million to $11.4 million.
CONTACT:
American Campus Communities, Inc., Austin
Ryan Dennison,
512-732-1000
Exhibit 99.2
SUPPLEMENTAL ANALYST PACKAGE 2Q 2013 JULY 23, 2013
TABLE OF CONTENTS
AMERICAN CAMPUS COMMUNITIES | FINANCIAL HIGHLIGHTS $ in thousands, except share and per share data 1.Market capitalization is calculated based on a common share price of $40.66 and $46.13 as of June 30, 2013 and December 31, 2012, respectively, and fully diluted common shares totaling 106,637,484 and 106,488,084 as of June 30, 2013 and December 31, 2012, respectively. 2.Based on Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) and Adjusted Interest Expense of $325.6 million and $102.9 million, respectively, for the four most recently completed fiscal quarters. Includes pro forma adjustments to EBITDA and Interest Expense of $28.7 million and $20.4 million, respectively, to reflect all acquisitions, development deliveries, dispositions, debt repayments and debt refinancings as if such transactions had occurred on the first day of the 12 month period presented. Adjusted Interest Expense includes $9.7 million of interest capitalized for GAAP purposes and excludes $9.8 million of amortization of debt premiums/discounts related to mortgage loans assumed in connection with acquisitions. 1
AMERICAN CAMPUS COMMUNITIES CONSOLIDATED BALANCE SHEETS $ in thousands 2
Consolidated statements of Comprehensive Income Unaudited, $ in thousands, except share and per share data 3
AMERICAN CAMPUS COMMUNITIES | CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS Unaudited, $ in thousands, except share and per share data 1.Net income for the three and six months ended June 30, 2012 includes $1.3 million and $1.4 million, respectively, of acquisition-related costs such as broker fees, due diligence costs and legal and accounting fees. 2.Excludes $0.4 million and $0.8 million for the three and six months ended June 30, 2013, respectively, and $0.4 million and $0.8 million for the three and six months ended June 30, 2012, respectively, of income attributable to the noncontrolling partner in The Varsity, a property purchased in December 2011 from a seller that retained a 20.5% noncontrolling interest in the property. 3.Represents our 10% share of FFO from a joint venture with Fidelity (“Fund II”) in which we were a noncontrolling partner. In January 2012, we purchased the full ownership interest in the one remaining property owned by Fund II (University Heights). Subsequent to the acquisition, the property is now wholly-owned and is consolidated by the company. 4.50% of the properties’ net cash available for distribution after payment of operating expenses, debt service (including repayment of principal) and capital expenditures. Represents amounts accrued for the interim periods. 5.On April 22, 2013, the company acquired a note and subrogation rights from National Public Finance Guarantee Corporation (formerly known as MBIA Insurance Corp. of Illinois) for an aggregate of $52.8 million, which are secured by a lien on, and the cash flows from, two student housing properties in close proximity to the University of Central Florida and currently under a ground lease with the UCF Foundation. The instruments carry an interest rate of 5.123 percent. The acquisition facilitated the settlement of litigation related to a third-party management agreement for the properties with a GMH entity that was acquired by the company’s 2008 merger with GMH. The acquisition resulted in a non-cash settlement charge of $2.8 million to reflect the fair market valuation of the instruments. Management believes it is appropriate to exclude this non-cash charge from FFOM in order to more accurately present the operating results of the company on a comparative basis during the periods presented. 6.In connection with our purchase of University Heights from Fund II (see Note 3), Fund II negotiated a Settlement Agreement with the lender of the property’s mortgage loan whereby the lender agreed to accept a discounted amount that was less than the original principal amount of the loan as payment in full. Accordingly, Fund II recorded a gain on debt restructuring to reflect the discounted payoff. Our 10% share of such gain is reflected above as an adjustment to FFOM. 7.Represents a non-cash loss recorded to remeasure our equity method investment in Fund II to fair value as a result of our purchase of the full ownership interest in University Heights from Fund II in January 2012. 4 20132012$ Change20132012$ ChangeNet income attributable to American Campus Communities, Inc. and Subsidiaries8,049$ 12,328$ 1(4,279)$ 29,639$ 32,354$ 1(2,715)$ Noncontrolling interests2235 287 (52) 617 669 (52) Gain from disposition of real estate- (83) 83 - (83) 83 Income from unconsolidated joint ventures- - - - (444) 444 FFO from unconsolidated joint ventures3- - - - 429 (429) Real estate related depreciation and amortization47,269 24,074 23,195 93,799 48,079 45,720 Funds from operations ("FFO")55,553 36,606 18,947 124,055 81,004 43,051 Elimination of operations of on-campus participating propertiesNet loss (income) from on-campus participating properties1,159 1,044 115 (1,495) (1,454) (41) Amortization of investment in on-campus participating properties(1,182) (1,159) (23) (2,356) (2,314) (42) 55,530 36,491 19,039 120,204 77,236 42,968 Modifications to reflect operational performance of on-campus participating propertiesOur share of net cash flow4520 523 (3) 1,059 1,073 (14) Management fees214 216 (2) 590 578 12 Impact of on-campus participating properties734 739 (5) 1,649 1,651 (2) Non-cash litigation settlement expense5- - - 2,800 - 2,800 Elimination of gain on debt restructuring - unconsolidated joint venture6- - - - (424) 424 Loss on remeasurement of equity method investment7- - - - 122 (122) Funds from operations-modified ("FFOM")56,264$ 37,230$ 19,034$ 124,653$ 78,585$ 46,068$ FFO per share - diluted0.52$ 0.48$ 1.16$ 1.06$ FFOM per share - diluted0.53$ 0.49$ 1.17$ 1.03$ Weighted average common shares outstanding - diluted106,637,886 76,283,442 106,624,997 76,080,653 Six Months Ended June 30,Three Months Ended June 30,
AMERICAN CAMPUS COMMUNITIES WHOLLY-OWNED PROPERTIES RESULTS OF OPERATIONS1 $ in thousands Note: The same store grouping above represents properties owned or operated for the entire comparative periods presented. The second quarter same store grouping includes properties purchased or developed prior to April 1, 2012. The year-to-date same store grouping includes properties purchased or developed prior to January 1, 2012. 1.Includes State College Park, University Pines, and The Village at Blacksburg, which were sold in July 2013 and are classified within discontinued operations on the accompanying consolidated statements of comprehensive income. Also includes Northgate Lakes and University Mills which are anticipated to be sold in the third or fourth quarter of 2013 and are included in discontinued operations on the accompanying consolidated statements of comprehensive income. Revenues for these five properties totaled $5.2 million and $5.1 million for the three months ended June 30, 2013 and 2012, respectively, and $10.5 million and $10.1 million for the six months ended June 30, 2013 and 2012, respectively. Operating expenses for these properties totaled $2.1 million and $1.8 million for the three months ended June 30, 2013 and 2012, respectively, and $4.0 million and $3.6 million for the six months ended June 30, 2013 and 2012, respectively. Excluding these five properties, there would have been no change to the decrease in same store net operating income for the three months ended June 30, 2013, and same store net operating income for the six months ended June 30, 2013 would have increased by 1.2%. 2.Includes revenues that are reflected as Resident Services Revenue on the accompanying consolidated statements of comprehensive income. 3.Same store wholly-owned properties operating expenses for the three months ended June 30, 2013 include an additional $1.4 million in marketing and leasing related costs as compared to the prior year, which were incurred to stimulate leasing velocity for the 2013/2014 academic year. Excluding these additional expenses, operating expenses for same store properties would have increased 2.4% over the second quarter prior year, and net operating income for same store properties would have increased 1.4% over the second quarter prior year. 5
AMERICAN CAMPUS COMMUNITIES SEASONALITY OF OPERATIONS1 $ in thousands, except for per bed amounts Note: The same store grouping above includes properties owned or operating for the entire year ended December 31, 2012 (i.e. properties purchased or developed on or prior to December 31, 2011.) 1.Excludes properties sold prior to July 23, 2013. Includes two properties classified as Held For Sale as of June 30, 2013 which are anticipated to be sold in the third or fourth quarter 2013. All such properties are included in discontinued operations on the accompanying consolidated statements of comprehensive income. 2.For the four most recently completed fiscal quarters. 3.Other income is all income other than Net Student Rent. This includes, but is not limited to, utility income, damages, parking income, summer conference rent, application and administration fees, income from retail tenants, etc. 4.Includes the following properties opened or acquired in 2012: University Heights-Knoxville, Avalon Heights, University Commons, The Block, The Retreat, University Edge, the 15-property Campus Acquisitions portfolio acquired in September 2012, 11 properties that completed construction and opened for operations in August and September 2012 and the 19-property Kayne Anderson portfolio acquired in November 2012. Also includes U Club Townhomes on Woodward and The Plaza on University, two properties currently undergoing redevelopment activities. 6
AMERICAN CAMPUS COMMUNITIES CAPITAL STRUCTURE AS OF JUNE 30, 2013 $ in millions, except share and per share data Note – refer to the Definitions outlined on pages 20 and 21 for detailed definitions of terms appearing on this page. 1.Excludes net unamortized debt premiums related to mortgage loans assumed in connection with acquisitions of $79.5 million and the unamortized original issue discount on unsecured notes of $1.3 million. Includes capital lease obligations, net of accumulated amortization, of $83,000. 2.Based on share price of $40.66 and fully diluted share count of 106,637,484 as of June 30, 2013. Assumes conversion of 1,247,204 common and preferred Operating Partnership units and 608,963 unvested restricted stock awards. 3.Excludes accumulated depreciation of $527.3 million and receivables and intangible assets, net of accumulated amortization, of $54.9 million. 4.Based on Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) and Adjusted Interest Expense of $325.6 million and $102.9 million, respectively, for the four most recently completed fiscal quarters. Includes pro forma adjustments to EBITDA and Interest Expense of $28.7 million and $20.4 million, respectively, to reflect all acquisitions, development deliveries, dispositions, debt repayments and debt refinancings as if such transactions had occurred on the first day of the 12 month period presented. Adjusted Interest Expense includes $9.7 million of interest capitalized for GAAP purposes and excludes $9.8 million of amortization of debt premiums/discounts related to mortgage loans assumed in connection with acquisitions. 5.Including the amortization of net debt premiums related to mortgage loans assumed in connection with property acquisitions, the effective interest rate for fixed rate mortgage loans is 4.5%. Total Debt 5.6% 4.0% 5.2% 4.6% 3.4% 5.5% - 5.6% 5.4% 4.2% Fixed Rate Mortgage Loans 5.6% 5.5% 5.2% 5.9% 5.8% 5.5% - 5.6% 5.4% 4.4% Weighted Average Interest Rate Of Debt Maturing Each Year
AMERICAN CAMPUS COMMUNITIES | PORTFOLIO OVERVIEW Summary Note: The same store grouping above includes all properties owned by the company as of June 30, 2012. 1.Two properties currently undergoing redevelopment, U Club Townhomes on Woodward and The Plaza on University, are excluded from the new property grouping for both periods presented. 2.Includes 11 properties that completed construction and opened for operations in August and September 2012. 3.Includes the following properties: (1) The Block, a 1,555-bed property purchased in August 2012; and (2) The Retreat, a 780-bed property purchased in September 2012. Also includes University Edge, a 608-bed property that was previously subject to a pre-sale agreement and was purchased by the company in December 2012. 4.The company acquired this 15-property portfolio in September 2012. 5.The company acquired this 19-property portfolio in November 2012. 6.Excludes properties that were not owned as of June 30, 2012. 7.Occupancy at our on-campus participating properties is low during the summer months due to the expiration of the nine-month leases concurrent with the end of the spring semester. 8 UnitsBeds20132012Same Store Wholly-owned Properties18,70060,18191.6%92.2%New Wholly-owned Properties1New Development Properties21,9156,70371.2%n/aNew Acquisition Properties31,0572,94396.0%n/aCampus Acquisitions Portfolio42,5006,59082.4%n/aKayne Anderson Portfolio54,08011,68394.9%n/aNew Wholly-owned Properties - Total9,55227,91986.4%n/aWholly-owned Properties - Total28,25288,10090.0%92.2%6On-campus Participating Properties71,8634,51917.8%19.6%Physical Occupancy at June 30,Property Type
AMERICAN CAMPUS COMMUNITIES 2013/2014 LEASING STATUS Wholly-owned properties – summary 9 Note: The same store grouping presented above for purposes of disclosing the pre-leasing status for the upcoming 2013/2014 academic year represents properties that will be classified as same store properties during the fourth quarter 2013 (the first full quarter of operations in the 2013/2014 academic year.) This represents properties purchased or developed prior to October 1, 2012. 1.As of July 19, 2013 for the current year and July 19, 2012 for the prior year. 2.Rentable beds exclude beds needed for on-site staff. 3.As of September 30, 2012. 4.Includes two properties classified as Held for Sale as of June 30, 2013 and included in discontinued operations on the accompanying consolidated financial statements. Excluding these properties, the same store legacy portfolio is 91.0% leased as of July 19, 2013 as compared to 92.0% leased as of July 19, 2012. Excludes three properties sold in July 2013 which are included in discontinued operations on the accompanying consolidated financial statements. 5.Properties not owned or under ACC management during the prior year are excluded for purposes of calculating the prior year percentage of rentable beds and final fall 2012 occupancy. 6.Represents September 30, 2012 occupancy per the previous portfolio owner. This portfolio was acquired by the company on November 30, 2012. 7.Projected rate increase is based on current executed leases and assumes all future leases will be executed at currently marketed rates up to targeted occupancy. 8.Manzanita Hall is currently 278 leases above maximum occupancy due to the University’s assignment process. Excluding the additional leases, this property grouping is 98.4% leased as of July 19, 2013.
AMERICAN CAMPUS COMMUNITIES | 2013/2014 LEASING STATUS Q4 2013 same store legacy properties with final fall 2012 occupancy of 98% or greater 1.As of July 19, 2013 for the current year and July 19, 2012 for the prior year. 2.Rentable beds exclude beds needed for on-site staff. 3.As of September 30, 2012. 4.Projected rate increase is based on current executed leases and assumes all future leases will be executed at currently marketed rates up to targeted occupancy. 5.Property is leased under the University on-campus assignment process. 10
AMERICAN CAMPUS COMMUNITIES | 2013/2014 LEASING STATUS Q4 2013 same store legacy properties with final fall 2012 occupancy of 98% or greater, continued 1.As of July 19, 2013 for the current year and July 19, 2012 for the prior year. 2.Rentable beds exclude beds needed for on-site staff. 3.As of September 30, 2012. 4.Projected rate increase is based on current executed leases and assumes all future leases will be executed at currently marketed rates up to targeted occupancy. 11
AMERICAN CAMPUS COMMUNITIES | 2013/2014 LEASING STATUS Q4 2013 same store legacy properties with final fall 2012 occupancy between 95% and 98% 1.As of July 19, 2013 for the current year and July 19, 2012 for the prior year. 2.Rentable beds exclude beds needed for on-site staff. 3.As of September 30, 2012. 4.Projected rate increase is based on current executed leases and assumes all future leases will be executed at currently marketed rates up to targeted occupancy. 5.Property is classified as Held For Sale as of June 30, 2013 and is included in discontinued operations on the accompanying consolidated financial statements. 12
AMERICAN CAMPUS COMMUNITIES | 2013/2014 LEASING STATUS Q4 2013 same store legacy properties with final fall 2012 occupancy less than 95% 1.As of July 19, 2013 for the current year and July 19, 2012 for the prior year. 2.Rentable beds exclude beds needed for on-site staff. 3.As of September 30, 2012. 4.Projected rate increase is based on current executed leases and assumes all future leases will be executed at currently marketed rates up to targeted occupancy. 5.Property is leased under the University on-campus assignment process. 6.The company owns a 79.5% interest in this property. 13
AMERICAN CAMPUS COMMUNITIES | 2013/2014 LEASING STATUS 2012 acquisitions 1.As of July 19, 2013 for the current year and July 19, 2012 for the prior year. 2.Rentable beds exclude beds needed for on-site staff. 3.As of September 30, 2012. 4.Projected rate increase is based on current executed leases and assumes all future leases will be executed at currently marketed rates up to targeted occupancy. 5.Properties not owned or under ACC management during the prior year are excluded for purposes of calculating the prior year percentage of rentable beds. 14
AMERICAN CAMPUS COMMUNITIES | 2013/2014 LEASING STATUS New wholly-owned properties 1.As of July 19, 2013 for the current year and July 19, 2012 for the prior year. 2.Rentable beds exclude beds needed for on-site staff. 3.As of September 30, 2012. 4.Projected rate increase is based on current executed leases and assumes all future leases will be executed at currently marketed rates up to targeted occupancy. 5.Includes a second phase containing 366 beds that is subject to a pre-sale agreement. The company anticipates closing on the purchase of this second phase during the third quarter 2013 once the third-party developer meets certain construction completion deadlines and other closing conditions. 6.Property is leased under the University on-campus assignment process. 7.Property is currently under development and is subject to a pre-sale agreement. The company anticipates closing on the purchase of this property during the third quarter 2013 once the third-party developer meets certain construction completion deadlines and other closing conditions. 8.Properties not owned or under ACC management during the prior year are excluded for purposes of calculating the prior year percentage of rentable beds and final fall 2012 occupancy. 15
AMERICAN CAMPUS COMMUNITIES | OWNED DEVELOPMENT UPDATE $ in thousands 16 1.The total construction in progress (“CIP”) balance above excludes $4.1 million related to ongoing renovation projects at operating properties, as well as the CIP balance of $20.8 million related to the Townhomes at Newtown Crossing property in Lexington, KY and $18.0 million related to the Lodges of East Lansing Phase II property in East Lansing, MI that are discussed on page 17. 2.Consists of amounts incurred to purchase the land for off-campus development projects, as well as any other development-related expenditures not included in CIP such as deposits, furniture, etc. 3.Based on costs incurred under the general construction contract as of June 30, 2013. 4.This project consists of the redevelopment of an existing student housing high-rise building into a new residence hall product, utilizing the existing building structure. 5.This project was purchased in July 2011. In October 2012, demolition of the existing retail center began in connection with the development of a new mixed-use community. 6.This faculty and staff community consists of two phases, with the first phase anticipated to be completed in July 2014 and the second phase anticipated to be completed in July 2015. 7.Execution of this project’s ground lease and construction commencement occurred in July 2013. 8.Does not include undeveloped land parcels in 4 university markets totaling $22.7 million. 9.Commencement of owned off-campus development projects is subject to final determination of feasibility, execution and closing on definitive agreements, municipal approval processes, fluctuations in the construction market, and current capital market conditions. ACE awards provide the company with the opportunity to exclusively negotiate with the subject universities. Commencement of ACE projects is subject to various levels of university board approval, final determination of feasibility, execution and closing on definitive agreements, municipal approval processes, fluctuations in the construction market, and current capital market conditions. 10.Estimated project costs include land and other predevelopment costs of $7.1 million incurred as of June 30, 2013 for owned development pipeline projects.
AMERICAN CAMPUS COMMUNITIES | INVESTMENT UPDATE $ in thousands 1.In July 2012, the company provided mezzanine financing to a private developer and is obligated to purchase the property as long as certain construction completion deadlines and other closing conditions are met. The company is responsible for leasing, management, and initial operations of the project while the third-party developer retains the development risk. As of June 30, 2013, the company is including this property in its consolidated financial statements. Therefore, as of June 30, 2013, the company has included the following amounts in its consolidated balance sheet: land of $7.7 million, construction in progress of $20.8 million, and construction loan payable of $26.0 million. 2.As part of the purchase of the Kayne Anderson Portfolio in November 2012, the company is obligated to purchase a second phase of an existing property, which is currently under construction, as long as certain construction completion deadlines and other closing conditions are met. In connection with the closing of the Kayne Anderson Portfolio, the company deposited $8.3 million towards the purchase of this second phase, and the remaining $24.0 million of the purchase price will be paid at closing. The company is responsible for leasing, management, and initial operations of the project while the third-party developer retains the development risk. As of June 30, 2013, the company is including this property in its consolidated financial statements. Therefore, as of June 30, 2013, the company has included the following amounts in its consolidated balance sheet: land of $3.2 million, construction in progress of $18.0 million, and construction loan payable of $15.8 million. 17
AMERICAN CAMPUS COMMUNITIES | THIRD-PARTY DEVELOPMENT UPDATE $ in thousands 18 1.The Company is earning a fee to assist the University in building a dining hall that will be located adjacent to the student housing project. The dining hall will be owned by the University and will be operated by a third-party food service operator. 2.In July 2013, the company entered into long-term ground and facility leases with the University to finance, construct, and manage this on-campus student housing facility. Under the terms of the leases, title to the constructed facility will be held by the University/lessor and the University will receive 50% of defined net cash flows on an annual basis through the term of the leases. Upon completion of construction and commencement of operations, the company will manage the physical plant and accounting aspects of the facility, while the University will be responsible for residence life, leasing, marketing, billing, and cash collection duties. Although the company is including this project in its consolidated financial statements for accounting purposes, similar to our other on-campus participating properties, we view the economic benefit of such properties as limited to the development/construction management fees, property management fees, and the 50% share of net cash flow that we receive. As such, for purposes of calculating FFOM, we will recognize the fees received for this project similar to our other third-party development projects. 3.These awards relate to speculative development projects that are subject to final determination of feasibility, execution and closing on definitive agreements, and fluctuations in the construction and financing markets. Anticipated commencement and fees are dependent upon the availability of project financing, which is affected by current capital market conditions. 4.The company and Drexel University have entered into a letter of intent to convert this existing 1,016-bed American Campus wholly-owned off-campus housing community into an ACE property.
AMERICAN CAMPUS COMMUNITIES | MANAGEMENT SERVICES UPDATE $ in thousands 19 1.Stabilized annual fees are dependent upon the achievement of anticipated occupancy levels. 2.Facilities management only.
AMERICAN CAMPUS COMMUNITIES | DEFINITIONS 20 * These definitions are provided for purposes of calculating the company’s bond covenants and other key ratios.
AMERICAN CAMPUS COMMUNITIES | DEFINITIONS, CONTINUED 21 * These definitions are provided for purposes of calculating the company’s bond covenants and other key ratios.
AMERICAN CAMPUS COMMUNITIES | INVESTOR INFORMATION 22
AMERICAN CAMPUS COMMUNITIES | FORWARD-LOOKING STATEMENT In addition to historical information, this supplemental package 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.
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