UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
ý☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the quarterly period ended March 31, 2019.   2020.
 
o☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period From ______________________ to _________________________
  
Commission file number 001-32265 (American Campus Communities, Inc.)
Commission file number 333-181102-01 (American Campus Communities Operating Partnership LP)
 
AMERICAN CAMPUS COMMUNITIES, INC.
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP
(Exact name of registrant as specified in its charter)
 
 Maryland (American Campus Communities, Inc.)
Maryland76-0753089
Maryland (American(American Campus Communities Operating
Partnership LP)
Maryland56-2473181
 
 76-0753089 (American Campus Communities, Inc.)
56-2473181 (American Campus Communities Operating
Partnership LP)
 (State(State or Other Jurisdiction of
Incorporation or Organization)
(IRS Employer Identification No.)
12700 Hill Country Blvd.,Suite T-200
78738
Austin,TX
(Zip Code)
(Address of Principal Executive Offices) 
78738
(Zip Code)
 
(512) (512) 732-1000
Registrant’s telephone number, including area code
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
American Campus Communities, Inc.
Yesx
☒Noo☐
American Campus Communities Operating Partnership LP
Yesx
☒Noo☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
American Campus Communities, Inc.
Yesx
☒Noo☐
American Campus Communities Operating Partnership LP
Yesx
☒Noo☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 

American Campus Communities, Inc.                                                                                                                                    
Large accelerated filerx
☒
Accelerated Filer o

Non-accelerated filer   o
Smaller reporting company o☐
Non-accelerated filer   ☐Smaller reporting company☐
 
Emerging growth companyo
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐


American Campus Communities Operating Partnership LP
Large accelerated filero
☐
Accelerated Filero☐
Non-accelerated filerx
☒     (Do not check if a smaller reporting company) 
Smaller reporting companyo
☐
 
Emerging growth companyo
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
American Campus Communities, Inc.
Yeso
☐Nox☒
American Campus Communities Operating Partnership LP
Yeso
☐Nox☒


Securities registered pursuant to Section 12(b) of the Act:                                                                                   
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, par value $.01 per shareACCNew York Stock Exchange


There were 137,260,121137,604,447 shares of the American Campus Communities, Inc.’s common stock with a par value of $0.01 per share outstanding as of the close of business on April 26, 2019.24, 2020.
 



EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the quarterly period ended March 31, 20192020 of American Campus Communities, Inc. and American Campus Communities Operating Partnership LP. Unless stated otherwise or the context otherwise requires, references to “ACC” mean American Campus Communities, Inc., a Maryland corporation that has elected to be treated as a real estate investment trust (“REIT”) under the Internal Revenue Code, and references to “ACCOP” mean American Campus Communities Operating Partnership LP, a Maryland limited partnership. References to the “Company,” “we,” “us” or “our” mean collectively ACC, ACCOP and those entities/subsidiaries owned or controlled by ACC and/or ACCOP. References to the “Operating Partnership” mean collectively ACCOP and those entities/subsidiaries owned or controlled by ACCOP. The following chart illustrates the Company’s and the Operating Partnership’s corporate structure:
companyflowchart3312019.jpg
a12companyflowchart93019a12.jpg

The general partner of ACCOP is American Campus Communities Holdings, LLC (“ACC Holdings”), an entity that is wholly-owned by ACC. As of March 31, 2019,2020, ACC Holdings held an ownership interest in ACCOP of less than 1%. The limited partners of ACCOP are ACC and other limited partners consisting of current and former members of management and nonaffiliated third parties. As of March 31, 2019,2020, ACC owned an approximate 99.5%99.6% limited partnership interest in ACCOP. As the sole member of the general partner of ACCOP, ACC has exclusive control of ACCOP’s day-to-day management. Management operates the Company and the Operating Partnership as one business. The management of ACC consists of the same members as the management of ACCOP. The Company is structured as an umbrella partnership REIT (“UPREIT”) and ACC contributes all net proceeds from its various equity offerings to the Operating Partnership. In return for those contributions, ACC receives a number of units of the Operating Partnership (“OP Units,” see definition below) equal to the number of common shares it has issued in the equity offering. Contributions of properties to the Company can be structured as tax-deferred transactions through the issuance of OP Units in the Operating Partnership. Based on the terms of ACCOP’s partnership agreement, OP Units can be exchanged for ACC’s common shares on a one-for-one basis. The Company maintains a one-for-one relationship between the OP Units of the Operating Partnership issued to ACC and ACC Holdings and the common shares issued to the public. The Company believes that combining the reports on Form 10-Q of ACC and ACCOP into this single report provides the following benefits:

(1)enhances investors’ understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
(2)eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and
(3)creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.



ACC consolidates ACCOP for financial reporting purposes, and ACC essentially has no assets or liabilities other than its investment in ACCOP. Therefore, the assets and liabilities of the Company and the Operating Partnership are the same on their respective financial statements. However, the Company believes it is important to understand the few differences between the Company and the Operating Partnership in the context of how the entities operate as a consolidated company. All of the Company’s property

ownership, development and related business operations are conducted through the Operating Partnership. ACC also issues public equity from time to time and guarantees certain debt of ACCOP, as disclosed in this report. ACC does not have any indebtedness, as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from ACC’s equity offerings, which are contributed to the capital of ACCOP in exchange for OP Units on a one-for-one common share per OP Unit basis, the Operating Partnership generates all remaining capital required by the Company’s business. These sources include, but are not limited to, the Operating Partnership’s working capital, net cash provided by operating activities, borrowings under its credit facility, the issuance of unsecured notes, and proceeds received from the disposition of certain properties. Noncontrolling interests, stockholders’ equity, and partners’ capital are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The noncontrolling interests in the Operating Partnership’s financial statements consist of the interests of unaffiliated partners in various consolidated joint ventures. The noncontrolling interests in the Company’s financial statements include the same noncontrolling interests at the Operating Partnership level and OP Unit holders of the Operating Partnership. The differences between stockholders’ equity and partners’ capital result from differences in the equity issued at the Company and Operating Partnership levels.


To help investors understand the significant differences between the Company and the Operating Partnership, this report provides separate consolidated financial statements for the Company and the Operating Partnership. A single set of consolidated notes to such financial statements is presented that includes separate discussions for the Company and the Operating Partnership when applicable (for example, noncontrolling interests, stockholders’ equity or partners’ capital, earnings per share or unit, etc.). A combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section is also included that presents discrete information related to each entity, as applicable. This report also includes separate Part I, Item 4 Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of the Company and the Operating Partnership in order to establish that the requisite certifications have been made and that the Company and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.

In order to highlight the differences between the Company and the Operating Partnership, the separate sections in this report for the Company and the Operating Partnership specifically refer to the Company and the Operating Partnership. In the sections that combine disclosure of the Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the Company operates its business through the Operating Partnership. The separate discussions of the Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.



FORM 10-Q
FOR THE QUARTER ENDED March 31, 20192020
TABLE OF CONTENTS
 
 PAGE NO.
  
PART I. 
   
Item 1.Consolidated Financial Statements of American Campus Communities, Inc. and Subsidiaries: 
   
 Consolidated Balance Sheets as of March 31, 20192020 (unaudited) and December 31, 20182019
1
   
 Consolidated Statements of Comprehensive Income for the three months ended March 31, 20192020 and 20182019 (all unaudited)
2
   
 Consolidated Statements of Changes in Equity for the three months ended March 31, 20192020 and 20182019 (all unaudited)
3
   
 Consolidated Statements of Cash Flows for the three months ended March 31, 20192020 and 20182019 (all unaudited)
54
   
 Consolidated Financial Statements of American Campus Communities Operating Partnership LP and Subsidiaries: 
   
 Consolidated Balance Sheets as of March 31, 20192020 (unaudited) and December 31, 20182019
65
   
 Consolidated Statements of Comprehensive Income for the three months ended March 31, 20192020 and 20182019 (all unaudited)
76
   
 Consolidated Statements of Changes in Capital for the three months ended March 31, 20192020 and 20182019 (all unaudited)
87
   
 Consolidated Statements of Cash Flows for the three months ended March 31, 20192020 and 20182019 (all unaudited)
108
   
 Notes to Consolidated Financial Statements of American Campus Communities, Inc. and Subsidiaries and American Campus Communities Operating Partnership LP and Subsidiaries (unaudited)
119
   
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
3025
   
Item 3.Quantitative and Qualitative Disclosure about Market Risk
4237
   
Item 4.Controls and Procedures
4237
  
PART II. 
   
Item 1.Legal Proceedings
4338
   
Item 1A.Risk Factors
4338
   
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
4339
   
Item 3.Defaults Upon Senior Securities
4339
   
Item 4.Mine Safety Disclosures
4339
   
Item 5.Other Information
4339
   
Item 6.Exhibits
4440
  
SIGNATURES
4541


AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)






 March 31, 2019 December 31, 2018 March 31, 2020 December 31, 2019
 (Unaudited)   (Unaudited)  
Assets        
        
Investments in real estate:        
Owned properties, net $6,606,019
 $6,583,397
 $6,636,857
 $6,694,715
Owned property held for sale 9,258
 —
On-campus participating properties, net 78,870
 77,637
 73,716
 75,188
Investments in real estate, net 6,694,147
 6,661,034
 6,710,573
 6,769,903
        
Cash and cash equivalents 46,166
 71,238
 176,758
 54,650
Restricted cash 33,689
 35,279
 32,130
 26,698
Student contracts receivable 14,056
 8,565
Student contracts receivable, net 12,287
 13,470
Operating lease right of use assets 459,957
 460,857
Other assets 537,390
 262,730
 228,051
 234,176
        
Total assets $7,325,448
 $7,038,846
 $7,619,756
 $7,559,754
        
Liabilities and equity  
  
  
  
        
Liabilities:  
  
  
  
Secured mortgage, construction and bond debt, net $864,070
 $853,084
 $749,902
 $787,426
Unsecured notes, net 1,589,096
 1,588,446
 1,981,472
 1,985,603
Unsecured term loans, net 198,857
 198,769
 199,209
 199,121
Unsecured revolving credit facility 457,400
 387,300
 609,700
 425,700
Accounts payable and accrued expenses 58,439
 88,767
 53,086
 88,411
Operating lease liabilities 282,550
 —
 477,779
 473,070
Other liabilities 185,234
 191,233
 178,702
 157,368
Total liabilities 3,635,646
 3,307,599
 4,249,850
 4,116,699
        
Commitments and contingencies (Note 12) 

 

 


 


        
Redeemable noncontrolling interests 186,695
 184,446
 17,768
 104,381
        
Equity:  
  
  
  
American Campus Communities, Inc. and Subsidiaries stockholders’ equity:  
  
  
  
Common stock, $0.01 par value, 800,000,000 shares authorized, 137,188,689 and 136,967,286 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively 1,370
 1,370
Common stock, $0.01 par value, 800,000,000 shares authorized, 137,523,031 and 137,326,824 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively 1,375
 1,373
Additional paid in capital 4,455,948
 4,458,240
 4,467,906
 4,458,456
Common stock held in rabbi trust, 71,432 and 69,603 shares at March 31, 2019 and December 31, 2018, respectively (3,162) (3,092)
Common stock held in rabbi trust, 81,416 and 77,928 shares at March 31, 2020 and December 31, 2019, respectively (3,615) (3,486)
Accumulated earnings and dividends (1,005,041) (971,070) (1,129,108) (1,144,721)
Accumulated other comprehensive loss (10,191) (4,397) (26,747) (16,946)
Total American Campus Communities, Inc. and Subsidiaries stockholders’ equity 3,438,924
 3,481,051
 3,309,811
 3,294,676
Noncontrolling interests - partially owned properties 64,183
 65,750
 42,327
 43,998
Total equity 3,503,107
 3,546,801
 3,352,138
 3,338,674
        
Total liabilities and equity $7,325,448
 $7,038,846
 $7,619,756
 $7,559,754
        
Consolidated variable interest entities’ assets and debt included in the above balances:
        
Investments in real estate, net $1,056,632
 $1,042,585
 $596,506
 $788,393
Cash, cash equivalents and restricted cash $52,282
 $72,218
 $37,711
 $59,908
Other assets $17,747
 $11,918
 $14,794
 $18,387
Secured mortgage and construction debt, net $465,744
 $447,292
 $417,765
 $418,241
Accounts payable, accrued expenses and other liabilities $47,981
 $53,432
 $34,317
 $56,976


See accompanying notes to consolidated financial statements.


1
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in thousands, except share and per share data)


 Three Months Ended 
 March 31,		 Three Months Ended
March 31,
 2019 2018 2020 2019
Revenues:        
Owned properties $224,419
 $205,532
 $232,091
 $224,419
On-campus participating properties 11,448
 10,443
 10,709
 11,448
Third-party development services 3,171
 846
 2,055
 3,171
Third-party management services 2,311
 2,731
 3,829
 2,311
Resident services 782
 857
 720
 782
Total revenues 242,131
 220,409
 249,404
 242,131
        
Operating expenses:  
  
Operating expenses (income):  
  
Owned properties 92,169
 88,060
 92,474
 92,169
On-campus participating properties 3,957
 3,425
 3,366
 3,957
Third-party development and management services 4,186
 4,198
 6,207
 4,186
General and administrative 7,315
 6,699
 10,158
 7,315
Depreciation and amortization 68,755
 64,779
 66,169
 68,755
Ground/facility leases 3,549
 2,842
 4,069
 3,549
Provision for real estate impairment 3,201
 —
Gain from disposition of real estate (48,525) —
Provision for impairment —
 3,201
Total operating expenses 183,132
 170,003
 133,918
 183,132
        
Operating income 58,999
 50,406
 115,486
 58,999
        
Nonoperating income (expenses):  
  
  
  
Interest income 926
 1,223
 851
 926
Interest expense (27,061) (23,684) (27,783) (27,061)
Amortization of deferred financing costs (1,132) (1,414) (1,287) (1,132)
Loss from early extinguishment of debt (4,827) —
Total nonoperating expenses (27,267) (23,875) (33,046) (27,267)
        
Income before income taxes 31,732
 26,531
 82,440
 31,732
Income tax provision (364) (281) (379) (364)
Net income 31,368
 26,250
 82,061
 31,368
Net income attributable to noncontrolling interests (1,728) (323) (1,206) (1,728)
Net income attributable to ACC, Inc. and Subsidiaries common stockholders $29,640
 $25,927
 $80,855
 $29,640
        
Other comprehensive (loss) income  
  
Other comprehensive loss  
  
Change in fair value of interest rate swaps and other (5,794) 465
 (9,801) (5,794)
Comprehensive income $23,846
 $26,392
 $71,054
 $23,846
        
Net income per share attributable to ACC, Inc. and Subsidiaries common shareholders  
  
  
  
Basic $0.21
 $0.19
Diluted $0.21
 $0.18
Basic and diluted $0.58
 $0.21
        
Weighted-average common shares outstanding:  
  
  
  
Basic 137,101,535
 136,525,557
 137,477,169
 137,101,535
Diluted 138,152,378
 137,499,963
 138,587,513
 138,152,378
    


See accompanying notes to consolidated financial statements.


2
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited, in thousands, except share data)




 
Common
Shares
 
Par Value of
Common
Shares
 
Additional Paid
in Capital
 Common Shares Held in Rabbi Trust Common Shares Held in Rabbi Trust at Cost 
Accumulated
Earnings and
Dividends
 
Accumulated
Other
Comprehensive
Loss
 
Noncontrolling
Interests –
Partially Owned
Properties
 Total 
Common
Shares
 
Par Value of
Common
Shares
 
Additional Paid
in Capital
 Common Shares Held in Rabbi Trust Common Shares Held in Rabbi Trust at Cost 
Accumulated
Earnings and
Dividends
 
Accumulated
Other
Comprehensive
Loss
 
Noncontrolling
Interests –
Partially Owned
Properties
 Total
Equity, December 31, 2018 136,967,286
 $1,370
 $4,458,240
 69,603
 $(3,092) $(971,070) $(4,397) $65,750
 $3,546,801
Equity, December 31, 2019 137,326,824
 $1,373
 $4,458,456
 77,928
 $(3,486) $(1,144,721) $(16,946) $43,998
 $3,338,674
Adjustments to reflect redeemable noncontrolling interests at fair value —
 —
 (2,547) —
 —
 —
 —
 —
 (2,547) —
 —
 9,490
 —
 —
 —
 —
 —
 9,490
Amortization of restricted stock awards and vesting of restricted stock units —
 —
 3,765
 —
 —
 —
 —
 —
 3,765
Amortization of restricted stock awards —
 —
 3,988
 —
 —
 —
 —
 —
 3,988
Vesting of restricted stock awards 180,961
 —
 (3,831)     —
 —
 —
 (3,831) 199,695
 2
 (4,157) —
 —
 —
 —
 —
 (4,155)
Distributions to common and restricted stockholders and other ($0.46 per common share) —
 —
 —
 —
 —
 (63,611) —
 —
 (63,611)
Contributions by noncontrolling interests - partially owned properties —
 —
 —
 —
 —
 —
   625
 625
Distributions to common and restricted stockholders and other ($0.47 per common share) —
 —
 —
 —
 —
 (65,242) —
 —
 (65,242)
Distributions to noncontrolling interests - partially owned properties —
 —
 —
 —
 —
 —
 —
 (3,661) (3,661) —
 —
 —
 —
 —
 —
 —
 (2,566) (2,566)
Conversion of common and preferred operating partnership units to common stock 42,271
 —
 251
 —
 —
 —
 —
 —
 251
Change in fair value of interest rate swaps and other —
 —
 —
 —
 —
 —
 (5,794) —
 (5,794) —
 —
 —
 —
 —
 —
 (9,801) —
 (9,801)
Deposits to deferred compensation plan, net of withdrawals (1,829) —
 70
 1,829
 (70) —
 —
 —
 —
 (3,488) —
 129
 3,488
 (129) —
 —
 —
 —
Net income —
 —
 —
 —
 —
 29,640
 —
 1,469
 31,109
 —
 —
 —
 —
 —
 80,855
 —
 895
 81,750
Equity, March 31, 2019 137,188,689

$1,370

$4,455,948
 71,432
 $(3,162)
$(1,005,041)
$(10,191)
$64,183

$3,503,107
Equity, March 31, 2020 137,523,031

$1,375

$4,467,906
 81,416
 $(3,615)
$(1,129,108)
$(26,747)
$42,327

$3,352,138




  Common
Shares		 Par Value of
Common
Shares		 Additional Paid
in Capital		 Common Shares Held in Rabbi Trust Common Shares Held in Rabbi Trust at Cost Accumulated
Earnings and
Dividends		 Accumulated
Other
Comprehensive
(Loss) Income		 Noncontrolling
Interests –
Partially Owned
Properties		 Total
Equity, December 31, 2018 136,967,286
 $1,370
 $4,458,240
 69,603
 $(3,092) $(971,070) $(4,397) $65,750
 $3,546,801
Adjustments to reflect redeemable noncontrolling interests at fair value —
 —
 (2,547) —
 —
 —
 —
 —
 (2,547)
Amortization of restricted stock awards —
 —
 3,765
 —
 —
 —
 —
 —
 3,765
Vesting of restricted stock awards 180,961
 —
 (3,831) —
 —
 —
 —
 —
 (3,831)
Distributions to common and restricted stockholders and other ($0.46 per common share) —
 —
 —
 —
 —
 (63,611) —
 —
 (63,611)
Contributions by noncontrolling interests - partially owned properties —
 —
 —
 —
 —
 —
 —
 625
 625
Distributions to noncontrolling interests - partially owned properties —
 —
 —
 —
 —
 —
 —
 (3,661) (3,661)
Conversion of common and preferred operating partnership units to common stock 42,271
 —
 251
 —
 —
 —
 —
 —
 251
Change in fair value of interest rate swaps and other —
 —
 —
 —
 —
 —
 (5,794) —
 (5,794)
Deposits to deferred compensation plan, net of withdrawals (1,829) —
 70
 1,829
 (70) —
 —
 —
 —
Net income —
 —
 —
 —
 —
 29,640
 —
 1,469
 31,109
Equity, March 31, 2019 137,188,689
 $1,370
 $4,455,948
 71,432
 $(3,162) $(1,005,041) $(10,191) $64,183
 $3,503,107

See accompanying notes to consolidated financial statements.


3
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited, in thousands, except share data)


  Common
Shares		 Par Value of
Common
Shares		 Additional Paid
in Capital		 Common Shares Held in Rabbi Trust Common Shares Held in Rabbi Trust at Cost Accumulated
Earnings and
Dividends		 Accumulated
Other
Comprehensive
Loss		 Noncontrolling
Interests –
Partially Owned
Properties		 Total
Equity, December 31, 2017 136,362,728
 $1,364
 $4,326,910
 63,778
 $(2,944) $(837,644) $(2,701) $13,973
 $3,498,958
Adjustments to reflect redeemable noncontrolling interests at fair value —
 —
 4,526
 —
 —
 —
 —
 —
 4,526
Amortization of restricted stock awards and vesting of restricted stock units 3,040
 —
 3,443
 —
 —
 —
 —
 —
 3,443
Vesting of restricted stock awards 165,263
 1
 (2,758) —
 —
 —
 —
 —
 (2,757)
Distributions to common and restricted stockholders and other ($0.44 per common share) —
 —
 —
 —
 —
 (60,564) —
 —
 (60,564)
Contributions by noncontrolling interests - partially owned properties —
 —
 —
 —
 —
 —
 —
 9,515
 9,515
Distributions to noncontrolling interests - partially owned properties —
 —
 —
 —
 —
 —
 —
 (47) (47)
Conversion of common and preferred operating partnership units to common stock 68,448
 1
 477
 —
 —
 —
 —
 —
 478
Change in fair value of interest rate swaps and other —
 —
 —
 —
 —
 —
 465
 —
 465
Withdrawals from deferred compensation plan, net of deposits 1,160
 —
 (127) (1,160) 127
 —
 —
 —
 —
Net income —
 —
 —
 —
 —
 25,927
 —
 113
 26,040
Equity, March 31, 2018 136,600,639
 $1,366
 $4,332,471
 62,618
 $(2,817) $(872,281) $(2,236) $23,554
 $3,480,057

See accompanying notes to consolidated financial statements.

4
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)




 Three Months Ended March 31, Three Months Ended March 31,
 2019 2018 2020 2019
Operating activities        
Net income $31,368
 $26,250
 $82,061
 $31,368
Adjustments to reconcile net income to net cash provided by operating activities:  
  
  
  
Provision for real estate impairment 3,201
 —
Gain from disposition of real estate (48,525) —
Loss from early extinguishment of debt 4,827
 —
Provision for impairment —
 3,201
Depreciation and amortization 68,755
 64,779
 66,169
 68,755
Amortization of deferred financing costs and debt premiums/discounts (19) (16) (3) (19)
Share-based compensation 3,765
 3,443
 3,988
 3,765
Income tax provision 364
 281
 379
 364
Amortization of interest rate swap terminations and other 102
 102
 428
 102
Changes in operating assets and liabilities: 

 

 

 

Student contracts receivable (5,491) (556)
Student contracts receivable, net 1,143
 (5,491)
Other assets (7,723) 2,100
 6,990
 (7,723)
Accounts payable and accrued expenses (30,595) (1,088) (36,172) (30,595)
Other liabilities 16,885
 12,845
 9,499
 16,885
Net cash provided by operating activities 80,612
 108,140
 90,784
 80,612
        
Investing activities  
  
  
  
Proceeds from disposition of properties and land parcels 146,144
 —
Capital expenditures for owned properties (10,751) (11,338) (11,852) (10,751)
Investments in owned properties under development (104,768) (122,912) (84,359) (104,768)
Capital expenditures for on-campus participating properties (230) (1,146) (565) (230)
Other investing activities (1,123) (1,314) (1,347) (1,123)
Net cash used in investing activities (116,872) (136,710)
Net cash provided by (used in) investing activities 48,021
 (116,872)
        
Financing activities  
  
  
  
Proceeds from unsecured notes 399,240
 —
Pay-off of mortgage and construction loans —
 (10,375) (34,219) —
Costs paid related to early extinguishment of debt (4,156) —
Pay-off of unsecured notes (400,000) —
Proceeds from revolving credit facility 180,600
 234,900
 1,295,700
 180,600
Paydowns of revolving credit facility (110,500) (144,500) (1,111,700) (110,500)
Proceeds from construction loans 14,174
 32,966
 —
 14,174
Scheduled principal payments on debt (2,040) (2,248) (2,040) (2,040)
Debt issuance and assumption costs (1,853) —
Debt issuance costs (4,693) (1,853)
Increase in ownership of consolidated subsidiary (77,200) —
Contribution by noncontrolling interests 625
 854
 —
 625
Taxes paid on net-share settlements (3,831) (2,757) (4,155) (3,831)
Distributions paid to common and restricted stockholders (63,611) (60,564) (65,242) (63,611)
Distributions paid to noncontrolling interests (3,966) (491) (2,800) (3,966)
Net cash provided by financing activities 9,598
 47,785
Net cash (used in) provided by financing activities (11,265) 9,598
        
Net change in cash, cash equivalents, and restricted cash (26,662) 19,215
 127,540
 (26,662)
Cash, cash equivalents, and restricted cash at beginning of period 106,517
 64,772
 81,348
 106,517
Cash, cash equivalents, and restricted cash at end of period $79,855
 $83,987
 $208,888
 $79,855
        
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets        
Cash and cash equivalents $46,166
 $55,502
 $176,758
 $46,166
Restricted cash 33,689
 28,485
 32,130
 33,689
Total cash, cash equivalents, and restricted cash at end of period $79,855
 $83,987
 $208,888
 $79,855
        
Supplemental disclosure of non-cash investing and financing activities  
  
  
  
Conversion of common and preferred operating partnership units to
common stock		 $251
 $478
 $—
 $251
Non-cash contribution from noncontrolling interest $—
 $8,729
Change in accrued construction in progress $(13,915) $12,118
Accrued development costs and capital expenditures $27,056
 $35,545
Change in fair value of derivative instruments, net $(5,896) $363
 $(10,229) $(5,896)
Adjustment to reflect redeemable noncontrolling interests at fair value $(2,547) $4,526
Change in fair value of redeemable noncontrolling interest $9,490
 $(2,547)
Initial recognition of operating lease right of use assets $280,687
 $—
 $—
 $280,687
Initial recognition of operating lease liabilities $279,982
 $—
 $—
 $279,982
        
Supplemental disclosure of cash flow information  
  
  
  
Interest paid $20,912
 $17,911
 $31,959
 $20,912
    


See accompanying notes to consolidated financial statements.


54
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)




 March 31, 2019 December 31, 2018 March 31, 2020 December 31, 2019
 (Unaudited)   (Unaudited)  
Assets        
        
Investments in real estate:        
Owned properties, net $6,606,019
 $6,583,397
 $6,636,857
 $6,694,715
Owned property held for sale 9,258
 —
On-campus participating properties, net 78,870
 77,637
 73,716
 75,188
Investments in real estate, net 6,694,147
 6,661,034
 6,710,573
 6,769,903
        
Cash and cash equivalents 46,166
 71,238
 176,758
 54,650
Restricted cash 33,689
 35,279
 32,130
 26,698
Student contracts receivable 14,056
 8,565
Student contracts receivable, net 12,287
 13,470
Operating lease right of use assets 459,957
 460,857
Other assets 537,390
 262,730
 228,051
 234,176
        
Total assets $7,325,448
 $7,038,846
 $7,619,756
 $7,559,754
        
Liabilities and capital  
  
  
  
        
Liabilities:  
  
  
  
Secured mortgage, construction and bond debt, net $864,070
 $853,084
 $749,902
 $787,426
Unsecured notes, net 1,589,096
 1,588,446
 1,981,472
 1,985,603
Unsecured term loans, net 198,857
 198,769
 199,209
 199,121
Unsecured revolving credit facility 457,400
 387,300
 609,700
 425,700
Accounts payable and accrued expenses 58,439
 88,767
 53,086
 88,411
Operating lease liabilities 282,550
 —
 477,779
 473,070
Other liabilities 185,234
 191,233
 178,702
 157,368
Total liabilities 3,635,646
 3,307,599
 4,249,850
 4,116,699
        
Commitments and contingencies (Note 12) 

 

 


 


        
Redeemable limited partners 186,695
 184,446
 17,768
 104,381
        
Capital:  
  
  
  
Partners’ capital:  
  
  
  
General partner - 12,222 OP units outstanding at both March 31, 2019 and December 31, 2018 52
 55
Limited partner - 137,247,899 and 137,024,667 OP units outstanding at March 31, 2019 and December 31, 2018, respectively 3,449,063
 3,485,393
General partner - 12,222 OP units outstanding at both March 31, 2020 and December 31, 2019 41
 40
Limited partner - 137,592,225 and 137,392,530 OP units outstanding at March 31, 2020 and December 31, 2019, respectively 3,336,517
 3,311,582
Accumulated other comprehensive loss (10,191) (4,397) (26,747) (16,946)
Total partners’ capital 3,438,924
 3,481,051
 3,309,811
 3,294,676
Noncontrolling interests - partially owned properties 64,183
 65,750
 42,327
 43,998
Total capital 3,503,107
 3,546,801
 3,352,138
 3,338,674
        
Total liabilities and capital $7,325,448
 $7,038,846
 $7,619,756
 $7,559,754
        
Consolidated variable interest entities’ assets and debt included in the above balances:
        
Investments in real estate, net $1,056,632
 $1,042,585
 $596,506
 $788,393
Cash, cash equivalents and restricted cash $52,282
 $72,218
 $37,711
 $59,908
Other assets $17,747
 $11,918
 $14,794
 $18,387
Secured mortgage and construction debt, net $465,744
 $447,292
 $417,765
 $418,241
Accounts payable, accrued expenses and other liabilities $47,981
 $53,432
 $34,317
 $56,976




See accompanying notes to consolidated financial statements.


65
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in thousands, except unit and per unit data)




 Three Months Ended 
 March 31,		 Three Months Ended
March 31,
 2019 2018 2020 2019
Revenues:        
Owned properties $224,419
 $205,532
 $232,091
 $224,419
On-campus participating properties 11,448
 10,443
 10,709
 11,448
Third-party development services 3,171
 846
 2,055
 3,171
Third-party management services 2,311
 2,731
 3,829
 2,311
Resident services 782
 857
 720
 782
Total revenues 242,131
 220,409
 249,404
 242,131
        
Operating expenses:  
  
Operating expenses (income):  
  
Owned properties 92,169
 88,060
 92,474
 92,169
On-campus participating properties 3,957
 3,425
 3,366
 3,957
Third-party development and management services 4,186
 4,198
 6,207
 4,186
General and administrative 7,315
 6,699
 10,158
 7,315
Depreciation and amortization 68,755
 64,779
 66,169
 68,755
Ground/facility leases 3,549
 2,842
 4,069
 3,549
Provision for real estate impairment 3,201
 —
Gain from disposition of real estate (48,525) —
Provision for impairment —
 3,201
Total operating expenses 183,132
 170,003
 133,918
 183,132
        
Operating income 58,999
 50,406
 115,486
 58,999
        
Nonoperating income (expenses):  
  
  
  
Interest income 926
 1,223
 851
 926
Interest expense (27,061) (23,684) (27,783) (27,061)
Amortization of deferred financing costs (1,132) (1,414) (1,287) (1,132)
Loss from early extinguishment of debt (4,827) —
Total nonoperating expenses (27,267) (23,875) (33,046) (27,267)
Income before income taxes 31,732
 26,531
 82,440
 31,732
Income tax provision (364) (281) (379) (364)
Net income 31,368
 26,250
 82,061
 31,368
Net income attributable to noncontrolling interests – partially owned properties (1,568) (114) (916) (1,568)
Net income attributable to American Campus Communities Operating Partnership LP 29,800
 26,136
 81,145
 29,800
Series A preferred units distributions (31) (31) (14) (31)
Net income attributable to common unitholders $29,769
 $26,105
 $81,131
 $29,769
        
Other comprehensive (loss) income  
  
Other comprehensive loss  
  
Change in fair value of interest rate swaps and other (5,794) 465
 (9,801) (5,794)
Comprehensive income $23,975
 $26,570
 $71,330
 $23,975
        
Net income per share attributable to ACC, Inc. and Subsidiaries common shareholders  
  
Basic $0.21
 $0.19
Diluted $0.21
 $0.18
Net income per unit attributable to common unitholders  
  
Basic and diluted $0.58
 $0.21
        
Weighted-average common units outstanding  
  
  
  
Basic 137,696,323
 137,482,493
 137,945,644
 137,696,323
Diluted 138,747,166
 138,456,899
 139,055,988
 138,747,166


See accompanying notes to consolidated financial statements.


76
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
(unaudited, in thousands, except unit data)





          Accumulated Noncontrolling  
      Other Interests -  
  General Partner Limited Partner Comprehensive Partially Owned  
  Units Amount Units Amount Loss Properties Total
Capital, December 31, 2018 12,222
 $55
 137,024,667
 $3,485,393
 $(4,397) $65,750
 $3,546,801
Adjustments to reflect redeemable limited partners’ interest at fair value —
 —
 —
 (2,547) —
 —
 (2,547)
Amortization of restricted stock awards and vesting of restricted stock units —
 —
 —
 3,765
 —
 —
 3,765
Vesting of restricted stock awards —
 —
 180,961
 (3,831) —
 —
 (3,831)
Distributions to common and restricted unit holders and other ($0.46 per common unit) —
 (6) —
 (63,605) —
 —
 (63,611)
Contribution by noncontrolling interests - partially owned properties —
 —
 —
 —
 —
 625
 625
Distributions to noncontrolling joint venture partners —
 —
 —
 —
 —
 (3,661) (3,661)
Conversion of common and preferred operating partnership units to common stock —
 —
 42,271
 251
 —
 —
 251
Change in fair value of interest rate swaps and other —
 —
 —
 —
 (5,794) —
 (5,794)
Net income —
 3
 —
 29,637
 —
 1,469
 31,109
Capital, March 31, 2019 12,222
 $52
 137,247,899
 $3,449,063
 $(10,191) $64,183
 $3,503,107
          Accumulated Noncontrolling  
      Other Interests -  
  General Partner Limited Partner Comprehensive Partially Owned  
  Units Amount Units Amount Loss Properties Total
Capital, December 31, 2019 12,222
 $40
 137,392,530
 $3,311,582
 $(16,946) $43,998
 $3,338,674
Adjustments to reflect redeemable limited partners’ interest at fair value —
 —
 —
 9,490
 —
 —
 9,490
Amortization of restricted stock awards —
 —
 —
 3,988
 —
 —
 3,988
Vesting of restricted stock awards —
 —
 199,695
 (4,155) —
 —
 (4,155)
Distributions to common and restricted unit holders and other ($0.47 per common unit) —
 (6) —
 (65,236) —
 —
 (65,242)
Distributions to noncontrolling joint venture partners —
 —
 —
 —
 —
 (2,566) (2,566)
Change in fair value of interest rate swaps and other —
 —
 —
 —
 (9,801) —
 (9,801)
Net income —
 7
 —
 80,848
 —
 895
 81,750
Capital, March 31, 2020 12,222
 $41
 137,592,225
 $3,336,517
 $(26,747) $42,327
 $3,352,138






          Accumulated Noncontrolling  
      Other Interests -  
  General Partner Limited Partner Comprehensive Partially Owned  
  Units Amount Units Amount Loss Properties Total
Capital, December 31, 2018 12,222
 $55
 137,024,667
 $3,485,393
 $(4,397) $65,750
 $3,546,801
Adjustments to reflect redeemable limited partners’ interest at fair value —
 —
 —
 (2,547) —
 —
 (2,547)
Amortization of restricted stock awards —
 —
 —
 3,765
 —
 —
 3,765
Vesting of restricted stock awards —
 —
 180,961
 (3,831) —
 —
 (3,831)
Distributions to common and restricted unit holders and other ($0.46 per common unit) —
 (6) —
 (63,605) —
 —
 (63,611)
Contribution by noncontrolling interests - partially owned properties —
 —
 —
 —
 —
 625
 625
Distributions to noncontrolling joint venture partners —
 —
 —
 —
 —
 (3,661) (3,661)
Conversion of common and preferred operating partnership units to common stock —
 —
 42,271
 251
 —
 —
 251
Change in fair value of interest rate swaps and other —
 —
 —
 —
 (5,794) —
 (5,794)
Net income —
 3
 —
 29,637
 —
 1,469
 31,109
Capital, March 31, 2019 12,222
 $52
 137,247,899
 $3,449,063
 $(10,191) $64,183
 $3,503,107





















See accompanying notes to consolidated financial statements.


8
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
(unaudited, in thousands, except unit data)


          Accumulated Noncontrolling  
      Other Interests -  
  General Partner Limited Partner Comprehensive Partially Owned  
  Units Amount Units Amount Loss Properties Total
Capital, December 31, 2017 12,222
 $67
 136,414,284
 $3,487,619
 $(2,701) $13,973
 $3,498,958
Adjustments to reflect redeemable limited partners’ interest at fair value —
 —
 —
 4,526
 —
 —
 4,526
Amortization of restricted stock awards and vesting of restricted stock units —
 —
 3,040
 3,443
 —
 —
 3,443
Vesting of restricted stock awards —
 —
 165,263
 (2,757) —
 —
 (2,757)
Distributions to common and restricted unit holders and other ($0.44 per common unit) —
 (5) —
 (60,559) —
 —
 (60,564)
Contribution by noncontrolling interests - partially owned properties —
 —
 —
 —
 —
 9,515
 9,515
Distributions to noncontrolling joint venture partners —
 —
 —
 —
 —
 (47) (47)
Conversion of common and preferred operating partnership units to common stock —
 —
 68,448
 478
 —
 —
 478
Change in fair value of interest rate swaps and other —
 —
 —
 —
 465
 —
 465
Net income —
 2
 —
 25,925
 —
 113
 26,040
Capital, March 31, 2018 12,222
 $64
 136,651,035
 $3,458,675
 $(2,236) $23,554
 $3,480,057


See accompanying notes to consolidated financial statements.

97
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)




 Three Months Ended March 31, Three Months Ended March 31,
 2019 2018 2020 2019
Operating activities        
Net income $31,368
 $26,250
 $82,061
 $31,368
Adjustments to reconcile net income to net cash provided by operating activities:  
  
  
  
Provision for real estate impairment 3,201
 —
Gain from disposition of real estate (48,525) —
Loss from early extinguishment of debt 4,827
 —
Provision for impairment —
 3,201
Depreciation and amortization 68,755
 64,779
 66,169
 68,755
Amortization of deferred financing costs and debt premiums/discounts (19) (16) (3) (19)
Share-based compensation 3,765
 3,443
 3,988
 3,765
Income tax provision 364
 281
 379
 364
Amortization of interest rate swap terminations and other 102
 102
 428
 102
Changes in operating assets and liabilities:        
Student contracts receivable (5,491) (556)
Student contracts receivable, net 1,143
 (5,491)
Other assets (7,723) 2,100
 6,990
 (7,723)
Accounts payable and accrued expenses (30,595) (1,088) (36,172) (30,595)
Other liabilities 16,885
 12,845
 9,499
 16,885
Net cash provided by operating activities 80,612
 108,140
 90,784
 80,612
        
Investing activities  
  
  
  
Proceeds from disposition of properties and land parcels 146,144
 —
Capital expenditures for owned properties (10,751) (11,338) (11,852) (10,751)
Investments in owned properties under development (104,768) (122,912) (84,359) (104,768)
Capital expenditures for on-campus participating properties (230) (1,146) (565) (230)
Other investing activities (1,123) (1,314) (1,347) (1,123)
Net cash used in investing activities (116,872) (136,710)
Net cash provided by (used in) investing activities 48,021
 (116,872)
        
Financing activities  
  
  
  
Proceeds from unsecured notes 399,240
 —
Pay-off of mortgage and construction loans —
 (10,375) (34,219) —
Costs paid related to early extinguishment of debt (4,156) —
Pay-off of unsecured notes (400,000) —
Proceeds from revolving credit facility 180,600
 234,900
 1,295,700
 180,600
Paydowns of revolving credit facility (110,500) (144,500) (1,111,700) (110,500)
Proceeds from construction loans 14,174
 32,966
 —
 14,174
Scheduled principal payments on debt (2,040) (2,248) (2,040) (2,040)
Debt issuance and assumption costs (1,853) —
Debt issuance costs (4,693) (1,853)
Increase in ownership of consolidated subsidiary (77,200) —
Contribution by noncontrolling interests 625
 854
 —
 625
Taxes paid on net-share settlements (3,831) (2,757) (4,155) (3,831)
Distributions paid to common and preferred unitholders (63,343) (60,502) (64,814) (63,343)
Distributions paid on unvested restricted stock awards (573) (506) (662) (573)
Distributions paid to noncontrolling interests - partially owned properties (3,661) (47) (2,566) (3,661)
Net cash provided by financing activities 9,598
 47,785
Net cash (used in) provided by financing activities (11,265) 9,598
        
Net change in cash, cash equivalents, and restricted cash (26,662) 19,215
 127,540
 (26,662)
Cash, cash equivalents, and restricted cash at beginning of period 106,517
 64,772
 81,348
 106,517
Cash, cash equivalents, and restricted cash at end of period $79,855
 $83,987
 $208,888
 $79,855
        
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets        
Cash and cash equivalents $46,166
 $55,502
 $176,758
 $46,166
Restricted cash 33,689
 28,485
 32,130
 33,689
Total cash, cash equivalents, and restricted cash at end of period $79,855
 $83,987
 $208,888
 $79,855
        
Supplemental disclosure of non-cash investing and financing activities  
  
  
  
Conversion of common and preferred operating partnership units to
common stock		 $251
 $478
 $—
 $251
Non-cash contribution from noncontrolling interest $—
 $8,729
Change in accrued construction in progress $(13,915) $12,118
Accrued development costs and capital expenditures $27,056
 $35,545
Change in fair value of derivative instruments, net $(5,896) $363
 $(10,229) $(5,896)
Adjustment to reflect redeemable noncontrolling interests at fair value $(2,547) $4,526
Change in fair value of redeemable noncontrolling interest $9,490
 $(2,547)
Initial recognition of operating lease right of use assets $280,687
 $—
 $—
 $280,687
Initial recognition of operating lease liabilities $279,982
 $—
 $—
 $279,982
        
Supplemental disclosure of cash flow information  
  
  
  
Interest paid $20,912
 $17,911
 $31,959
 $20,912
    


See accompanying notes to consolidated financial statements.


108
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)






1. Organization and Description of Business
 
American Campus Communities, Inc. (“ACC”) is a real estate investment trust (“REIT”) that commenced operations effective with the completion of an initial public offering (“IPO”) on August 17, 2004.  Through ACC’s controlling interest in American Campus Communities Operating Partnership LP (“ACCOP”), ACC is one of the largest owners, managers and developers of high quality student housing properties in the United States in terms of beds owned and under management.  ACC is a fully integrated, self-managed and self-administered equity REIT with expertise in the acquisition, design, financing, development, construction management, leasing and management of student housing properties.  ACC’s common stock is publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “ACC.”
 
The general partner of ACCOP is American Campus Communities Holdings, LLC (“ACC Holdings”), an entity that is wholly-owned by ACC.  As of March 31, 2019,2020, ACC Holdings held an ownership interest in ACCOP of less than 1%. The limited partners of ACCOP are ACC and other limited partners consisting of current and former members of management and nonaffiliated third parties.  As of March 31, 2019,2020, ACC owned an approximate 99.5%99.6% limited partnership interest in ACCOP.  As the sole member of the general partner of ACCOP, ACC has exclusive control of ACCOP’s day-to-day management.  Management operates ACC and ACCOP as one business.  The management of ACC consists of the same members as the management of ACCOP.  ACC consolidates ACCOP for financial reporting purposes, and ACC does not have significant assets other than its investment in ACCOP.  Therefore, the assets and liabilities of ACC and ACCOP are the same on their respective financial statements.  References to the “Company” means collectively ACC, ACCOP and those entities/subsidiaries owned or controlled by ACC and/or ACCOP.  References to the “Operating Partnership” mean collectively ACCOP and those entities/subsidiaries owned or controlled by ACCOP.  Unless otherwise indicated, the accompanying Notes to the Consolidated Financial Statements apply to both the Company and the Operating Partnership.
 
As of March 31, 2019,2020, the Company’s property portfolio contained 171166 properties with approximately 109,400111,900 beds.  The Company’s property portfolio consisted of 131126 owned off-campus student housing properties that are in close proximity to colleges and universities, 34 American Campus Equity (“ACE®”) properties operated under ground/facility leases, and six6 on-campus participating properties operated under ground/facility leases with the related university systems.  Of the 171166 properties, eight3 were under development as of March 31, 2019,2020, and when completed will consist of a total of approximately 9,00011,300 beds.  The Company’s communities contain modern housing units and are supported by a resident assistant system and other student-oriented programming, with many offering resort-style amenities.
 
Through one of ACC’s taxable REIT subsidiaries (“TRSs”), the Company also provides construction management and development services, primarily for student housing properties owned by colleges and universities, charitable foundations, and others.  As of March 31, 2019,2020, also through one of ACC’s TRSs, the Company provided third-party management and leasing services for 3435 properties that represented approximately 24,30026,000 beds.  Third-party management and leasing services are typically provided pursuant to management contracts that have initial terms that range from one year to five years.  As of March 31, 2019,2020, the Company’s total owned and third-party managed portfolio included 205201 properties with approximately 133,700137,900 beds.

2. Summary of Significant Accounting Policies
 
Basis of Presentation and use of Estimates
 
The accompanying consolidated financial statements, presented in U.S. dollars, are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements, and revenue and expenses during the reporting periods. The Company’s actual results could differ from those estimates and assumptions. All material intercompany transactions among consolidated entities have been eliminated. All dollar amounts in the tables herein, except share, per share, unit and per unit amounts, are stated in thousands unless otherwise indicated.



9
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)




Principles of Consolidation


The Company’s consolidated financial statements include its accounts and the accounts of other subsidiaries and joint ventures (including partnerships and limited liability companies) over which it has control. Investments acquired or created are evaluated based on the accounting guidance relating to variable interest entities (“VIEs”), which requires the consolidation of VIEs in which the Company is considered to be the primary beneficiary. If the investment is determined not to be a VIE, then the investment is evaluated for consolidation using the voting interest model.


Recently Issued Accounting Pronouncements


In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

In March 2020, the Securities and Exchange Commission (“SEC”) adopted final rules that amend the financial disclosure requirements for subsidiary issuers and guarantors of registered debt securities in Rule 3-10 of Regulation S-X. Under the amended rules, parent companies can provide alternative disclosures in lieu of separate audited financial statements of subsidiary issuers and guarantors that meet certain circumstances. The rule is effective on January 4, 2021, but earlier compliance is permitted. The Company is in the process of evaluating the rule and its potential effect on the consolidated financial statements of both ACC and ACCOP.

In addition, the Company does not expect the following accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”)FASB to have a material effect on its consolidated financial statements:
Accounting Standards Update Effective Date
   
ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)2019-12, “Income Taxes (Topic 740): Customer’sSimplifying the Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract”Income Taxes" January 1, 2020
ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”January 1, 2020
ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”January 1, 20202021



Recently Adopted Accounting Pronouncements


In FebruaryJune 2016, the FASB issued ASU 2016-02 (“ASU 2016-12”)2016-13, “Financial Instruments-Credit Losses (Topic 326), “Leases (Topic 842): AmendmentsMeasurement of Credit Losses on Financial Instruments.” The standard requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, and to present the FASB Accounting Standards Codification.” ASU 2016-02 outlines principles fornet amount of the recognition, measurement, presentation and disclosure of leases.  Subsequentfinancial instrument expected to the issuance of ASU 2016-02,be collected. In November 2018, the FASB issued additional ASUs clarifying aspectsASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” which amends the transition requirements and scope of ASU 2016-13 and clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard. The Company adopted ASU 2016-13 on January 1, 2020.

The Company notes that a majority of its financial instruments result from operating leasing transactions, which as mentioned above, are not within the scope of the new lease accountingstandard. However, the Company did perform both a quantitative and qualitative analysis on the financial assets that are covered under this guidance, including its loans receivable. Based on this analysis, which included analyzing historical performance, occupancy rates, projected future performance, and macroeconomic trends, the Company concluded this new standard which are effective upon adoption of ASU 2016-02. These lease-related ASUs are collectively referred to asdid not have a material impact on the “New Leases Standard.”consolidated financial statements.


The Company adopted the New Leases StandardIn addition, on January 1, 2019, utilizing the modified retrospective transition approach. Under this approach, the Company elected to apply the new standard to leases that were in place as of January 1, 2019.Results for reporting periods beginning January 1, 2019 are presented under the New Leases Standard.   Upon adoption, the Company did not record an adjustment to beginning retained earnings.

In addition,2020, the Company adopted the following additional practical expedients available for implementation:

•An entity needaccounting pronouncements which did not reassess whether any existing or expired contracts are or contain leases;
•An entity need not reassess lease classification for any existing or expired leases; and
•An entity need not reassess initial direct costs for any existing leases.

As Lessee:

Under the New Leases Standard, lessees classify leases as either operating or finance leases basedhave a material effect on the principle of whether or not the lease is effectivelyCompany’s consolidated financial statements:

ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a financed purchase by the lessee. This classification determines whether lease expense is recognized on a straight-line basis over the term of the lease (operating lease) or under the effective interest method (finance lease). In addition, the New Leases Standard requires lessees to recognize right-of-use assets and related lease liabilities for leases with a term greater than 12 months regardless of their lease classification.
Upon adoption of the New Leases Standard on January 1, 2019, the Company was a lessee under 28 ground leases and two corporate office headquarters leases for which it recorded $278.2 million inright of use assets (“ROU Assets”), which are included in other assets on the accompanying consolidated balance sheet, and $277.5 million of operating lease liabilities. 
Because the Company’s existing leases under which itCloud Computing Arrangement that is a lessee will continue to be classified as operating leases, the timing and pattern of lease expense recognition (straight-line basis) will remain unchanged. However, for any leases entered into or modified after January 1, 2019 the leases will need to be evaluated under the New Leases Standard and may be classified as finance leases depending on the terms of the transactions.Service Contract”

10
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)




As Lessor:

Under the New Leases Standard, the accounting for lessors remained largely unchanged from current GAAP; however, ASU 2016-02 required that lessors expense, on an as-incurred basis, certain initial direct costs that are not incremental in negotiating a lease. Under existing standards, these costs are capitalizable and therefore the New Leases Standard will result in certain of these costs being expensed as incurred after adoption. For the Company, these costs include internal leasing payroll costs incurred for owned and presale development projects, as well as certain legal expenses incurred when negotiating commercial leases. 
The New Leases Standard also required lessors to evaluate collectability of all operating lease payments in a contract at lease commencement and thereafter. If the operating lease payments are deemed not probable of collection, adjustments are recognized as a reduction to lease income. This resulted in the reclassification of the provision for uncollectible accounts from operating expenses to revenue. This adjustment is reflected on a prospective basis in the accompanying consolidated statements of comprehensive income, starting in the three months ended March 31, 2019. The adjustments to lease income for owned properties and on-campus participating properties were a $1.1 million reduction to income and a $0.8 million addition to income, respectively, for the three months ended March 31, 2019. 
The New Leases Standard provides a practical expedient that allows lessors to not separate certain lease and non-lease components if certain criteria are met. The Company assessed the criteria and determined that the timing and pattern of transfer for common area maintenance and the related rental revenue is the same. Therefore, the Company elected the practical expedient which resulted in no change to how revenue is currently recorded.

Other
In addition, on January 1, 2019, the Company adopted the following accounting pronouncements which did not have a material effect on the Company’s consolidated financial statements:


ASU 2018-02, “Income Statement2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”Changes to the Disclosure Requirements for Fair Value Measurement”
ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”


Interim Financial Statements


The accompanying interim financial statements are unaudited but have been prepared in accordance with GAAP for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission.SEC.  Accordingly, they do not include all disclosures required by GAAP for complete financial statements.  In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements of the Company for these interim periods have been included.  Because of the seasonal nature of the Company’s operations, the results of operations and cash flows for any interim period are not necessarily indicative of results for other interim periods or for the full year.  These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.2019.
 
Investments in Real Estate
Investments in real estate are recorded at historical cost.  Major improvements that extend the life of an asset are capitalized and depreciated over the remaining useful life of the asset.  The cost of ordinary repairs and maintenance are charged to expense when incurred.  Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives of the assets as follows:
Buildings and improvements7-40 years
Leasehold interest - on-campus participating properties25-34 years (shorter of useful life or respective lease term)
Furniture, fixtures and equipment3-7 years
Project costs directly associated with the development and construction of an owned real estate project, which include interest, property taxes, and amortization of deferred financing costs, are capitalized as construction in progress.  Upon completion of the project, costs are transferred into the applicable asset category and depreciation commences.  Interest totaling approximately $2.7 million and $3.0 million was capitalized during the three months ended March 31, 2019 and 2018.
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


Management assesses whether there has been an impairment in the value of the Company’s investments in real estate whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Impairment is recognized when estimated expected future undiscounted cash flows are less than the carrying value of the property, or when a property meets the criteria to be classified as held for sale, at which time an impairment charge is recognized for any excess of the carrying value of the property over the expected net proceeds from the disposal.  The estimation of expected future net cash flows is inherently uncertain and relies on assumptions regarding current and future economics and market conditions.  If such conditions change, then an adjustment to the carrying value of the Company’s long-lived assets could occur in the future period in which the conditions change.  To the extent that a property is impaired, the excess of the carrying amount of the property over its estimated fair value is charged to earnings. In the case of any impairment, the valuation would be based on Level 3 inputs. There were no impairments of the carrying values of the Company's investments in real estate as of March 31, 2019, other than a $3.2 million impairment charge recorded on March 31, 2019 concurrent with the classification of one owned property as held for sale.

Long-Lived Assets–Held for Sale
Long-lived assets to be disposed of are classified as held for sale in the period in which all of the following criteria are met:

a.Management, having the authority to approve the action, commits to a plan to sell the asset.

b.The asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets.

c.An active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated.

d.The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year.

e.The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value.

f.Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Concurrent with this classification, the asset is recorded at the lower of cost or fair value less estimated selling costs, and depreciation ceases. The Company had one property classified as held for sale as of March 31, 2019.

Restricted Cash
 
Restricted cash consists of funds held in trust and invested in low risk investments, generally consisting of government backed securities, as permitted by the indentures of trusts, which were established in connection with three bond issues for the Company’s on-campus participating properties.  Additionally, restricted cash includes escrow accounts held by lenders and resident security deposits, as required by law in certain states.  Restricted cash also consists of escrow deposits made in connection with potential property acquisitions and development opportunities.  These escrow deposits are invested in interest-bearing accounts at federally-insured banks.  Realized and unrealized gains and losses are not material for the periods presented.


Leasing Revenue
The Company’s primary business involves leasing properties to students under agreements that are classified as operating leases, and which have terms of 12 months or less. These student leases do not provide for variable rent payments. The Company is also a lessor under commercial leases at certain owned properties, some of which provide for variable lease payments based upon tenant performance such as a percentage of sales. The Company recognizes the base lease payments provided for under the leases on a straight-line basis over the lease term, and variable payments are recognized in the period in which the changes in facts and circumstances on which the variable payments are based occur. Lease income under both student and commercial leases is included in owned property revenues in the accompanying consolidated statements of comprehensive income. Lease income under student leases totaled $231.4 million and $221.7 million for the three months ended March 31, 2020 and 2019, respectively. Lease income under commercial leases totaled $3.2 million and $3.4 million for the three months ended March 31, 2020 and 2019, respectively.

Consolidated VIEs


The Company has investments in various entities that qualify as VIEs for accounting purposes and for which the Company is the primary beneficiary and therefore includes the entities in its consolidated financial statements.  These VIEs include the Operating Partnership, six5 joint ventures that own a total of 1510 operating properties two properties subject to presale arrangements, and sixa land parcel, and 6 properties owned under the on-campus participating property structure.  The VIE assets and liabilities consolidated within the Company's assets and liabilities are disclosed at the bottom of the Consolidated Balance Sheets.accompanying consolidated balance sheets.   


Impairment of Long-Lived Assets

Management assesses whether there has been an impairment in the value of the Company’s investments in real estate whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As of March 31, 2020, the Company evaluated whether the global economic disruption caused by the novel coronavirus disease (“COVID-19”), which was characterized on March 11, 2020 by the World Health Organization as a pandemic, was an impairment indicator. The Company examined a number of factors and concluded that there were no impairments of the carrying values of the Company’s investments in real estate as of March 31, 2020.


11
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


3. Earnings Per Share

Earnings perPer Share – Company
 
Basic earnings per share is computed using net income attributable to common stockholders and the weighted average number of shares of the Company’s common stock outstanding during the period.  Diluted earnings per share reflects common shares issuable
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


from the assumed conversion of American Campus Communities Operating Partnership Units (“OP Units”) and common share awards granted.  Only those items having a dilutive impact on basic earnings per share are included in diluted earnings per share.
 
The following potentially dilutive securities were outstanding for the three months ended March 31, 20192020 and 2018,2019, but were not included in the computation of diluted earnings per share because the effects of their inclusion would be anti-dilutive. 
  Three Months Ended
March 31,
  2020 2019
Common OP Units (Note 8) 468,475
 594,788
Preferred OP Units (Note 8) 35,242
 64,361
Total potentially dilutive securities 503,717
 659,149

  Three Months Ended 
 March 31,		 
  2019 2018 
Common OP Units (Note 7) 594,788
 956,936
 
Preferred OP Units (Note 7) 64,361
 77,513
 
Total potentially dilutive securities 659,149
 1,034,449
 


The following is a summary of the elements used in calculating basic and diluted earnings per share:
 Three Months Ended 
 March 31,		 Three Months Ended
March 31,
 2019 2018 2020 2019
Numerator – basic and diluted earnings per share:        
Net income $31,368
 $26,250
 $82,061
 $31,368
Net income attributable to noncontrolling interests (1,728) (323) (1,206) (1,728)
Net income attributable to common stockholders 29,640
 25,927
Net income attributable to ACC, Inc. and Subsidiaries common stockholders 80,855
 29,640
Amount allocated to participating securities (573) (506) (662) (573)
Net income attributable to common stockholders $29,067
 $25,421
 $80,193
 $29,067
        
Denominator:  
  
  
  
Basic weighted average common shares outstanding 137,101,535
 136,525,557
 137,477,169
 137,101,535
Unvested restricted stock awards (Note 8) 1,050,843
 974,406
Unvested restricted stock awards (Note 9) 1,110,344
 1,050,843
Diluted weighted average common shares outstanding 138,152,378
 137,499,963
 138,587,513
 138,152,378
        
Earnings per share:        
Net income attributable to common stockholders - basic $0.21
 $0.19
Net income attributable to common stockholders - diluted $0.21
 $0.18
Net income attributable to common stockholders - basic and diluted $0.58
 $0.21



12

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)




Earnings per Unit – Operating Partnership
 
Basic earnings per OP Unit is computed using net income attributable to common unitholders and the weighted average number of common units outstanding during the period.  Diluted earnings per OP Unit reflects the potential dilution that could occur if securities or other contracts to issue OP Units were exercised or converted into OP Units or resulted in the issuance of OP Units and then shared in the earnings of the Operating Partnership.


The following is a summary of the elements used in calculating basic and diluted earnings per unit: 
  Three Months Ended
March 31,
  2020 2019
Numerator – basic and diluted earnings per unit:    
Net income $82,061
 $31,368
Net income attributable to noncontrolling interests – partially owned properties (916) (1,568)
Series A preferred unit distributions (14) (31)
Amount allocated to participating securities (662) (573)
Net income attributable to common unitholders $80,469
 $29,196
     
Denominator:  
  
Basic weighted average common units outstanding 137,945,644
 137,696,323
Unvested restricted stock awards (Note 9) 1,110,344
 1,050,843
Diluted weighted average common units outstanding 139,055,988
 138,747,166
  Three Months Ended 
 March 31,
  2019 2018
Numerator – basic and diluted earnings per unit:    
Net income $31,368
 $26,250
Net loss attributable to noncontrolling interests – partially owned properties (1,568) (114)
Series A preferred unit distributions (31) (31)
Amount allocated to participating securities (573) (506)
Net income attributable to common unitholders $29,196
 $25,599
     
Denominator:  
  
Basic weighted average common units outstanding 137,696,323
 137,482,493
Unvested restricted stock awards (Note 8) 1,050,843
 974,406
Diluted weighted average common units outstanding 138,747,166
 138,456,899
Earnings per unit:    
Net income attributable to common unitholders - basic and diluted $0.58
 $0.21

Earnings per unit:    
Net income attributable to common unitholders - basic $0.21
 $0.19
Net income attributable to common unitholders - diluted $0.21
 $0.18


3. Acquisitions 4. Property Dispositions

Presale Development Projects: During the three months endedProperty Dispositions

In March 31, 2018,2020, the Company entered into two presale agreements to purchase two properties under development that when completed will contain 783 beds.sold The Company is obligated to purchase the propertiesVarsity, an owned property located near University of Maryland in College Park, Maryland, containing 901 beds for $148.0 million, resulting in net cash proceeds of approximately $107.3 million, which includes the contractual purchase price and the cost of elected upgrades, as long as the developer meets certain construction completion deadlines and other closing conditions. As part of the presale agreement, the Company provided $15.6 million of mezzanine financing to one of the projects.$146.1 million. The net gain on this disposition totaled approximately $48.5 million.



13
4. Investments in Owned Properties
Owned properties, both wholly-owned and those owned through investments in VIEs, consisted of the following: 
  March 31, 2019 December 31, 2018
Land (1)
 $651,573
 $653,522
Buildings and improvements 6,471,752
 6,486,106
Furniture, fixtures and equipment 371,556
 371,429
Construction in progress 397,811
 302,902
  7,892,692
 7,813,959
Less accumulated depreciation (1,286,673) (1,230,562)
Owned properties, net 
 $6,606,019
(2) 
$6,583,397
(1)
The land balance above includes undeveloped land parcels with book values of approximately $54.5 million as of both March 31, 2019 and December 31, 2018.  It also includes land totaling approximately $10.3 million as of both March 31, 2019 and December 31, 2018 related to properties under development.
(2)
Excludes the net book value of one property classified as held for sale in the accompanying consolidated balance sheet at March 31, 2019.

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)




5. Investments in Real Estate
Owned Properties

Owned properties, both wholly-owned and those owned through investments in VIEs, consisted of the following: 
  March 31, 2020 December 31, 2019
Land $643,380
 $654,985
Buildings and improvements 6,646,917
 6,749,757
Furniture, fixtures and equipment 389,589
 391,208
Construction in progress 437,203
 341,554
  8,117,089
 8,137,504
Less accumulated depreciation (1,480,232) (1,442,789)
Owned properties, net 
 $6,636,857
 $6,694,715

Project costs directly associated with the development and construction of an owned real estate project, which include interest, property taxes, and amortization of deferred financing costs, are capitalized as construction in progress.  Upon completion of the project, costs are transferred into the applicable asset category and depreciation commences.  Interest totaling approximately $3.2 million and $2.7 million was capitalized during the three months ended March 31, 2020 and 2019, respectively.

On-Campus Participating Properties

Our on-campus participating properties segment includes 6 on-campus properties that are operated under long-term ground/facility leases with 3 university systems. Under our ground/facility leases, we receive an annual distribution representing 50% of these properties’ net cash flows, as defined in the ground/facility lease agreements.  We also manage these properties under long-term management agreements and are paid management fees equal to a percentage of defined gross receipts. 

On-campus participating properties consisted of the following:
  March 31, 2020 December 31, 2019
Buildings and improvements $156,359
 $155,941
Furniture, fixtures and equipment 13,705
 13,552
Construction in progress —
 6
  170,064
 169,499
Less accumulated depreciation (96,348) (94,311)
On-campus participating properties, net 
 $73,716
 $75,188



14
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


6. Debt
 
A summary of the Company’s outstanding consolidated indebtedness, including unamortized debt premiums and discounts, is as follows: 
  March 31, 2020 December 31, 2019
Debt secured by owned properties:    
Mortgage loans payable:    
Unpaid principal balance $657,840
 $693,584
Unamortized deferred financing costs (1,172) (1,294)
Unamortized debt premiums 5,173
 6,596
Unamortized debt discounts (187) (199)
  661,654
 698,687
Debt secured by on-campus participating properties:  
  
Mortgage loans payable (1)
 65,428
 65,942
Bonds payable (1)
 23,215
 23,215
Unamortized deferred financing costs (395) (418)
  88,248
 88,739
Total secured mortgage, construction and bond debt 749,902
 787,426
Unsecured notes, net of unamortized OID and deferred financing costs (2)
 1,981,472
 1,985,603
Unsecured term loans, net of unamortized deferred financing costs (3)
 199,209
 199,121
Unsecured revolving credit facility 609,700
 425,700
Total debt, net $3,540,283
 $3,397,850
  March 31, 2019 December 31, 2018
Debt secured by owned properties:    
Mortgage loans payable:    
Unpaid principal balance $725,606
 $727,163
Unamortized deferred financing costs (1,961) (1,757)
Unamortized debt premiums 10,333
 11,579
  733,978
 736,985
Construction loans payable (1)
 36,382
 22,207
Unamortized deferred financing costs (205) (480)
  770,155
 758,712
Debt secured by on-campus participating properties:  
  
Mortgage loans payable (2)
 67,384
 67,867
Bonds payable (2)
 27,030
 27,030
Unamortized deferred financing costs (499) (525)
  93,915
 94,372
Total secured mortgage, construction and bond debt 864,070
 853,084
Unsecured notes, net of unamortized OID and deferred financing costs (3)
 1,589,096
 1,588,446
Unsecured term loans, net of unamortized deferred financing costs (4)
 198,857
 198,769
Unsecured revolving credit facility 457,400
 387,300
Total debt, net $3,109,423
 $3,027,599

 
(1) 
Construction loans payable relate to construction loans partially financing the development of two presale development projects. These properties are owned by entities determined to be VIEs for which the Company is the primary beneficiary. The creditors of these construction loans do not have recourse to the assets of the Company.
(2)
The creditors of mortgage loans payable and bonds payable related to on-campus participating properties do not have recourse to the assets of the Company.
(3)(2) 
Includes net unamortized original issue discount (“OID”) of $1.5$2.8 million and $1.6$2.3 million at March 31, 20192020 and December 31, 2018,2019, respectively, and net unamortized deferred financing costs of $9.4$15.7 million and $10.0$12.1 million at March 31, 20192020 and December 31, 2018,2019, respectively.
(4)(3) 
Includes net unamortized deferred financing costs of $1.1$0.8 million and $1.2$0.9 million at March 31, 20192020 and December 31, 2018,2019, respectively.


Mortgage and Construction Loans Payable     


During the three months ended March 31, 2020, the Company paid off approximately $34.2 million of fixed rate mortgage debt secured by 1 owned property. During the three months ended March 31, 2019, the Company did not pay off any mortgage debt.

In January 2019, the Company refinanced $70.0 million of variable rate debt on one wholly-owned property, extending the maturity to January 2024. This transaction was accounted for as a debt extinguishment. The Company entered into an interest rate swap contract to hedge the variable rate cash flows associated with interest payments on this LIBOR-based mortgage loan, resulting in a fixed rate of 4.00%. Refer to Note 910 for information related to derivatives.


Unsecured Notes

In May 2017,January 2020, the lenderOperating Partnership closed a $400 million offering of senior unsecured notes under its existing shelf registration. These 10-year notes were issued at 99.81% of par value with a coupon of 2.85% and are fully and unconditionally guaranteed by the Company. Interest on the notes is payable semi-annually on February 1 and August 1, with the first payment due and payable on August 1, 2020. The notes will mature on February 1, 2030. Net proceeds from the sale of the non-recourse mortgage loan secured by Blanton Common, a property located near Valdosta State Universitysenior unsecured notes totaled approximately $394.5 million, after deducting the underwriting discount and offering expenses which was inherited as partwill be amortized over the term of the GMH student housing transactionunsecured notes. The Company used the proceeds to fund the early redemption of its $400 million 3.35% Senior Notes due October 2020. The prepayment resulted in 2008, sent a formal noticeloss from early extinguishment of default and initiated foreclosure proceedings. The property generated insufficient cash flow to coverdebt of approximately $4.8 million for the debt service on the mortgage, which had a balance of $27.4 million at default and a contractual maturity date of August 2017.  In May 2017, the lender began receiving the net operating cash flows of the property each month in lieu of scheduled monthly mortgage payments. In June 2017, the Company recorded an impairment charge for this property of $15.3 million. In August 2017, the property transferred to receivership and a third-party manager began managing the property on behalf of the lender. As ofthree months ended March 31, 2019,2020, which is included in the Company was cooperating with the lender to allow for a consensual foreclosure process upon which the property will be surrendered to the lender in satisfactionaccompanying statements of the mortgage loan.comprehensive income.


15
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)



Unsecured Notes

The Company has issued the following senior unsecured notes:notes issued by the Company are outstanding as of March 31, 2020:
Date Issued Amount % of Par Value Coupon Yield Original Issue Discount Term (Years) Amount % of Par Value Coupon Yield Original Issue Discount Term (Years)
April 2013 $400,000
 99.659 3.750% 3.791% $1,364
 10 $400,000
 99.659 3.750% 3.791% $1,364
 10
June 2014 400,000
 99.861 4.125% 4.269%
(1) 
556
 10 400,000
 99.861 4.125% 4.269%
(1) 
556
 10
September 2015 400,000
 99.811 3.350% 3.391% 756
 5
October 2017 400,000
 99.912 3.625% 3.635% 352
 10 400,000
 99.912 3.625% 3.635% 352
 10
June 2019 400,000
 99.704 3.300% 3.680%
(1) 
1,184
 7
January 2020 400,000
 99.810 2.850% 2.872% 760
 10
 $1,600,000
     $3,028
  $2,000,000
     $4,216
 
(1) 
The yield includes the effect of the amortization of interest rate swap terminations (see Note 9)10).


The notes are fully and unconditionally guaranteed by the Company.  Interest on the notes is payable semi-annually. The terms of the unsecured notes include certain financial covenants that require the Operating Partnership to limit the amount of total debt and secured debt as a percentage of total asset value, as defined.  In addition, the Operating Partnership must maintain a minimum ratio of unencumbered asset value to unsecured debt, as well as a minimum interest coverage level. As of March 31, 2019,2020, the Company was in compliance with all such covenants.
 
Unsecured Revolving Credit Facility


In February 2019, the Company exercised the option under the existing credit agreement to increase the capacity of the unsecured revolving credit facility from $700 million to $1$1.0 billion. It may be expanded by up to an additional $200 million upon the satisfaction of certain conditions. The maturity date of the revolving credit facility is March 2022.


The unsecured revolving credit facility bears interest at a variable rate, at the Company’s option, based upon a base rate of one-, two-, three- or six-month LIBOR, plus, in each case, a spread based upon the Company’s investment grade rating from either Moody’s Investor Services, Inc. or Standard & Poor’s Rating Group. Additionally, the Company is required to pay a facility fee of 0.20% per annum on the $1$1.0 billion revolving credit facility.  As of March 31, 2019,2020, the revolving credit facility bore interest at a weighted average annual rate of 3.69% (2.49%2.13% (0.93% + 1.00% spread + 0.20% facility fee), and availability under the revolving credit facility totaled $542.6$390.3 million.


The terms of the unsecured credit facility include certain restrictions and covenants, which limit, among other items, the incurrence of additional indebtedness and liens.  The facility contains customary affirmative and negative covenants and also contains financial covenants that, among other things, require the Company to maintain certain maximum leverage ratios and minimum ratios of “EBITDA” (earnings before interest, taxes, depreciation and amortization) to fixed charges.  The financial covenants also include a minimum asset value requirement, a maximum secured debt ratio, and a minimum unsecured debt service coverage ratio.  As of March 31, 2019,2020, the Company was in compliance with all such covenants.


Unsecured Term Loans


In 2017, theThe Company entered intois currently party to an Unsecured Term Loan Credit Agreement (the “Term Loan II Facility”) totaling $200 million. The maturity date of the Term Loan II Facility ismillion which matures in June 2022. The agreement has an accordion feature that allows the Company to expand the amount by up to an additional $100 million, subject to the satisfaction of certain conditions. In November and December 2019, the Company entered into two interest rate swap contracts to hedge the variable rate cash flows associated with the LIBOR-based interest payments on the Term Loan Facility. The weighted average annual rate on the Term Loan II Facility was 3.58% (2.48%2.54% (1.44% + 1.10% spread) at March 31, 2019.

2020. The terms of the term loan facilities described aboveTerm Loan Facility include certain restrictions and covenants consistent with those of the unsecured revolving credit facility discussed above. As of March 31, 2019,2020, the Company was in compliance with all such covenants.




16
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)




6.7. Stockholders’ Equity / Partners’ Capital
 
Stockholders’ Equity - Company


In May 2018, theThe Company renewed itshas an at-the-market share offering program (the “ATM Equity Program”) through which the Company may issue and sell, from time to time, shares of common stock having an aggregate offering price of up to $500 million.  The shares that may be sold under this program include shares of common stock of the Company with an aggregate offering price of approximately $233.0 million that were not sold under the Company's previous ATM equity program that expired in May 2018.  Actual sales under the program will depend on a variety of factors including, but not limited to, market conditions, the trading price of the Company’s common stock and determinations of the appropriate sources of funding for the Company.  


There was no activity under the Company’s ATM Equity Program during the three months ended March 31, 20192020 and 2018.2019. As of March 31, 2019,2020, the Company had approximately $500.0 million available for issuance under its ATM Equity Program.


In 2015, theThe Company establishedhas a Non-Qualified Deferred Compensation Plan (“Deferred Compensation Plan”) maintained for the benefit of certain employees and members of the Company’s Board of Directors, in which vested share awards (see Note 8)9), salary, and other cash amounts earned may be deposited. Deferred Compensation Plan assets are held in a rabbi trust, which is subject to the claims of the Company’s creditors in the event of bankruptcy or insolvency. The shares held in the Deferred Compensation Plan are classified within stockholders’ equity in a manner similar to the manner in which treasury stock is classified. Subsequent changes in the fair value of the shares are not recognized. During the three months ended March 31, 2019, 7,3322020, 9,365 and 5,5035,877 shares of vested stock were deposited into and withdrawn from the Deferred Compensation Plan, respectively. As of March 31, 2019, 71,4322020, 81,416 shares of ACC’s common stock were held in the Deferred Compensation Plan.


7.8. Noncontrolling Interests


Interests in Consolidated Real Estate Joint Ventures and Presale Arrangements


Noncontrolling interests - partially owned properties: As of March 31, 2019,2020, the Operating Partnership consolidates four4 joint ventures that own and operate ten10 owned off-campus properties. Additionally, the Company has entered into two presale agreements to purchase two in-process development properties. The portion of net assets attributable to the third-party partners in these arrangements is classified as “noncontrolling interests - partially owned properties” within equity and capital on the accompanying consolidated balance sheets of ACC and the Operating Partnership, respectively.


Redeemable noncontrolling interests (ACC) / redeemable limited partners (Operating Partnership): InThe noncontrolling interest holder in the third quarter of 2017, the Company entered into twoCore Spaces / DRW Real Estate Investment joint ventures (the “Core Joint Ventures”). The Company is consolidating these joint ventures and the noncontrolling interest holder, which were formed in each of these consolidated joint ventures has2017, had the option to redeem its noncontrolling interest in the entities through the exercise of put options. The options will be exercisable in the third and fourth quarter of 2019, and the redemption price is based on the fair value of the properties at the time of option exercise. As the exercise of the options iswas outside of the Company’s control, the portion of net assets attributable to the third-party partner in each of the Core Joint Ventures iswas classified as “redeemable noncontrolling interests” and “redeemable limited partners” in the mezzanine section of the accompanyingDecember 31, 2019 consolidated balance sheets of ACC and the Operating Partnership, respectively.  DuringThe redemption price was based on the fair value of the properties at the time of option exercise. These redeemable noncontrolling interests were marked to their redemption value at each balance sheet date.  As the change in redemption value was based on fair value, there was no effect on the Company’s earnings per share. The noncontrolling interest holder exercised its option to redeem its remaining ownership interest in the Core Joint Ventures during the three months ended March 31, 2019, there were no changes in2020, which reduced the redemption value of redeemable noncontrolling interest that resulted from a changeby $77.2 million. As of March 31, 2020, the Company had 100% ownership interest in the fair value of the net assetsall 5 properties initially held by the Core Joint Ventures.

The third-party partners’ share of the income or loss of the joint ventures described above is calculated based on the partners’ economic interest in the joint ventures and is included in “net income attributable to noncontrolling interests” on the consolidated statements of comprehensive income of ACC, and is reported as “net income attributable to noncontrolling interests - partially owned properties” on the consolidated statements of comprehensive income of the Operating Partnership.


Operating Partnership Ownership


Also included in redeemable noncontrolling interests (ACC) / redeemable limited partners (Operating Partnership) are OP Units for which the Operating Partnership is required, either by contract or securities law, to deliver registered common shares of ACC to the exchanging OP unit holder, or for which the Operating Partnership has the intent or history of exchanging such units for cash. The units classified as such include Series A Preferred Units (“Preferred OP Units”) as well as Common OP Units. The value of OP Units is reported at the greater of fair value, which is based on the closing market value of the Company’s common
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


stock at period end, or historical cost at the end of each reporting period. The OP Unitholders’ share of the income or loss of the Company is included in “net income attributable to noncontrolling interests” on the consolidated statements of comprehensive income of ACC.


As of March 31, 20192020 and December 31, 2018,2019, approximately 0.5%0.4% of the equity interests of the Operating Partnership were held by owners of Common OP Units and Preferred OP Units not held by ACC or ACC Holdings. During the three months ended March 31, 2020, no Common or Preferred OP Units were converted into an equal number of shares of ACC’s common stock.

17
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


During the year ended December 31, 2019, 126,313 Common OP Units and 42,271 Preferred OP Units were converted into an equal number of shares of ACC’s common stock. During the year ended December 31, 2018, 412,343 Common OP Units were converted into an equal number of shares of ACC’s common stock.


Below is a table summarizing the activity of redeemable noncontrolling interests (ACC) / redeemable limited partners (Operating Partnership) for the three months ended March 31, 2020 and 2019, which includes both the redeemable joint venture partners and OP Units discussed above: 
Balance, December 31, 2019$104,381
Net income311
Distributions(234)
Purchase of noncontrolling interests(77,200)
Adjustments to reflect redeemable noncontrolling interests at fair value(9,490)
Balance, March 31, 2020$17,768

Balance, December 31, 2018$184,446
Net income259
Distributions(305)
Conversion of OP Units into shares of ACC common stock(252)
Adjustments to reflect OP Units at fair value2,547
Balance, March 31, 2019$186,695


Balance, December 31, 2018$184,446
Net income259
Distributions(305)
Conversion of OP Units into shares of ACC common stock(252)
Adjustments to reflect redeemable noncontrolling interests at fair value2,547
Balance, March 31, 2019$186,695

Balance, December 31, 2017$132,169
Net income210
Distributions, net of contributions(376)
Conversion of OP Units into shares of ACC common stock(478)
Adjustments to reflect OP Units at fair value(4,526)
Balance, March 31, 2018$126,999



8.9. Incentive Award Plan


In May 2018, the Company’s stockholders approved the American Campus Communities, Inc. 2018The Company has an Incentive Award Plan (the “2018 Plan”“Plan”).  The 2018 Plan replaced the Company’s 2010 Incentive Award Plan (the “2010 Plan”). The 2018 Plan that provides for the grant of various stock-based incentive awards to selected employees and directors of the Company and the Company’s affiliates.  The types of awards that may be granted under the 2018 Plan include incentive stock options, nonqualified stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), profits interest units (“PIUs”) and other stock-based awards.  The Company has reserved a total 3.5 million shares of the Company’s common stock for issuance pursuant to the 2018 Plan, subject to certain adjustments for changes in the Company’s capital structure, as defined in the 2018 Plan.  Upon approval of the 2018 Plan, all remaining authorized shares that were not granted under the 2010 Plan were forfeited and are no longer available for issuance as new awards.

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)



Restricted Stock Awards (“RSAs”)
 
A summary of RSAs as of March 31, 20192020 and activity during the three months then ended is presented below:
 Number of RSAs
Nonvested balance at December 31, 20182019862,680967,341

Granted383,087443,998

Vested(1)
(266,556295,385)
Forfeited(5,29510,787)
Nonvested balance at March 31, 20192020973,9161,105,167


(1) Includes shares withheld to satisfy tax obligations upon vesting.
 
The fair value of RSAs is calculated based on the closing market value of ACC’s common stock on the date of grant.  The fair value of these awards is amortized to expense over the vesting periods. Amortization expense for the three months ended March 31, 20192020 and 20182019 amounted to approximately $3.8$4.0 million and $3.3$3.8 million, respectively.
 

18
9.
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


10. Derivative Instruments and Hedging Activities
 
The Company is exposed to certain risks arising from both its business operations and economic conditions.  The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities.  The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments.  Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.  The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.


Cash Flow Hedges of Interest Rate Risk
 
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements.  To accomplish this objective, the Company primarily uses interest rate swaps and forward starting swaps as part of its interest rate risk management strategy.  Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.  Forward starting swaps are used to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows relating to interest payments on a forecasted issuance of debt. As disclosed in Note 2,These agreements containprovisions such that if the adoptionCompany defaults on any of ASU 2017-12 did not have a material effect onits indebtedness, regardless of whether the Company’s consolidated financial statements. The change in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in other comprehensive income (“OCI”) (outside of earnings) and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effectrepayment of the hedged transaction.indebtedness has been accelerated by the lender or not, then the Company could also be declared in default on its derivative obligations. As of March 31, 2020, the Company was not in default on any of its indebtedness or derivative instruments.

The following table summarizes the Company’s outstanding interest rate swap contracts and forward starting swap contracts which are included in other assets and other liabilities on the accompanying consolidated balance sheets as of March 31, 2019:2020:
Hedged Debt Instrument Effective Date Maturity Date Pay Fixed Rate 
Receive Floating
Rate Index
 Current Notional Amount Fair Value
Cullen Oaks mortgage loan 
Feb 18, 2014
 
Feb 15, 2021
 2.2750% LIBOR - 1 month $12,446
 $(209)
Cullen Oaks mortgage loan 
Feb 18, 2014
 
Feb 15, 2021
 2.2750% LIBOR - 1 month 12,575
 (211)
Park Point mortgage loan 
Feb 1, 2019
 
Jan 16, 2024
 2.7475% LIBOR - 1 month 70,000
 (6,368)
College Park mortgage loan 
Oct 16, 2019
 
Oct 16, 2022
 1.2570% LIBOR - 1 month, with 1 day lookback 37,500
 (927)
Unsecured term loan 
Nov 4, 2019
 
Jun 27, 2022
 1.4685% LIBOR - 1 month 100,000
 (2,656)
Unsecured term loan 
Dec 2, 2019
 
Jun 27, 2022
 1.4203% LIBOR - 1 month 100,000
 (2,547)
        Total $332,521
 $(12,918)
Hedged Debt Instrument Effective Date Maturity Date Pay Fixed Rate 
Receive Floating
Rate Index
 Current Notional Amount Fair Value
Cullen Oaks mortgage loan Feb 18, 2014 Feb 15, 2021 2.2750% LIBOR - 1 month $13,014
 $(6)
Cullen Oaks mortgage loan Feb 18, 2014 Feb 15, 2021 2.2750% LIBOR - 1 month 13,148
 (6)
Park Point mortgage loan Feb 1, 2019 Jan 16, 2024 2.7475% LIBOR - 1 month 70,000
 (1,919)
Unsecured corporate debt
(1) 
Sep 30, 2019 Sep 30, 2029 2.8020% LIBOR - 3 month 100,000
 (3,490)
Unsecured corporate debt
(1) 
Sep 30, 2019 Sep 30, 2029 2.8025% LIBOR - 3 month 50,000
 (1,742)
Unsecured corporate debt
(1) 
Sep 30, 2019 Sep 30, 2029 2.7990% LIBOR - 3 month 50,000
 (1,727)
        Total $296,162
 $(8,890)
(1)
Represents forward starting swaps to hedge forecasted issuances of unsecured debt.

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)



The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of March 31, 20192020 and December 31, 2018:2019:
  Asset Derivatives Liability Derivatives
    Fair Value as of   Fair Value as of
Description Balance Sheet Location 3/31/2020 12/31/2019 Balance Sheet Location 3/31/2020 12/31/2019
             
Interest rate swap contracts Other assets $—
 $743
 Other liabilities $12,918
 $3,436
Total derivatives designated
as hedging instruments		   $—
 $743
   $12,918
 $3,436



19
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

  Asset Derivatives Liability Derivatives
    Fair Value as of   Fair Value as of
Description Balance Sheet Location March 31, 2019 December 31, 2018 Balance Sheet Location March 31, 2019 December 31, 2018
             
Interest rate swap contracts Other assets $—
 $101
 Other liabilities $1,931
 $—
Forward starting swap contracts Other assets —
 —
 Other liabilities 6,959
 2,287
Total derivatives designated
as hedging instruments		   $—
 $101
   $8,890
 $2,287


The table below presents the effect of the Company’s derivative financial instruments on the accompanying consolidated statements of comprehensive income for the three months ended March 31, 20192020 and 2018.2019.
  Three Months Ended March 31,
Description 2020 2019
Change in fair value of derivatives and other recognized in OCI $(10,229) $(5,896)
Amortization of interest rate swap terminations (1)
 428
 102
Total change in OCI due to derivative financial instruments $(9,801) $(5,794)
     
Interest expense presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded $27,783
 $27,061

(1)
Represents amortization from OCI into interest expense.
  Three Months Ended March 31,
Description 2019 2018
Amount of (loss) gain recognized in OCI on derivatives $(5,896) $363
Amount of loss reclassified from accumulated OCI into interest expense $102
 $102
Interest expense presented in the consolidated statements of comprehensive income in which the effects of cash flow hedges are recorded $27,061
 $23,684

Credit-risk-related Contingent Features
The Company has agreements with some of its derivative counterparties that contain a provision such that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. Similarly, the Company has agreements with some of its derivative counterparties that contain a provision such that the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness.


10.11.  Fair Value Disclosures


There have been no significant changes in the Company’s policies and valuation techniques utilized to determine fair value from what was disclosed in the Annual Report on Form 10-K for the year ended December 31, 2019.

Financial Instruments Carried at Fair Value


The following table presents information about the Company’s financial instruments measured at fair value on a recurring basis as of March 31, 20192020 and December 31, 2018,2019, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. In general,There were no Level 1 measurements for the periods presented, and the Company had no transfers between Levels 1, 2 or 3 during the periods presented. Refer to Note 8 for a discussion of the Level 3 activity during the period related to the redeemable noncontrolling interests in partially owned properties.

  Fair Value Measurements as of
 March 31, 2020 December 31, 2019
  Level 2 Level 3 Total Level 2 Level 3 Total
Assets:            
Derivative financial instruments $—
 $—
 $—
 $743
(1) 
$—
 $743
Liabilities:  
  
  
  
  
  
Derivative financial instruments $12,918
(1) 
$—
 $12,918
 $3,436
(1) 
$—
 $3,436
Mezzanine:  
  
  
  
  
  
Redeemable noncontrolling interests (Company)/Redeemable limited partners (Operating Partnership) $14,768
(2) 
$3,000
 $17,768
 $23,690
(2) 
$80,691
(3) 
$104,381

(1)
Valued using discounted cash flow analyses with observable market-based inputs of interest rate curves and option volatility, as well as credit valuation adjustments to reflect nonperformance risk.
(2)
Represents the OP Unit component of redeemable noncontrolling interests which is reported at the greater of the fair value of the Company’s common stock or historical cost at the balance sheet date. Represents a quoted price for a similar asset in an active market. Refer to Note 8.
(3)
Represents the Core Joint Ventures component of redeemable noncontrolling interests which is valued using primarily unobservable inputs, including the Company’s analysis of comparable properties in the Company’s portfolio, estimations of net operating results of the properties, capitalization rates, discount rates, and other market data.  Refer to Note 8.
Financial Instruments Not Carried at Fair Value
As of March 31, 2020 and December 31, 2019, the carrying values for the following instruments represent fair values determined by Level 1 inputs utilize quoted prices (unadjusted)due to the short maturity of the instruments: Cash and Cash Equivalents, Restricted Cash, Student Contracts Receivable, certain items in active markets for identical assets or liabilitiesOther Assets (including receivables, deposits, and prepaid expenses), Accounts Payable, Accrued Expenses, and Other Liabilities.

As of March 31, 2020 and December 31, 2019, the Company has the ability to access.  Faircarrying values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.  Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices observable forfollowing instruments represent fair values due the asset or liability, such asvariable interest rates and yield curves observable at commonly quoted intervals.  Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.
In instances in which the inputs used to measure fair value may fall into different levelsrate feature of the fair value hierarchy, the level in the fair value hierarchy within which the fair value measurement in its entirety has been determined is based on the lowest level input significant to the fair value measurement in its entirety.  The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment,instruments: Unsecured Revolving Credit Facility and considers factors specific to the asset or liability.Mortgage Loan Payable (variable rate).


20
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)



Disclosures concerning financial instruments measured at fair value are as follows:
   Fair Value Measurements as of
  March 31, 2019 December 31, 2018
  
Quoted Prices in
Active Markets for
Identical Assets and
Liabilities (Level 1)
 
Significant
Other
Observable
Inputs (Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 Total 
Quoted Prices in
Active Markets for
Identical Assets and
Liabilities (Level 1)
 
Significant
Other
Observable
Inputs (Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
 
 
Total
Assets:                
Derivative financial instruments $—
 $—
 $—
 $—
 $—
 $101
 $—
 $101
Liabilities:  
  
  
  
  
  
  
  
Derivative financial instruments $—
 $8,890
 $—
 $8,890
 $—
 $2,287
 $—
 $2,287
Mezzanine:  
  
  
  
  
  
  
  
Redeemable noncontrolling interests (Company)/Redeemable limited partners (Operating Partnership) $—
 $29,977
 $156,718
 $186,695
 $—
 $27,828
 $156,618
 $184,446
The OP Unit component of redeemable noncontrolling interests has a redemption feature, and is marked to its redemption value when the redemption value exceeds the original issue price.  The redemption value is based on the fair value of the Company’s common stock at the redemption date, and is therefore calculated based on the fair value of the Company’s common stock at the balance sheet date.  Since the valuation is based on observable inputs such as quoted prices for similar instruments in active markets, these instruments are classified in Level 2 of the fair value hierarchy. 

As discussed in Note 7, the redeemable noncontrolling interests related to the joint venture partners in the Core Transaction are marked to their redemption value at each balance sheet date.  The redemption value is based on the fair value of the underlying properties held by the joint ventures.  This analysis incorporates information obtained from a number of sources, including the Company’s analysis of comparable properties in the Company’s portfolio, estimations of net operating results of the properties, capitalization rates, discount rates, and other market data. The Company has determined these estimates are primarily based upon unobservable inputs and therefore are considered to be Level 3 inputs within the fair value hierarchy. 
Financial Instruments Not Carried at Fair Value
Cash and Cash Equivalents, Restricted Cash, Student Contracts Receivable, certain items in Other Assets (including receivables, deposits, and prepaid expenses), Accounts Payable and Accrued Expenses and Other Liabilities:  The Company estimates that the carrying amount approximates fair value, due to the short maturity of these instruments.
Loans Receivable: The fair value of loans receivable is based on a discounted cash flow analysis consisting of scheduled cash flows and discount rate estimates to approximate those that a willing buyer and seller might use. These financial instruments utilize Level 3 inputs.

Mortgage Loans Payable: The fair value of mortgage loans payable is based on the present value of the cash flows at current market interest rates through maturity.  The Company has concluded the fair value of these financial instruments utilize Level 2 inputs as the majority of the inputs used to value these instruments fall within Level 2 of the fair value hierarchy.

Bonds Payable: The fair value of bonds payable is based on quoted prices in markets that are not active due to the unique characteristics of these financial instruments; as such, the Company has concluded the inputs used to measure fair value fall within Level 2 of the fair value hierarchy.
Unsecured Notes:In calculating the fair value of unsecured notes, interest rate and spread assumptions reflect current creditworthiness and market conditions available for the issuance of unsecured notes with similar terms and remaining maturities. These financial instruments utilize Level 2 inputs.

Construction Loans Payable, Unsecured Revolving Credit Facility, and Unsecured Term Loans: The fair value of these instruments approximates their carrying values due to the variable interest rate feature of these instruments.
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)



The table below contains the estimated fair value and related carrying amounts for the Company’s other financial instruments as of March 31, 20192020 and December 31, 2018: 2019. There were no Level 1 measurements for the periods presented.

  March 31, 2020 December 31, 2019 
    Estimated Fair Value   Estimated Fair Value 
  Carrying Amount Level 2 Level 3 Carrying
Amount		 Level 2 Level 3 
Assets             
Loans receivable $51,268
 $—
 $48,307
(1) 
$50,553
 $—
 $48,307
(1) 
Liabilities (2)
  
      
  
  
 
Unsecured notes $1,981,472
 $1,977,419
(3) 
$—
 $1,985,603
 $2,069,817
(3) 
$—
 
Mortgage loans payable (fixed rate) $723,978
(4) 
$772,773
(5) 
$—
 $761,296
(4) 
$766,821
(5) 
$—
 
Bonds payable $23,017
 $25,292
(6) 
$—
 $23,001
 $25,110
(6) 
$—
 
Unsecured term loan (fixed rate) $199,209
 $203,420
(7) 
$—
 $199,121
 $198,687
(7) 
$—
 
  March 31, 2019  December 31, 2018 
  
Estimated
Fair Value
 
Carrying
Amount
  
Estimated
Fair Value
 
Carrying
Amount
 
Assets:          
Loans receivable $50,993
 $55,383
  $50,993
 $54,611
 
Liabilities:    
   
  
 
Unsecured notes $1,592,615
 $1,589,096
(1) 
 $1,566,900
 $1,588,446
(1) 
Mortgage loans payable $737,020
 $760,093
(2) 
 $668,911
 $693,384
(3) 
Bonds payable $28,911
 $26,760
(4) 
 $28,805
 $26,741
(4) 

(1)
IncludesValued using a discounted cash flow analysis with inputs of scheduled cash flows and discount rates that a willing buyer and seller might use.
(2)
Carrying amounts disclosed include any applicable net unamortized OID, and net unamortized deferred financing costs, and net unamortized debt premiums and discounts (see Note 5)6).
(2)(3)
Includes net unamortized debt premiumsValued using interest rate and discountsspread assumptions that reflect current creditworthiness and net unamortized deferred financing costs (see Note 5). market conditions available for the issuance of unsecured notes with similar terms and remaining maturities.
(4)
Does not include one1 variable rate mortgage loan with a principal balance of $41.2$2.9 million and $3.1 million as of March 31, 2019.2020 and December 31, 2019, respectively.
(3) (5) 
Includes net unamortized debt premiums and discounts and net unamortized deferred financing costsValued using the present value of the cash flows at current market interest rates through maturity that primarily fall within the Level 2 category.
(6)
Valued using quoted prices in markets that are not active due to the unique characteristics of these financial instruments.
(7)
In 2019, the Company entered into two interest rate swap contracts to hedge the variable rate cash flows associated with the LIBOR-based interest payments on the Term Loan Facility (see Note 5)6). Does not include two variable rate mortgage loans with a combined principal balanceValued using the present value of $111.4 million as of December 31, 2018.the cash flows at interpolated 1-month LIBOR swap rates through maturity that primarily fall within the Level 2 category.
(4) Includes net unamortized deferred financing costs (see Note 5).


11. Leases12. Commitments and Contingencies

Refer to Note 2 for information on the impact of the adoption of the New Leases Standard.Commitments


As Lessee

The Company, as lessee, has entered into 50 ground/facility and office space lease agreements, which qualify as operating leases under the New Leases Standard. These leases include leases entered into under the ACE program with university systems and Walt Disney World® Resort, leases with local and regional land owners for owned off-campus properties, leases for corporate office space, and leases under the OCPP structure. Under such leases, the lessors receive annual minimum (base) rent, variable rent based upon the operating performance of the property, or a combination thereof.  The leases have original terms (excluding extension options) ranging from seven to 102 years. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company records base rent expense under the straight-line method over the term of the lease, and variable rent expense is recorded when the achievement of the target is considered probable. Straight-line rent is capitalized during the construction period and expensed upon the commencement of operations. In the accompanying consolidated statements of comprehensive income, rent expense for ACE properties and OCPPs is included in ground/facility lease expense, and rent expense for owned off-campus properties is included in owned properties operating expenses. Total straight line rent expense, variable rent expense, and capitalized rent costs for the three months ended March 31, 2019 was $2.5 million, $2.6 million, and $2.5 million, respectively.

Construction Contracts:As of March 31, 2019, ROU Assets, which are included in other assets on the accompanying consolidated balance sheet, were approximately $280.0 million. For purposes of calculating the ROU Asset and lease liability for such leases, extension options are not included in the lease term unless it is reasonably certain that the Company will exercise the option, or the lessor has the sole ability to exercise the option. As most of the Company’s leases do not contain an implicit rate, the Company uses its incremental borrowing rate to determine the present value of the lease payments. This involves determining a secured interest rate for each lease based on the term of the respective lease. The weighted average incremental borrowing rate was 6.03% as of March 31, 2019. The weighted average remaining lease term of leases with a lease liability as of March 31, 2019 is 58.2 years (excluding extension options).

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


There were no finance lease obligations outstanding as of March 31, 2019. Future minimum commitments over the life of all operating leases, which exclude variable rent payments, are as follows:
  March 31, 2019 December 31, 2018
2019 $8,331
(1) 
$9,463
2020 11,814
 12,092
2021 16,280
 16,653
2022 18,988
 18,999
2023 19,067
 18,903
Thereafter 1,049,874
 1,042,842
Total minimum lease payments 1,124,354
 $1,118,952
Less imputed interest (841,804)  
Total lease liabilities $282,550
  
(1) Excluding the three months ended March 31, 2019.

As Lessor

The Company’s primary business involves leasing properties to students under agreements that are classified as operating leases, and which have terms of 12 months or less. These student leases do not provide for variable rent payments. The Company is also a lessor under commercial leases at certain owned properties, some of which provide for variable lease payments based upon tenant performance such as a percentage of sales. The Company recognizes the base lease payments provided for under the leases on a straight-line basis over the lease term, and variable payments are recognized in the period in which the changes in facts and circumstances on which the variable payments are based occur. Lease income under both student and commercial leases is included in owned property revenues in the accompanying consolidated statements of comprehensive income. Lease income under student leases totaled $221.7 million and $201.7 million for the three months ended March 31, 2019 and 2018, respectively, and lease income under commercial leases totaled $3.4 million and $3.3 million for the three months ended March 31, 2019 and 2018, respectively.
12. Commitments and Contingencies
Commitments
Construction Contracts: As of March 31, 2019, excluding two properties under construction and subject to presale arrangements which are being funded by construction loans,2020, the Company estimates additional costs to complete six3 owned development projects under construction to be approximately $446.1$355.3 million.

Joint Ventures: As part of the Core Transaction, the Company entered into two joint ventures during the third quarter of 2017. As part of this transaction, the Company is obligated to increase its investment in the joint ventures over a two year period. As of March 31, 2019, the remaining funding commitment was approximately $154.0 million.

Presale Development Projects: The Company has entered into two presale agreements to purchase properties which will be completed in Fall 2019. Total estimated development costs of approximately $107.3 million include the purchase price and elected upgrades, of which $87.1 million remains to be funded as of March 31, 2019. The Company is obligated to purchase the properties as long as the developer meets certain construction completion deadlines and other closing conditions. As a part of the presale agreements, the Company has the option to elect not to purchase the asset, which would result in the Company paying a significant penalty. The Company is responsible for leasing, management, and initial operations of the project while the third-party developer retains development risk during the construction period. See Note 7 for further discussion.

The Company expects to fund the commitments mentioned above through a combination of proceeds from cash flows generated from operations, anticipated property dispositions, joint venture activity, and a combination of debt and equity transactions, which may include net proceeds from the ATM Equity Program discussed in Note 6, borrowings under the Company’s existing unsecured credit facilities, and accessing the unsecured bond market.

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)



Contingencies


Development-related Guarantees:  For certain of its third-party development projects, the Company commonly provides alternate housing and project cost guarantees, subject to force majeure. These guarantees are typically limited, on an aggregate basis, to the amount of the projects’ related development fees or a contractually agreed-upon maximum exposure amount.  Alternate housing guarantees generally require the Company to provide substitute living quarters and transportation for students to and from the university if the project is not complete by an agreed-upon completion date. These guarantees typically expire at the later of five days after completion of the project or once the Company has moved all students from the substitute living quarters into the project.


Under project cost guarantees, the Company is responsible for the construction cost of a project in excess of an approved budget. The budget consists primarily of costs included in the general contractors’ guaranteed maximum price contract (“GMP”). In most cases, the GMP obligates the general contractor, subject to force majeure and approved change orders, to provide completion date guarantees and to cover cost overruns and liquidated damages. In addition, the GMP is in certain cases secured with payment and performance bonds. Project cost guarantees expire upon completion of certain developer obligations, which are normally satisfied within one year after completion of the project. The Company’s estimated maximum exposure amount under the above guarantees is approximately $15.8$10.6 million as of March 31, 2019.  2020. 

As of March 31, 2019,2020, management diddoes not anticipate any material deviations from schedule or budget related to third-party development projects currently in progress. Although the company currently anticipates completing these projects on time and within budget, the project locations are currently subject to “shelter in place” or “stay at home” orders adopted by state and local authorities in response to the COVID-19 pandemic.  Some of these orders may adversely affect the timely completion and final project costs of some or all of our projects under development if, for example, we are required to temporarily cease construction


In
21
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


entirely, experience delays in obtaining governmental permits and authorizations, or experience disruption in the normal coursesupply of business,materials or labor; however, the Company enters into various development-related purchase commitments with partiesanticipates that provide development-related goods and services.  In the event that the Company was to terminate development services priordeviations from schedule or budget related due to the completioneffects of projects under construction, the Company could potentially be committed to satisfy outstanding purchase orders with such parties.    COVID-19 pandemic will qualify as force majeure events.


As a part of the development agreement with Walt Disney World® Resort, the Company has guaranteed the completion of construction of a $614.6 million project to be delivered in phases from 2020 to 2023. In addition, the Company is subject to a development guarantee in the event that the substantial completion of a project phase is delayed beyond its respective targeted delivery date, except in circumstances resulting in unavoidable delays. The agreement dictates that the Company shall pay damages of $20 per bed for each day of delay for any Disney College Internship Program participant who was either scheduled to live in the delayed phase as well as any participant who was not able to participate in the program due to the lack of available housing and would have otherwise been housed in the delayed phase. Under the agreement, the maximum exposure related to the Disney project assuming all beds are not delivered on their respective delivery date is approximately $0.2 million per day.


Conveyance to University: In August 2013, the Company entered into an agreement to convey fee interest in a parcel of land, on which one of the Company’s student housing properties resides (University Crossings), to Drexel University (the “University”). Concurrent with the land conveyance, the Company as lessee entered into a ground lease agreement with the University as lessor for an initial term of 40 years, with three3 10-year extensions, at the Company’s option. The Company also agreed to convey the building and improvements to the University at an undetermined date in the future and to pay real estate transfer taxes not to exceed $2.4 million. The Company paid approximately $0.6 million in real estate transfer taxes upon the conveyance of land to the University, leaving approximately $1.8 million to be paid by the Company upon the transfer of the building and improvements.


Other Guarantees: In June 2019, the Company entered into a purchase and sale agreement to buy a land parcel initially scheduled to close on or before June 30, 2021, with potential extensions at the Company’s option to June 1, 2022 or June 1, 2023.  In connection with the execution of the agreement, the Company made an earnest money deposit of $2.1 million which is included in restricted cash on the accompanying consolidated balance sheet. As a part of the agreement, within 60 days of certain conditions not being met, the seller of the property can either terminate the agreement or exercise an option to require the Company to purchase the undeveloped land, with the Company retaining all rights to fully own, develop, and utilize the land. If the option is exercised, the Company must pay the agreed upon purchase price of $28.7 million and a commission calculated as a percentage of the sales price, and also reimburse the seller for demolition costs.

Pre-development expenditures: The Company incurs pre-development expenditures such as architectural fees, permits, and deposits associated with the pursuit of third-party and owned development projects.  The Company bears the risk of loss of these pre-development expenditures if financing cannot be arranged or the Company is unable to obtain the required permits and authorizations for the project.  As such, management periodically evaluates the status of third-party and owned projects that have not yet commenced construction and expenses any deferred costs related to projects whose current status indicates the commencement of construction is unlikely and/or the costs may not provide future value to the Company in the form of revenues. As of March 31, 2019,2020, the Company has deferred approximately $8.2$9.5 million in pre-development costs related to third-party and owned development projects that have not yet commenced construction.  Such costs are net of any contractual arrangements through which the Company could be reimbursed by another party. Such costs are included in other assets on the accompanying consolidated balance sheets.


Other Guarantees: In 2017, as part of the purchase of an undeveloped land parcel, the Company entered into an agreement to construct a commercial retail space within a project under development that will be conveyed back to the seller upon construction completion.  If the construction of the retail space is not completed in accordance with the agreement, the Company is required to pay liquidated damages of $2.1 million. As of March 31, 2019, management anticipates completing construction of the retail space in accordance with the agreement.
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


Litigation:  The Company is subject to various claims, lawsuits and legal proceedings, as well as other matters that have not been fully resolved and that have arisen in the ordinary course of business.  While it is not possible to ascertain the ultimate outcome of such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on the consolidated financial position or results of operations of the Company.  However, the outcome of claims, lawsuits and legal proceedings brought against the Company is subject to significant uncertainty.  Therefore, although management considers the likelihood of such an outcome to be remote, the ultimate results of these matters cannot be predicted with certainty.

LettersLitigation Settlement: Although the Company denied any wrongdoing in this matter and believes it has valid defenses to the claims asserted, in March 2020, the Company entered into a memorandum of Intent:  Insettlement to resolve an alleged collective action pursuant to which the ordinary courseCompany agreed to pay an aggregate of $1.5 million to the plaintiffs, which memorandum is subject to court approval. During the quarter ended December 31, 2019, when the settlement became probable and reasonably estimable, the Company recorded litigation expense of $0.4 million based on legal counsel’s estimate of the Company’s business,settlement amount which was not yet determined. During the first quarter 2020, the Company enters into lettersrecorded an additional $1.1 million in litigation expense to reflect the amount owed under the memorandum of intent indicating a willingness to negotiate for acquisitions, dispositions or joint ventures.  Such letterssettlement, which is reflected in general and administrative expenses in the accompanying consolidated statements of intent are non-binding (except with regard to exclusivity and confidentiality), and neither party to the letter of intent is obligated to pursue negotiations unless and until a definitive contract is entered into by the parties.  Even if definitive contracts are entered into, the letters of intent relating to the acquisition and disposition of real property and resulting contracts generally contemplate that such contracts will provide the acquirer with time to evaluate the property and conduct due diligence, during which periods the acquirer will have the ability to terminate the contracts without penalty or forfeiture of any material deposit or earnest money.  There can be no assurance that definitive contracts will be entered into with respect to any matter covered by letters of intent or that the Company will consummate any transaction contemplated by any definitive contract.  Furthermore, due diligence periods for real property are frequently extended as needed.  Once the due diligence period expires, the Company is then at risk under a real property acquisition contract, but only to the extent of any non-refundable earnest money deposits associated with the contract and subject to normal closing conditions being met.operations.

Environmental Matters:  The Company is not aware of any environmental liability with respect to the properties that would have a material adverse effect on the Company’s business, assets or results of operations. However, there can be no assurance that such a material environmental liability does not exist. The existence of any such material environmental liability could have an adverse effect on the Company’s results of operations and cash flows. 

22
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


13. Segments
 
The Company defines business segments by their distinct customer base and service provided.  The Company has identified four4 reportable segments: Owned Properties, On-Campus Participating Properties, Development Services, and Property Management Services.  Management evaluates each segment’s performance based on operating income before depreciation, amortization and minority interests.



During the year ended December 31, 2019, the Company updated the presentation of certain items in the reconciliations section in the segment disclosures by including additional detail in the reconciliation of segment income before depreciation and amortization to consolidated net income. These updates were also made in the tables below.
  Three Months Ended March 31,
  2020 2019
Owned Properties    
Rental revenues and other income $232,811
 $225,201
Interest income 117
 119
Total revenues from external customers 232,928
 225,320
Operating expenses before depreciation, amortization, and ground/facility lease expense (92,474) (92,169)
Ground/facility lease expense (3,209) (2,667)
Interest expense, net (1)
 (3,046) (4,763)
Operating income before depreciation and amortization $134,199
 $125,721
Depreciation and amortization $63,243
 $65,504
Capital expenditures $96,211
 $115,519
     
On-Campus Participating Properties  
  
Rental revenues and other income $10,709
 $11,448
Interest income 19
 41
Total revenues from external customers 10,728
 11,489
Operating expenses before depreciation, amortization, and ground/facility lease expense (3,366) (3,957)
Ground/facility lease expense (860) (882)
Interest expense, net (1)
 (1,142) (1,303)
Operating income before depreciation and amortization $5,360
 $5,347
Depreciation and amortization $2,037
 $2,029
Capital expenditures $565
 $230
     
Development Services  
  
Development and construction management fees $2,055
 $3,171
Operating expenses (2,525) (2,300)
Operating (loss) income before depreciation and amortization $(470) $871
     
Property Management Services  
  
Property management fees from external customers $3,829
 $2,311
Operating expenses (3,682) (1,886)
Operating income before depreciation and amortization $147
 $425
     
Reconciliations  
  
Total segment revenues and other income $249,540
 $242,291
Unallocated interest income earned on investments and corporate cash 715
 766
Total consolidated revenues, including interest income $250,255
 $243,057
     
Segment income before depreciation and amortization $139,236
 $132,364
Segment depreciation and amortization (65,280) (67,533)
Corporate depreciation (889) (1,222)
Net unallocated expenses relating to corporate interest and overhead (33,038) (27,544)
Gain from disposition of real estate 48,525
 —
Amortization of deferred financing costs (1,287) (1,132)
Provision for impairment —
 (3,201)
Loss from early extinguishment of debt (4,827) —
Income tax provision (379) (364)
Net income $82,061
 $31,368
     

(1)
Net of capitalized interest and amortization of debt premiums.

23
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)




  Three Months Ended 
 March 31,		 
  2019 2018 
Owned Properties     
Rental revenues and other income $225,201
 $206,389
 
Interest income 119
 381
 
Total revenues from external customers 225,320
 206,770
 
Operating expenses before depreciation, amortization, and ground/facility lease expense (92,169) (88,060) 
Ground/facility lease expense (2,667) (2,047) 
Interest expense, net (1)
 (4,763) (1,629) 
Operating income before depreciation and amortization $125,721
 $115,034
 
Depreciation and amortization $65,632
 $61,808
 
Capital expenditures $115,519
 $134,250
 
      
On-Campus Participating Properties  
  
 
Rental revenues and other income $11,448
 $10,443
 
Interest income 41
 21
 
Total revenues from external customers 11,489
 10,464
 
Operating expenses before depreciation, amortization, and ground/facility lease expense (3,957) (3,425) 
Ground/facility lease expense (882) (795) 
Interest expense, net (1)
 (1,303) (1,253) 
Operating income before depreciation and amortization $5,347
 $4,991
 
Depreciation and amortization $2,056
 $1,942
 
Capital expenditures $230
 $1,146
 
      
Development Services  
  
 
Development and construction management fees $3,171
 $846
 
Operating expenses (1,886) (2,205) 
Operating income (loss) before depreciation and amortization $1,285
 $(1,359) 
      
Property Management Services  
  
 
Property management fees from external customers $2,311
 $2,731
 
Operating expenses (2,300) (1,993) 
Operating income before depreciation and amortization $11
 $738
 
      
Reconciliations  
  
 
Total segment revenues and other income $242,291
 $220,811
 
Unallocated interest income earned on investments and corporate cash 766
 821
 
Total consolidated revenues, including interest income $243,057
 $221,632
 
      
Segment operating income before depreciation and amortization $132,364
 $119,404
 
Depreciation and amortization (69,887) (66,193) 
Net unallocated expenses relating to corporate interest and overhead (27,544) (26,680) 
Provision for real estate impairment (3,201) —
 
Income tax provision (364) (281) 
Net income $31,368
 $26,250
 
      
      
(1)
Net of capitalized interest and amortization of debt premiums.
AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


14. Subsequent Events


Distributions:  On May 1, 2019,April 29, 2020, the Board of Directors of the Company declared a distribution per share of $0.47, which will be paid on May 24, 201922, 2020 to all common stockholders of record as of May 13, 2019.11, 2020.  At the same time, the Operating Partnership will pay an equivalent amount per unit to holders of Common OP Units, as well as the quarterly cumulative preferential distribution to holders of Preferred OP Units (see Note 7)8).



COVID-19 Pandemic: COVID-19, which was characterized on March 11, 2020 by the World Health Organization as a pandemic, has currently resulted in a widespread health crisis, which has adversely affected international, national and local economies and financial markets generally, and has had an unprecedented effect on many businesses including the student housing industry. Given the daily evolution of the COVID-19 pandemic and the global responses to curb its spread, the Company is not able to estimate the resulting effects on its results of operations, cash flows, financial condition, or liquidity for the year ending December 31, 2020. The Company will continue to closely monitor the magnitude and duration of the economic disruption associated with the COVID-19 pandemic, especially as it relates to whether future evolving facts and circumstances indicate if an impairment indicator has occurred with respect to the Company’s investments in real estate.





24


Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Forward-looking Statements
 
This report contains forward-looking statements within the meaning of the federal securities laws. We caution investors that any forward-looking statements presented in this report, or which management may make orally or in writing from time to time, are based on management’s beliefs and assumptions made by, and information currently available to, management. When used, the words “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,” “project,” “should,” “will,” “result” and similar expressions, do not relate solely to historical matters and are intended to identify forward-looking statements. Such statements are subject to risks, uncertainties and assumptions and may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We caution you that forward-looking statements are not guarantees of future performance and will be impacted by actual events when they occur after we make such statements. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on results and trends at the time they were made, to anticipate future results or trends.
 
Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following: general risks affecting the real estate industry; risks associated with changes in University admission or housing policies; risks associated with the availability and terms of financing and the use of debt to fund acquisitions and developments; failure to manage effectively our growth and expansion into new markets or to integrate acquisitions successfully; risks and uncertainties affecting property development and construction; risks associated with downturns in the national and local economies, volatility in capital and credit markets, increases in interest rates, and volatility in the securities markets; costs of compliance with the Americans with Disabilities Act and other similar laws; potential liability for uninsured losses and environmental contamination; risks associated with our Company’s potential failure to qualify as a REIT under the Internal Revenue Code of 1986 (the “Code”), as amended, and possible adverse changes in tax and environmental laws; risks related to the novel coronavirus disease (“COVID-19”) pandemic as outlined in Part II, Item 1A herein; and the other factors discussed in the “Risk Factors” contained in Item 1A of our Form 10-K for the year ended December 31, 2018.2019.

COVID-19, which was characterized on March 11, 2020 by the World Health Organization as a pandemic, has currently resulted in a widespread health crisis, which has adversely affected international, national and local economies and financial markets generally, and has had an unprecedented effect on many businesses including the student housing industry. The discussions below, including without limitation statements with respect to outlooks of future operating performance and liquidity, are subject to the future effects of the COVID-19 pandemic and the global responses to curb its spread, which continue to evolve daily. As such, as described in Part II, Item 1A, Risk Factors, the full magnitude of the pandemic and its ultimate effect on our results of operations, cash flows, financial condition, and liquidity for the year ending December 31, 2020, as well as for future years, is uncertain at this time.

Our Company and Our Business
 
Overview

American Campus Communities, Inc. (“ACC”) is a real estate investment trust (“REIT”) that commenced operations effective withWe are the completion of an initial public offering (“IPO”) on August 17, 2004. Through ACC’s controlling interest in American Campus Communities Operating Partnership LP (“ACCOP”), ACC is one of the largest owners, managers, and developers of high quality student housing properties in the United States in terms of beds owned and under management. ACC isStates.  We are a fully integrated, self-managed, and self-administered equity REIT with expertise in the acquisition, design, financing, development, construction management, leasing, and management of student housing properties.  ACC’s common stock is publicly traded onRefer to Note 1 in the New York Stock Exchange (“NYSE”) under the ticker symbol “ACC.”  Referencesaccompanying Notes to the “Company,” “we,” “us” or “our” mean collectively ACC, ACCOPConsolidated Financial Statements contained in Item 1 for additional information regarding our business objectives and those entities/subsidiaries owned or controlled by ACC and/or ACCOP.  Referencesinvestment strategies.  Refer to Note 13 in the accompanying Notes to the “Operating Partnership” mean collectively ACCOP and those entities/subsidiaries owned or controlled by ACCOP.  Unless otherwise indicated, the accompanying discussion applies to both the Company and the Operating Partnership.Consolidated Financial Statements contained in Item 1 for information about our operating segments.
 
Property Portfolio

AsWe believe that the ownership and operation of March 31, 2019, our total owned property portfolio contained 171 properties, consisting of owned off-campus student housing properties that arecommunities in close proximity to selected colleges and universities American Campus Equity (“ACE®”) properties operated under ground/facility leasespresents an attractive long-term investment opportunity for our investors.  We intend to continue to execute our strategy of identifying existing differentiated, typically highly amenitized, student housing communities or development opportunities in close proximity to university campuses with university systems, and on-campus participating properties operated under ground/facility leases with the related university systems.  Of the 171 properties, eight were under development ashigh barriers to entry which are projected to experience substantial increases in enrollment and/or are under-serviced in terms of March 31, 2019.  Our communities contain modern housing units and are supported by a resident assistant system and other student-oriented programming, with many offering resort-style amenities.existing on and/or off-campus student housing.

As of March 31, 2019, through ACC’s taxable REIT subsidiary (“TRS”) entities, we provided third-party management and leasing services for 34 properties, bringing our total owned and third-party managed portfolio to 205 properties.  Third-party management and leasing services are typically provided pursuant to management contracts that have initial terms that range from one to five years.  



Below is a summary of our property portfolio as of March 31, 2019:2020:
Property portfolio: Properties Beds Properties Beds
Owned operating properties:        
Off-campus properties 128
 71,856
 126
 70,223
On-campus ACE (1) (2)
 29
 23,250
 31
 25,131
Subtotal – operating properties 157
 95,106
 157
 95,354
        
Owned properties under development:  
  
  
  
Off-campus properties 3
 1,278
On-campus ACE (2)
 5
 7,733
 3
 11,296
Subtotal – properties under development 8
 9,011
 3
 11,296
        
Total owned properties 165
 104,117
 160
 106,650
        
On-campus participating properties 6
 5,230
 6
 5,230
        
Total owned property portfolio 171
 109,347
 166
 111,880
        
Managed properties 34
 24,343
 35
 25,966
Total property portfolio 205
 133,690
 201
 137,846
        
(1)  
Includes two properties at Prairie View A&M University that we ultimately expect to be refinanced under the existing on-campus participating structure.
(2)  
Includes 33 properties operated under ground/facility leases with 16 university systems and one property operated under a ground/facility lease with Walt Disney World® Resort.
 
Leasing Results


Our financial results for the year ended December 31, 20192020 are significantly impacted by the results of our annual leasing process for the 2017/20182019/2020 and 2018/20192020/2021 academic years.  As of September 30, 2018,2019, the beginning of the 2018/20192019/2020 academic year, occupancy at our 20192020 same store properties was 97.0%97.4% with a rental rate increase of 2.0%1.4% compared to the prior academic year, and occupancy at our total owned property portfolio (including 2019 development deliveries) was also 97.0%97.4%.


As previously discussed, the COVID-19 pandemic has had an unprecedented effect on the student housing industry, including many of the universities in markets where the Company owns properties shifting to an online delivery method for academic instruction in order to accommodate shelter in place orders issued by state and local municipalities. In response to such orders, the Company has adapted its marketing strategies to conduct leasing activities for the upcoming 2020/2021 academic year through virtual channels. Management currently anticipates slower leasing velocity during the upcoming months until such shelter in place orders are lifted, and the ultimate impact of the pandemic on the annual leasing results for the 2020/2021 academic year, if any, is unknown at this time.

Development


Owned Development Projects Under Construction:

At March 31, 2019,2020, we were in the process of constructing fivethree on-campus ACE properties, andincluding one owned off-campus property.property at Walt Disney World® Resort housing college students participating in the Disney student internship program (the “Disney College Program”), which will be delivered in multiple phases from 2020 to 2023. These properties are summarized in the table below:

Owned Development Projects Under Construction:


Project
 
 
 
Location
 
 
Primary University Served
 Project Type 
 
Beds
 Estimated Project Cost Total Costs Incurred Scheduled Occupancy  Location Primary University Served Project Type Beds Estimated Project Cost Total Costs Incurred Scheduled Occupancy
          
191 College Auburn, AL Auburn University Off-campus 495 $59,300
 $47,507
 July 2019
LightView Boston, MA Northeastern University ACE 825 153,400
 129,986
 August 2019
University of Arizona Honors College Tucson, AZ University of Arizona ACE 1,056 84,700
 62,826
 August 2019
 SUBTOTAL - 2019 DELIVERIES 2,376 $297,400
 $240,319
 
       
Disney College Program Phases I-II (1)
 Orlando, FL Walt Disney World Resort ACE 1,627 $108,500
 $24,775
 May & Aug 2020 Orlando, FL 
Walt Disney World® Resort
 ACE 1,627 $108,500
 $96,113
 May & Aug 2020
Currie Hall Phase II Los Angeles, CA Univ. of Southern California ACE 272 42,000
 4,313
 July 2020 Los Angeles, CA Univ. of Southern California ACE 272 42,000
 32,531
 August 2020
San Francisco State University San Francisco, CA San Francisco State Univ. ACE 584 129,200
 27,912
 August 2020
Holloway Residences San Francisco, CA San Francisco State Univ. ACE 584 129,200
 107,475
 August 2020
 SUBTOTAL - 2020 DELIVERIES 2,483 $279,700
 $57,000
  SUBTOTAL - 2020 DELIVERIES 2,483 $279,700
 $236,119
 
          
Disney College Program Phases III-V (1)
 Orlando, FL Walt Disney World Resort ACE 3,369 $190,400
 $24,082
 Jan, May & Aug 2021 Orlando, FL 
Walt Disney World® Resort
 ACE 3,369 $190,400
 $130,262
 Jan, May & Aug 2021
 SUBTOTAL - 2021 DELIVERIES 3,369 $190,400
 $24,082
  SUBTOTAL - 2021 DELIVERIES 3,369 $190,400
 $130,262
 
          
Disney College Program Phases VI-VIII (1)
 Orlando, FL 
Walt Disney World® Resort
 ACE 3,235 $193,000
 $43,580
 Jan, May & Aug 2022
SUBTOTAL – 2022 DELIVERIESSUBTOTAL – 2022 DELIVERIES 3,235 $193,000
 $43,580
 
     
Disney College Program Phases IX-X (1)
 Orlando, FL 
Walt Disney World® Resort
 ACE 2,209 $122,700
 $20,506
 Jan & May 2023
SUBTOTAL - 2023 DELIVERIESSUBTOTAL - 2023 DELIVERIES 2,209 $122,700
 $20,506
 
     
(1) 
The
In response to the recent developments related to COVID-19, Walt Disney College Program project will be delivered in multiple phases over several years with initial deliveries expectedWorld ® Resort has closed and has not announced a reopening date.  Although completion is currently anticipated to occur in 2020. Including project phases that are not yet under construction, full development completion is anticipated for 2023. All phases are counted as one property.originally scheduled, the ultimate occupancy date and levels will depend on the reopening date.  As such, the effect on the project’s initial operating results cannot be determined. 


Presale Development Projects:

Under the terms of a presale transaction,Although the Company is obligated to purchasecurrently anticipates completing the property as long as certain construction completion deadlinesabove projects on time and other closing conditions are met. The Company is responsible for leasing, management, and initial operations ofwithin budget, the project whilelocations are currently subject to “shelter in place” or “stay at home” orders adopted by state and local authorities in response to the third-party developer retainsCOVID-19 pandemic. Some of these orders may adversely affect the timely completion and final project costs of some or all of our projects under development risk during theif, for example, we are required to temporarily cease construction period. In accordance with accounting guidance, the Company includes presale propertiesentirely, experience delays in its consolidated financial statements upon execution of the presale agreement with the developer.

Presale Development Projects Under Construction:

The Company is currently party to presale agreements to purchase two owned properties. Refer to Note 3obtaining governmental permits and authorizations, or experience disruption in the accompanying Notes to Consolidated Financial Statements contained in Item 1 for a more detailed discussionsupply of our recent presale development activity. materials or labor.

Third-Party Development and Management Services

As of March 31, 2019, our presale development pipeline consisted of the following properties:

 
 
Project		  
 
Location		  
Primary University Served		 Project Type  
Beds		 Purchase Price Amount Funded as of March 31, 2019 Scheduled Occupancy
               
The Flex at Stadium Centre Tallahassee, FL Florida State University Off-campus 340 $36,700
 $353
 August 2019
959 Franklin (1)
 Eugene, OR University of Oregon Off-campus 443 70,600
 19,873
 September 2019
SUBTOTAL – 2019 DELIVERIES 783 $107,300
 $20,226
  

(1)
As part of the presale agreement, the Company provided $15.6 million of mezzanine financing to the project.

Third-Party Development Services

Through ACC’s TRS entities, we provide development and construction management services for student housing properties owned by colleges and universities, charitable foundations and others.  As of March 31, 2019,2020, we were under contract on seventhree third-party development projects that are currently under construction and whose fees total $25.2$14.2 million.  As of March 31, 2019,2020, fees of approximately $8.1$4.5 million remained to be earned by the Company with respect to these projects, which have scheduled completion dates in 20192020 and 2020.2021.


Although the completion of the third-party development projects currently under construction is anticipated to occur as originally scheduled, the timely completion of the projects is subject to any future shelter in place or related orders issued by state and/or local municipalities affecting construction sites. To the extent COVID-19 related orders and/or events delay the construction of such projects, the timing of the recognition of third-party development revenue could also be impacted.

Critical Accounting Policies


With the exception of the adoption of ASC Topic 842, Leases (“ASC 842”), thereThere have been no material changes to the Company’s critical accounting policies disclosed in the Company’s Form 10-K for the year ended December 31, 2018.2019. Refer to Note 2 in the accompanying Notes to Consolidated Financial statements contained in Item 1 for information regarding recently adopted accounting standards, including ASC 842.standards.



Results of Operations


COVID 19, which was characterized on March 11, 2020 by the World Health Organization as a pandemic, did not materially affect the Company’s results of operations for the three months ended March 31, 2020. However, for the reasons described previously, the Company is unable to predict the full magnitude of the pandemic and its effect on our results of operations for the remainder of the year ending December 31, 2020, and future years. The most significant factors affecting the Company’s future results of operations are: (1) the level of lease terminations and rent refunds and abatements granted to student and commercial tenants; (2) the economic hardship experienced by student and commercial tenants and its ultimate effect on rent collections and thus the provision for uncollectible accounts; (3) the ultimate outcome of the Company’s leasing efforts for the 2020/2021 academic year; (4) the impact of any stimulus payments received by the Company, our tenants, and/or our University partners under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”); and (5) any increase in, or reduction to, operating expenses as a result of the pandemic.
Comparison of the Three Months Ended March 31, 20192020 and March 31, 2018
2019
The following table presents our results of operations for the three months ended March 31, 20192020 and 2018,2019, including the amount and percentage change in these results between the two periods.
 Three Months Ended 
 March 31,		     Three Months Ended
March 31,		    
 2019 2018 Change ($) Change (%) 2020 2019 Change ($) Change (%)
Revenues:                
Owned properties $224,419
 $205,532
 $18,887
 9.2 % $232,091
 $224,419
 $7,672
 3.4 %
On-campus participating properties 11,448
 10,443
 1,005
 9.6 % 10,709
 11,448
 (739) (6.5)%
Third-party development services 3,171
 846
 2,325
 274.8 % 2,055
 3,171
 (1,116) (35.2)%
Third-party management services 2,311
 2,731
 (420) (15.4)% 3,829
 2,311
 1,518
 65.7 %
Resident services 782
 857
 (75) (8.8)% 720
 782
 (62) (7.9)%
Total revenues 242,131
 220,409
 21,722
 9.9 % 249,404
 242,131
 7,273
 3.0 %
                
Operating expenses:  
  
  
  
  
  
  
  
Owned properties 92,169
 88,060
 4,109
 4.7 % 92,474
 92,169
 305
 0.3 %
On-campus participating properties 3,957
 3,425
 532
 15.5 % 3,366
 3,957
 (591) (14.9)%
Third-party development and management services 4,186
 4,198
 (12) (0.3)% 6,207
 4,186
 2,021
 48.3 %
General and administrative 7,315
 6,699
 616
 9.2 % 10,158
 7,315
 2,843
 38.9 %
Depreciation and amortization 68,755
 64,779
 3,976
 6.1 % 66,169
 68,755
 (2,586) (3.8)%
Ground/facility leases 3,549
 2,842
 707
 24.9 % 4,069
 3,549
 520
 14.7 %
Provision for real estate impairment 3,201
 —
 3,201
 100.0 %
Gain from disposition of real estate (48,525) —
 (48,525) 100.0 %
Provision for impairment —
 3,201
 (3,201) (100.0)%
Total operating expenses 183,132
 170,003
 13,129
 7.7 % 133,918
 183,132
 (49,214) (26.9)%
                
Operating income 58,999
 50,406
 8,593
 17.0 % 115,486
 58,999
 56,487
 95.7 %
                
Nonoperating income (expenses):  
  
  
  
  
  
  
  
Interest income 926
 1,223
 (297) (24.3)% 851
 926
 (75) (8.1)%
Interest expense (27,061) (23,684) (3,377) 14.3 % (27,783) (27,061) (722) 2.7 %
Amortization of deferred financing costs (1,132) (1,414) 282
 (19.9)% (1,287) (1,132) (155) 13.7 %
Loss from early extinguishment of debt (4,827) —
 (4,827) 100.0 %
Total nonoperating expenses (27,267) (23,875) (3,392) 14.2 % (33,046) (27,267) (5,779) 21.2 %
                
Income before income taxes 31,732
 26,531
 5,201
 19.6 % 82,440
 31,732
 50,708
 159.8 %
Income tax provision (364) (281) (83) 29.5 % (379) (364) (15) 4.1 %
                
Net income 31,368
 26,250
 5,118
 19.5 % 82,061
 31,368
 50,693
 161.6 %
                
Net income attributable to noncontrolling interests (1,728) (323) (1,405) 435.0 % (1,206) (1,728) 522
 (30.2)%
Net income attributable to ACC, Inc. and Subsidiaries common stockholders $29,640
 $25,927
 $3,713
 14.3 % $80,855
 $29,640
 $51,215
 172.8 %


Same Store and New Property Operations
 
We define our same store property portfolio as owned properties that were owned and operating for both of the full years ended December 31, 20192020 and December 31, 2018,2019, which are not conducting or planning to conduct substantial development, redevelopment, or repositioning activities, and are not classified as held for sale as of March 31, 2019.2020. It also includes the full operating results of properties owned through joint ventures in which the company has a controlling financial interest and which are consolidated for financial reporting purposes.


Same store revenues are defined as revenues generated from our same store portfolio and consist of rental revenue earned from student leases as well as other income items such as utility income, damages, parking income, summer conference rent, application and administration fees, income from retail tenants, the provision for uncollectible accounts, and income earned by one of our TRS entities from ancillary activities such as the provision of food services.
 

Same store operating expenses are defined as operating expenses generated from our same store portfolio and include usual and customary expenses incurred to operate a property such as payroll, maintenance, utilities, marketing, general and administrative costs, insurance, and property taxes.  Same store operating expenses also include an allocation of payroll and other administrative costs related to corporate management and oversight.
 
A reconciliation of our same store, new property and sold/other property operations to our consolidated statements of comprehensive income is set forth below: 
 Same Store Properties New Properties 
Sold Properties/Other(1)
 Total - All Properties  Same Store Properties New Properties 
Sold Properties/Other(1)
 Total - All Properties 
 Three Months Ended 
 March 31,		 Three Months Ended 
 March 31,		 Three Months Ended 
 March 31,		 Three Months Ended 
 March 31,		  Three Months Ended
March 31,		 Three Months Ended
March 31,		 Three Months Ended
March 31,		 Three Months Ended
March 31,		 
 2019 2018 2019 2018 
2019  (2)
 
2018 (3)
 2019 2018  2020 2019 2020 2019 2020 2019 2020 2019 
Number of properties (4)
 144
 144
 10
 —
 3
 7
 157
 151
  152
 152
 5
 —
 1
 5
(2) 
158
 157
 
Number of beds (4)
 86,717
 86,717
 6,985
 —
 1,404
 2,886
 95,106
 89,603
  92,195
 92,195
 3,159
 —
 901
 2,911
 96,255
 95,106
 
                                  
Revenues (5)(3)
 $205,369
 $199,115
 $18,558
 $121
 $1,274
 $6,235
 $225,201
 $205,471
(6) 
 $219,767
 $218,231
 $10,343
 $221
 $2,701
 $6,749
 $232,811
 $225,201
 
Operating expenses 84,837
 84,382
 6,115
 124
 1,217
 2,636
 92,169
 87,142
(6) 
 88,113
 88,120
 3,291
 525
 1,070
 3,524
 92,474
 92,169
 
(1) 
Does not include the allocation of payroll and other administrative costs related to corporate management and oversight.
(2)
Includes one property currently in receivership that is in the process of being transferred to the lender in settlement of the property’s $27.4 million mortgage loan that matured in August 2017, and one property consisting of two phases classified as Held for Sale as of March 31, 2019. Also includes recurring professional fees related to the formation and operation of the ACC / Allianz Joint Venture.
(3)(2) 
Includes the properties described above in Note 2, as well as properties sold in 20182019 and 2020 and one property convertedtransferred to the OCPP structurelender in January 2019.July 2019 in settlement of its mortgage loan.
(4)(3) 
Does not include properties under construction or undergoing redevelopment.
(5)
Includes revenues which are reflected as resident services revenue on the accompanying consolidated statements of comprehensive income.
(6)
The Company adopted new lease accounting guidance on January 1, 2019 which required the reclassification of the provision for uncollectible accounts from operating expenses to revenue. For purposes of calculating same store and new property results of operations, the reclassification is reflected for all periods presented to ensure comparability between periods. The provision for uncollectible accounts for all owned properties was $1.1 million and $0.9 million for the three months ended March 31, 2019 and 2018, respectively.


Same Store Properties:  The increase in revenue from our same store properties was primarily due to an increase in average rental rates for the 2018/20192019/2020 academic year, as well as an increase in weighted average occupancy from 94.9% during the three months ended March 31, 2018 to 96.9% during the three months ended March 31, 2019. Future revenues will be dependent on our ability2019 to maintain our current leases in effect for97.0% during the 2018/2019 academic year and our ability to achieve appropriate rental rates and desired occupancy levels for the 2019/2020 academic year at our various properties.three months ended March 31, 2020.

The slight increase in operating expenses for our same store properties was primarily due to a decreaseanticipated increases in utilitiespayroll expenses which was primarily due to our continuing efforts to renegotiate expiring cable and internet agreements at lower rates, lower electricity costs from favorable weather patterns, and savings at properties that have recently undergone LED replacements. We anticipate that operating expenses for our same store property portfolio for 2019 will increase as compared to 2018 due to increases in property taxes, payroll,Fair Labor Standards Act (“FLSA”) minimum exempt status salaries and general inflation.statutory minimum wage increases in numerous states.


New Property Operations: Our new properties for the three months ended March 31, 2019 include development properties that completed construction and opened for operations in Fall 2018. These properties are summarized in the table below:
PropertyLocationPrimary University Served BedsOpening Date
Gladding Residence Center (ACE)Richmond, VAVirginia Commonwealth University1,524August 2018
Irvington House (ACE)Indianapolis, INButler University648August 2018
Greek Leadership Village (ACE)Tempe, AZArizona State University957August 2018
David Blackwell Hall (ACE)Berkeley, CAUniversity of California, Berkeley780August 2018
NAU Honors College (ACE)Flagstaff, AZNorthern Arizona University636August 2018
U Club Townhomes at Oxford (ACE)Oxford, MSUniversity of Mississippi528August 2018
The Edge - Stadium CentreTallahassee, FLFlorida State University413August 2018
Hub Ann ArborAnn Arbor, MIUniversity of Michigan310August 2018
Hub FlagstaffFlagstaff, AZNorthern Arizona University591August 2018
Campus Edge on PierceWest Lafayette, INPurdue University598August 2018
Total - Owned New Developments Properties6,985


On-Campus Participating Properties (“OCPP”) Operations
 
Same Store OCPP Properties:As of March 31, 2019,2020, we had six OCPPs on-campus participating properties containing 5,230 beds. In January 2019, one owned property located at Prairie View A&M University was converted to the OCPP structure and is now included in our OCPP portfolio, contributing to the increase in both revenues and expensesRevenues from these properties decreased by $0.7 million, from $11.4 million for the three months ended March 31, 2019, as compared to $10.7 million for the three months ended March 31, 2018. In addition, the Company adopted new lease accounting guidance on January 1, 2019 which required the reclassification of2020. This decrease was primarily due to an increase in the provision for uncollectible accounts, offset by an increase in average rental rates coupled with an increase in average occupancy from operating expenses to revenue. The reclassification is reflected on a prospective basis in the Consolidated Statements of Comprehensive Income contained in Item 1 herein starting in the first quarter 2019. The amount reclassified from operating expenses to revenue was a $0.8 million benefit and a $0.1 million expense95.8% for the three months ended March 31, 2019, and 2018, respectively.

Revenues from these properties increased by $1.0 million, from $10.4 million during the three months ended March 31, 2018, to $11.4 million during the three months ended March 31, 2019. In addition to the factors described above, the increase was also due to a slight increase in average occupancy from 95.4%98.3% for the three months ended March 31, 2018 to 95.7%2020. Operating expenses at these properties decreased by $0.6 million, from $4.0 million for the three months ended March 31, 2019. Operating expenses at these properties increased by $0.6 million, from2019, to $3.4 million for the three months ended March 31, 2018,2020, primarily due to $4.0transaction costs incurred in the prior year associated with the conversion of an owned property to the OCPP structure.


Third-Party Development Services Revenue

Third-party development services revenue decreased by approximately $1.1 million, from $3.2 million during the three months ended March 31, 2019, to $2.1 million for the three months ended March 31, 2019. This increase was primarily due to the conversion of one property to the OCPP structure as described above, including related transaction expenses. We anticipate that revenues from these properties for 2019 will increase due to the factors described above. In addition, future revenues will be dependent on our ability to maintain our current leases in effect for the 2018/2019 academic year and our ability to obtain appropriate rental rates and desired occupancy for the 2019/2020 academic year. We anticipate that operating expenses for these properties for 2019 will increase as compared to 2018 due to the conversion of one property to the OCPP structure in January 2019 and general inflation.

Third-Party Development Services Revenue

Third-party development services revenue increased by approximately $2.4 million, from $0.8 million during the three months ended March 31, 2018, to $3.2 million for the three months ended March 31, 2019.  This increase2020.  The decrease was primarily due to the closing of bond financing and commencement of construction of the Calhoun Hall project at Drexel University during the three months ended March 31, 2019,prior year, which contributed approximately $1.3 million in revenue for the quarter. The remainder of the increase is due to an increase in the number of third-party development projects under construction during the current year as compared to the prior year. During the three months ended March 31, 2019, we had six projects under construction with an average contractual fee of $3.8 million, as compared to three projects under construction during the three months ended March 31, 2018 with an average contractual fee of $4.5 million.2019.


Development services revenues are dependent on our ability to successfully be awarded such projects, the amount of the contractual fee related to the project and the timing and completion of the development and construction of the project. In addition, to the extent projects are completed under budget, we may be entitled to a portion of such savings, which are recognized as revenue when performance has been agreed upon by all parties, or when performance has been verified by an independent third-party. We anticipate that third-party development

Third-Party Management Services Revenue

Third-party management services revenue will increase in 2019 as compared to 2018 due to an increase in the volume and timing of third-party development projects anticipated to close and commence construction in 2019.


General and Administrative

General and administrative expenses increased by approximately $0.6$1.5 million, from $6.7$2.3 million during the three months ended March 31, 2018,2019, to $7.3$3.8 million for the three months ended March 31, 2020. The increase is primarily due to reimbursed payroll and other costs from the Disney College Program management contract which began in April 2019. ThisAs facilities manager, the Company is responsible for the operations and maintenance of the projects. Because of the company’s role in funding payroll costs for on-site personnel at the properties, as well as other miscellaneous costs, accounting guidance requires the management fee for this project to be recorded on a gross basis in the Company’s consolidated financial statements. Accordingly, both management services revenue and third-party management services expenses for the three months ended March 31, 2020 include approximately $1.2 million in such reimbursed costs. The remainder of the increase in revenue as compared to the prior year is due to newly executed contracts, net of contracts discontinued during the respective periods.

Third-Party Development and Management Services Expenses

Third-party development and management services expenses increased by approximately $2.0 million, from $4.2 million during the three months ended March 31, 2019, to $6.2 million for the three months ended March 31, 2020. The increase is primarily due to $1.1 million of payroll costs from the Disney College Program management contract described above, as well as an increase in the provision for uncollectable accounts related to accounts receivable from third-party development and management projects.

General and Administrative

General and administrative expenses increased by approximately $2.9 million, from $7.3 million during the three months ended March 31, 2019, to $10.2 million for the three months ended March 31, 2020. The increase was primarily due to $1.1 million in litigation settlement expenses incurred during the three months ended March 31, 2020, as well as additional expenses incurred in connection with enhancements to our operating systems platform additional payroll expenses, and other general inflationary factors.  We anticipate general and administrative expenses will decrease in 2019 as compared to 2018 due to transaction costs incurred in 2018 related to the formation of the ACC / Allianz Joint Venture Transaction, offset by an increase in payroll costs and an increase in expenses incurred in connection with enhancements to our operating systems platform.

Depreciation and Amortization
 
Depreciation and amortization increaseddecreased by approximately $4.0$2.6 million, from $64.8$68.8 million during the three months ended March 31, 2018,2019, to $68.8$66.2 million for the three months ended March 31, 2019.2020.  This increasedecrease was primarily due to an approximate $4.2 million decrease related to assets at our same store properties that became fully depreciated or amortized over the last year, a $5.6decrease of approximately $1.7 million related to properties sold in 2019 and 2020, and a decrease of approximately $0.3 million in depreciation of corporate assets. These decreases were offset by an increase of approximately $3.6 million related to the completion of construction and opening of ten owned development properties in Fall 2018, offset by a $1.7 million decrease in depreciation and amortization expense related to properties sold in 2018. We anticipate depreciation and amortization expense will increase in 2019 as compared to 2018 due to the completion of owned development projects in Fall 2018 and Fall 2019, offset by property dispositions completed during 2018 and anticipated during 2019.


Ground/Facility Leases

Ground/facility leases expense increased by approximately $0.7$0.6 million from $2.8$3.5 million during the three months ended March 31, 2018,2019, to $3.5$4.1 million for the three months ended March 31, 2019.2020. This increase was primarily due to ACE development projects that completed construction and opened for operations in Fall 2018. We anticipate ground/facility leases expense will increase in 2019 as compared to 2018, primarily as a resultand increased variable payments at various ACE same store properties.


Gain from Disposition of Real Estate

During the timing of new ACE projects being placed into service, and the conversion ofthree months ended March 31, 2020, we sold one owned property containing 901 beds, resulting in a net gain from disposition of real estate of approximately $48.5 million. Refer to Note 4 in the OCPP structureaccompanying Notes to Consolidated Financial Statements contained in January 2019.Item 1 for additional details regarding our recent disposition transaction.


Provision for Real Estate Impairment


During the three months ended March 31, 2019, we recorded an impairment charge of approximately $3.2 million for one owned property serving students attending Florida A&M University, that iswhich was classified as Heldheld for Salesale as of March 31, 2019. Refer to Note 22019 and was sold in the accompanying Notes to Consolidated Financial Statements contained in Item 1 for a detailed discussion of this transaction.May 2019.


Interest Expense


Interest expense increased by approximately $3.4$0.7 million, from $23.7$27.1 million during the three months ended March 31, 2018,2019, to $27.1$27.8 million for the three months ended March 31, 2019. This2020. The increase was primarily due to $3.3 million in additional interest expense incurred in the current year related to the issuance of $330 million in mortgage debt as part of the ACC / Allianz Joint Venture Transaction which closed in May 2018, and $2.8$3.4 million of additional interest incurred related to our offerings of unsecured notes in June 2019 and January 2020, net of unsecured notes repaid in January 2020 that were originally scheduled to mature in October 2020. This increase was offset by: (i) a $0.9 million decrease in default interest related to a property that was transferred to the lender in settlement of the property’s mortgage loan in July 2019; (ii) a $0.5 million decrease in interest on our term loan facility due to interest rate swaps executed in November and December 2019; (iii) a $0.5 million increase in capitalized interest related to the timing of construction activities for our owned development pipeline; (iv) a $0.4 million decrease related to mortgage loans paid off in 2019 and 2020; and (v) an $0.3 million decrease in interest expense duerelated to the timing of borrowings under our unsecured revolving credit facility during the respective three-month periods.

Loss from Early Extinguishment of Debt

During the three month periods. These increases were offset bymonths ended March 31, 2020, we recognized a $2.6$4.8 million decrease in term loan interest expense dueloss on the extinguishment of debt related to the pay-offearly redemption of $450our $400 million 3.35% Senior Notes due October 2020. The redemption was funded using net proceeds from the Operating Partnership’s closing of term loansa $400 million offering of senior unsecured notes under its existing shelf registration in 2018. We anticipate interest expense will increaseJanuary 2020. Refer to Note 6 in 2019 as comparedthe accompanying Notes to 2018 due to increased interest rates onConsolidated Financial Statements in Item 1 for a higher average outstanding balance under our revolving credit facility throughout 2019, additional interest incurred from $330 million in mortgage debt as partdetailed discussion of the ACC / Allianz Joint Venture Transaction, and additional interest incurred from any additional unsecured debt anticipated during 2019.this transaction.

Net Income Attributable to Noncontrolling Interests


Net income attributable to noncontrolling interests represents consolidated joint venture partners’ share of net income, as well as net income allocable to holders of Operating Partnership units. The increase in this item as comparedNet income attributable to noncontrolling interests decreased by $0.5 million, from $1.7 million for the prior yearthree months ended March 31, 2019 to $1.2 million for the three months ended March 31, 2020. This decrease is primarily due to the closingpurchase of the ACC / Allianz Joint Ventureremaining ownership interests in properties held in a joint venture as part of the Core Transaction, in May 2018.as well as decreased operating performance at certain properties held through joint ventures.



Liquidity and Capital Resources
 
Cash Balances and Cash Flows
 
As of March 31, 2019,2020, we had $79.9$208.9 million in cash and cash equivalents and restricted cash as compared to $106.5$81.3 million in cash and cash equivalents and restricted cash as of December 31, 2018.2019.  Restricted cash primarily consists of escrow accounts held by lenders, resident security deposits as required by law in certain states, and funds held in escrow in connection with potential acquisition and development opportunities.  The following discussion relates to changes in cash due to operating, investing and financing activities, which are presented in our consolidated statements of cash flows included in Item 1.
 
Operating Activities: For the three months ended March 31, 2019,2020, net cash provided by operating activities was approximately $80.6$90.8 million, as compared to approximately $108.1$80.6 million for the three months ended March 31, 2018, a decrease2019, an increase of $27.5$10.2 million.  This decreaseincrease in cash flows was primarily due to operating cash flows from the completion of construction of owned development properties and presale development properties in 2019 as well as the timing of collections of student contracts receivable. This increase was offset by the timing of property tax payments for owned properties and the saledisposition of three properties in 2018. This decrease was partially offset by operating cash flows from the completion of construction2019 and opening of six owned development properties and four presale developments in August 2018, and an increase in operating results for same store properties.2020.


Investing Activities:  Investing  For the three months ended March 31, 2020, net cash provided by investing activities totaled approximately $48.0 million as compared to net cash utilized approximatelyby investing activities of $116.9 million and $136.7 million for the three months ended March 31, 2019 and 2018, respectively.2019. The $19.8$164.9 million decreaseincrease in cash utilized inprovided by investing activities was primarily a result of $146.1 million in proceeds from the following: (i) an $18.1disposition of one property during the three months ended March 31, 2020 as compared to none in the prior year, and $20.4 million decrease in cash used to fund the construction of our owned development properties, related to the timing of construction commencement and completion of our owned development pipeline; and (ii)properties. These increases were partially offset by a $1.5$1.4 million decreaseincrease in cash used to fund capital expenditures at our owned and on-campus participating properties.


Financing Activities: For the three months ended March 31, 2019,2020, net cash providedutilized by financing activities totaled approximately $9.6$11.3 million as compared to net cash provided by financing activities of $47.8$9.6 million for the three months ended March 31, 2018. 2019.
The $38.2$20.9 million decreaseincrease in cash providedutilized by financing activities was primarily a result of the following: (i) the $404.2 million pay-off of unsecured notes including costs associated with the early extinguishment of the notes; (ii) the purchase of the remaining ownership interest in two properties for $77.2 million; (iii) the $34.2 million pay-off of mortgage debt; (iv) a $20.3$14.2 million decrease in net proceeds on our revolving credit facility; (ii) an $18.8 million decrease indue to proceeds from construction loans; (iii) a $3.5 million increaseloans in distributions to noncontrolling interests; (iv) a $3.0 million increase in distributions to common and restricted stockholders;the prior year period; (v) a $1.9$2.8 million increase in payments of debt issuance costs; and (vi) a $1.1$1.6 million increase in taxes paid on net share settlements.distributions to common and restricted stockholders. These decreasesincreases in cash utilized were partially offset byby: (i) $399.2 million in proceeds from the issuance of unsecured notes in January 2020 and (ii) a $10.4$113.9 million decreaseincrease in cash used to pay off mortgage and construction debt.net proceeds on our revolving credit facility.


Liquidity Needs, Sources and Uses of Capital

As previously discussed, the ultimate effect of the COVID-19 pandemic on the student housing industry generally, and the Company specifically, is uncertain at this time. As such, the Company is unable to predict the full magnitude of the pandemic and its effect on our future cash flows and liquidity needs. The most significant factors affecting our future results are outlined above under Results of Operations.

As of March 31, 2019,2020, our short-term liquidity needs included, but were not limited to, the following: (i) anticipated distribution payments to our common and restricted stockholders totaling approximately $259.9$260.8 million based on an assumed annual cash distribution of $1.88 per share and the number of our shares outstanding as of March 31, 2019;2020; (ii) anticipated distribution payments to our Operating Partnership unitholders totaling approximately $1.2$0.9 million based on an assumed annual distribution of $1.88 per common unit and a cumulative preferential per annum cash distribution rate of 5.99% on our Preferred OP Units based on the number of units outstanding as of March 31, 2019;2020; (iii) estimated development costs over the next 12 months totaling approximately $315.7$255.4 million for our owned properties currently under construction; (iv) an $87.1 million obligation to purchase two properties subject to presale arrangements (see Note 12 in the accompanying Notes to the Consolidated Financial Statements contained in Item 1); (v) an obligation to increase our investment in two joint ventures, resulting in a funding commitment of approximately $154.0 million (see Note 12 in the accompanying Notes to the Consolidated Financial Statements contained in Item 1); (vi) funds for other development projects scheduled to commence construction during the next 12 months; and (vii) potential future developments, property or land acquisitions, including mezzanine financed developments.acquisitions; and (v) recurring capital expenditures.

We expect to meet our short-term liquidity requirements by: (i) utilizing current cash on hand and net cash provided by operations; (ii) borrowing under our existing revolving credit facility; (ii)facility, which has availability of $390.3 million as of March 31, 2020; (iii) accessing the unsecured bond market; (iii)(iv) exercising debt extension options to the extent they are available; (iv)(v) issuing securities, including common stock, under our ATM Equity Program discussed more fully in Note 67 in the accompanying Notes to Consolidated Financial Statements contained in Item 1, or otherwise; (v)and (vi) potentially disposing of properties and/or entering into joint venture arrangements, depending on market conditions; and (vi) utilizing current cash on hand and net cash provided by operations.conditions. Our ability to obtain additional financing will depend on a variety of factors such as market conditions, the general availability of credit, the overall availability of credit to the real estate industry, our credit ratings and credit capacity, as well as the perception of lenders regarding our long or short-term financial prospects.


We may seek additional funds to undertake initiatives not contemplated by our business plan or obtain additional cushion against possible shortfalls. We also may pursue additional financing as opportunities arise. Future financings may include a range of

different sizes or types of financing, including the incurrence of additional secured debt and the sale of additional debt or equity securities. These funds may not be available on favorable terms or at all. Our ability to obtain additional financing depends on several factors, including future market conditions, our success or lack of success in penetrating our markets, our future creditworthiness, and restrictions contained in agreements with our investors or lenders, including the restrictions contained in the agreements governing our unsecured credit facility and unsecured notes. These financings could increase our level of indebtedness or result in dilution to our equity holders. Although the Company’s liquidity position and cash flows were unaffected by the COVID-19 pandemic as of and for the quarter ended March 31, 2020, the impact of the pandemic on global capital markets and the related effect on the Company’s stock price has introduced additional economic uncertainty which could affect our ability to obtain additional financing to meet short-term and/or long-term liquidity needs.

Distributions
 
We are required to distribute 90% of our REIT taxable income (excluding capital gains) on an annual basis in order to qualify as a REIT for federal income tax purposes.  Distributions to common stockholders are at the discretion of the Board of Directors. We may use borrowings under our unsecured revolving credit facility to fund distributions.  The Board of Directors considers a number of factors when determining distribution levels, including market factors and our Company’s performance in addition to REIT requirements.
 
On May 1, 2019,April 29, 2020, our Board of Directors declared a distribution per share of $0.47, which will be paid on May 24, 201922, 2020 to all common stockholders of record as of May 13, 2019.11, 2020.  At the same time, the Operating Partnership will pay an equivalent amount per unit to holders of Common OP Units, as well as the quarterly cumulative preferential distribution to holders of Preferred OP Units.


Although the ultimate magnitude of the impact of COVID-19 on the Company’s cash flows is uncertain, any curtailed or deferred tenant demand, lease terminations, rent refunds and abatements, and increased uncollectible accounts we experience could materially adversely affect our cash flows from operations, and thus our ability to make distributions to stockholders.
Indebtedness
 
The amounts below exclude net unamortized debt premiums and discounts related to mortgage loans assumed in connection with property acquisitions, original issue discounts (“OID”s), and deferred financing costs (see Note 56 in the accompanying Notes to the Consolidated Financial Statements contained in Item 1). A summary of our consolidated indebtedness as of March 31, 20192020 is as follows:
 Amount % of Total 
Weighted Average Rates (1)
 Weighted Average Maturities Amount % of Total 
Weighted Average Rates (1)
 Weighted Average Maturities
Secured $856,402
 27.5% 4.7% 6.5 Years $746,483
 21.2% 4.5% 6.2 Years
Unsecured 2,257,400
 72.5% 3.7% 4.3 Years 2,809,700
 78.8% 3.2% 5.0 Years
Total consolidated debt $3,113,802
 100.0% 4.0% 4.9 Years $3,556,183
 100.0% 3.4% 5.3 Years
              
Fixed rate debt              
Secured              
Project-based taxable bonds $27,030
 0.9% 7.6% 5.6 Years $23,215
 0.7% 7.6% 4.6 Years
Mortgage 751,769
 24.1% 4.6% 5.7 Years 720,361
 20.4% 4.4% 6.2 Years
Unsecured              
April 2013 Notes 400,000
 12.8% 3.8% 4.0 Years 400,000
 11.2% 3.8% 3.0 Years
June 2014 Notes 400,000
 12.8% 4.1% 5.3 Years 400,000
 11.2% 4.1% 4.3 Years
September 2015 Notes 400,000
 12.8% 3.4% 1.5 Years
October 2017 Notes 400,000
 12.8% 3.6% 8.6 Years 400,000
 11.2% 3.6% 7.6 Years
June 2019 Notes 400,000
 11.2% 3.3% 6.3 Years
January 2020 Notes 400,000
 11.2% 2.9% 9.8 Years
Term loans 200,000
 5.7% 2.5% 2.2 Years
Total - fixed rate debt 2,378,799
 76.2% 3.9% 5.0 Years 2,943,576
 82.8% 3.7% 5.9 Years
              
Variable rate debt:              
Secured              
Mortgage and construction 77,603
 2.5% 5.2% 14.2 Years
Mortgage 2,907
 0.1% 3.3% 25.3 Years
Unsecured              
Term loans 200,000
 6.5% 3.6% 3.2 Years
Unsecured revolving credit facility 457,400
 14.8% 3.7% 3.0 Years 609,700
 17.1% 2.1% 2.0 Years
Total - variable rate debt 735,003
 23.8% 4.2% 4.7 Years 612,607
 17.2% 2.1% 2.1 Years
Total consolidated debt $3,113,802
 100.0% 4.0% 4.9 Years $3,556,183
 100.0% 3.4% 5.3 Years
              
(1) 
Represents stated interest rate and does not include the effect of the amortization of deferred financing costs, debt premiums and discounts, OIDs, and interest rate swap terminations.

As discussed previously, the Company’s ability to service its debt and related financial obligations was unaffected by the COVID-19 pandemic as of March 31, 2020; however, the ultimate magnitude of the pandemic on our future cash flows and liquidity position is uncertain at this time. While the Company was in compliance with all debt covenants for both secured and unsecured indebtedness as of March 31, 2020, the economic disruption caused by the COVID-19 pandemic could affect our future ability to remain in compliance with our debt covenants, depending on the ultimate impact to the valuation of collateral and any additional financing we obtain to meet our liquidity needs. The specific covenants that management is closely monitoring as the situation evolves

include the debt to total asset value and fixed charge coverage requirements per the Company’s unsecured revolving credit facility. As it relates to the debt to total asset value covenant, which is highly dependent on net operating income levels of the Company’s operating properties, management estimates that net operating income at such properties could decrease in the next twelve months by up to approximately $165 million before the Company would be in the position of potentially violating the covenant. As it relates to the fixed charge coverage requirement, which is highly dependent upon a specific measure of Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”), as defined in the related agreement, management estimates that the EBITDA measure for the next twelve months could decrease by up to approximately $280 million before the Company would be in the position of potentially violating the covenant. In addition, our credit ratings given by Moody’s and Standard & Poor’s are based on a number of factors, which include their assessment of our financial strength, liquidity, capital structure, asset quality and sustainability of cash flow and earnings. If we are unable to maintain our current credit ratings due to the COVID-19 pandemic or other changes in market conditions, the cost of funds under our credit facilities and our liquidity and access to capital markets would be adversely affected. The Company has a BBB credit rating with a stable outlook from Moody’s Investors Services, Inc. and a Baa2 credit rating with a negative outlook from Standard & Poor’s Rating Group.


34

Funds From Operations (“FFO”)


The National Association of Real Estate Investment Trusts (“NAREIT”) currently defines 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, impairment charges and 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.  FFO excludes GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time.  Historically, however, real estate values have risen or fallen with market conditions.  We therefore believe that FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, and interest costs, among other items, providing perspective not immediately apparent from net income.  We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its December 2018 White Paper, which may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to such other REITs.
 

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, the elimination of transaction costs, and other items, as we determine in good faith. Under our participating ground leases, we and the participating university systems each receive 50% of the properties’ net cash available for distribution after payment of operating expenses, debt service (which includes significant amounts towards repayment of principal), and capital expenditures.  A substantial portion of our revenues attributable to these properties is reflective of cash that is required to be used for capital expenditures and for the amortization of applicable property indebtedness. These amounts do not increase our economic interest in these properties or otherwise benefit us since our interest in the properties terminates upon the repayment of the applicable property indebtedness.  Therefore, unlike the ownership of our owned properties, the unique features of our ownership interest in our on-campus participating properties cause the value of these properties to diminish over time.  For example, since the ground/facility leases under which we operate the participating properties require the reinvestment from operations of specified amounts for capital expenditures and for the repayment of debt while our interest in these properties terminates upon the repayment of the debt, such capital expenditures do not increase the value of the property to us and mortgage debt amortization only increases the equity of the ground lessor. Accordingly, we believe it is meaningful to modify FFO to exclude the operations of our on-campus participating properties and to consider their impact on our performance by including only that portion of our revenues from those properties that are reflective of our share of net cash flow and the management fees that we receive, both of which increase and decrease with the operating performance of the properties.  This narrower measure of performance measures our profitability for these properties in a manner that is similar to the measure of our profitability from our third-party services business where we similarly incur no initial or ongoing capital investment in a property and derive only consequential benefits from capital expenditures and debt amortization. We believe, however, that this narrower measure of performance is inappropriate in traditional real estate ownership structures where debt amortization and capital expenditures enhance the property owner’s long-term profitability from its investment.

Our FFOM may have limitations as an analytical tool because it reflects the contractual calculation of net cash flow from our on-campus participating properties, which is unique to us and is different from that of our owned off-campus properties.  Companies that are considered to be in our industry may not have similar ownership structures; and therefore those companies may not calculate FFOM in the same manner that we do, or at all, limiting its usefulness as a comparative measure. We compensate for these limitations by relying primarily on our GAAP and FFO results and using FFOM only supplementally.  Further, FFO and FFOM do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments and uncertainties.  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.


During the year ended December 31, 2019, the Company updated the presentation of the calculation of FFO, as it relates to the presentation of consolidated joint venture partners' share of FFO and the presentation of corporate depreciation. Prior period amounts have been updated to conform to the current presentation. There were no changes to the FFO calculated or the underlying financial information used in the calculation.



The following table presents a reconciliation of our net income attributable to common stockholders to FFO and FFOM:
  Three Months Ended 
 March 31,
  2019 2018
Net income attributable to ACC, Inc. and Subsidiaries common stockholders $29,640
 $25,927
Noncontrolling interests(1)
 160
 322
Elimination of provision for real estate impairment 3,201
 —
Real estate related depreciation and amortization(2)
 65,376
 63,578
Funds from operations (“FFO”) attributable to
  common stockholders and OP unitholders
 98,377
 89,827
     
Elimination of operations of on-campus participating properties:  
  
  Net income from on-campus participating properties (3,692) (3,369)
  Amortization of investment in on-campus participating properties (2,029) (1,942)
  92,656
 84,516
Modifications to reflect operational performance of on-campus participating properties:  
  
  Our share of net cashflow (3)
 882
 795
  Management fees and other(4)
 820
 477
Contribution from on-campus participating properties 1,702
 1,272
     
Elimination of FFO from property in receivership (5)
 969
 590
Funds from operations – modified (“FFOM”) attributable to
  common stockholders and OP unitholders
 $95,327
 $86,378
     
FFO per share – diluted $0.71
 $0.65
FFOM per share – diluted $0.69
 $0.62
Weighted-average common shares outstanding – diluted 138,811,527
 138,534,412

  Three Months Ended
March 31,
  2020 2019
Net income attributable to ACC, Inc. and Subsidiaries common stockholders $80,855
 $29,640
Noncontrolling interests' share of net income 1,206
 1,728
     
Joint Venture (“JV”) partners’ share of FFO    
JV partners' share of net income (916) (1,568)
JV partners' share of depreciation and amortization (1,965) (2,157)
  (2,881) (3,725)
     
Gain from disposition of real estate (48,525) —
Elimination of provision for real estate impairment —
 3,201
Total depreciation and amortization 66,169
 68,755
Corporate depreciation (1)
 (889) (1,222)
FFO attributable to common stockholders and OP unitholders 95,935
 98,377
     
Elimination of operations of on-campus participating properties ("OCPPs")  
  
  Net income from OCPPs (3,706) (3,692)
  Amortization of investment in OCPPs (2,037) (2,029)
  90,192
 92,656
     
Modifications to reflect operational performance of OCPPs  
  
  Our share of net cash flow (2)
 860
 882
  Management fees and other 583
 820
Contribution from OCPPs 1,443
 1,702
     
Elimination of loss from extinguishment of debt (3)
 4,827
 —
Elimination of FFO from property in receivership (4)
 —
 969
Elimination of litigation settlement expense (5)
 1,100
 —
Funds from operations-modified ("FFOM") attributable to common stockholders and OP unitholders $97,562
 $95,327
     
FFO per share – diluted $0.69
 $0.71
FFOM per share – diluted $0.70
 $0.69
Weighted-average common shares outstanding – diluted 139,091,230
 138,811,527
1.
(1)
The difference from the amount presented in the Company’s consolidated statementsRepresents depreciation on corporate assets not added back for purposes of comprehensive income represents consolidated joint venture partners’ share of net income.calculating FFO.
2.The difference from the amount presented in the Company’s consolidated statements of comprehensive income represents corporate depreciation and consolidated joint venture partners’ share of depreciation. Corporate depreciation for the three months ended March 31, 2019 was $1.2 million. The joint venture partners' share of depreciation for the three months ended March 31, 2019 was $2.2 million.
3.
(2)
50% of the properties’ net cash available for distribution after payment of operating expenses, debt service (including repayment of principal) and capital expenditures which is included in ground/facility leases expense in the consolidated statements of comprehensive income.
4.
(3)
Includes a $0.3Represents loss associated with the January 2020 redemption of the Company's $400 million transaction fee related3.35% Senior Notes originally scheduled to the conversion of one property at Prairie View A&M University to the OCPP structuremature in January 2019.October 2020.
5.
(4)
Represents FFO for an owned property that has been in receivership since May 2017 and is in the process of beingwas transferred to the lender in July 2019 in settlement of the property's $27.4 million mortgage loanloan.
(5)
Represents the settlement of a litigation matter that maturedis included in August 2017. FFOM forgeneral and administrative expenses in the prior year comparable period has been adjusted to reflect this elimination.accompanying consolidated statements of comprehensive income.


Inflation


Our student leases do not typically provide for rent escalations. However, they typically do not have terms that extend beyond 12 months. Accordingly, although on a short term basis we would be required to bear the impact of rising costs resulting from inflation, we have the opportunity to raise rental rates at least annually to offset such rising costs. However, a weak economic environment or declining student enrollment at our principal universities may limit our ability to raise rental rates.

36


Item 3.  Quantitative and Qualitative Disclosures About Market Risk
 
Market risk is the risk of loss from adverse changes in market prices and interest rates.  Our future earnings and cash flows are dependent upon prevailing market rates.  Accordingly, we manage our market risk by matching projected cash inflows from operating, investing, and financing activities with projected cash outflows for debt service, acquisitions, capital expenditures, distributions to stockholders and unitholders, and other cash requirements.  The majority of our outstanding debt has fixed interest rates, which minimizes the risk of fluctuating interest rates.  Our exposure to market risk includes interest rate fluctuations in connection with our revolving credit facilities and variable rate construction loansfacility and our ability to incur more debt without stockholder approval, thereby increasing our debt service obligations, which could adversely affect our cash flows.  No material changes have occurred in relation to market risk since our Annual Report on Form 10-K for the year ended December 31, 2018.2019, except as disclosed in Part II, Item 1A, herein, “Risk Factors.”

Item 4.  Controls and Procedures
 
American Campus Communities, Inc.
 
(a)Evaluation of Disclosure Controls and Procedures


As required by SEC Rule 13a-15(b), we have carried out an evaluation, under the supervision of and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures for the quarter covered by this report were effective at the reasonable assurance level.
 
(b)
Changes in Internal Control Over Financial Reporting


There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
American Campus Communities Operating Partnership LP
 
(a)Evaluation of Disclosure Controls and Procedures


As required by SEC Rule 13a-15(b), we have carried out an evaluation, under the supervision of and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures for the quarter covered by this report were effective at the reasonable assurance level.
 
(b)Changes in Internal Control Over Financial Reporting


There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

37



PART II OTHER INFORMATION
 
Item 1.  Legal Proceedings
 
We are subject to various claims, lawsuits and legal proceedings that arise in the ordinary course of business.  While it is not possible to ascertain the ultimate outcome of such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on the our consolidated financial position or our results of operations.
 
Item 1A.  Risk Factors
 
ThereExcept as described below, there have been no material changes to the risk factors that were discussed in Part 1, Item 1A of the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2018.2019.

The effects of the COVID-19 pandemic have materially affected how we are operating our business, and the duration and extent to which this will impact our future results of operations and overall financial performance remains uncertain.
The novel coronavirus disease (“COVID-19”), which was characterized on March 11, 2020 by the World Health Organization as a pandemic, has currently resulted in a widespread health crisis, which has adversely affected international, national and local economies and financial markets generally, and has had an unprecedented effect on many businesses including the student housing industry.

Beginning in April 2020, our operations have begun to be negatively affected by a range of external factors related to the COVID-19 pandemic that are not within our control. All of the colleges and universities our properties serve have canceled in-person classes and many have closed their on-campus residence halls or encouraged students living in on-campus residence halls to return to their permanent residences for the remainder of the spring term and in some cases for the summer term. Also, many governmental entities have imposed a wide range of restrictions on physical movement to limit the spread of COVID-19. While our properties remain open, as a result of these actions, we have experienced significant decreases in students physically occupying their units at many of our properties. We have waived all late fees and financial-related eviction proceedings temporarily and are working with residents and families who endure financial hardship on a case by case basis. We have also offered rent abatement and refunds at some of our on-campus properties based on individual university policies. In addition, we have closed our on-site offices to walk-in traffic and transitioned property tours to virtual experiences. Furthermore, we have experienced cancellations of summer conferences and other events, which will impact revenue we typically earn during the summer months at certain of our properties. Any curtailed or deferred tenant demand we experience could materially adversely affect our revenues and cash flows from operations, and thus our ability to make distributions to stockholders and service indebtedness.

At this time, there is uncertainty as to the dates for reopening by colleges and universities, and whether they will resume in-person classes for the upcoming 2020/2021 academic year, continue to offer classes online, adopt a hybrid online/on-campus model, or possibly, in some cases, reopen at all. Should a significant number of the colleges and universities that our properties serve fail to resume in-person classes for the upcoming 2020/2021 academic year, we would experience further adverse effects.

A significant number of the locations in which we conduct business are subject to “shelter in place” or “stay at home” orders adopted by state and local authorities. This has resulted in the temporary closing of our corporate headquarters and other offices and the implementation of travel restrictions, all of which have disrupted how we operate our business. We have taken steps to allow our workforce to render critical business functions remotely. Many of these measures are being deployed for the first time and there is no guarantee that the data security and privacy safeguards we have put in place will be completely effective or that we will not encounter some of the common risks associated with employees accessing data and systems remotely. Additionally, some of these orders may adversely affect the completion of some or all of our projects under development at both universities and at Walt Disney World® Resort if we are required to temporarily cease construction entirely, experience delays in obtaining governmental permits and authorizations, or experience disruption in the supply of materials or labor, which may result in our not completing these development projects on schedule or within budgeted amounts.

The COVID-19 pandemic has impacted the capital markets and could impact our cost of borrowing. Also, the pandemic may pose risks arising from market liquidity and credit concerns. Any deterioration of the capital markets could cause our income and expense to vary from expectations. As of March 31, 2020, we had no impairment charges associated with our long-term real estate investments, but we cannot predict future market conditions, market liquidity or credit availability, and can provide no assurance that our real estate portfolio will remain materially unimpaired. While we were in compliance with all debt covenants for both secured and unsecured indebtedness as of March 31, 2020, the economic disruption caused by the COVID-19 pandemic could


affect our future ability to remain in compliance with our debt covenants, depending on the ultimate impact to the valuation of collateral and any additional financing we obtain to meet our liquidity needs. In addition, our credit ratings given by Moody’s and Standard & Poor’s are based on a number of factors, which include their assessment of our financial strength, liquidity, capital structure, asset quality and sustainability of cash flow and earnings. If we are unable to maintain our current credit ratings due to the COVID-19 pandemic or other changes in market conditions, the cost of funds under our credit facilities and our liquidity and access to capital markets would be adversely affected.

The COVID-19 pandemic and the responses to curb its spread continue to evolve daily. As such, it is uncertain as to the full magnitude of the pandemic on our results of operations, cash flows, financial condition, or liquidity for the year ending December 31, 2020, or future years.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
 
None.
 
Item 3.  Defaults Upon Senior Securities
 
None.
 
Item 4.  Mine Safety Disclosures
 
Not applicable.
 
Item 5.  Other Information
 
None.



39


Item 6.  Exhibits
 
Exhibit Number Description of Document
   
31.1
 American Campus Communities, Inc. - Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
31.2
 American Campus Communities, Inc. - Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
31.3
 American Campus Communities Operating Partnership LP - Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
31.4
 American Campus Communities Operating Partnership LP - Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
32.1
 American Campus Communities, Inc. - Certification of Chief Executive Officer Pursuant to 18 U. S. C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
32.2
 American Campus Communities, Inc. - Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
32.3
 American Campus Communities Operating Partnership LP - Certification of Chief Executive Officer Pursuant to 18 U. S. C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
32.4
 American Campus Communities Operating Partnership LP - Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
   
101.SCH XBRL Taxonomy Extension Schema Document
   
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)


 




40


SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Dated:May 2, 20191, 2020
AMERICAN CAMPUS COMMUNITIES, INC.
  
By:/s/ Daniel B. Perry
  
 
Daniel B. Perry

Executive Vice President,

Chief Financial Officer,
Treasurer and Secretary
  
By:/s/ Kim K. Voss
  
 Kim K. Voss

Executive Vice President,

Chief Accounting Officer,

and Assistant Secretary
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Dated:May 2, 20191, 2020
AMERICAN CAMPUS COMMUNITIES
OPERATING PARTNERSHIP LP
By:
American Campus Communities Holdings,
   LLC, its general partner
 By:American Campus Communities, Inc.,

its sole member
   
 By:/s/ Daniel B. Perry
   
  Daniel B. Perry

Executive Vice President,

Chief Financial Officer,

Treasurer and Secretary
   
 By:/s/ Kim K. Voss
   
  
Kim K. Voss

Executive Vice President,

Chief Accounting Officer,
and Assistant Secretary
 




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