UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September 30, 2021~~March 31, 2022

☐ 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.

(Exact name of registrant as specified in its charter)


Maryland		76-0753089
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

12700 Hill Country Blvd. Suite T-200 Austin, TX		78738
(Address of Principal Executive Offices)		(Zip Code)

	(512) 732-1000
	(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock, par value $.01 per share

ACC

New York Stock Exchange

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.

Yes

☒

☐

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).

Yes

☒

☐

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.

Large accelerated filer

☒

Accelerated Filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☒

There were ~~139,156,671~~139,483,032 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 ~~October~~April 29, ~~2021.~~2022.

FORM 10-Q

FOR THE QUARTER ENDED ~~SEPTEMBER 30, 2021~~MARCH 31, 2022

TABLE OF CONTENTS


		PAGE NO.

PART I.

Item 1.	Consolidated Financial Statements of American Campus Communities, Inc. and Subsidiaries

	Consolidated Balance Sheets as of ~~September 30, 2021~~March 31, 2022 (unaudited) and December 31, ~~2020~~2021	1

	Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (all unaudited)	2

	Consolidated Statements of Changes in Equity for the three months ended March 31, ~~2021~~2022 and ~~2020, June 30,~~ 2021 ~~and 2020, and September 30, 2021 and 2020~~ (all unaudited)	3

	Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (all unaudited)	54

	Notes to Consolidated Financial Statements of American Campus Communities, Inc. and Subsidiaries	65

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2420

Item 3.	Quantitative and Qualitative Disclosure about Market Risk	4133

Item 4.	Controls and Procedures	4133

PART II.

Item 1.	Legal Proceedings	4133

Item 1A.	Risk Factors	4133

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4135

Item 3.	Defaults Upon Senior Securities	4135

Item 4.	Mine Safety Disclosures	4135

Item 5.	Other Information	4135

Item 6.	Exhibits	4236

SIGNATURES		4337

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(Unaudited)					(Unaudited)
Assets	Assets					Assets

Investments in real estate	Investments in real estate					Investments in real estate
Owned properties, net	Owned properties, net	$	6,709,528	$	6,721,744	Owned properties, net	$	6,637,363	$	6,676,811

On-campus participating properties, net	On-campus participating properties, net	65,813		69,281		On-campus participating properties, net	63,809		65,559
Investments in real estate, net	Investments in real estate, net	6,775,341		6,791,025		Investments in real estate, net	6,701,172		6,742,370

Cash and cash equivalents	Cash and cash equivalents	42,073		54,017		Cash and cash equivalents	87,656		120,351
Restricted cash	Restricted cash	20,163		19,955		Restricted cash	16,988		14,326
Student contracts receivable, net	Student contracts receivable, net	22,188		11,090		Student contracts receivable, net	20,476		14,187
Operating lease right of use assets	Operating lease right of use assets	456,871		457,573		Operating lease right of use assets	455,627		456,239
Other assets	Other assets	232,083		197,500		Other assets	214,329		227,113

Total assets	Total assets	$	7,548,719	$	7,531,160	Total assets	$	7,496,248	$	7,574,586

Liabilities and equity	Liabilities and equity					Liabilities and equity

Liabilities	Liabilities					Liabilities
Secured mortgage and bond debt, net	Secured mortgage and bond debt, net	$	562,343	$	646,827	Secured mortgage and bond debt, net	$	534,735	$	535,836

Unsecured notes, net	Unsecured notes, net	2,378,380		2,375,603		Unsecured notes, net	2,774,979		2,773,855
Unsecured term loan, net	Unsecured term loan, net	199,736		199,473		Unsecured term loan, net	199,912		199,824
Unsecured revolving credit facility	Unsecured revolving credit facility	577,000		371,100		Unsecured revolving credit facility	—		—
Accounts payable and accrued expenses	Accounts payable and accrued expenses	98,380		85,070		Accounts payable and accrued expenses	57,277		93,067
Operating lease liabilities	Operating lease liabilities	494,397		486,631		Operating lease liabilities	498,897		496,821
Other liabilities	Other liabilities	191,251		185,352		Other liabilities	152,202		173,898
Total liabilities	Total liabilities	4,501,487		4,350,056		Total liabilities	4,218,002		4,273,301

Commitments and contingencies (Note 13)		0		0
Commitments and contingencies (Note 11)						Commitments and contingencies (Note 11)	0		0

Redeemable noncontrolling interests	Redeemable noncontrolling interests	27,405		24,567		Redeemable noncontrolling interests	31,193		31,858

Equity	Equity					Equity
American Campus Communities, Inc. and Subsidiaries stockholders’ equity	American Campus Communities, Inc. and Subsidiaries stockholders’ equity					American Campus Communities, Inc. and Subsidiaries stockholders’ equity
Common stock, $0.01 par value, 800,000,000 shares authorized, 139,046,139 and 137,540,345 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		1,390		1,375
Common stock, $0.01 par value, 800,000,000 shares authorized, 139,293,193 and 139,064,213 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively						Common stock, $0.01 par value, 800,000,000 shares authorized, 139,293,193 and 139,064,213 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	1,393		1,391
Additional paid in capital	Additional paid in capital	4,538,210		4,472,170		Additional paid in capital	4,693,018		4,694,242
Common stock held in rabbi trust, 110,532 and 91,746 shares at September 30, 2021 and December 31, 2020, respectively		(4,711)		(3,951)
Common stock held in rabbi trust, 90,223 and 92,700 shares at March 31, 2022 and December 31, 2021, respectively						Common stock held in rabbi trust, 90,223 and 92,700 shares at March 31, 2022 and December 31, 2021, respectively	(3,887)		(3,943)
Accumulated earnings and dividends	Accumulated earnings and dividends	(1,534,660)		(1,332,689)		Accumulated earnings and dividends	(1,586,700)		(1,559,765)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(17,236)		(22,777)		Accumulated other comprehensive loss	(9,830)		(14,547)
Total American Campus Communities, Inc. and Subsidiaries stockholders’ equity	Total American Campus Communities, Inc. and Subsidiaries stockholders’ equity	2,982,993		3,114,128		Total American Campus Communities, Inc. and Subsidiaries stockholders’ equity	3,093,994		3,117,378
Noncontrolling interests – partially owned properties	Noncontrolling interests – partially owned properties	36,834		42,409		Noncontrolling interests – partially owned properties	153,059		152,049
Total equity	Total equity	3,019,827		3,156,537		Total equity	3,247,053		3,269,427

Total liabilities and equity	Total liabilities and equity	$	7,548,719	$	7,531,160	Total liabilities and equity	$	7,496,248	$	7,574,586


Consolidated variable interest entities’ assets and liabilities included in the above balances	Consolidated variable interest entities’ assets and liabilities included in the above balances					Consolidated variable interest entities’ assets and liabilities included in the above balances

Investments in real estate, net	Investments in real estate, net	$	577,445	$	592,787	Investments in real estate, net	$	810,794	$	819,795
Cash, cash equivalents, and restricted cash	Cash, cash equivalents, and restricted cash	$	35,579	$	41,248	Cash, cash equivalents, and restricted cash	$	50,149	$	46,234
Other assets	Other assets	$	20,129	$	13,078	Other assets	$	22,464	$	23,743
Secured mortgage debt, net	Secured mortgage debt, net	$	405,445	$	410,837	Secured mortgage debt, net	$	404,128	$	404,790
Accounts payable, accrued expenses, and other liabilities	Accounts payable, accrued expenses, and other liabilities	$	54,991	$	46,645	Accounts payable, accrued expenses, and other liabilities	$	40,936	$	52,407

See accompanying notes to consolidated financial statements.

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands, except share and per share data)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
Revenues	Revenues									Revenues
Owned properties	Owned properties	$	219,413	$	192,332	$	637,480	$	602,631	Owned properties		$	253,048	$	218,444
On-campus participating properties	On-campus participating properties	6,067		5,386		20,246		20,196		On-campus participating properties		10,694		8,958
Third-party development services	Third-party development services	938		2,186		3,763		5,531		Third-party development services		6,882		1,959
Third-party management services	Third-party management services	2,459		2,771		8,631		9,268		Third-party management services		3,122		3,361

Total revenues	Total revenues	228,877		202,675		670,120		637,626		Total revenues		273,746		232,722

Operating expenses (income)
Operating expenses										Operating expenses
Owned properties	Owned properties	117,176		106,518		306,870		284,741		Owned properties		103,608		93,991
On-campus participating properties	On-campus participating properties	4,120		3,783		10,689		10,357		On-campus participating properties		4,001		3,290
Third-party development and management services	Third-party development and management services	4,990		5,061		15,377		16,245		Third-party development and management services		5,154		5,387
General and administrative	General and administrative	10,309		8,638		35,563		28,563		General and administrative		10,298		11,128
Depreciation and amortization	Depreciation and amortization	69,445		67,369		206,303		199,979		Depreciation and amortization		70,552		68,117
Ground/facility leases	Ground/facility leases	5,502		3,071		12,145		10,033		Ground/facility leases		6,138		3,208
Gain from disposition of real estate		—		—		—		(48,525)

Other operating expenses										Other operating expenses		—		1,200
Total operating expenses	Total operating expenses	211,542		194,440		586,947		501,393		Total operating expenses		199,751		186,321

Operating income	Operating income	17,335		8,235		83,173		136,233		Operating income		73,995		46,401

Nonoperating income (expenses)	Nonoperating income (expenses)									Nonoperating income (expenses)
Interest income	Interest income	387		855		959		2,576		Interest income		560		220
Interest expense	Interest expense	(29,271)		(29,056)		(87,488)		(84,007)		Interest expense		(30,061)		(28,977)
Amortization of deferred financing costs	Amortization of deferred financing costs	(1,470)		(1,349)		(4,207)		(3,891)		Amortization of deferred financing costs		(1,614)		(1,319)
Loss from extinguishment of debt		—		—		—		(4,827)

Other nonoperating income	Other nonoperating income	—		264		157		264		Other nonoperating income		180		—
Total nonoperating expenses	Total nonoperating expenses	(30,354)		(29,286)		(90,579)		(89,885)		Total nonoperating expenses		(30,935)		(30,076)

(Loss) income before income taxes		(13,019)		(21,051)		(7,406)		46,348
Income before income taxes										Income before income taxes		43,060		16,325
Income tax provision	Income tax provision	(340)		(373)		(1,021)		(1,133)		Income tax provision		(340)		(340)
Net (loss) income		(13,359)		(21,424)		(8,427)		45,215
Net income										Net income		42,720		15,985

Net loss attributable to noncontrolling interests		1,920		1,909		3,204		2,781
Net (loss) income attributable to ACC, Inc. and Subsidiaries common stockholders		$	(11,439)	$	(19,515)	$	(5,223)	$	47,996
Net income attributable to noncontrolling interests										Net income attributable to noncontrolling interests		(3,537)		(367)
Net income attributable to ACC, Inc. and Subsidiaries common stockholders										Net income attributable to ACC, Inc. and Subsidiaries common stockholders		$	39,183	$	15,618

Other comprehensive income (loss)
Other comprehensive income										Other comprehensive income
Change in fair value of interest rate swaps and other	Change in fair value of interest rate swaps and other	1,672		1,851		5,541		(7,668)		Change in fair value of interest rate swaps and other		4,717		2,518
Comprehensive (loss) income		$	(9,767)	$	(17,664)	$	318	$	40,328
Comprehensive income										Comprehensive income		$	43,900	$	18,136

Net (loss) income per share attributable to ACC, Inc. and Subsidiaries common stockholders
Net income per share attributable to ACC, Inc. and Subsidiaries common stockholders										Net income per share attributable to ACC, Inc. and Subsidiaries common stockholders
Basic	Basic	$	(0.09)	$	(0.15)	$	(0.05)	$	0.34	Basic		$	0.28	$	0.11
Diluted	Diluted	$	(0.09)	$	(0.15)	$	(0.05)	$	0.33	Diluted		$	0.27	$	0.11

Weighted-average common shares outstanding	Weighted-average common shares outstanding									Weighted-average common shares outstanding
Basic	Basic	139,068,939		137,632,091		138,283,616		137,574,485		Basic		139,237,447		137,711,965
Diluted	Diluted	139,068,939		137,632,091		138,283,616		138,678,713		Diluted		140,536,609		139,008,642

See accompanying notes to consolidated financial statements.

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) Income		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) Income		Noncontrolling Interests – Partially Owned Properties		Total
Equity, December 31, 2020		137,540,345	$	1,375	$	4,472,170	91,746	$	(3,951)	$	(1,332,689)	$	(22,777)	$	42,409	$	3,156,537
Adjustments to reflect redeemable noncontrolling interests at fair value		—	—		(354)		—	—		—		—		—		(354)
Amortization of restricted stock awards and vesting of restricted stock units		9,054	—		5,148		—	—		—		—		—		5,148
Vesting of restricted stock awards		224,647	3		(4,472)		—	—		—		—		—		(4,469)
Distributions to common and restricted stockholders ($0.47 per common share)		—	—		—		—	—		(65,421)		—		—		(65,421)

Distributions to noncontrolling interests - partially owned properties		—	—		—		—	—		—		—		(1,138)		(1,138)

Change in fair value of interest rate swaps and other		—	—		—		—	—		—		2,518		—		2,518

Deposits to deferred compensation plan, net of withdrawals		(10,115)	—		375		10,115	(375)		—		—		—		—
Net income		—	—		—		—	—		15,618		—		300		15,918
Equity, March 31, 2021		137,763,931	$	1,378	$	4,472,867	101,861	$	(4,326)	$	(1,382,492)	$	(20,259)	$	41,571	$	3,108,739
Adjustments to reflect redeemable noncontrolling interests at fair value		—	—		(2,031)		—	—		—		—		—		(2,031)
Amortization of restricted stock awards and vesting of restricted stock units		24,460	—		6,481		—	—		—		—		—		6,481

Distributions to common and restricted stockholders ($0.47 per common share)		—	—		—		—	—		(65,379)		—		—		(65,379)

Distributions to noncontrolling interests - partially owned properties		—	—		—		—	—		—		—		(1,189)		(1,189)

Change in fair value of interest rate swaps and other		—	—		—		—	—		—		1,351		—		1,351

Net proceeds from sale of common stock and other		788,600	8		37,729		—	—		—		—		—		37,737
Deposits to deferred compensation plan, net of withdrawals		(9,054)	—		404		9,054	(404)		—		—		—		—
Net loss		—	—		—		—	—		(9,402)		—		(1,634)		(11,036)
Equity, June 30, 2021		138,567,937	$	1,386	$	4,515,450	110,915	$	(4,730)	$	(1,457,273)	$	(18,908)	$	38,748	$	3,074,673
Equity, December 31, 2021																		Equity, December 31, 2021	139,064,213	$	1,391	$	4,694,242	92,700	$	(3,943)	$	(1,559,765)	$	(14,547)	$	152,049	$	3,269,427
Adjustments to reflect redeemable noncontrolling interests at fair value	Adjustments to reflect redeemable noncontrolling interests at fair value	—	—		(1,130)		—	—		—		—		—		(1,130)		Adjustments to reflect redeemable noncontrolling interests at fair value	—	—		577		—	—		—		—		—		577
Amortization of restricted stock awards	Amortization of restricted stock awards	—	—		4,693		—	—		—		—		—		4,693		Amortization of restricted stock awards	—	—		4,294		—	—		—		—		—		4,294
Vesting of restricted stock awards	Vesting of restricted stock awards	49,819	—		(1,521)		—	—		—		—		—		(1,521)		Vesting of restricted stock awards	226,503	2		(6,039)		—	—		—		—		—		(6,037)
Distributions to common and restricted stockholders ($0.47 per common share)	Distributions to common and restricted stockholders ($0.47 per common share)	—	—		—		—	—		(65,948)		—		—		(65,948)		Distributions to common and restricted stockholders ($0.47 per common share)	—	—		—		—	—		(66,118)		—		—		(66,118)

Distributions to noncontrolling interests - partially owned properties	Distributions to noncontrolling interests - partially owned properties	—	—		—		—	—		—		—		(18)		(18)		Distributions to noncontrolling interests - partially owned properties	—	—		—		—	—		—		—		(2,381)		(2,381)

Change in fair value of interest rate swaps and other	Change in fair value of interest rate swaps and other	—	—		—		—	—		—		1,672		—		1,672		Change in fair value of interest rate swaps and other	—	—		—		—	—		—		4,717		—		4,717
Net proceeds from sale of common stock		428,000	4		20,737		—	—		—		—		—		20,741
Deposits to deferred compensation plan, net of withdrawals		383	—		(19)		(383)	19		—		—		—		—
Net loss		—	—		—		—	—		(11,439)		—		(1,896)		(13,335)
Equity, September 30, 2021		139,046,139	$	1,390	$	4,538,210	110,532	$	(4,711)	$	(1,534,660)	$	(17,236)	$	36,834	$	3,019,827

Withdrawals from deferred compensation plan, net of deposits																		Withdrawals from deferred compensation plan, net of deposits	2,477	—		(56)		(2,477)	56		—		—		—		—
Net income																		Net income	—	—		—		—	—		39,183		—		3,391		42,574
Equity, March 31, 2022																		Equity, March 31, 2022	139,293,193	$	1,393	$	4,693,018	90,223	$	(3,887)	$	(1,586,700)	$	(9,830)	$	153,059	$	3,247,053


	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, 2020	137,540,345	$	1,375	$	4,472,170	91,746	$	(3,951)	$	(1,332,689)	$	(22,777)	$	42,409	$	3,156,537
Adjustments to reflect redeemable noncontrolling interests at fair value	—	—		(354)		—	—		—		—		—		(354)
Amortization of restricted stock awards and vesting of restricted stock units	9,054	—		5,148		—	—		—		—		—		5,148
Vesting of restricted stock awards	224,647	3		(4,472)		—	—		—		—		—		(4,469)
Distributions to common and restricted stockholders ($0.47 per common share)	—	—		—		—	—		(65,421)		—		—		(65,421)

Distributions to noncontrolling interests - partially owned properties	—	—		—		—	—		—		—		(1,138)		(1,138)


Change in fair value of interest rate swaps and other	—	—		—		—	—		—		2,518		—		2,518


Deposits to deferred compensation plan, net of withdrawals	(10,115)	—		375		10,115	(375)		—		—		—		—
Net income	—	—		—		—	—		15,618		—		300		15,918
Equity, March 31, 2021	137,763,931	$	1,378	$	4,472,867	101,861	$	(4,326)	$	(1,382,492)	$	(20,259)	$	41,571	$	3,108,739

See accompanying notes to consolidated financial statements.

~~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) Income Noncontrolling
Interests –
Partially Owned
Properties Total
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 — — 9,490 — — — — — 9,490
Amortization of restricted stock awards — — 3,988 — — — — — 3,988
Vesting of restricted stock awards 199,695 2 (4,157) — — — — — (4,155)
Distributions to common and restricted stockholders ($0.47 per common share) — — — — — (65,242) — — (65,242)
Distributions to noncontrolling interests - partially owned properties — — — — — — — (2,566) (2,566)
Change in fair value of interest rate swaps and other — — — — — — (9,801) — (9,801)
Deposits to deferred compensation plan, net of withdrawals (3,488) — 129 3,488 (129) — — — —
Net income — — — — — 80,855 — 895 81,750
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
Adjustments to reflect redeemable noncontrolling interests at fair value — — (3,410) — — — — — (3,410)
Amortization of restricted stock awards and vesting of restricted stock units 27,644 — 4,439 — — — — — 4,439
Vesting of restricted stock awards — — (20) — — — — — (20)
Distributions to common and restricted stockholders ($0.47 per common share) — — — — — (65,193) — — (65,193)
Distributions to noncontrolling interests - partially owned properties — — �� — — — — (1,816) (1,816)
Change in fair value of interest rate swaps and other — — — — — — 282 — 282
Deposits to deferred compensation plan, net of withdrawals (10,330) — 336 10,330 (336) — — — —
Net loss — — — — — (13,344) — (2,046) (15,390)
Equity, June 30, 2020 137,540,345 $ 1,375 $ 4,469,251 91,746 $ (3,951) $ (1,207,645) $ (26,465) $ 38,465 $ 3,271,030
Adjustments to reflect redeemable noncontrolling interests at fair value — — (264) — — — — — (264)
Amortization of restricted stock awards and vesting of restricted stock units — — 3,502 — — — — — 3,502
Distributions to common and restricted stockholders ($0.47 per common share) — — — — — (65,204) — — (65,204)
Contributions by noncontrolling interests - partially owned properties — — — — — — — 6,110 6,110
Distributions to noncontrolling interests - partially owned properties — — — — — — — (18) (18)
Change in fair value of interest rate swaps and other — — — — — — 1,851 — 1,851
Net loss — — — — — (19,515) — (1,857) (21,372)
Equity, September 30, 2020 137,540,345 $ 1,375 $ 4,472,489 91,746 $ (3,951) $ (1,292,364) $ (24,614) $ 42,700 $ 3,195,635

~~See accompanying notes to consolidated financial statements.~~

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Operating activities	Operating activities					Operating activities
Net (loss) income		$	(8,427)	$	45,215
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Gain from disposition of real estate		—		(48,525)
Net income						Net income	$	42,720	$	15,985
Adjustments to reconcile net income to net cash provided by operating activities						Adjustments to reconcile net income to net cash provided by operating activities

Gain from insurance settlement	Gain from insurance settlement	(157)		—		Gain from insurance settlement	(180)		—
Loss from extinguishment of debt		—		4,827

Depreciation and amortization	Depreciation and amortization	206,303		199,979		Depreciation and amortization	70,552		68,117
Amortization of deferred financing costs and debt premiums/discounts	Amortization of deferred financing costs and debt premiums/discounts	3,661		908		Amortization of deferred financing costs and debt premiums/discounts	1,775		1,107
Share-based compensation	Share-based compensation	16,322		11,929		Share-based compensation	4,294		5,148
Income tax provision	Income tax provision	1,021		1,133		Income tax provision	340		340
Amortization of interest rate swap terminations	Amortization of interest rate swap terminations	1,287		1,287		Amortization of interest rate swap terminations	426		426

Changes in operating assets and liabilities:
Changes in operating assets and liabilities						Changes in operating assets and liabilities
Student contracts receivable, net	Student contracts receivable, net	(11,098)		(8,578)		Student contracts receivable, net	(6,289)		(2,552)
Other assets	Other assets	(25,337)		(5,997)		Other assets	12,693		(3,479)
Accounts payable and accrued expenses	Accounts payable and accrued expenses	12,289		(2,414)		Accounts payable and accrued expenses	(36,130)		(27,178)
Other liabilities	Other liabilities	24,701		44,551		Other liabilities	(16,787)		(8,100)
Net cash provided by operating activities	Net cash provided by operating activities	220,565		244,315		Net cash provided by operating activities	73,414		49,814

Investing activities	Investing activities					Investing activities
Proceeds from disposition of properties		—		146,144
Cash paid for acquisition of land parcels		(12,219)		(10,830)

Capital expenditures for owned properties	Capital expenditures for owned properties	(53,236)		(46,458)		Capital expenditures for owned properties	(10,252)		(9,329)
Investments in owned properties under development	Investments in owned properties under development	(137,183)		(253,644)		Investments in owned properties under development	(20,664)		(57,565)
Other investing activities	Other investing activities	2,302		(4,951)		Other investing activities	3,359		319
Net cash used in investing activities	Net cash used in investing activities	(200,336)		(169,739)		Net cash used in investing activities	(27,557)		(66,575)

Financing activities	Financing activities					Financing activities
Proceeds from unsecured notes		—		795,808
Proceeds from sale of common stock		59,674		—
Offering costs		(747)		—

Pay-off of mortgage loans	Pay-off of mortgage loans	(74,514)		(34,219)		Pay-off of mortgage loans	—		(10,295)
Defeasance costs related to early extinguishment of debt		—		(4,156)
Pay-off of unsecured notes		—		(400,000)

Proceeds from revolving credit facility	Proceeds from revolving credit facility	570,800		1,655,900		Proceeds from revolving credit facility	—		205,300
Paydowns of revolving credit facility	Paydowns of revolving credit facility	(364,900)		(1,804,900)		Paydowns of revolving credit facility	—		(113,900)

Scheduled principal payments on debt	Scheduled principal payments on debt	(8,860)		(10,063)		Scheduled principal payments on debt	(1,120)		(1,588)
Debt issuance costs	Debt issuance costs	(7,632)		(9,614)		Debt issuance costs	—		(237)
Increase in ownership of consolidated subsidiary		—		(77,200)
Contribution by noncontrolling interests		—		5,414

Taxes paid on net-share settlements	Taxes paid on net-share settlements	(5,990)		(4,175)		Taxes paid on net-share settlements	(6,037)		(4,469)
Distributions paid to common and restricted stockholders	Distributions paid to common and restricted stockholders	(196,748)		(195,639)		Distributions paid to common and restricted stockholders	(66,118)		(65,421)
Distributions paid to noncontrolling interests	Distributions paid to noncontrolling interests	(3,048)		(5,103)		Distributions paid to noncontrolling interests	(2,615)		(1,372)

Net cash used in financing activities		(31,965)		(87,947)
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(75,890)		8,018

Net change in cash, cash equivalents, and restricted cash	Net change in cash, cash equivalents, and restricted cash	(11,736)		(13,371)		Net change in cash, cash equivalents, and restricted cash	(30,033)		(8,743)
Cash, cash equivalents, and restricted cash at beginning of period	Cash, cash equivalents, and restricted cash at beginning of period	73,972		81,348		Cash, cash equivalents, and restricted cash at beginning of period	134,677		73,972
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	62,236	$	67,977	Cash, cash equivalents, and restricted cash at end of period	$	104,644	$	65,229

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets	Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets					Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents	Cash and cash equivalents	$	42,073	$	44,449	Cash and cash equivalents	$	87,656	$	41,111
Restricted cash	Restricted cash	20,163		23,528		Restricted cash	16,988		24,118
Total cash, cash equivalents, and restricted cash at end of period	Total cash, cash equivalents, and restricted cash at end of period	$	62,236	$	67,977	Total cash, cash equivalents, and restricted cash at end of period	$	104,644	$	65,229

Supplemental disclosure of non-cash investing and financing activities	Supplemental disclosure of non-cash investing and financing activities					Supplemental disclosure of non-cash investing and financing activities

Accrued development costs and capital expenditures	Accrued development costs and capital expenditures	$	22,110	$	29,461	Accrued development costs and capital expenditures	$	12,287	$	18,131
Change in fair value of redeemable noncontrolling interest	Change in fair value of redeemable noncontrolling interest	$	(3,515)	$	5,816	Change in fair value of redeemable noncontrolling interest	$	577	$	(354)

Initial recognition of operating lease right of use assets		$	1,559	$	—
Initial recognition of operating lease liabilities		$	1,559	$	—

Supplemental disclosure of cash flow information	Supplemental disclosure of cash flow information					Supplemental disclosure of cash flow information
Interest paid, net of amounts capitalized	Interest paid, net of amounts capitalized	$	97,566	$	85,916	Interest paid, net of amounts capitalized	$	37,179	$	38,437

See accompanying notes to consolidated financial statements.

AMERICAN CAMPUS COMMUNITIES, INC. 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, and 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 is structured as an umbrella partnership REIT (“UPREIT”) and contributes all net proceeds from its various equity offerings to American Campus Communities Operating Partnership LP (“ACCOP” or “the Operating Partnership”). In return for those contributions, ACC receives a number of units of the Operating Partnership (“OP Units”) 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 American Campus Communities Holdings, LLC (“ACC Holdings”), the general partner of ACCOP, and the common shares issued to the public.

As used in this report, unless stated otherwise or the context otherwise requires, references to “ACC,” “the Company,” “we,” “us,” or “our” mean American Campus Communities, Inc., a Maryland corporation that has elected to be treated as a REIT under the Internal Revenue Code, and its consolidated subsidiaries, including ACCOP.

As previously announced, on April 18, 2022, the Company and the Operating Partnership entered into an agreement and plan of merger (the “Merger Agreement”) with Abacus Parent LLC (“Parent”), Abacus Merger Sub I LLC (“Merger Sub I”), and Abacus Merger Sub II LLC (“Merger Sub II”). Parent, Merger Sub I, and Merger Sub II are affiliates of Blackstone Core+ perpetual capital vehicles, primarily comprised of Blackstone Real Estate Income Trust, Inc. and Blackstone Property Partners. Pursuant to the Merger Agreement, Merger Sub II will merge with and into the Operating Partnership (the “Partnership Merger”), with the Operating Partnership being the surviving entity, and immediately following the consummation of the Partnership Merger, the Company shall merge with and into Merger Sub I (the “Company Merger”), with Merger Sub I being the surviving entity. Pursuant to the Merger Agreement, the outstanding shares of common stock of the Company will be acquired for $65.47 per share (the “Merger Consideration”) in an all-cash transaction. During the term of the Merger Agreement, the Company may not pay dividends except as necessary to preserve its tax status as a REIT, and any such dividends would result in an offsetting decrease to the Merger Consideration.

The Company Merger, Partnership Merger, and the other transactions contemplated by the Merger Agreement (the “Merger Transactions”) are subject to customary closing conditions, including approval by the Company’s common stockholders. The Merger Transactions are expected to close during the third quarter of 2022. The Company can provide no assurances regarding whether the Merger Transactions will close as expected during the third quarter of 2022 or at all. The Board of Directors of the Company has unanimously approved the Merger Agreement, and has recommended approval of the merger, and the other transactions contemplated by the Merger Agreement, by the Company’s stockholders.

As of ~~September 30, 2021,~~March 31, 2022, the Company’s property portfolio contained 166 properties with approximately 111,900 beds. The Company’s property portfolio consisted of 126 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 6 on-campus participating properties (“OCPPs”) operated under ground/facility leases with the related university systems. Of the 166 properties, 54 of 10 phases at 1 property were under development as of ~~September 30, 2021,~~March 31, 2022, and when completed will consist of a total of approximately ~~5,200~~3,700 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 ~~September 30, 2021,~~March 31, 2022, also through one of ACC’s TRSs, the Company provided third-party management and leasing services for 36 properties that represented approximately ~~28,800~~28,400 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 ~~September 30, 2021,~~March 31, 2022, the Company’s total owned and third-party managed portfolio included 202 properties with approximately ~~140,700~~140,300 beds.

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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 and per share amounts, are stated in thousands unless otherwise indicated.

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.

~~AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

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. In March 2020, the Company 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. In May 2021, the Company modified its unsecured term loan credit agreement (“Term Loan”) to include LIBOR transition language and to conform the covenants and various administrative items from the agreement to those in the Company’s senior unsecured revolving credit facility agreement (the “Credit Facility”), which was also amended in May 2021. Refer to Note 7 for additional information regarding these modifications. As the changes to covenants and administrative items do not impact the contractual cash flows of the Term Loan, the LIBOR transition language qualifies for, and the Company elected to apply the ~~optional expedients in in ASC 848-20-15-2 through 15-11 which~~contract modification expedient to contracts affected by reference rate reform. This expedient allows the Company to treat ~~the amendment~~contract modifications related to reference rate reform as a modification without additional ~~analysis.~~analysis, as long as there are no changes to contractual cash flows as a result of the modification. 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 addition, the Company does not expect the following accounting pronouncements to have a material effect on its consolidated financial statements:


Accounting Standards Update						Effective Date
ASU ~~2020-06 “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity"~~						~~January 1, 2022~~
~~ASU 2021-05 “Leases (Topic 842): Lessors – Certain Leases with Variable Lease Payments”~~						~~January 1, 2022~~
~~ASU~~ 2021-08 “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”						January 1, 2023

Recently Adopted Accounting Pronouncements

In March 2020, the U.S. Securities and Exchange Commission (“SEC”) adopted rules that amended the financial disclosure requirements for subsidiary issuers and guarantors of registered debt securities in Rule 3-10 of Regulation S-X. Subsequently, in November 2020, the FASB issued ASU 2020-09 “Amendments to SEC Paragraphs Pursuant to SEC Release No. 33-10762” which revises SEC paragraphs of the codification to reflect, as appropriate, the amended disclosure requirements mentioned above. The amended rules permit subsidiary issuers of obligations guaranteed by the parent to omit separate financial statements if the consolidated financial statements of the parent company have been filed, the subsidiary obligor is a consolidated subsidiary of the parent company, the guaranteed security is debt or debt-like, and the security is guaranteed fully and unconditionally by the parent. The amendments include requirements related to narrative and summarized financial information disclosures, as well as guidance on when the summarized financial information can be excluded by a filer. The Company adopted both rules on their effective date of January 4, 2021. Accordingly, separate consolidated financial statements of the Operating Partnership have not been presented. Furthermore, as permitted under Rule 13-01(a)(4)(vi), the Company has excluded the summarized financial information for the Operating Partnership as the assets, liabilities, and results of operations of the Company and the Operating Partnership are not materially different than the corresponding amounts presented in the consolidated financial statements of the Company, and management believes such summarized financial information would be repetitive and not provide incremental value to investors. The Company has addressed the required disclosures herein within Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~In addition, on~~On January 1, ~~2021,~~2022, the Company adopted the following accounting ~~pronouncement~~pronouncements which did not have a material effect on the Company’s consolidated financial statements:

•ASU ~~2019-12 “Income Taxes~~2020-06 “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity"

•ASU 2021-05 “Leases (Topic ~~740)~~842): ~~Simplifying the Accounting for Income Taxes"~~Lessors – Certain Leases with Variable Lease Payments”

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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 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 the interim period 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, ~~2020.~~2021.

Prior Year Reclassifications

~~The resident services revenues financial statement~~Certain prior period amounts were reclassified to conform to current presentation, which include:

•Litigation settlement expenses previously reported in the general and administrative expenses line item on the statements of comprehensive income ~~has been~~were reclassified for all applicable periods ~~presented~~ to the ~~owned properties revenues financial statement~~other operating expenses line ~~item.~~item in the accompanying consolidated statements of comprehensive income.

Restricted Cash

Restricted cash consists of funds held in trust that are 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 OCPPs. Additionally, restricted cash includes escrow accounts held by lenders and residents’ 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.

Leases

As Lessee

The Company, as lessee, has entered into lease agreements with university systems and other third parties for the purpose of financing, constructing, and operating student housing properties. Under the terms of the ground/facility leases, the lessor may receive annual minimum rent, variable rent based upon the operating performance of the property, or a combination thereof.

In the accompanying consolidated statements of comprehensive income, rent expense for ACE properties and OCPPs is included in ground/facility leases expense, and rent expense for owned off-campus properties is included in owned properties operating expenses. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, the Company received rent concessions in the form of ground rent abatements at one ACE property related to the initial suspension of the Disney College Internship Program due to the effects of the novel coronavirus disease pandemic (“COVID-19”). The abatements allow for variable ground rent payments in lieu of fixed ground rent payments until the occupancy for the project, which is currently being developed, is stabilized. These concessions ~~were~~are recorded as a reduction to ground/facility leases expense, in accordance with the FASB Staff Question & Answer “Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic,” issued in 2020 and are presented in the following table:

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Ground rent abatements $ 2,289 $ 807 $ 4,990 $ 807


	Three Months Ended March 31,
		2022		2021
Ground rent abatements		$	2,717	$	1,131

As Lessor

The Company’s primary business involves leasing properties to students under agreements that are classified as operating leases and 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.

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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 properties revenues and on-campus participating properties revenues in the accompanying consolidated statements of comprehensive income and is presented in the following table:

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Student lease income $ 213,218 $ 186,561 $ 613,843 $ 594,851
Commercial lease income $ 3,433 $ 2,900 $ 9,368 $ 9,040

During the three and nine months ended September 30, 2021 and 2020, the Company provided various rent abatements and rent refunds to its tenants experiencing financial hardship due to COVID-19. These amounts were recorded as reductions to revenues in accordance with the FASB Staff Question & Answer “Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic:”

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Abatements through the Resident Hardship Program (1)
$ — $ 4,680 $ 1,036 $ 13,274
Net rent refunds through ACE university partnerships (1) (2)
$ 751 $ 2,100 $ 2,811 $ 17,228
Other university reimbursements (1) (3)
$ 266 $ 1,013 $ 2,527 $ 1,013
Net rent refunds through OCPP university partnerships (4)
$ — $ — $ — $ 1,472

~~(1)Recorded as reductions to owned properties revenue.~~

~~(2)~~Net of reimbursements received from university partners of $0.6 million and $2.6 million for three and nine months ended September 30, 2021, respectively, and $2.0 million and $2.8 million for the three and nine months ended September 30, 2020, respectively.

~~(3)Represents reimbursements received from university partners to assist in the financial impacts of dedensification requirements.~~

~~(4)Recorded as reductions to OCPP revenue.~~


	Three Months Ended March 31,
		2022		2021
Student lease income		$	248,118	$	213,854
Commercial lease income		$	3,265	$	2,945

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 ACCOP, 67 joint ventures that own a total of 1013 operating properties and 2 land parcels, and 6 properties owned under the on-campus participating property ~~structure~~ (“OCPP”). structure. The VIE assets and liabilities consolidated within the Company's assets and liabilities are disclosed at the bottom of the 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. 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 ~~as of September 30, 2021.~~March 31, 2022.

~~AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

3. Earnings Per Share

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 from the assumed conversion of 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 ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ 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
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Common OP Units (Note 9) 468,475 468,475 468,475 468,475
Preferred OP Units (Note 9) 35,242 35,242 35,242 35,242
Unvested restricted stock awards (Note 10) 1,175,294 1,099,256 1,228,103 —
Total potentially dilutive securities 1,679,011 1,602,973 1,731,820 503,717


	Three Months Ended March 31,
		2022	2021
Common OP Units (Note 7)		468,475	468,475
Preferred OP Units (Note 7)		35,242	35,242

Total potentially dilutive securities		503,717	503,717

~~The following is a summary of the elements used in calculating basic and diluted earnings per share:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Numerator – basic and diluted earnings per share
Net (loss) income $ (13,359) $ (21,424) $ (8,427) $ 45,215
Net loss attributable to noncontrolling interests 1,920 1,909 3,204 2,781
Net (loss) income attributable to ACC, Inc. and Subsidiaries common stockholders (11,439) (19,515) (5,223) 47,996
Amount allocated to participating securities (567) (517) (1,872) (1,698)
Net (loss) income attributable to ACC, Inc. and Subsidiaries common stockholders $ (12,006) $ (20,032) $ (7,095) $ 46,298
Denominator
Basic weighted average common shares outstanding 139,068,939 137,632,091 138,283,616 137,574,485
Unvested restricted stock awards (Note 10) — — — 1,104,228
Diluted weighted average common shares outstanding 139,068,939 137,632,091 138,283,616 138,678,713
Earnings per share
Net (loss) income attributable to common stockholders - basic $ (0.09) $ (0.15) $ (0.05) $ 0.34
Net (loss) income attributable to common stockholders - diluted $ (0.09) $ (0.15) $ (0.05) $ 0.33

~~4. Acquisition and Joint Venture Investment~~

~~Land Acquisition~~

In May 2021, the Company acquired a land parcel near Arizona State University for approximately $12.2 million including transaction costs. The land was purchased for the potential future development of a student housing facility.

~~Joint Venture Transaction~~

In August 2020, the Company entered into a joint venture arrangement with a third-party partner to develop a property located in Nashville, TN (the “Nashville Joint Venture”). The Company contributed cash and pre-development expenditures of $5.6 million in exchange for a 50% ownership interest in the Nashville Joint Venture. Additionally as part of the transaction,

108

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following is a summary of the Company financed the third-party partner’s contribution with a $5.4 million, two-year note receivable (the “Note”) at a 6.5% annual interest rate. The third-party partner contributed the proceeds from the Note as well as pre-developmentelements used in calculating basic and transaction costs of approximately $0.7 million in exchange for a 50% ownership interest in the Nashville Joint Venture. In September 2020, the Nashville Joint Venture purchased a land parcel for $11.3 million including transaction costs.diluted earnings per share:

The Nashville Joint Venture was determined to be a VIE with the Company being the primary beneficiary. As such, the Nashville Joint Venture is included in the Company’s consolidated financial statements contained herein and the third-party partner’s ownership interest is accounted for as noncontrolling interest - partially owned properties.


	Three Months Ended March 31,
		2022		2021
Numerator – basic and diluted earnings per share
Net income		$	42,720	$	15,985
Net income attributable to noncontrolling interests		(3,537)		(367)
Net income attributable to ACC, Inc. and Subsidiaries common stockholders		39,183		15,618
Amount allocated to participating securities		(714)		(734)
Net income attributable to ACC, Inc. and Subsidiaries common stockholders		$	38,469	$	14,884







Denominator
Basic weighted average common shares outstanding		139,237,447		137,711,965
Unvested restricted stock awards (Note 8)		1,299,162		1,296,677


Diluted weighted average common shares outstanding		140,536,609		139,008,642

Earnings per share
Net income attributable to common stockholders - basic		$	0.28	$	0.11
Net income attributable to common stockholders - diluted		$	0.27	$	0.11

~~5. Property Dispositions~~

~~Property Disposition~~

In March 2020, the Company sold The Varsity, 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 $146.1 million. The net gain on this disposition totaled approximately $48.5 million.

6.4. Investments in Real Estate

Owned Properties

Owned properties, both wholly-owned and those owned through investments in VIEs, consisted of the following:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Land	Land	$	677,289	$	664,879	Land	$	678,254	$	678,254
Buildings and improvements	Buildings and improvements	7,189,594		6,949,781		Buildings and improvements	7,295,097		7,241,918
Furniture, fixtures, and equipment	Furniture, fixtures, and equipment	429,335		405,843		Furniture, fixtures, and equipment	431,163		425,469
Construction in progress	Construction in progress	270,136		361,893		Construction in progress	211,558		242,566
		8,566,354		8,382,396			8,616,072		8,588,207
Less accumulated depreciation	Less accumulated depreciation	(1,856,826)		(1,660,652)		Less accumulated depreciation	(1,978,709)		(1,911,396)
Owned properties, net	Owned properties, net	$	6,709,528	$	6,721,744	Owned properties, net	$	6,637,363	$	6,676,811

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 ~~$1.8~~$1.6 million and ~~$2.9~~$2.5 million was capitalized during the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively. Interest totaling approximately $6.7 million and $9.5 million was capitalized during the nine months ended September 30, 2021 and 2020,~~ respectively.

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

On-Campus Participating Properties (OCPPs)

Our OCPP 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.

OCPPs consisted of the following:

September 30, 2021 December 31, 2020
Buildings and improvements $ 159,116 $ 157,218
Furniture, fixtures, and equipment 15,073 14,389
174,189 171,607
Less accumulated depreciation (108,376) (102,326)
On-campus participating properties, net
$ 65,813 $ 69,281

~~AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~



	March 31, 2022		December 31, 2021

Buildings and improvements	$	160,476	$	160,275
Furniture, fixtures, and equipment	14,315		14,213
Construction in progress	—		60
	174,791		174,548
Less accumulated depreciation	(110,982)		(108,989)
On-campus participating properties, net	$	63,809	$	65,559

7.5. Debt

A summary of the Company’s outstanding consolidated indebtedness, including unamortized debt premiums and discounts, is as follows:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Debt secured by owned properties	Debt secured by owned properties					Debt secured by owned properties
Mortgage loans payable	Mortgage loans payable					Mortgage loans payable
Unpaid principal balance	Unpaid principal balance	$	486,579	$	563,506	Unpaid principal balance	$	460,404	$	460,825
Unamortized deferred financing costs	Unamortized deferred financing costs	(644)		(848)		Unamortized deferred financing costs	(562)		(596)
Unamortized debt premiums	Unamortized debt premiums	683		1,819		Unamortized debt premiums	490		540
Unamortized debt discounts	Unamortized debt discounts	(115)		(151)		Unamortized debt discounts	(91)		(103)
		486,503		564,326			460,241		460,666

Debt secured by OCPPs	Debt secured by OCPPs					Debt secured by OCPPs
Mortgage loans payable (1)	Mortgage loans payable (1)	61,681		63,714		Mortgage loans payable (1)	60,288		60,986
Bonds payable (1)	Bonds payable (1)	14,695		19,110		Bonds payable (1)	14,695		14,695
Unamortized deferred financing costs	Unamortized deferred financing costs	(536)		(323)		Unamortized deferred financing costs	(489)		(511)

		75,840		82,501			74,494		75,170
Total secured mortgage and bond debt, net	Total secured mortgage and bond debt, net	562,343		646,827		Total secured mortgage and bond debt, net	534,735		535,836
Unsecured notes, net of unamortized OID and deferred financing costs (2)	Unsecured notes, net of unamortized OID and deferred financing costs (2)	2,378,380		2,375,603		Unsecured notes, net of unamortized OID and deferred financing costs (2)	2,774,979		2,773,855
Unsecured term loan, net of unamortized deferred financing costs (3)	Unsecured term loan, net of unamortized deferred financing costs (3)	199,736		199,473		Unsecured term loan, net of unamortized deferred financing costs (3)	199,912		199,824
Unsecured revolving credit facility	Unsecured revolving credit facility	577,000		371,100		Unsecured revolving credit facility	—		—
Total debt, net	Total debt, net	$	3,717,459	$	3,593,003	Total debt, net	$	3,509,626	$	3,509,515

(1)The creditors of mortgage loans payable and bonds payable related to OCPPs do not have recourse to the assets of the Company.

(2)Includes net unamortized original issue discount (“OID”) of ~~$5.2~~$5.1 million and ~~$5.8~~$5.3 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, and net unamortized deferred financing costs of ~~$16.4~~$19.9 million and ~~$18.6~~$20.8 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

(3)Includes net unamortized deferred financing costs of ~~$0.3~~$0.1 million and ~~$0.5~~$0.2 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

We are subject to various restrictions under the Merger Agreement on issuing and assuming additional debt and utilizing our revolving credit facility.

Mortgage Loans Payable

~~During the nine months ended September 30,~~In March 2021, the Company paid off approximately ~~$74.5~~$10.3 million of fixed rate mortgage debt secured by 51 owned ~~properties.~~property.

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

In February 2021, the Company refinanced $24.0 million of OCPP mortgage debt that was scheduled to mature in 2021, which extended the maturity to February 2028. Additionally, in February 2021, the Company entered into 2 interest rate swap agreements to convert the refinanced mortgage loan to a fixed rate of 2.8%. Refer to Note 119 for information related to derivatives.

~~In February 2020, the Company paid off approximately $34.2 million of fixed rate mortgage debt secured by 1 owned property.~~

Unsecured Notes

In June 2020, the Operating Partnership closed a $400.0 million offering of senior unsecured notes under its existing shelf registration. These 10-year notes were issued at 99.142% of par value with a coupon of 3.875% and are fully and unconditionally guaranteed by the Company. Interest on the notes is payable semi-annually on January 30 and July 30, with the first payment due and payable on January 30, 2021. The notes will mature on January 30, 2031. Net proceeds from the sale of the senior unsecured notes totaled approximately $391.7 million, after deducting the underwriting discount and offering expenses which will be amortized over the term of the unsecured notes. The Company used the proceeds to repay borrowings under its revolving credit facility.

~~AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

In January 2020, the Operating 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 senior unsecured notes totaled approximately $394.5 million, after deducting the underwriting discount and offering expenses which will be amortized over the term of the unsecured 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 a loss from early extinguishment of debt of approximately $4.8 million, which is included in the accompanying statements of comprehensive income for the nine months ended September 30, 2020.

The following senior unsecured notes issued by the Operating Partnership were outstanding as of ~~September 30, 2021:~~March 31, 2022:


Date Issued	Date Issued	Amount		% of Par Value	Coupon		Yield			Original Issue Discount		Term (Years)	Date Issued	Amount		% of Par Value	Coupon		Yield			Original Issue Discount		Term (Years)
April 2013	April 2013	$	400,000	99.659	3.750	%	3.791	%		$	1,364	10	April 2013	$	400,000	99.659	3.750	%	3.791	%		$	1,364	10
June 2014	June 2014	400,000		99.861	4.125	%	4.269	%	(1)	556		10	June 2014	400,000		99.861	4.125	%	4.269	%	(1)	556		10
October 2017	October 2017	400,000		99.912	3.625	%	3.635	%		352		10	October 2017	400,000		99.912	3.625	%	3.635	%		352		10
June 2019	June 2019	400,000		99.704	3.300	%	3.680	%	(1)	1,184		7	June 2019	400,000		99.704	3.300	%	3.680	%	(1)	1,184		7
January 2020	January 2020	400,000		99.810	2.850	%	2.872	%		760		10	January 2020	400,000		99.810	2.850	%	2.872	%		760		10
June 2020	June 2020	400,000		99.142	3.875	%	3.974	%		3,432		10	June 2020	400,000		99.142	3.875	%	3.974	%		3,432		10
October 2021													October 2021	400,000		99.928	2.250	%	2.261	%		288		7
		$	2,400,000							$	7,648			$	2,800,000							$	7,936

(1)The yield includes the effect of the amortization of interest rate swap terminations (see Note ~~11)~~9).

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 ~~September 30, 2021,~~March 31, 2022, the Company was in compliance with all such covenants.

Unsecured Revolving Credit Facility

~~In May 2021, the~~The Company ~~closed on the renewal~~is party to an unsecured revolving credit facility (“Credit Facility”) that has capacity of ~~its existing~~ $1.0 billion ~~Credit Facility which was previously scheduled to mature in March 2022. The renewed agreement~~and contains an accordion feature that allows the Company to expand the Credit Facility by up to an additional $500 million, subject to the satisfaction of certain conditions. Additionally, a component of the interest rate is based on the achievement of specified environmental, social, and governance (“ESG”) targets which include the achievement of diversity rates among the Company’s independent board members and employees and completion of certifications or renovations that meet certain sustainability standards. The Credit Facility matures in May 2025, and can be extended through two six-month extension options, subject to the satisfaction of certain conditions.

The Credit Facility bears interest at a variable rate, at the Company’s option, based upon a base rate of one-, 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, subject to adjustment based upon the achievement of ESG targets described above. Additionally, the Company is required to pay a facility fee of 0.20% per annum on the $1.0 billion Credit Facility.As of ~~September 30, 2021,~~March 31, 2022, the Credit Facility ~~bore interest at~~had a ~~weighted average annual rate of 1.13% (0.08% + 0.85% spread + 0.20% facility fee),~~zero balance and availability under the Credit Facility totaled ~~$423.0 million.~~$1.0 billion.

The terms of the 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 ~~September 30, 2021,~~March 31, 2022, the Company was in compliance with all such covenants.

~~AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

Unsecured Term Loan

The Company’s Term Loan totals $200 million and 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. The Company is also currently party to two interest rate swap contracts to hedge the variable rate cash flows associated with the

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

LIBOR-based interest payments on the Term Loan. The weighted average annual rate on the Term Loan was 2.54% (1.44% + 1.10% spread) at ~~September 30, 2021.~~March 31, 2022. The terms of the Term Loan include certain restrictions and covenants consistent with those of the unsecured revolving credit facility discussed above. As of ~~September 30, 2021,~~March 31, 2022, the Company was in compliance with all such covenants.

In ~~May~~ 2021, the Company modified the Term Loan to include LIBOR transition language and to conform the covenants and various administrative items from the agreement to those in the Company’s Credit Facility which was also amended in ~~May~~ 2021.

8.6. Stockholders’ Equity

~~In May 2021, the~~The Company ~~renewed its~~has 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 $500.0 million that were not sold under the Company's previous ATM equity program that expired in May 2021. 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.

~~The following table presents activity under the Company’s ATM Equity Program during the three and nine months ended September 30,~~ 2021. There was no activity under the Company’s ATM Equity Program during the three ~~and nine~~ months ended ~~September 30, 2020.~~

Three Months Ended September 30, 2021 Nine Months Ended
September 30, 2021
Total net proceeds $ 20,928 $ 58,927
Commissions paid to sales agents $ 270 $ 747
Weighted average price per share $ 49.52 $ 49.05
Shares of common stock sold 428,000 1,216,600

March 31, 2022 and 2021. As of ~~September 30, 2021,~~March 31, 2022, the Company had approximately $440.3 million available for issuance under its ATM Equity Program. Pursuant to the Merger Agreement, the Company is restricted from issuing common stock under the ATM Equity Program.

The Company has a Non-Qualified Deferred Compensation Plan (“Deferred Compensation Plan”) for the benefit of certain employees and members of the Company’s Board of Directors in which vested share awards (see Note ~~10)~~8), 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 ~~nine~~three months ended ~~September 30, 2021, 28,899~~March 31, 2022, 7,311 and ~~10,113~~9,788 shares of vested stock were deposited into and withdrawn from the Deferred Compensation Plan, respectively. As of ~~September 30, 2021, 110,532~~March 31, 2022, 90,223 shares of ACC’s common stock were held in the Deferred Compensation Plan.

~~AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~Pursuant to the Merger Agreement, shares held in the Deferred Compensation Plan will, as of immediately before the effective time of the Merger Transactions, become vested and no longer subject to restriction, and all shares will, at the merger effective time, be adjusted and converted into a right of the holder to have allocated to the holder’s account under the Deferred Compensation Plan an amount denominated in cash equal to the product of (1) the number of shares of common stock allocated to such account as of the merger effective time and (2) the Merger Consideration, and will no longer represent a right to receive a number of shares of common stock or cash equal to or based on the value of a number of shares of common stock.

9.7. Noncontrolling Interests

Noncontrolling interests - partially owned properties: As of ~~September 30, 2021,~~March 31, 2022, the Company consolidates 56 joint ventures that own and operate 1013 owned off-campus properties and 1 land parcel. The portion of net assets attributable to the third-party partners in these arrangements is classified as “noncontrolling interests - partially owned properties” within equity on the accompanying consolidated balance sheets.

Redeemable noncontrolling interests - OP Units: Included in redeemable noncontrolling interests on the accompanying consolidated balance sheets are OP Units for which ACCOP is required, either by contract or securities law, to deliver registered shares of ACC’s common stock to the exchanging OP unitholder, or for which ACCOP has the intent or history of exchanging such units for cash. The units include Series A Preferred Units (“Preferred OP Units”) and 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 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.

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Below is a table summarizing the activity of redeemable noncontrolling interests for the three months ended March 31, ~~2021~~2022 and ~~2020, June 30, 2021 and 2020, and September 30, 2021 and 2020:~~2021:


Balance, December 31, 2021	$	31,858
Net income	146
Distributions	(234)




Adjustments to reflect redeemable noncontrolling interests at fair value	(577)
Balance, March 31, 2022	$	31,193


Balance, December 31, 2020	$	24,567
Net income	67
Distributions	(234)




Adjustments to reflect redeemable noncontrolling interests at fair value	354
Balance, March 31, 2021	$	24,754
~~Net loss~~	~~(17)~~
~~Distributions~~	~~(234)~~



~~Adjustments to reflect redeemable noncontrolling interests at fair value~~	~~2,031~~
~~Balance, June 30, 2021~~	$	~~26,534~~
~~Net loss~~	~~(24)~~
~~Distributions~~	~~(235)~~





~~Adjustments to reflect redeemable noncontrolling interests at fair value~~	~~1,130~~
~~Balance, September 30, 2021~~	$	~~27,405~~


~~Balance, December 31, 2019~~	$	~~104,381~~
~~Net income~~	~~311~~
~~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~~
~~Net loss~~	~~(32)~~
~~Distributions~~	~~(234)~~



~~Adjustments to reflect redeemable noncontrolling interests at fair value~~	~~3,410~~
~~Balance, June 30, 2020~~	$	~~20,912~~
~~Net loss~~	~~(52)~~
~~Distributions~~	~~(235)~~




~~Adjustments to reflect redeemable noncontrolling interests at fair value~~	~~264~~
~~Balance, September 30, 2020~~	$
	~~20,889~~

~~AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~Pursuant to the Merger Agreement, at the effective time of the Partnership Merger, each Common OP Unit and each Preferred OP Unit, or fraction thereof, issued and outstanding as of immediately prior to such time (other than common partnership units held by the Company or any wholly owned subsidiary of the Company) will be automatically cancelled and converted into the right to receive an amount in cash equal to the Merger Consideration, without interest and less any applicable withholding taxes.

~~10.~~8. Incentive Award Plan

The Company has an Incentive Award Plan (the “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 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 Plan, subject to certain adjustments for changes in the Company’s capital structure, as defined in the Plan. Pursuant to the Merger Agreement, the Company is restricted from issuing RSAs, RSUs, and PIUs, subject to certain conditions.

Restricted Stock Awards

A summary of RSAs as of ~~September 30, 2021~~March 31, 2022 and activity during the ~~nine~~three months then ended is presented below:


			Number of RSAs
Nonvested balance as of December 31, ~~2020~~2021			~~1,092,596~~1,111,098
Granted			~~468,771~~433,128
Vested (1)			~~(415,228)~~(338,737)
Forfeited			~~(22,557)~~(12,952)
Nonvested balance as of ~~September 30, 2021~~March 31, 2022			~~1,123,582~~1,192,537

(1) Includes ~~140,762~~112,234 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 ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was approximately ~~$4.7~~$4.3 million and ~~$3.4~~$4.7 million, ~~respectively, and $14.8 million and $10.9 million for the nine months ended September 30, 2021 and 2020,~~ respectively.

~~Restricted Stock Units~~

~~Upon initial appointment~~Pursuant to the ~~Board of Directors and reelection~~Merger Agreement, immediately prior to the ~~Board of Directors at each annual stockholders’ meeting, each independent member~~effective time of the ~~Board of Directors is granted RSUs. On~~Merger Consideration, each outstanding unvested RSA, other than each outstanding equity-based award credited to a participant’s stock account under the ~~settlement date,~~Deferred Compensation Plan, and each outstanding unvested equity-based award with respect to which a valid deferral election under the ~~Company~~Deferred Compensation Plan has been made, will ~~deliver to the recipients a number of~~automatically become fully vested and all restrictions and reacquisition rights thereon will lapse, and thereafter all shares of common stock or cash, as determined by the Compensation Committee of the Board of Directors, equal to the number of RSUs granted to the recipients. In addition, recipients of RSUs are entitled to dividend equivalents equal to the cash distributions paid by the Company on one share of common stock for each RSU issued, payable currently, or on the settlement date, as determined by the Compensation Committee of the Board of Directors.

Upon reelection to the Board of Directors in April 2021, all members of the Company’s Board of Directors were granted RSUs in accordance with the Plan. These RSUs were valued at $170,000 for the Chair of the Board of Directors and at $122,500represented thereby will be considered outstanding for all ~~other members. The number of RSUs granted was determined based on~~purposes under the ~~fair market value of~~Merger Agreement and will have the ~~Company’s stock on~~right to receive the date of grant, as defined in the Plan. All awards vested and settled immediately on the date of grant, and the Company delivered shares of common stock, as determined by the Compensation Committee of the Board of Directors. A compensation charge of approximately $1.2 million was recorded during the nine months ended September 30, 2021 related to these awards.

In January 2021, the Company appointed 3 new members to the Board of Directors who were each granted RSUs valued at $122,500. A compensation charge of approximately $0.4 million was recorded related to these awards.

~~A summary of RSUs as of September 30, 2021 and activity during the nine months then ended is presented below:~~


			~~Number of RSUs~~
~~Outstanding as of December 31, 2020~~			—
~~Granted~~			~~34,626~~
~~Settled in common shares~~			~~(33,514)~~
~~Settled in cash~~			~~(1,112)~~
~~Outstanding as of September 30, 2021~~			—

Merger Consideration, less any applicable withholding taxes.

1613

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

~~11.~~9. 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 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. These agreements contain provisions such that if the Company defaults on any of its indebtedness, regardless of whether the repayment of the indebtedness has been accelerated by the lender or not, then the Company could also be declared in default on its derivative obligations. As of ~~September 30, 2021,~~March 31, 2022, the Company was not in default on any of its indebtedness or derivative instruments. Pursuant to the Merger Agreement, the Company is restricted from entering into new or amended indebtedness or derivative instruments.

The following table summarizes the Company’s outstanding interest rate swap contracts as of ~~September 30, 2021,~~March 31, 2022, all of which have been designated as cash flow hedges and qualify for hedge accounting:


Hedged Debt Instrument	Hedged Debt Instrument	Effective Date	Maturity Date	Pay Fixed Rate	Receive Floating Rate Index	Current Notional Amount		Fair Value		Hedged Debt Instrument	Effective Date	Maturity Date	Pay Fixed Rate	Receive Floating Rate Index	Current Notional Amount		Fair Value
Park Point mortgage loan	Park Point mortgage loan	Feb 1, 2019	Jan 16, 2024	2.7475%	LIBOR - 1 month	$	70,000	$	(3,775)	Park Point mortgage loan	Feb 1, 2019	Jan 16, 2024	2.7475%	LIBOR - 1 month	$	69,926	$	(551)
College Park mortgage loan	College Park mortgage loan	Oct 16, 2019	Oct 16, 2022	1.2570%	LIBOR - 1 month	37,500		(445)		College Park mortgage loan	Oct 16, 2019	Oct 16, 2022	1.2570%	LIBOR - 1 month	37,500		(1)
Unsecured term loan	Unsecured term loan	Nov 4, 2019	Jun 27, 2022	1.4685%	LIBOR - 1 month	100,000		(1,017)		Unsecured term loan	Nov 4, 2019	Jun 27, 2022	1.4685%	LIBOR - 1 month	100,000		(170)
Unsecured term loan	Unsecured term loan	Dec 2, 2019	Jun 27, 2022	1.4203%	LIBOR - 1 month	100,000		(981)		Unsecured term loan	Dec 2, 2019	Jun 27, 2022	1.4203%	LIBOR - 1 month	100,000		(158)
Cullen Oaks mortgage loan	Cullen Oaks mortgage loan	Feb 16, 2021	Feb 15, 2028	0.7850%	LIBOR - 1 month	11,423		130		Cullen Oaks mortgage loan	Feb 16, 2021	Feb 15, 2028	0.7850%	LIBOR - 1 month	11,024		729
Cullen Oaks mortgage loan	Cullen Oaks mortgage loan	Feb 16, 2021	Feb 15, 2028	0.7850%	LIBOR - 1 month	11,540		131		Cullen Oaks mortgage loan	Feb 16, 2021	Feb 15, 2028	0.7850%	LIBOR - 1 month	11,138		737
					Total	$	330,463	$	(5,957)					Total	$	329,588	$	586

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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:

Asset Derivatives

Liability Derivatives

Asset Derivatives

Liability Derivatives

Balance Sheet Location

Fair Value as of

Balance Sheet Location

Fair Value as of

Balance Sheet Location

Fair Value as of

Balance Sheet Location

Fair Value as of

Description

9/30/2021

12/31/2020

9/30/2021

12/31/2020

Description

3/31/2022

12/31/2021

3/31/2022

12/31/2021

Interest rate swap contracts

Other assets

261

—

Other liabilities

6,218

10,211

Interest rate swap contracts

Other assets

1,466

464

Other liabilities

880

4,169

1714

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The table below presents the effect of the Company’s derivative financial instruments on the accompanying consolidated statements of comprehensive income for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
Description	Description	2021		2020		2021		2020		Description		2022		2021
Change in fair value of derivatives and other recognized in other comprehensive income ("OCI")	Change in fair value of derivatives and other recognized in other comprehensive income ("OCI")	$	(82)	$	68	$	330	$	(11,439)	Change in fair value of derivatives and other recognized in other comprehensive income ("OCI")		$	3,054	$	786
Swap interest accruals reclassified to interest expense	Swap interest accruals reclassified to interest expense	1,323		1,351		3,924		2,484		Swap interest accruals reclassified to interest expense		1,237		1,306

Amortization of interest rate swap terminations (1)	Amortization of interest rate swap terminations (1)	431		432		1,287		1,287		Amortization of interest rate swap terminations (1)		426		426
Total change in OCI due to derivative financial instruments	Total change in OCI due to derivative financial instruments	$	1,672	$	1,851	$	5,541	$	(7,668)	Total change in OCI due to derivative financial instruments		$	4,717	$	2,518

Interest expense presented in the consolidated statements of comprehensive income in which the effects of cash flow hedges are recorded	Interest expense presented in the consolidated statements of comprehensive income in which the effects of cash flow hedges are recorded	$	29,271	$	29,056	$	87,488	$	84,007	Interest expense presented in the consolidated statements of comprehensive income in which the effects of cash flow hedges are recorded		$	30,061	$	28,977

(1)Represents amortization from OCI into interest expense.

As of ~~September 30, 2021,~~March 31, 2022, the Company estimates that ~~$6.2~~$2.5 million will be reclassified from OCI to interest expense over the next twelve months.

~~12.~~10. 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, ~~2020.~~2021.

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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. 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.


		Fair Value Measurements as of																Fair Value Measurements as of
		September 30, 2021								December 31, 2020									March 31, 2022								December 31, 2021
			Level 2			Level 3		Total		Level 2			Level 3		Total					Level 2			Level 3		Total		Level 2			Level 3		Total
Assets	Assets																Assets
Derivative financial instruments	Derivative financial instruments		$	261	(1)	$	—	$	261	$	—		$	—	$	—	Derivative financial instruments			$	1,466	(1)	$	—	$	1,466	$	464	(1)	$	—	$	464
Liabilities	Liabilities																Liabilities
Derivative financial instruments	Derivative financial instruments		$	6,218	(1)	$	—	$	6,218	$	10,211	(1)	$	—	$	10,211	Derivative financial instruments			$	880	(1)	$	—	$	880	$	4,169	(1)	$	—	$	4,169
Mezzanine	Mezzanine																Mezzanine
Redeemable noncontrolling interests	Redeemable noncontrolling interests		$	24,405	(2)	$	3,000	$	27,405	$	21,567	(2)	$	3,000	$	24,567	Redeemable noncontrolling interests			$	28,193	(2)	$	3,000	$	31,193	$	28,858	(2)	$	3,000	$	31,858

(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 9.7.

Financial Instruments Not Carried at Fair Value

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the carrying values for the following instruments represent fair values due to the short maturity of the instruments: Cash and cash equivalents, Restricted cash, Student contracts receivable, certain items in Other assets (including receivables, deposits, and prepaid expenses), Accounts payable, Accrued expenses, and Other liabilities.

As of March 31, 2022 and December 31, 2021, the carrying value for the Company’s one variable rate mortgage loan payable represented fair value due the variable interest rate feature of the instrument.

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

As of September 30, 2021 and December 31, 2020, the carrying values for the following instruments represent fair values due the variable interest rate feature of the instruments: Unsecured revolving credit facility and one variable rate mortgage loan payable.

The table below contains the estimated fair value and related carrying amounts for the Company’s other financial instruments as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. There were no Level 1 or Level 3 measurements for the periods presented.


		September 30, 2021						December 31, 2020								March 31, 2022							December 31, 2021
		Carrying Amount			Estimated Fair Value			Carrying Amount			Estimated Fair Value					Carrying Amount		Estimated Fair Value					Carrying Amount		Estimated Fair Value
				Level 2					Level 2						Carrying Amount			Level 2		Carrying Amount					Level 2

Liabilities (1)	Liabilities (1)																	Liabilities (1)
Unsecured notes	Unsecured notes	$	2,378,380		$	2,556,755	(2)		$	2,375,603		$	2,609,373	(2)			Unsecured notes	$	2,774,979			$	2,728,846	(2)				$	2,773,855			$	2,917,121	(2)
Mortgage loans payable (fixed rate) (3)	Mortgage loans payable (fixed rate) (3)	$	546,541		$	560,700	(4)		$	625,783		$	656,648	(4)			Mortgage loans payable (fixed rate) (3)	$	519,502	$	511,325		(4)			$	520,316			$	535,401		(4)
Bonds payable	Bonds payable	$	14,584		$	15,895	(5)		$	18,960		$	20,720	(5)			Bonds payable	$	14,607	$	15,126		(5)			$	14,597			$	15,703		(5)
Unsecured term loan (fixed rate)	Unsecured term loan (fixed rate)	$	199,736		$	201,754	(6)		$	199,473		$	203,348	(6)			Unsecured term loan (fixed rate)	$	199,912	$	200,357		(6)			$	199,824			$	201,042		(6)

(1)Carrying amounts disclosed include any applicable net unamortized OID, net unamortized deferred financing costs, and net unamortized debt premiums and discounts (see Note 7)5).

(2)Valued using interest rate and spread assumptions that reflect current creditworthiness and market conditions available for the issuance of unsecured notes with similar terms and remaining maturities.

(3)Does not include 1 variable rate mortgage loan with a principal balance of ~~$1.2~~$0.6 million and $0.9 million as of ~~September 30, 2021~~March 31, 2022 and ~~$2.1 million as of~~ December 31, ~~2020,~~2021, respectively.

(4)Valued using the present value of the cash flows at current market interest rates through maturity that primarily fall within the Level 2 category.

(5)Valued using quoted prices in markets that are not active due to the unique characteristics of these financial instruments.

(6)The Company is party to 2 interest rate swap contracts to hedge the variable rate cash flows associated with the LIBOR-based interest payments on the Term Loan (see Note 7)5). Valued using the present value of the cash flows at interpolated 1-month LIBOR swap rates through maturity that primarily fall within the Level 2 category.

~~13.~~11. Commitments and Contingencies

Commitments

Construction Contracts: As of ~~September 30, 2021,~~March 31, 2022, the Company estimates additional costs to complete 1 owned development project under construction to be approximately ~~$48.9~~$27.2 million.

Charitable Donation: In connection with the ACC / HS Joint Venture Transaction in December 2021, the Company committed to donate $5.0 million to Arizona State University for scholarships, programs that support student success, and sustainability. As of March 31, 2022, $2.5 million of the commitment had been paid. The remaining $2.5 million will be recorded upon the closing of the second phase of the transaction which is expected to close in late 2022 or early 2023.

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 order to mitigate risk due to change orders, all final development budgets also include a contingency line item. 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 was approximately ~~$4.3~~$24.4 million as of ~~September 30, 2021.~~March 31, 2022. As of ~~September 30, 2021,~~March 31, 2022, management does not anticipate any material deviations from schedule or budget related to third-party development projects currently in progress.

1916

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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. As of ~~September 30, 2021,~~March 31, 2022, the Company has completed construction on 56 full phases and 1 partial phase of the 10-phase project within the targeted delivery timeline. 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 remaining beds are not delivered on their respective delivery date is approximately $0.1 million per day. The Company anticipates completing all remaining phases within the targeted delivery timeline.

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 3 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 February 2021, the Company provided notice in accordance with the purchase and sale agreement and elected to extend the scheduled close date to June 1, 2022. In connection with the execution of the agreement and the closing extension, the Company has made earnest money deposits totaling $2.4 million which are included in restricted cash on the accompanying consolidated balance sheets. 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, a commission calculated as a percentage of the sales price, and 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 ~~September 30, 2021,~~March 31, 2022, the Company has deferred approximately ~~$27.5~~$24.6 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.

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.

~~AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

~~Litigation Settlement:~~ In June 2021, the Company entered into a Joint Stipulation and Settlement Agreement to end all outstanding litigation brought by an alleged class of certain current and former California-based employees alleging violations of statutory labor laws and regulations by the Company. The agreement is subject to final court approval. The Company agreed to pay an aggregate of $2.0 million to the plaintiffs, plus a portion of payroll taxes on the wage portion on the plaintiffs’ payment, in consideration of the settlement when the settlement agreement is formally approved by the court. The parties agreed the settlement was intended solely as a compromise of disputed claims and was not to be understood as a concession or determination that the Company has engaged in any wrongdoing. During the quarter ended March 31, 2021, when management and legal counsel deemed it probable that a material loss exposure existed in relation to these matters, the Company recorded litigation expense of $1.2 million based on legal counsel’s estimate of potential exposure. During the three months ended June 30, 2021, the Company recorded an additional $0.8 million in litigation expense to reflect the final amount owed under the settlement agreement, which is reflected in general and administrative expenses in the accompanying consolidated statements of operations.

2117

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

~~14.~~12. Segments

The Company defines business segments by their distinct customer base and service provided. The Company has identified 4 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.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
Owned Properties	Owned Properties									Owned Properties
Rental revenues and other income	Rental revenues and other income	$	219,413	$	192,332	$	637,480	$	602,631	Rental revenues and other income		$	253,048	$	218,444
Interest income	Interest income	294		115		682		347		Interest income		403		127
Total revenues from external customers	Total revenues from external customers	219,707		192,447		638,162		602,978		Total revenues from external customers		253,451		218,571
Operating expenses before depreciation, amortization, and ground/facility lease expense	Operating expenses before depreciation, amortization, and ground/facility lease expense	(117,176)		(106,518)		(306,870)		(284,741)		Operating expenses before depreciation, amortization, and ground/facility lease expense		(103,608)		(93,991)
Ground/facility lease expense	Ground/facility lease expense	(4,541)		(2,553)		(10,511)		(8,401)		Ground/facility lease expense		(5,705)		(3,069)
Interest expense, net (1)	Interest expense, net (1)	(3,113)		(3,594)		(9,242)		(9,697)		Interest expense, net (1)		(3,112)		(2,960)
Operating income before depreciation and amortization	Operating income before depreciation and amortization	$	94,877	$	79,782	$	311,539	$	300,139	Operating income before depreciation and amortization		$	141,026	$	118,551
Depreciation and amortization	Depreciation and amortization	$	(66,777)	$	(64,628)	$	(198,099)	$	(191,382)	Depreciation and amortization		$	(67,875)	$	(65,326)
Capital expenditures	Capital expenditures	$	60,411	$	118,270	$	190,419	$	300,102	Capital expenditures		$	30,916	$	66,894

On-Campus Participating Properties	On-Campus Participating Properties									On-Campus Participating Properties
Rental revenues and other income	Rental revenues and other income	$	6,067	$	5,386	$	20,246	$	20,196	Rental revenues and other income		$	10,694	$	8,958
Interest income	Interest income	4		2		12		28		Interest income		—		5
Total revenues from external customers	Total revenues from external customers	6,071		5,388		20,258		20,224		Total revenues from external customers		10,694		8,963
Operating expenses before depreciation, amortization, and ground/facility lease expense	Operating expenses before depreciation, amortization, and ground/facility lease expense	(4,120)		(3,783)		(10,689)		(10,357)		Operating expenses before depreciation, amortization, and ground/facility lease expense		(4,001)		(3,290)
Ground/facility lease expense	Ground/facility lease expense	(961)		(518)		(1,634)		(1,632)		Ground/facility lease expense		(433)		(139)
Interest expense, net (1)	Interest expense, net (1)	(867)		(854)		(2,678)		(3,169)		Interest expense, net (1)		(777)		(918)
Operating income before depreciation and amortization	Operating income before depreciation and amortization	$	123	$	233	$	5,257	$	5,066	Operating income before depreciation and amortization		$	5,483	$	4,616
Depreciation and amortization	Depreciation and amortization	$	(1,969)	$	(1,883)	$	(6,050)	$	(5,965)	Depreciation and amortization		$	(1,993)	$	(2,042)
Capital expenditures	Capital expenditures	$	1,797	$	765	$	2,582	$	1,931	Capital expenditures		$	243	$	206

Development Services	Development Services									Development Services
Development and construction management fees	Development and construction management fees	$	938	$	2,186	$	3,763	$	5,531	Development and construction management fees		$	6,882	$	1,959
Operating expenses	Operating expenses	(2,420)		(2,094)		(6,815)		(6,699)		Operating expenses		(2,477)		(2,235)
Operating (loss) income before depreciation and amortization		$	(1,482)	$	92	$	(3,052)	$	(1,168)
Operating income (loss) before depreciation and amortization										Operating income (loss) before depreciation and amortization		$	4,405	$	(276)

Property Management Services	Property Management Services									Property Management Services
Property management fees from external customers	Property management fees from external customers	$	2,459	$	2,771	$	8,631	$	9,268	Property management fees from external customers		$	3,122	$	3,361
Operating expenses	Operating expenses	(2,570)		(2,967)		(8,562)		(9,546)		Operating expenses		(2,677)		(3,152)
Operating (loss) income before depreciation and amortization		$	(111)	$	(196)	$	69	$	(278)
Operating income before depreciation and amortization										Operating income before depreciation and amortization		$	445	$	209

Reconciliations	Reconciliations									Reconciliations
Total segment revenues and other income	Total segment revenues and other income	$	229,175	$	202,792	$	670,814	$	638,001	Total segment revenues and other income		$	274,149	$	232,854
Unallocated interest income earned on investments and corporate cash	Unallocated interest income earned on investments and corporate cash	89		738		265		2,201		Unallocated interest income earned on investments and corporate cash		157		88
Total consolidated revenues, including interest income	Total consolidated revenues, including interest income	$	229,264	$	203,530	$	671,079	$	640,202	Total consolidated revenues, including interest income		$	274,306	$	232,942

Segment income before depreciation and amortization	Segment income before depreciation and amortization	$	93,407	$	79,911	$	313,813	$	303,759	Segment income before depreciation and amortization		$	151,359	$	123,100
Segment depreciation and amortization	Segment depreciation and amortization	(68,746)		(66,511)		(204,149)		(197,347)		Segment depreciation and amortization		(69,868)		(67,368)
Corporate depreciation	Corporate depreciation	(699)		(858)		(2,154)		(2,632)		Corporate depreciation		(684)		(749)
Net unallocated expenses relating to corporate interest and overhead	Net unallocated expenses relating to corporate interest and overhead	(35,511)		(32,508)		(110,866)		(97,503)		Net unallocated expenses relating to corporate interest and overhead		(36,313)		(36,139)
Gain from disposition of real estate		—		—		—		48,525
Other nonoperating income		—		264		157		264

Other operating and nonoperating income (expense)										Other operating and nonoperating income (expense)		180		(1,200)
Amortization of deferred financing costs	Amortization of deferred financing costs	(1,470)		(1,349)		(4,207)		(3,891)		Amortization of deferred financing costs		(1,614)		(1,319)

Loss from extinguishment of debt		—		—		—		(4,827)

Income tax provision	Income tax provision	(340)		(373)		(1,021)		(1,133)		Income tax provision		(340)		(340)
Net (loss) income		$	(13,359)	$	(21,424)	$	(8,427)	$	45,215
Net income										Net income		$	42,720	$	15,985

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

2218

AMERICAN CAMPUS COMMUNITIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

~~15.~~13. Subsequent Events

~~Distributions: On November 3, 2021,~~As discussed in Note 1, on April 18, 2022, the ~~Board~~Company and the Operating Partnership entered into an agreement and plan of ~~Directors~~merger (the “Merger Agreement”) with Abacus Parent LLC (“Parent”), Abacus Merger Sub I LLC (“Merger Sub I”), and Abacus Merger Sub II LLC (“Merger Sub II”). Parent, Merger Sub I, and Merger Sub II are affiliates of Blackstone Core+ perpetual capital vehicles, primarily comprised of Blackstone Real Estate Income Trust, Inc. and Blackstone Property Partners. Pursuant to the Merger Agreement the outstanding shares of common stock of the Company ~~declared a distribution~~will be acquired for Merger Consideration of $65.47 per share in an all-cash transaction. During the term of ~~$0.47, which will be paid on November 26, 2021~~the Merger Agreement, the Company may not pay dividends except as necessary to ~~all common stockholders of record~~preserve its tax status as ~~of November 15, 2021. At~~a REIT, and any such dividends would result in an offsetting decrease to 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.Merger Consideration.

~~October 2021 Bond Offering:~~ In October 2021, the Operating Partnership closed a $400 million offering of senior unsecured notes under its existing shelf registration. These seven-year notes were issued at 99.928% of par value with a coupon of 2.250% and are fully and unconditionally guaranteed by the Company. Interest on the notes is payable semi-annually on January 15 and July 15, with the first payment due and payable on January 15, 2022. The notes will mature on January 15, 2029. Net proceeds from the sale of the senior unsecured notes totaled approximately $394.4 million. The Company used the proceeds to repay borrowings under its Credit Facility.

2319

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, risks associated with the Merger, including our ability to consummate the Merger Transactions on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary stockholder approvals and satisfaction of other closing conditions to consummate the Merger Transactions and the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement, and the other factors discussed in the “Risk Factors” contained in Item 1A of our Form 10-K for the year ended December 31, ~~2020.~~2021 and Item 1A of this Quarterly Report and subsequent reports we file with the SEC.

As previously announced, on April 18, 2022, the Company and the Operating Partnership entered into an agreement and plan of merger (the “Merger Agreement”) with Abacus Parent LLC (“Parent”), Abacus Merger Sub I LLC (“Merger Sub I”), and Abacus Merger Sub II LLC (“Merger Sub II”). Parent, Merger Sub I, and Merger Sub II are affiliates of Blackstone Core+ perpetual capital vehicles, primarily comprised of Blackstone Real Estate Income Trust, Inc. and Blackstone Property Partners. Pursuant to the Merger Agreement Merger Sub II will merge with and into the Operating Partnership (the “Partnership Merger”), with the Operating Partnership being the surviving entity, and immediately following the consummation of the Partnership Merger, the Company shall merge with and into Merger Sub I (the “Company Merger”), with Merger Sub I being the surviving entity. Pursuant to the Merger Agreement the outstanding shares of common stock of the Company will be acquired for $65.47 per share (the “Merger Consideration”) in an all-cash transaction. During the term of the Merger Agreement, the Company may not pay dividends except as necessary to preserve its tax status as a REIT, and any such dividends would result in an offsetting decrease to the Merger Consideration.

The Company Merger, Partnership Merger, and the other transactions contemplated by the Merger Agreement (the “Merger Transactions”) are subject to customary closing conditions, including approval by the Company’s common stockholders. The Merger Transactions are expected to close during the third quarter of 2022. The Company can provide no assurances regarding whether the Merger Transactions will close as expected during the third quarter of 2021 or at all. The Board of Directors of the Company has unanimously approved the Merger Agreement, and has recommended approval of the merger, and the other transactions contemplated by the Merger Agreement, by the Company’s stockholders.

Our Company and Our Business

Overview

We are one of the largest owners, managers, and developers of high quality student housing properties in the United States. 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. Refer to Note 1412 in the accompanying Notes to the Consolidated Financial Statements contained in Item 1 for information about our operating segments.

We believe that the ownership and operation of student housing communities in close proximity to selected colleges and universities presents 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 high barriers to entry which are projected to experience substantial increases in enrollment and/or are under-serviced in terms of existing on and/or off-campus student housing.

Property Portfolio

Below is a summary of our property portfolio as of ~~September 30, 2021:~~March 31, 2022:


Property portfolio:	Property portfolio:	Properties	Beds	Property portfolio:	Properties	Beds
Owned operating properties	Owned operating properties			Owned operating properties
Off-campus properties	Off-campus properties	126	70,220	Off-campus properties	126	70,234
On-campus ACE (1) (2)	On-campus ACE (1) (2)	33	31,271	On-campus ACE (1) (2)	33	32,759
Subtotal – operating properties	Subtotal – operating properties	159	101,491	Subtotal – operating properties	159	102,993

Owned properties under development	Owned properties under development			Owned properties under development

On-campus ACE (3)	On-campus ACE (3)	1	5,156	On-campus ACE (3)	1	3,681
Subtotal – properties under development	Subtotal – properties under development	1	5,156	Subtotal – properties under development	1	3,681

Total owned properties	Total owned properties	160	106,647	Total owned properties	160	106,674

On-campus participating properties	On-campus participating properties	6	5,230	On-campus participating properties	6	5,230

Total owned property portfolio	Total owned property portfolio	166	111,877	Total owned property portfolio	166	111,904

Managed properties	Managed properties	36	28,840	Managed properties	36	28,443
Total property portfolio	Total property portfolio	202	140,717	Total property portfolio	202	140,347

(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 completed phases of the Walt Disney World® Resort project, which consists of ten phases, ~~five~~ of which six full phases and one partial phase were delivered as of ~~September 30, 2021,~~March 31, 2022, with the remainder anticipated to be delivered in 2022 and 2023.

(3)The Walt Disney World® Resort project consists of one property with multiple phases delivered through 2023; as such, only the beds for remaining phases to be completed are included in the beds for owned properties under development. Beds for any completed phases of this project are included in owned operating properties beds.

Leasing Results

Our financial results for the year ended December 31, ~~2021~~2022 are impacted by the results of our annual leasing process for the ~~2020/2021~~2021/2022 and ~~2021/2022~~2022/2023 academic years. As of September 30, 2020, the beginning of the 2020/2021 academic year, occupancy at our 2021 same store properties was 90.3% with a rental rate increase of 1.1% compared to the prior academic year, and occupancy at our total owned property portfolio (including two development properties completed in Fall 2020) was 89.9%. Our leasing results for the 2020/2021 academic year were negatively impacted by general uncertainty associated with COVID-19, with university policies affecting students’ housing decisions and preferences. However, leasing results for the 2021/2022 academic year for both our Company and the broader student housing sector improved significantly due to many universities reinstating on-campus housing policies and resuming in-person campus activities. As of September 30, 2021, the beginning of the 2021/2022 academic year, occupancy at our 2022 same store properties was 95.8% with a rental rate increase of 3.8% compared to the prior academic year.

Owned Development

The Company is in the process of constructing a ten-phase housing project under our ACE® structure with scheduled phase deliveries from 2020 to 2023 for Walt Disney World® Resort that will serve student interns participating in the highly

competitive Disney College Program (“Disney College Program” or “DCP”). As of ~~September 30, 2021,~~March 31, 2022, the Company has completed construction on ~~five~~six full phases and one partial phase of the project within the targeted delivery timeline, and the remaining phases are anticipated to be delivered in 2022 and 2023. In May 2021, Walt Disney World® Resort announced that it was recommencing the DCP in the summer of 2021 after temporarily suspending the program in 2020 due to the COVID-19 pandemic. As of ~~October 25, 2021,~~March 31, 2022, occupancy at the completed phases of the project was approximately ~~85.0%~~89.7%. Barring unforeseen future impacts related to the COVID-19 pandemic, the Company expects the project to meet its original 2022 targeted yield, with stabilization occurring in May 2023, as initially anticipated prior to the pandemic.

Recently Completed Owned Development ~~Projects~~Project

During the three months ended ~~September 30, 2021,~~March 31, 2022, the ~~final stages of construction were completed for the following phase~~phases of the Disney College Program project as summarized in the table ~~below:~~below opened for occupancy:

University/Market Served Project Location Beds Total Project Cost Construction Completed
Walt Disney World® Resort
Disney College Program Phase V (1)
Orlando, FL 1,152 $ 71,900 July 2021

~~(1)Includes the early delivery of 288 beds which were previously scheduled for delivery in January 2022 as part of Phase VI.~~

University/Market Served

Project

Location

Beds

Total Project Cost

Opened for Occupancy

Walt Disney World® Resort

Disney College Program Phase VI (1)

Orlando, FL

739

49,800

January 2022

Disney College Program Phase VII A

Orlando, FL

736

40,700

March 2022

1,475

90,500

Owned Development Project Under Construction

At ~~September 30, 2021,~~March 31, 2022, we were in process of constructing the remaining phases of the Disney College Program project as summarized in the table below:


University/Market Served	University/Market Served	Project	Location		Beds		Estimated Project Cost		Total Costs Incurred		Scheduled Completion	University/Market Served	Project	Location			Beds		Estimated Project Cost		Total Costs Incurred		Scheduled Occupancy

Walt Disney World® Resort	Walt Disney World® Resort	Disney College Program Phases VI-VIII	Orlando, FL		2,947		$	172,600	$	155,057	Jan, May & Aug 2022	Walt Disney World® Resort	Disney College Program Phases VII B-VIII	Orlando, FL			1,472		$	82,100	$	77,783	May & Aug 2022
		Disney College Program Phases IX-X	Orlando, FL		2,209		122,700		91,371		Jan & May 2023		Disney College Program Phases IX-X	Orlando, FL			2,209		122,700		99,779		Jan & May 2023
				5,156	$	295,300	$	246,428						3,681	$	204,800	$	177,562

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 ~~September 30, 2021,~~March 31, 2022, we were under contract on ~~two~~six third-party development projects that are currently under construction and whose fees total ~~$4.3~~$27.7 million. As of ~~September 30, 2021,~~March 31, 2022, fees of approximately ~~$1.2~~$12.8 million remained to be earned by the Company with respect to these projects, which have scheduled completion dates ~~in 2022.~~through 2024.

Critical Accounting Policies and Estimates

There have been no material changes to the Company’s critical accounting policies and estimates disclosed in the Company’s Form 10-K for the year ended December 31, ~~2020.~~2021. Refer to Note 2 in the accompanying Notes to Consolidated Financial statements contained in Item 1 for information regarding recently adopted accounting standards.

2622

Results of Operations

Comparison of the Three Months Ended ~~September 30,~~March 31, 2022 and March 31, 2021 ~~and September 30, 2020~~

The following table presents our results of operations for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ including the amount and percentage change in these results between the two periods.


		Three Months Ended September 30,									Three Months Ended March 31,
		2021		2020		Change ($)		Change (%)			2022		2021		Change ($)		Change (%)
Revenues	Revenues									Revenues
Owned properties	Owned properties	$	219,413	$	192,332	$	27,081	14.1	%	Owned properties	$	253,048	$	218,444	$	34,604	15.8	%
On-campus participating properties	On-campus participating properties	6,067		5,386		681		12.6	%	On-campus participating properties	10,694		8,958		1,736		19.4	%
Third-party development services	Third-party development services	938		2,186		(1,248)		(57.1)	%	Third-party development services	6,882		1,959		4,923		251.3	%
Third-party management services	Third-party management services	2,459		2,771		(312)		(11.3)	%	Third-party management services	3,122		3,361		(239)		(7.1)	%

Total revenues	Total revenues	228,877		202,675		26,202		12.9	%	Total revenues	273,746		232,722		41,024		17.6	%

Operating expenses
Operating expenses (income)										Operating expenses (income)
Owned properties	Owned properties	117,176		106,518		10,658		10.0	%	Owned properties	103,608		93,991		9,617		10.2	%
On-campus participating properties	On-campus participating properties	4,120		3,783		337		8.9	%	On-campus participating properties	4,001		3,290		711		21.6	%
Third-party development and management services	Third-party development and management services	4,990		5,061		(71)		(1.4)	%	Third-party development and management services	5,154		5,387		(233)		(4.3)	%
General and administrative	General and administrative	10,309		8,638		1,671		19.3	%	General and administrative	10,298		11,128		(830)		(7.5)	%
Depreciation and amortization	Depreciation and amortization	69,445		67,369		2,076		3.1	%	Depreciation and amortization	70,552		68,117		2,435		3.6	%
Ground/facility leases	Ground/facility leases	5,502		3,071		2,431		79.2	%	Ground/facility leases	6,138		3,208		2,930		91.3	%

Other operating expenses										Other operating expenses	—		1,200		(1,200)		(100.0)	%

Total operating expenses	Total operating expenses	211,542		194,440		17,102		8.8	%	Total operating expenses	199,751		186,321		13,430		7.2	%

Operating income	Operating income	17,335		8,235		9,100		110.5	%	Operating income	73,995		46,401		27,594		59.5	%

Nonoperating income (expenses)	Nonoperating income (expenses)									Nonoperating income (expenses)
Interest income	Interest income	387		855		(468)		(54.7)	%	Interest income	560		220		340		154.5	%
Interest expense	Interest expense	(29,271)		(29,056)		(215)		0.7	%	Interest expense	(30,061)		(28,977)		(1,084)		3.7	%
Amortization of deferred financing costs	Amortization of deferred financing costs	(1,470)		(1,349)		(121)		9.0	%	Amortization of deferred financing costs	(1,614)		(1,319)		(295)		22.4	%

Other nonoperating income	Other nonoperating income	—		264		(264)		(100.0)	%	Other nonoperating income	180		—		180		100.0	%
Total nonoperating expenses	Total nonoperating expenses	(30,354)		(29,286)		(1,068)		3.6	%	Total nonoperating expenses	(30,935)		(30,076)		(859)		2.9	%

Loss before income taxes		(13,019)		(21,051)		8,032		(38.2)	%
Income before income taxes										Income before income taxes	43,060		16,325		26,735		163.8	%
Income tax provision	Income tax provision	(340)		(373)		33		(8.8)	%	Income tax provision	(340)		(340)		—		—	%
Net income										Net income	42,720		15,985		26,735		167.3	%

Net loss		(13,359)		(21,424)		8,065		(37.6)	%

Net loss attributable to noncontrolling interests		1,920		1,909		11		0.6	%
Net loss attributable to ACC, Inc. and Subsidiaries common stockholders		$	(11,439)	$	(19,515)	$	8,076	(41.4)	%
Net income attributable to noncontrolling interests										Net income attributable to noncontrolling interests	(3,537)		(367)		(3,170)		863.8	%
Net income attributable to ACC, Inc. and Subsidiaries common stockholders										Net income attributable to ACC, Inc. and Subsidiaries common stockholders	$	39,183	$	15,618	$	23,565	150.9	%

Same Store and New Property Operations

We define our same store property portfolio as owned properties that are owned and operating for both of the full years ended December 31, ~~2021~~2022 and December 31, ~~2020,~~2021, which are not conducting or planning to conduct substantial development, redevelopment, or repositioning activities, and are not classified as held for sale as of ~~September 30, 2021.~~March 31, 2022. 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.

2723

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 (1)				Sold Properties/Other (2)				Total - All Properties					Same Store Properties				New Properties (1)				Other (2)				Total - All Properties
		Three Months Ended September 30,				Three Months Ended September 30,				Three Months Ended September 30,				Three Months Ended September 30,					Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020		2021		2020		2021		2020		2021		2020			2022		2021		2022		2021		2022		2021		2022		2021
Number of properties (3)	Number of properties (3)	157		157		2		2		—		—		159		159		Number of properties (3)	159		159		—		—		—		—		159		159
Number of beds (3)	Number of beds (3)	95,351		95,351		6,140		2,483		—		—		101,491		97,834		Number of beds (3)	96,234		96,234		6,759		2,611		—		—		102,993		98,845

Revenues	Revenues	$	207,371	$	191,149	$	12,042	$	1,183	$	—	$	—	$	219,413	$	192,332	Revenues	$	239,639	$	217,789	$	13,409	$	655	$	—	$	—	$	253,048	$	218,444
Operating expenses	Operating expenses	$	111,618	$	104,487	$	5,493	$	1,849	$	65	$	182	$	117,176	$	106,518	Operating expenses	$	96,369	$	92,403	$	7,148	$	1,517	$	91	$	71	$	103,608	$	93,991

(1)Property count does not include the Walt Disney World® Resort project which is counted as one property under development and consists of ten phases, ~~five~~ of which six full phases and one partial phase have been completed, with the remaining phases anticipated to be delivered in 2022 and 2023. ~~New properties number of beds~~Bed count includes the beds for the completed phases of this project.

(2)~~Does not include the allocation of payroll and other administrative costs related to corporate management and oversight.~~ Includes professional fees related to the operation of consolidated joint ventures that are included in owned properties operating expenses in the consolidated statements of comprehensive income.

(3)Does not include properties that are under construction or undergoing redevelopment.

Same Store Properties: The increase in ~~revenues from our~~ same store ~~properties~~revenue was primarily due to an increase in ~~rental rates as well as an increase in~~ average occupancy ~~during the periods being compared,~~ from ~~84.6%~~89.9% for the three months ended ~~September 30, 2020~~March 31, 2021, to ~~86.4%~~95.6% for the three months ended ~~September 30, 2021. The~~March 31, 2022 coupled with an increase in ~~revenues is also driven by COVID-19 related concessions provided in 2020 including rent forgiven as a part of our Resident Hardship Program, rent refunds provided~~average rental rates due to ~~tenants at our on-campus ACE properties and certain off-campus residence halls, and waived fees. Future revenues will be dependent on our ability to maintain our current leases in effect~~improved leasing results for the 2021/2022 academic ~~year.~~

year compared to the prior academic year, and an increase in other income. The increase in operating expenses for our same store properties during the three months ended March 31, 2022 was ~~primarily due to~~driven by the normalization of ~~the Company’s~~ operations, ~~in 2021~~ as ~~compared to~~ the prior year ~~quarter, which was significantly~~financial results were impacted by COVID-19, ~~related shelter-in-place orders. We anticipate that operating expenses for our same store property portfolio for 2021 will increase as compared to 2020 as a result of the reason discussed above.~~and other inflationary factors.

New Property Operations: Our new properties for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 include ~~development properties that completed construction~~six full phases and ~~opened for operations in Fall 2020, as well as five phases~~one partial phase at our Disney College Program project which ~~completed construction in 2020 and 2021.~~have opened for occupancy. These ~~properties~~phases are summarized in the table below:

Property

Location

University / Market Served

Beds

~~Opening Date / Construction Completed~~Opened for Occupancy

Disney College Program Phase I (ACE)

Orlando, FL

Walt Disney World® Resort

778

May 2020

~~Currie Hall Phase II (ACE)~~

~~Los Angeles, CA~~

~~Univ. of Southern California~~

~~272~~

~~July 2020~~

Disney College Program Phase II (ACE)

Orlando, FL

Walt Disney World® Resort

849

~~August 2020~~

~~Manzanita Square (ACE)~~

~~San Francisco, CA~~

~~San Francisco State Univ.~~

~~584~~

August 2020

Disney College Program Phase III (ACE)

Orlando, FL

Walt Disney World® Resort

984

January 2021

Disney College Program Phase IV (ACE)

Orlando, FL

Walt Disney World® Resort

1,521

May 2021

Disney College Program Phase V (ACE)

Orlando, FL

Walt Disney World® Resort

1,152

July 2021

Disney College Program Phase VI (ACE)

Orlando, FL

Walt Disney World® Resort

739

January 2022

Disney College Program Phase VII A (ACE)

Orlando, FL

Walt Disney World® Resort

736

March 2022

Total - New Properties

~~6,140~~6,759

On-Campus Participating Properties (“OCPP”) Operations

As of ~~September 30, 2021,~~March 31, 2022, we had six ~~on-campus participating properties~~OCPPs containing 5,230 beds. Revenues from ~~these properties~~our OCPPs increased by ~~$0.7~~$1.7 million, from ~~$5.4~~$9.0 million for the three months ended ~~September 30, 2020,~~March 31, 2021, to ~~$6.1~~$10.7 million for the three months ended ~~September 30, 2021.~~March 31, 2022. The increase iswas primarily due to an increase in ~~rental rates as well as an~~average occupancy from 81.3% for the three months ended March 31, 2021 to 90.6% for the three months ended March 31, 2022.

Operating expenses at our OCPPs increased by $0.7 million, from $3.3 million for the three months ended March 31, 2021, to $4.0 million for the three months ended March 31, 2022. The increase in ~~other income driven by an increase in summer camp and conference revenue and an increase in fee income. Future revenues will be dependent on~~OCPP expenses was primarily due to increased maintenance costs at our ~~ability to maintain our current leases in effect for the 2021/2022 academic year.~~OCPPs.

Third-Party Development Services Revenue

Third-party development services revenue ~~decreased~~increased by approximately ~~$1.3~~$4.9 million, from ~~$2.2~~$2.0 million during the three months ended ~~September 30, 2020,~~March 31, 2021, to ~~$0.9~~$6.9 million for the three months ended ~~September 30, 2021.~~March 31, 2022. The ~~decrease~~increase was primarily due to ~~fewer third-party development projects under~~the commencement of construction of the Family and Graduate Housing project at Massachusetts Institute of Technology which contributed $4.8 million of revenue during the three months ended ~~September 30, 2021,~~March 31, 2022, as compared to the ~~three months ended September 30, 2020. During~~commencement of construction of a second phase project at Concordia University during the ~~three months ended September 30, 2021 we had three projects under construction with an average contractual fee~~prior year period which contributed $0.8 million of ~~$3.7 million, as compared to four projects under construction~~revenue during the three months ended ~~September 30, 2020 with an average contractual fee of $4.3 million. Development~~March 31, 2021 and a $1.3 million increase in continued development services revenues ~~are dependent on our ability to successfully be awarded such~~for projects that commenced construction in 2019, 2020, and 2021. These increases were offset by a $0.4 million decrease in incentive fees earned during the ~~amount of the contractual fee~~comparable periods related to ~~the project and the timing and completion of the~~cost savings from completed 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 services revenue will increase in 2021 as compared to 2020 due to the anticipated closing and commencement of construction during the fourth quarter of 2021 of newly awarded projects and/or projects previously delayed as a result of COVID-19.projects.

General and Administrative

General and administrative expenses ~~increased~~decreased by approximately ~~$1.7~~$0.8 million, from ~~$8.6~~$11.1 million during the three months ended ~~September 30, 2020,~~March 31, 2021, to $10.3 million for the three months ended ~~September 30, 2021.~~March 31, 2022. The ~~increase~~decrease was primarily due to ~~$0.8 million of accelerated amortization of unvested~~a decrease in consulting, legal, and other costs related to stockholder engagement activities, a decrease in board compensation expense due to Board refreshment activities in January 2021, and a decrease in restricted stock ~~awards~~award amortization expense due to the acceleration of amortization related to the retirement of the ~~Company’s~~Company's President in August ~~2021 recorded~~2021. Excluding these items, general and administrative expenses increased by approximately $0.8 million during the three months ended ~~September 30, 2021. This increase was also~~March 31, 2022 as compared to the three months ended March 31, 2021 due to additional expenses incurred in connection with enhancements to our operating systems platform ~~anticipated increases in insurance expense,~~ and ~~other general inflationary factors. We anticipate general and administrative expenses will increase in 2021 as compared to 2020 for the reasons discussed above.~~

~~Depreciation and Amortization~~

Depreciation and amortization increased by approximately $2.0 million, from $67.4 million during the three months ended September 30, 2020, to $69.4 million for the three months ended September 30, 2021. The increase was primarily due to a $2.6 million increase related to the completion of construction and opening of owned development properties in 2020 and 2021, offset by a $0.5 million decrease at our same store properties due to assets that became fully amortized or depreciated over the last year. We anticipate depreciation and amortization will increase in 2021 as compared to 2020 for the reasons discussed above.

~~Ground/Facility Leases~~

Ground/facility leases expense increased by approximately $2.4 million, from $3.1 million during the three months ended September 30, 2020, to $5.5 million for the three months ended September 30, 2021. This increase was primarily due to additional expense incurred at our Disney College Program project as a result of the resumption of the Disney College Program in May 2021, as well as increased variable payments at various ACE same store properties and OCPPs due to improved operating performance at the properties, as compared to the prior year which was impacted by COVID-19. We anticipate ground/facility leases expense will increase in 2021 as compared to 2020 for the reasons discussed above.

~~Interest Expense~~

Interest expense increased by approximately $0.2 million, from $29.1 million during the three months ended September 30, 2020, to $29.3 million for the three months ended September 30, 2021. The increase was primarily due to a $1.0 million decrease in capitalized interest, which is based on the timing of completion of our owned development pipeline and a $0.6 million increase in interest expense on our revolving credit facility due to an increase in the average outstanding balance during the comparative three month periods, offset by a decrease in LIBOR rates and a decrease in the spread due to the renewal of the facility in May 2021. These decreases were partially offset by a $1.5 million decrease due to the pay-off of mortgage debt. We anticipate interest expense will increase in 2021 as compared to 2020 due to the factors noted above as well as the issuance of unsecured notes in October 2021 as discussed in Note 15 of the accompanying Notes to the Consolidated Financial Statements contained in Item 1.

~~Comparison of the Nine Months Ended September 30, 2021 and September 30, 2020~~

~~The following table presents our results of operations for the nine months ended September 30, 2021 and 2020, including the amount and percentage change in these results between the two periods.~~

Nine Months Ended
September 30,
2021 2020 Change ($) Change (%)
Revenues
Owned properties $ 637,480 $ 602,631 $ 34,849 5.8 %
On-campus participating properties 20,246 20,196 50 0.2 %
Third-party development services 3,763 5,531 (1,768) (32.0) %
Third-party management services 8,631 9,268 (637) (6.9) %
Total revenues 670,120 637,626 32,494 5.1 %
Operating expenses (income)
Owned properties 306,870 284,741 22,129 7.8 %
On-campus participating properties 10,689 10,357 332 3.2 %
Third-party development and management services 15,377 16,245 (868) (5.3) %
General and administrative 35,563 28,563 7,000 24.5 %
Depreciation and amortization 206,303 199,979 6,324 3.2 %
Ground/facility leases 12,145 10,033 2,112 21.1 %
Gain from disposition of real estate — (48,525) 48,525 (100.0) %
Total operating expenses 586,947 501,393 85,554 17.1 %
Operating income 83,173 136,233 (53,060) (38.9) %
Nonoperating income (expenses)
Interest income 959 2,576 (1,617) (62.8) %
Interest expense (87,488) (84,007) (3,481) 4.1 %
Amortization of deferred financing costs (4,207) (3,891) (316) 8.1 %
Loss from extinguishment of debt — (4,827) 4,827 (100.0) %
Other nonoperating income 157 264 (107) (40.5) %
Total nonoperating expenses (90,579) (89,885) (694) 0.8 %
(Loss) income before income taxes (7,406) 46,348 (53,754) (116.0) %
Income tax provision (1,021) (1,133) 112 (9.9) %
Net (loss) income (8,427) 45,215 (53,642) (118.6) %
Net loss attributable to noncontrolling interests 3,204 2,781 423 15.2 %
Net (loss) income attributable to ACC, Inc. and Subsidiaries common stockholders $ (5,223) $ 47,996 $ (53,219) (110.9) %

~~Same Store and New Property Operations~~

~~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 (1)
Sold Properties/
Other (2)
Total - All Properties
Nine Months Ended
September 30, Nine Months Ended
September 30, Nine Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020 2021 2020 2021 2020
Number of properties (3)
157 157 2 2 — 1 159 160
Number of beds (3)
95,351 95,351 6,140 2,483 — 901 101,491 98,735
Revenues $ 618,211 $ 598,461 $ 19,269 $ 1,469 $ — $ 2,701 $ 637,480 $ 602,631
Operating expenses $ 295,591 $ 280,442 $ 11,072 $ 2,999 $ 207 $ 1,300 $ 306,870 $ 284,741

~~(1)Property count does not include the~~ ~~Walt Disney World~~® Resort project which is counted as one property under development and consists of ten phases, five of which have been completed, with the remaining phases anticipated to be delivered in 2022 and 2023. New properties number of beds includes the beds for the completed phases of this project.

~~(2)~~Does not include the allocation of payroll and other administrative costs related to corporate management and oversight. Includes one property sold in 2020 and professional fees related to the operation of consolidated joint ventures that are included in owned properties operating expenses in the consolidated statements of comprehensive income.

~~(3)Does not include properties that are under construction or undergoing redevelopment.~~

~~Same Store Properties:~~ The increase in same store revenue was primarily driven by an increase in rental rates during the periods being compared, as well as COVID-19 related concessions provided during the nine months ended September 30, 2020, including rent forgiven as a part of our Resident Hardship Program, rent refunds provided to tenants at our on-campus ACE properties and certain off-campus residence halls, and waived fees. This increase was partially offset by a decrease in average occupancy from 88.9% for the nine months ended September 30, 2020, to 86.9% for the nine months ended September 30, 2021 primarily as a result of diminished leasing results for the 2020/2021 academic year due to COVID-19. The increase in operating expenses for our same store properties during the nine months ended September 30, 2021 is due to the same factors that contributed to the increase for the three months ended September 30, 2021.

~~New Property Operations:~~ Our new properties for the nine months ended September 30, 2021 are summarized in the table of new properties contained in the discussion of our results of operations for the three months ended September 30, 2021 and 2020.

~~Third-Party Development Services Revenue~~

Third-party development services revenue decreased by approximately $1.7 million, from $5.5 million during the nine months ended September 30, 2020, to $3.8 million for the nine months ended September 30, 2021. The decrease was primarily due to fewer third-party development projects under construction during the nine months ended September 30, 2021, as compared to the prior year period. During the nine months ended September 30, 2021 we had three projects under construction with an average contractual fee of $3.7 million, as compared to four projects under construction during the nine months ended September 30, 2020 with an average contractual fee of $4.3 million. This decrease was also due to a $0.3 million decrease in incentive fees earned during the comparable periods related to cost savings for completed development projects.

~~Third-Party Management Services Revenue~~

Third-party management services revenue decreased by approximately $0.7 million, from $9.3 million during the nine months ended September 30, 2020, to $8.6 million for the nine months ended September 30, 2021. The decrease was primarily due to a decrease in reimbursed payroll and other costs related to a decrease in the number of properties managed located near ~~Walt Disney World~~® Resort. As 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 nine months ended September 30, 2021 include approximately $1.7 million in such reimbursed costs as compared to approximately $3.0 million during the nine months ended September 30, 2020. This decrease was partially offset by increases due to new management contracts and improved operational performance at managed properties, as compared to the nine months ended September 30, 2020 which was significantly impacted by COVID-19. We anticipate third-party management services revenues will decrease in 2021 as compared to 2020 for the reasons discussed above.

~~Third-Party Development and Management Services Expenses~~

Third-party development and management services expenses decreased by approximately $0.8 million, from $16.2 million during the nine months ended September 30, 2020, to $15.4 million for the nine months ended September 30, 2021. The decrease was primarily due to a decrease in payroll and security costs related to the management of properties located near ~~Walt Disney World~~® Resort (as more fully described above) as well as a decrease in the provision for uncollectible accounts related to accounts receivable from third-party development and management projects. We anticipate third-party development and management services expenses will decrease in 2021 as compared to 2020 for the reasons discussed above.

~~General and Administrative~~

General and administrative expenses increased by approximately $7.0 million, from $28.6 million during the nine months ended September 30, 2020, to $35.6 million for the nine months ended September 30, 2021. The increase was primarily due to the following items incurred during the nine months ended September 30, 2021: (i) $2.6 million in accelerated amortization of unvested restricted stock awards due to the retirement of the Company’s President in August 2021; (ii) $0.9 million in consulting, legal, and other related costs incurred in relation to stockholder engagement activities in preparation for the Company’s 2021 annual stockholders’ meeting; (iii) a $0.9 million net increase in litigation settlement expense over the comparative nine month periods; (iv) a $0.6 million increase in compensation expense related to the appointment of three new Board of Directors members in January 2021; (v) additional expenses incurred in connection with enhancements to our operating systems platform; (vi) anticipated increases in insurance expense; and (vii) other general inflationary factors.

Depreciation and Amortization

Depreciation and amortization increased by approximately ~~$6.3~~$2.5 million, from ~~$200.0~~$68.1 million during the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, to ~~$206.3~~$70.6 million for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The increase was primarily due to a ~~$9.1~~$2.1 million increase in depreciation expense related to the completion of construction and opening of ~~owned development properties in 2020~~phases IV- VIIA of the Disney College Program during 2021 and 2021, offset by the following: (i) a $2.1 million decrease at our same store properties due to assets that became fully amortized or depreciated over the last year; (ii) a $0.5 million decrease in depreciation of corporate assets; and (iii) a $0.2 million decrease related to a property sold in 2020.2022.

Ground/Facility Leases

Ground/facility leases expense increased by approximately ~~$2.1~~$2.9 million, from ~~$10.0~~$3.2 million during the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, to ~~$12.1~~$6.1 million for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The increase was primarily due to the additional expense incurred at our Disney College Program Project as a result of the reinstatement of the Disney College Program in May 2021 and ~~ACE development projects that completed construction in 2020.~~the continued delivery of phases of the project during 2021 and 2022.

~~Gain from Disposition of Real Estate~~Other Operating Expenses

~~During~~Other operating expenses for the ~~nine~~three months ended ~~September 30, 2020, we sold one owned property containing 901 beds, resulting~~March 31, 2021, represent $1.2 million of expenses incurred in relation to a ~~net gain from disposition of real estate of approximately $48.5 million. Refer to Note 5 in the accompanying Notes to the Consolidated Financial Statements contained in Item 1.~~

~~Interest Income~~

Interest income decreased by approximately $1.6 million, from $2.6 million during the nine months ended September 30, 2020, to $1.0 million for the nine months ended September 30, 2021. The decrease was primarily due to the early repayment of a note receivable in October 2020. We anticipate interest income will decrease in 2021 as compared to 2020 due to this note receivable repayment.litigation settlement.

Interest Expense

Interest expense increased by approximately ~~$3.5~~$1.1 million, from ~~$84.0~~$29.0 million during the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, to ~~$87.5~~$30.1 million for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The increase was primarily due to ~~$6.7~~$2.3 million of additional interest incurred related to our ~~offerings~~offering of unsecured notes in ~~January 2020~~October 2021 and ~~June 2020, which is net of~~ a ~~reduction in interest expense related to the early repayment of unsecured notes in January 2020 that were originally scheduled to mature in October 2020, as well as a $2.7~~$0.9 million decrease in capitalized interest ~~which is based on~~due to the ~~timing~~delivery of ~~completion~~phases IV - VIIA of ~~our owned development pipeline.~~the Disney College Program. These items were offset ~~by: (i)~~by a ~~$3.1 million decrease due to the pay-off of mortgage debt; (ii) a $2.5~~$1.2 million decrease in interest expense on our revolving credit facility, ~~due to a decrease in LIBOR rates~~as there was no outstanding balance during the three months ended March 31, 2022, and a ~~decrease in the spread, which changed from 1.0% to 0.85% as a part of the renewal of the facility in May 2021; and (iii) a $0.5~~$0.8 million decrease ~~at one OCPP~~ due to the ~~refinance~~pay-off of ~~the~~ mortgage ~~loan on the property that was swapped to a fixed rate, as well as scheduled principal payments on OCPP debt.~~

~~Loss from Extinguishment of Debt~~

~~During the nine months ended September 30, 2020, we recognized a $4.8 million loss on the extinguishment of~~ debt related to the early redemption of our $400 million 3.35% Senior Notes due October 2020. The redemption was funded using net proceeds from the Operating Partnership’s closing of a $400 million offering of senior unsecured notes under its existing shelf registration in ~~January 2020.~~2021.

3425

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests represents consolidated joint venture partners’ share of net income and net income allocable to OP unitholders. Net income attributable to noncontrolling interests increased by $3.1 million, from $0.4 million for the three months ended March 31, 2021, to $3.5 million for the three months ended March 31, 2022. The increase is primarily due to the closing of an additional joint venture transaction on December 31, 2021 as well as improved operating performance at the properties in previously existing joint ventures.

Liquidity and Capital Resources

The Merger Agreement contains provisions which restrict or prohibit certain capital expenditures without the consent of the Parent as well as certain capital transactions typically used to fund our short and long-term liquidity requirements. Until the Merger Transactions close, or the Merger Agreement is terminated, our liquidity requirements will primarily be funded by our cash flow from operations and certain other capital activities allowed under the Merger Agreement. In particular, we are subject to various restrictions under the Merger Agreement on raising additional capital, assuming additional debt, issuing additional equity or debt, repurchasing equity, paying dividends, utilizing our revolving credit facility, and entering into certain acquisition and disposition transactions, among other restrictions.

Cash Balances and Cash Flows

~~As of September 30, 2021, we had $62.2 million in~~Our cash, cash equivalents, and restricted cash ~~as compared to $74.0 million~~balances as of March 31, 2022 and the change in the balances from December 31, ~~2020. Restricted cash primarily consists of escrow accounts held by lenders, resident security deposits as required by law~~2021 are summarized in ~~certain states, and funds held in escrow in connection with potential acquisition and development opportunities.~~ the table below.


	March 31, 2022		December 31, 2021		Change ($)
Cash and cash equivalents	$	87,656	$	120,351	$	(32,695)
Restricted cash	16,988		14,326		2,662
Total	$	104,644	$	134,677	$	(30,033)

The following ~~discussion relates to changes in~~table summarizes our cash ~~cash equivalents, and restricted cash~~flows due to operating, investing, and financing activities ~~which are presented in our consolidated statements of cash flows included in Item 1.~~

~~Operating Activities:~~ ~~For~~for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~net~~including a discussion of the changes.


	Three Months Ended March 31,
	2022		2021		Change ($)
Net cash provided by operating activities	$	73,414	$	49,814	$	23,600
Net cash used in investing activities	(27,557)		(66,575)		39,018
Net cash (used in) provided by financing activities	(75,890)		8,018		(83,908)
Net change in cash, cash equivalents, and restricted cash	$	(30,033)	$	(8,743)	$	(21,290)

Operating Activities

This increase in cash provided by operating activities was ~~approximately $220.6 million, as compared to approximately $244.3 million for the nine months ended September 30, 2020, a decrease of $23.7 million. This decrease was~~ primarily due to the following:

(i) increases in insurance related receivables as well as receivables due to contractual arrangements with universities to partially reimburse the Company over time for lost revenues as a result of rent abatements provided to tenants experiencing financial hardship due to COVID-19; (ii) decreases in other liabilities due to the timing of payments from universities under master lease agreements as well as the timing of accrued interest payments related to unsecured notes issued in January and June 2020; and (iii) decreased net operating income due to the disposition of an owned property in 2020. These decreases were partially offset by the following: (i) improved operating results at our ~~same store~~ properties during the ~~nine~~three months ended ~~September 30, 2021, as compared~~March 31, 2022 due to the ~~nine months ended September 30, 2020 due to~~continued normalization of operations at our owned properties, a decrease in COVID-19 related ~~financial impacts occurring~~concessions, increases in occupancy and rental rates for the ~~prior year; (ii) cash flows from the commencement of occupancy at two owned development properties completed in 2020;~~2021/2022 academic year, and ~~(iii)~~ the recommencement of the Disney College Program in ~~2021.~~2021;

(ii)timing of the collection of receivables related to third-party development projects; and

(iii)increases in payables due to the timing of property tax payments.

These increases were partially offset by the following:

(i)timing of the collection of receivables related to master lease agreements; and

(ii)decreases in accrued expenses and the payment of incentive compensation.

Investing ~~Activities:~~Activities

~~Investing activities utilized $200.3 million and $169.7 million for the nine months ended September 30, 2021 and 2020, respectively.~~

The ~~$30.6 million increase~~decrease in cash ~~utilized~~used in investing activities was primarily due to a result of $146.1 million in proceeds from the disposition of one property during the nine months ended September 30, 2020, as compared to no dispositions of properties during the nine months ended September 30, 2021, which was partially offset by a $116.5$36.9 million decrease in cash used to fund the construction of our owned development ~~properties.~~property.

Financing Activities

The increase in cash used in financing activities was primarily due to the following:

(i)a $91.2 million decrease in net borrowings of unsecured debt during the three months ended March 31, 2022 as compared to the prior year period;

(ii)a $1.6 million increase in taxes paid on net-share settlements; and

(iii)a $1.2 million increase in distributions made to noncontrolling partners.

~~Financing Activities:~~ ~~For the nine months ended September 30, 2021, net~~These increases in cash used ~~by financing activities totaled $32.0 million, as compared to net cash utilized by financing activities of $87.9 million for the nine months ended September 30, 2020. The $55.9 million decrease~~ in cash utilized by financing activities was primarily a result of the following: (i) a $77.2 million decrease due to cash paid to purchase the remaining ownership interest in two properties held in a joint venture during the nine months ended September 30, 2020, as compared to no such purchase during the nine months ended September 30, 2021 and (ii) $58.9 million in net proceeds from the sale of common stock during the nine months ended September 30, 2021. These decreases in cash utilized by financing activities were offset by ~~the following: (i)~~ a ~~$40.3~~$10.3 million ~~increase~~decrease in pay-offs of mortgage loans during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 as compared to the prior year period; (ii) a $35.1 million decrease in net borrowings of unsecured debt; and (iii) a $5.4 million decrease in contributions from noncontrolling partners due to a new joint venture agreement executed by the Company during the nine months ended September 30, 2020 as discussed in Note 4 in the accompanying Notes to the Consolidated Financial Statements contained in Item 1.period.

Liquidity Needs, Sources, and Uses of Capital

In May 2021, the Company renewed its $1.0 billion Credit Facility. The Credit Facility now matures in May 2025 and demonstrates the Company’s commitment to Environmental, Social and Governance (“ESG”) practices with sustainability-linked pricing, whereby the borrowing rate improves if the Company meets certain ESG performance targets. The Credit Facility also includes two 6-month extension options and an accordion feature that allows the Company to expand the Credit Facility by up to an additional $500 million, subject to the satisfaction of certain conditions. Borrowing rates float at a margin over LIBOR plus an annual facility fee with spreads reflecting current market terms, which are more favorable than those contained in the prior facility. Both the margin and the facility fee are priced on a grid that is tied to the Company’s credit rating. Based on the Company’s current Baa2/BBB rating, the annual facility fee is 20 basis points and the LIBOR margin is 85 basis points, a reduction of 15 basis points from previous pricing levels. Refer to Note 7 in the accompanying Notes to the Consolidated Financial Statements contained in Item 1 for additional information.

During the nine months ended September 30, 2021, the Company sold 1,216,600 shares of common stock under the ATM program at a weighted average price of $49.05 per share, for net proceeds of approximately $58.9 million. The proceeds were primarily used to repay borrowings on the Company’s Credit Facility. As of September 30, 2021, total gross proceeds of $59.7 million have been raised under the Company’s current ATM program, leaving approximately $440.3 million of capacity. Refer to Note 8 in the accompanying Notes to the Consolidated Financial Statements contained in Item 1 for additional information.

In October 2021, the Operating Partnership closed a $400 million offering of senior unsecured notes under its existing shelf registration. These seven-year notes were issued at 99.928% of par value with a coupon of 2.250% and are fully and unconditionally guaranteed by the Company. Interest on the notes is payable semi-annually on January 15 and July 15, with the first payment due and payable on January 15, 2022. The notes will mature on January 15, 2029. Net proceeds from the sale of the senior unsecured notes totaled approximately $394.4 million. The Company used the proceeds to repay borrowings under its Credit Facility.

~~As of September 30, 2021,~~March 31, 2022, our short-term liquidity needs included, but were not limited to, the following:

(i) potential distribution payments to our common and restricted stockholders totaling approximately $263.7 million assuming no change from the Company’s most recent quarterly distribution of $0.47 per share and the number of our shares outstanding as of September 30, 2021; (ii) potential distribution payments to our Operating Partnership unitholders totaling approximately $0.9 million assuming no change from the Operating Partnership’s most recent quarterly distribution of $0.47 per unit and the number of units outstanding as of September 30, 2021 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 September 30, 2021; (iii) estimated development costs over the next 12 months totaling approximately ~~$41.2~~$23.9 million for our owned property currently under construction; ~~(iv) the pay-off of approximately $25.4~~

(ii)our $200 million ~~of outstanding fixed rate mortgage debt scheduled to mature~~Term Loan which matures in ~~the next 12 months; (v)~~ June 2022;

(iii)potential future developments, property, or land acquisitions; and ~~(vi)~~

(iv)recurring capital expenditures. ~~We plan to refinance, renew, or extend our $200 million Term Loan prior to its maturity in June 2022.~~

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 Credit Facility, which had availability of ~~$423.0 million~~$1.0 billion as of ~~September 30, 2021;~~ March 31, 2022;

(iii)accessing the unsecured bond market;

(iv)exercising debt extension options to the extent they are available;

(v)issuing securities, including common stock, under our ATM Equity Program discussed more fully in Note 86 in the accompanying Notes to Consolidated Financial Statements contained in Item 1, or otherwise; and

(vi)potentially disposing of properties and/or selling ownership interests in existing properties through joint venture arrangements, depending on market 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 to 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.

The funding to meet short term liquidity needs may vary if the Merger Transactions close as expected. The Company is subject to various restrictions including equity issuances, other capital markets activities, borrowing on our Credit Facility, and sales of interests in certain projects into unconsolidated entities pursuant to the terms of the Merger Agreement, among other restrictions.

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. During the term of the Merger Agreement, the Company may not pay dividends except as necessary to preserve its tax status as a REIT, and any such dividends would result in an offsetting decrease to the Merger Consideration.

~~On November 3, 2021, our Board of Directors declared a distribution per share of $0.47, which will be paid on November 26, 2021 to all common stockholders of record as of November 15, 2021.~~

Indebtedness

The amounts below exclude net unamortized debt premiums and discounts related to mortgage loans assumed in connection with property acquisitions, original issue discounts (“OIDs”), and deferred financing costs (see Note 75 in the accompanying Notes to the Consolidated Financial Statements contained in Item 1). A summary of our consolidated indebtedness as of ~~September 30, 2021~~March 31, 2022 is as follows:


		Amount		% of Total		Weighted Average Rates (1)		Weighted Average Maturities		Amount		% of Total		Weighted Average Rates (1)		Weighted Average Maturities
Secured	Secured	$	562,955	15.1	%	4.1	%	6.5 Years	Secured	$	535,387	15.2	%	4.1	%	6.3 Years
Unsecured	Unsecured	3,177,000		84.9	%	3.1	%	4.8 Years	Unsecured	3,000,000		84.8	%	3.3	%	4.9 Years
Total consolidated debt	Total consolidated debt	$	3,739,955	100.0	%	3.2	%	5.1 Years	Total consolidated debt	$	3,535,387	100.0	%	3.5	%	5.1 Years

Fixed rate debt	Fixed rate debt								Fixed rate debt
Secured	Secured								Secured
Project-based taxable bonds	Project-based taxable bonds	$	14,695	0.4	%	7.5	%	3.4 Years	Project-based taxable bonds	$	14,695	0.4	%	7.5	%	2.9 Years

Mortgage	Mortgage	547,042		14.6	%	4.0	%	6.6 Years	Mortgage	520,066		14.7	%	4.0	%	6.4 Years
Unsecured	Unsecured								Unsecured
April 2013 Notes	April 2013 Notes	400,000		10.7	%	3.8	%	1.5 Years	April 2013 Notes	400,000		11.3	%	3.8	%	1.0 Years
June 2014 Notes	June 2014 Notes	400,000		10.7	%	4.1	%	2.8 Years	June 2014 Notes	400,000		11.3	%	4.1	%	2.3 Years
October 2017 Notes	October 2017 Notes	400,000		10.7	%	3.6	%	6.1 Years	October 2017 Notes	400,000		11.3	%	3.6	%	5.6 Years
June 2019 Notes	June 2019 Notes	400,000		10.7	%	3.3	%	4.8 Years	June 2019 Notes	400,000		11.3	%	3.3	%	4.3 Years
January 2020 Notes	January 2020 Notes	400,000		10.7	%	2.9	%	8.3 Years	January 2020 Notes	400,000		11.3	%	2.9	%	7.8 Years
June 2020 Notes	June 2020 Notes	400,000		10.7	%	3.9	%	9.3 Years	June 2020 Notes	400,000		11.3	%	3.9	%	8.8 Years
October 2021 Notes									October 2021 Notes	400,000		11.3	%	2.3	%	6.8 Years
Term loan	Term loan	200,000		5.3	%	2.5	%	0.7 Years	Term loan	200,000		5.7	%	2.5	%	.2 Years
Total - fixed rate debt	Total - fixed rate debt	3,161,737		84.5	%	3.6	%	5.4 Years	Total - fixed rate debt	3,534,761		99.9	%	3.5	%	5.1 Years

Variable rate debt	Variable rate debt								Variable rate debt
Secured mortgage	Secured mortgage	1,218		0.1	%	2.6	%	23.8 Years	Secured mortgage	626		0.1	%	2.9	%	23.3 Years
Unsecured revolving credit facility		577,000		15.4	%	1.1	%	3.6 Years
Unsecured revolving credit facility (2)									Unsecured revolving credit facility (2)	—		—	%	—	%	3.1 Years
Total - variable rate debt	Total - variable rate debt	578,218		15.5	%	1.1	%	3.7 Years	Total - variable rate debt	626		0.1	%	2.9	%	23.3 Years
Total consolidated debt	Total consolidated debt	$	3,739,955	100.0	%	3.2	%	5.1 Years	Total consolidated debt	$	3,535,387	100.0	%	3.5	%	5.1 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.

(2) The Company’s Credit Facility had a principal balance of zero as of March 31, 2022. Refer to Note 5 in the accompanying Notes to Consolidated Financial Statements contained in Item 1 for further discussion.

Supplemental Guarantor Information

~~Effective January 4, 2021,~~The Company has adopted rules issued by the Securities and Exchange Commission ~~(SEC) adopted amendments to the financial disclosure requirements applicable to registered debt offerings that include certain credit enhancements. The Company adopted the new rules on January 4, 2021~~ which permit subsidiary issuers of obligations guaranteed by the parent to omit separate financial statements if the consolidated financial statements of the parent company have been filed, the subsidiary obligor is a consolidated subsidiary of the parent company, the guaranteed security is debt or debt-like, and the security is guaranteed fully and unconditionally by the parent. Accordingly, separate consolidated

financial statements of the Operating Partnership have not been presented. Furthermore, as permitted under Rule 13-01(a)(4)(vi), the Company has excluded the summarized financial information for the Operating Partnership as the assets, liabilities, and results of operations of the Company and the Operating Partnership are not materially different than the corresponding amounts presented in the consolidated financial statements of the Company, and management believes such summarized financial information would be repetitive and not provide incremental value to investors.

American Campus Communities Operating Partnership, LP (the “Subsidiary Issuer") has issued the unsecured notes described in the Unsecured Notes section of Note 75 in the accompanying Notes to Consolidated Financial Statements contained in Item 1. The unsecured notes are fully and unconditionally guaranteed by the Company, and the Subsidiary Issuer is 99.6% owned, directly or indirectly, by the Company. The guarantees are direct senior unsecured obligations of the Company and rank equally in right of payment with all other senior unsecured indebtedness of the Company from time to time outstanding.

Furthermore, the Company’s guarantees will be effectively subordinated in right of payment to all liabilities, whether secured or unsecured, and any preferred equity of its subsidiaries (including the Operating Partnership and any entity the Company accounts for under the equity method of accounting). In addition, under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, a guarantee, such as the guarantee provided by the Company, could be voided, and payment thereon could be required to be returned to the guarantor or to a fund for the benefit of the creditors of the guarantor, under certain circumstances.

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 ~~September 30, 2021,~~March 31, 2022, the Operating Partnership was in compliance with all such covenants.

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 (“FFOM”), which reflects certain adjustments related to the economic performance of our on-campus participating properties, and other items, as we determine in good faith, that do not reflect our core operations on a comparative basis. 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.

The following table presents a reconciliation of our net income attributable to common stockholders to FFO and FFOM:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
Net (loss) income attributable to ACC, Inc. and Subsidiaries common stockholders		$	(11,439)	$	(19,515)	$	(5,223)	$	47,996
Noncontrolling interests' share of net loss		(1,920)		(1,909)		(3,204)		(2,781)
Net income attributable to ACC, Inc. and Subsidiaries common stockholders										Net income attributable to ACC, Inc. and Subsidiaries common stockholders		$	39,183	$	15,618
Noncontrolling interests' share of net income										Noncontrolling interests' share of net income		3,537		367

Joint Venture ("JV") partners' share of FFO	Joint Venture ("JV") partners' share of FFO									Joint Venture ("JV") partners' share of FFO
JV partners' share of net loss		1,896		1,857		3,230		2,987
JV partners' share of net income										JV partners' share of net income		(3,391)		(300)
JV partners' share of depreciation and amortization	JV partners' share of depreciation and amortization	(1,903)		(1,944)		(5,697)		(5,836)		JV partners' share of depreciation and amortization		(3,121)		(1,892)
		(7)		(87)		(2,467)		(2,849)				(6,512)		(2,192)

Gain from disposition of real estate		—		—		—		(48,525)

Total depreciation and amortization	Total depreciation and amortization	69,445		67,369		206,303		199,979		Total depreciation and amortization		70,552		68,117
Corporate depreciation (1)	Corporate depreciation (1)	(699)		(858)		(2,154)		(2,632)		Corporate depreciation (1)		(684)		(749)
FFO attributable to common stockholders and OP unitholders	FFO attributable to common stockholders and OP unitholders	55,380		45,000		193,255		191,188		FFO attributable to common stockholders and OP unitholders		106,076		81,161

Elimination of operations of OCPPs	Elimination of operations of OCPPs									Elimination of operations of OCPPs
Net loss (income) from OCPPs		1,458		1,294		(361)		(206)
Net income from OCPPs										Net income from OCPPs		(3,901)		(2,954)
Amortization of investment in OCPPs	Amortization of investment in OCPPs	(1,969)		(1,883)		(6,050)		(5,965)		Amortization of investment in OCPPs		(1,993)		(2,042)
		54,869		44,411		186,844		185,017				100,182		76,165

Modifications to reflect operational performance of OCPPs	Modifications to reflect operational performance of OCPPs									Modifications to reflect operational performance of OCPPs
Our share of net cash flow (2)	Our share of net cash flow (2)	961		518		1,634		1,632		Our share of net cash flow (2)		433		139
Management fees and other	Management fees and other	333		319		1,135		1,146		Management fees and other		569		508
Contribution from OCPPs	Contribution from OCPPs	1,294		837		2,769		2,778		Contribution from OCPPs		1,002		647

Elimination of loss from extinguishment of debt (3)		—		—		—		4,827

Executive retirement charges (4)		751		—		2,588		—
Elimination of litigation settlement expense (5)		—		—		2,033		1,100
Stockholder engagement and other proxy advisory costs (6)		—		—		914		—

Shareholder activism and other proxy advisory costs (3)										Shareholder activism and other proxy advisory costs (3)		202		914
Elimination of litigation settlement expense (4)										Elimination of litigation settlement expense (4)		—		1,200
Executive retirement charges (5)										Executive retirement charges (5)		—		538

FFOM attributable to common stockholders and OP unitholders	FFOM attributable to common stockholders and OP unitholders	$	56,914	$	45,248	$	195,148	$	193,722	FFOM attributable to common stockholders and OP unitholders		$	101,386	$	79,464

FFO per share - diluted	FFO per share - diluted	$	0.39	$	0.32	$	1.38	$	1.37	FFO per share - diluted		$	0.75	$	0.58
FFOM per share - diluted	FFOM per share - diluted	$	0.40	$	0.32	$	1.39	$	1.39	FFOM per share - diluted		$	0.72	$	0.57
Weighted-average common shares outstanding - diluted	Weighted-average common shares outstanding - diluted	140,747,950		139,235,064		140,015,436		139,182,430		Weighted-average common shares outstanding - diluted		141,040,326		139,512,359

(1)Represents depreciation on corporate assets not added back for purposes of calculating FFO.

(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 accompanying consolidated statements of comprehensive income.

(3)~~The nine months ended September 30, 2020 amount represents~~Represents consulting, legal, and other related costs incurred in relation to stockholder activism activities in preparation for the ~~loss~~Company’s 2021 and 2022 annual stockholders' meetings, which are included in general and administrative expenses in the accompanying consolidated statements of comprehensive income.

(4)Represents expense associated with the ~~January 2020 redemption~~settlement of a litigation matter, which is included in other operating expenses in the ~~Company's $400 million 3.35% Senior Notes originally scheduled to mature in October 2020.~~accompanying consolidated statements of comprehensive income.

~~(4)~~(5)Represents accelerated amortization of unvested restricted stock awards due to the retirement of the Company's President in August ~~2021.~~

~~(5)Represents expenses associated with settlements of litigation matters that are~~2021, which is included in general and administrative expenses in the accompanying consolidated statements of comprehensive income.

~~(6)Represents consulting, legal, and other related costs incurred in relation to stockholder engagement activities in preparation for the Company’s 2021 annual stockholders' meeting.~~

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.

4032

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s market risk has not changed materially from what was disclosed in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 4. Controls and Procedures

(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.

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 our consolidated financial position or our results of operations.

Refer to the Litigation section of Note 1311 in the accompanying Notes to Consolidated Financial Statements contained in Item 1 for additional discussion.

Item 1A. Risk Factors

~~There~~Except as set forth below, there have been no material changes to the risk factors that were discussed in Part 1, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

The Merger Transactions may not be completed on the terms or timeline currently contemplated or at all.

The completion of the Merger Transactions is subject to certain conditions, including (i) approval by our common stockholders; (ii) receipt by Parent and Merger Sub I of an opinion that we have been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code of 1986, as amended, since the taxable year ended December 31, 2009; and (iii) other closing conditions set forth in the Merger Agreement. While it is currently anticipated that the Merger Transactions will be completed in the third quarter of 2022, there can be no assurance that such conditions will be satisfied in a timely manner or at all, or that an effect, event, development, or change will not transpire that could delay or prevent these conditions from being satisfied.

If the Merger Transactions are completed, our stockholders will forgo the opportunity to benefit from potential future appreciation in the value of the Company.

The Merger Agreement provides for the Company’s stockholders of record to receive cash consideration of $65.47 per share, without interest, upon closing of the Merger Transactions. If the Merger Transactions are consummated, stockholders will no longer hold interests in the Company and, therefore, will not be entitled to benefit from any potential future appreciation in the value of the Company. In the absence of the Merger Transactions, the Company could have various opportunities to enhance its value, including, but not limited to, entering into a transaction that values the shares of common stock higher than the value provided for in the Merger Agreement. Therefore, if the Merger Transactions are completed, stockholders will forgo future

appreciation, if any, in the value of the Company and the opportunity to participate in any other potential transactions that may have resulted in a higher price per share than the price to be paid in the Merger Transactions.

If the Merger Transactions are not consummated by October 18, 2022, or in certain other circumstances, either of us or Parent may terminate the Merger Agreement.

We or Parent may terminate the Merger Agreement if the Merger Transactions have not been consummated by October 18, 2022. We or Parent also may terminate the Merger Agreement (i) by mutual written consent; (ii) if there is a final and non-appealable order permanently restraining, enjoining, or otherwise prohibiting consummation of the Merger Transactions; (iii) if our common stockholders fail to approve the Merger Transactions; (iv) if the other party has breached its representations or covenants in a way that would prevent satisfaction of a closing condition by October 18, 2022; (v) with respect to us, and in accordance with the Merger Agreement, in order to enter into certain superior proposals; or (vi) with respect to Parent, if our Board of Directors has made a change in its recommendation to our stockholders in accordance with the Merger Agreement that they vote in favor of the Merger Transactions.

The Merger Transactions may not be completed, which may adversely affect our business and could negatively affect our stock price.

If the Merger Transactions are not completed for any reason, the trading price of our common stock may decline to the extent that the market price of the common stock reflects positive market assumptions that the Merger Transactions will be completed and the related benefits will be realized. We may also be subject to additional risks if the Merger Transactions are not completed, including:

a.the requirement in the Merger Agreement that, under certain circumstances, we pay Parent a termination fee of $278 million, except that the termination fee will be $139 million if (1) a third party submits a Qualified Proposal (as defined in the Merger Agreement) no later than May 18, 2022 and which the Board determines, no later than May 18, 2022, after consultation with the Company’s outside legal counsel and financial advisor, constitutes or could reasonably be expected to lead to a Superior Proposal (as defined in the Merger Agreement) and (2) the Company terminates the Merger Agreement in order to enter into a definitive agreement with such third party providing for the implementation of a Superior Proposal no later than May 28, 2022;

b.incurring substantial costs related to the Merger Transactions, such as legal, accounting, financial advisory, and integration costs that have already been incurred or will continue to be incurred until closing;

c.reputational harm including relationships with customers and business partners due to the adverse perception of any failure to successfully complete the Merger Transactions; and

d.potential disruption to our business and distraction of our workforce and management team to pursue other opportunities that could be beneficial to the Company, in each case without realizing any of the benefits of having the Merger Transactions completed.

The pendency of the Merger Transactions could adversely affect our business and operations, including with customers, and may result in the departure of key personnel. In connection with the Merger Transactions, some of our university and business partners may delay or defer decisions or may end their relationships with us, which could negatively affect our revenues, earnings, and cash flows, regardless of whether the Merger Transactions are completed. In addition, due to operating restrictions in the Merger Agreement, the Company may be unable, during the pendency of the Merger Transactions to pursue strategic transactions, undertake significant capital projects, undertake certain significant financing transactions, and otherwise pursue other actions, even if such actions would prove beneficial. Similarly, our current and prospective employees may experience uncertainty about their future roles with us following the Merger Transactions, which may materially adversely affect our ability to attract and retain key personnel during the pendency of the Merger Transactions.

The Merger Agreement contains provisions that could discourage a potential competing acquirer of the Company or could result in a competing acquisition proposal being at a lower price than it might otherwise be.

The Merger Agreement contains provisions that, subject to limited exceptions, restrict the Company’s ability to solicit or negotiate any alternative acquisition proposal. With respect to any written, bona fide acquisition proposal that the Company receives, Parent generally has an opportunity to offer to modify the terms of the Merger Agreement in response to such proposal before the Company’s Board of Directors may withdraw or modify its recommendation to stockholders in response to such acquisition proposal or terminate the Merger Agreement to enter into a definitive agreement with respect to such acquisition proposal. Upon termination of the Merger Agreement under circumstances relating to an acquisition proposal, the

Company may be required to pay to Parent a termination fee of $278 million, except that the termination fee will be $139 million if (1) a third party submits a Qualified Proposal (as defined in the Merger Agreement) no later than May 18, 2022 and which the Board determines, no later than May 18, 2022, after consultation with the Company’s outside legal counsel and financial advisor, constitutes or could reasonably be expected to lead to a Superior Proposal (as defined in the Merger Agreement) and (2) the Company terminates the Merger Agreement in order to enter into a definitive agreement with such third party providing for the implementation of a Superior Proposal no later than May 28, 2022.

These provisions could discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of the Company’s business from considering or making a competing acquisition proposal, even if the potential competing acquirer was prepared to pay consideration with a higher per share cash value than the market value proposed to be received or realized in the Merger Transactions, or might cause a potential competing acquirer to propose to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee and expense reimbursement that may become payable in certain circumstances under the Merger Agreement.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Restrictions on Dividends

During the term of the Merger Agreement, the Company may not pay dividends except as necessary to preserve its tax status as a REIT, and any such dividends would result in an offsetting decrease to the Merger Consideration.

Unregistered Sales of Equity Securities and Repurchases of Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

4135

Item 6. Exhibits


Exhibit Number		Description of Document

~~4.1~~2.1	**	~~Form~~Agreement and Plan of Merger, dated as of April 18, 2022, by and among Abacus Parent LLC, Abacus Merger Sub I LLC, Abacus Merger Sub II LLC, American Campus Communities, Inc. and American Campus Communities Operating Partnership ~~LP 2.250% Senior Note due 2029.~~LP* (Incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K of the Company filed on April 19, 2022)

3.1	**	Fourth Amendment to Bylaws of American Campus Communities, Inc.

22.1	*	List of Subsidiary Issuer Guarantees

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.

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.

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

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

*		Filed herewith.

**		Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K.The Company agrees to furnish supplementally to the SEC a copy of any omitted schedule upon request by the SEC.

*~~Filed herewith.~~

4236

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:			~~November 4, 2021~~May 5, 2022


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

4337


	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Total net proceeds	$	20,928	$	58,927
Commissions paid to sales agents	$	270	$	747
Weighted average price per share	$	49.52	$	49.05
Shares of common stock sold	428,000		1,216,600


	Same Store Properties				New Properties (1)				Sold Properties/ Other (2)				Total - All Properties
	Nine Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020		2021		2020
Number of properties (3)	157		157		2		2		—		1		159		160
Number of beds (3)	95,351		95,351		6,140		2,483		—		901		101,491		98,735

Revenues	$	618,211	$	598,461	$	19,269	$	1,469	$	—	$	2,701	$	637,480	$	602,631
Operating expenses	$	295,591	$	280,442	$	11,072	$	2,999	$	207	$	1,300	$	306,870	$	284,741