UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
Amendment No. 1 to
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): May 9, 2006 (March 1, 2006)
AMERICAN CAMPUS COMMUNITIES, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Maryland 001-32265 76-0753089
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification Number)
805 Las Cimas Parkway, Suite 400, Austin, TX 78746
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(Address of principal executive offices) (Zip Code)
512-732-1000
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(Registrants' telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
American Campus Communities, Inc. (hereby referred to as the "Company", "we,"
"our", and "us") hereby amends our Current Report on Form 8-K filed on March 7,
2006, to provide the required financial statements relating to our acquisition
of a portfolio of 13 student housing properties (the "Royal Portfolio") from
affiliates of Royal Properties, as described in such Current Report.
Page
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Item 9.01 Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired
Report of Independent Registered Public Accounting Firm 1
Combined Statement of Revenues and Certain Expenses for the Royal Portfolio for
the year ended December 31, 2005 2
Notes to Combined Statement of Revenues and Certain Expenses 3
(b) Pro Forma Financial Information
Pro Forma Financial Information 5
Pro Forma Condensed Consolidated Balance Sheet for American Campus Communities,
Inc. and Subsidiaries as of December 31, 2005 (unaudited) 6
Pro Forma Condensed Consolidated Statement of Operations for American Campus
Communities, Inc. and Subsidiaries for the Year Ended December 31, 2005
(unaudited) 7
Notes to Pro Forma Condensed Consolidated Financial Statements 8
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 hereunto duly authorized.
American Campus Communities, Inc.
(Registrant)
Date: May 9, 2006 By: /s/ Jonathan A. Graf
---------------------
Senior Vice President, Chief Accounting Officer and
Treasurer
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of American Campus Communities, Inc.
We have audited the combined statement of revenues and certain expenses of the
Royal Portfolio (the "Portfolio"), located in Murfreesboro, TN, Oviedo, FL,
Tallahassee, FL, Gainesville, FL, Lexington, KN, Tucson, AZ, San Marcos, TX, San
Antonio, TX, Lubbock, TX, and Bryan, TX, for the year ended December 31, 2005.
The financial statement is the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. We were not engaged to perform an
audit of the Company's internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
The accompanying combined statement of revenues and certain expenses was
prepared for the purpose of complying with Rule 3-14 of Regulation S-X of the
Securities and Exchange Commission for inclusion in Form 8-K/A of American
Campus Communities, Inc. and is not intended to be a complete presentation of
the Portfolio's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the combined revenues and certain expenses of the
Portfolio as described in Note 1 for the year ended December 31, 2005, in
conformity with accounting principles generally accepted in the United States.
Ernst & Young, LLP
Austin, TX
March 30, 2006
1
Royal Portfolio
Combined Statement of Revenues and Certain Expenses
For the Year Ended December 31, 2005
(dollars in thousands)
Revenues:
Base rents $ 26,085
Other income 551
--------------------
Total revenues 26,636
Certain expenses:
Real estate taxes 2,484
Property operating expenses 7,056
Management fees 2,391
--------------------
Total certain expenses 11,931
--------------------
Revenues in excess of certain expenses $ 14,705
====================
See accompanying notes to combined statement of revenues and certain expenses
2
American Campus Communities, Inc. and Subsidiaries
Notes to Combined Statement of Revenues and Certain Expenses
For the Year Ended December 31, 2005
1. Basis of Presentation
The accompanying combined statement of revenues and certain expenses includes
the combined operations for the year ended December 31, 2005 for the 13-property
portfolio known as the Royal Portfolio. On March 1, 2006, American Campus
Communities Operating Partnership, LP (the "Operating Partnership") acquired the
Royal Portfolio from entities affiliated with Royal Properties for a total
contract contribution value of $244.3 million. Consideration for the transaction
included, but was not limited to, cash, Operating Partnership units, and assumed
fixed-rate mortgage debt.
The accompanying combined statement of revenues and certain expenses for the
year ended December 31, 2005 was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission for the
acquisition of real estate properties. The combined statement of revenues and
certain expenses is not intended to be a complete presentation of the actual
operations of the properties for the year ended December 31, 2005, as certain
expenses which may not be comparable to the expenses to be incurred in the
proposed future operations of the Royal Portfolio have been excluded. Expenses
excluded consist of interest expense, depreciation, amortization, and certain
corporate expenses not directly related to the future operations of the Royal
Portfolio.
The Royal Portfolio consists of the following properties:
Property Primary University Served Units Beds
-------------------------------------- ------------------------------------------- ----------- -----------
Entrada Real University of Arizona 98 363
Royal Oaks Florida State University 82 224
Royal Pavillion Florida State University 60 204
Royal Village Tallahassee Florida State University 75 288
Royal Village Gainesville University of Florida 118 448
Northgate Lakes The University of Central Florida 194 710
Royal Lexington The University of Kentucky 94 364
The Woods at Greenland Middle Tennessee State University 78 276
Raiders Crossing Middle Tennessee State University 96 276
Raiders Pass Texas Tech University 264 828
Aggie Station Texas A&M University 156 450
The Outpost San Marcos Texas State University - San Marcos 162 486
The Outpost San Antonio University of Texas - San Antonio 276 828
----------- -----------
Total 1,753 5,745
=========== ===========
2. Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
3. Rental Revenue Recognition
Students are required to execute lease contracts with payment schedules that
vary from single to monthly payments. Rental income is generally recognized on a
straight-line basis over the terms of the leases.
4. Management Fees
The Royal Portfolio was managed by a third-party management company, pursuant to
an agreement which provides for management fees of 9.0% of monthly cash-basis
revenue, as defined. Management fees of approximately $2,391,000 for the year
ended December 31, 2005 were incurred.
3
American Campus Communities, Inc. and Subsidiaries
Notes to Combined Statement of Revenues and Certain Expenses
For the Year Ended December 31, 2005
5. Commitments and Contingencies
In the normal course of business, the Royal Portfolio is subject to claims,
lawsuits, and legal proceedings. While it is not possible to ascertain the
ultimate outcome of such matters, in management's opinion, the liabilities, if
any, in excess of the amounts provided or covered by insurance, are not expected
to have a material adverse effect on the results of operations.
4
American Campus Communities, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Financial Statements
For the Year Ended December 31, 2005
The following unaudited pro forma condensed consolidated financial statements as
of and for the year ended December 31, 2005 are presented as if American Campus
Communities, Inc. and Subsidiaries (the "Company") had acquired the Royal
Portfolio as of December 31, 2005 for the pro forma condensed consolidated
balance sheet and as of January 1, 2005 for the pro forma condensed consolidated
statement of operations. In addition, the unaudited pro forma condensed
consolidated statement of operations assumes that the Company's acquisition of 7
properties during various dates in 2005 occurred as of January 1, 2005.
These pro forma financial statements should be read in conjunction with the
Company's historical financial statements, including the notes thereto, as filed
on Form 10-K for the year ended December 31, 2005. The pro forma condensed
consolidated financial statements are unaudited and are not necessarily
indicative of what the financial position or the actual results of operations
would have been had the Company completed the acquisition of the Royal Portfolio
on December 31, 2005 or January 1, 2005, respectively, nor do they purport to
represent the financial position or the results of operations of the Company as
of any future date or for any future periods.
5
American Campus Communities, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet
As of December 31, 2005
(unaudited, dollars in thousands)
Consolidated
American Campus Royal Portfolio Company
Communities, Inc. Pro Forma
and Subsidiaries Adjustments Pro Forma
---------------------- -------------------- -------------------
Assets
Investments in real estate, net $ 497,468 $ 247,611 (A) $ 745,079
Cash and cash equivalents 24,641 1,915 (B) 26,556
Restricted cash 9,502 1,896 (C) 11,398
Student contracts receivable, net 2,610 - 2,610
Other assets 16,641 (390) (D) 16,251
---------------------- -------------------- -------------------
Total assets $ 550,862 $ 251,032 $ 801,894
====================== ==================== ===================
Liability and stockholders' equity
Liabilities:
Secured debt $ 291,646 $ 126,369 (E) $ 418,015
Unsecured revolving credit facility - 67,000 (B) 67,000
Accounts payable and accrued expenses 7,983 2,797 (F) 10,780
Other liabilities 25,155 2,695 (G) 27,850
---------------------- -------------------- -------------------
Total liabilities 324,784 198,861 523,645
Minority interests 2,851 30,307 (H) 33,158
Stockholders' equity:
Common stock 172 - 172
Additional paid in capital 233,388 21,864 (H) 255,252
Accumulated earnings and distributions (10,817) - (10,817)
Accumulated other comprehensive income 484 - 484
---------------------- -------------------- -------------------
Total stockholders' equity 223,227 21,864 245,091
---------------------- -------------------- -------------------
Total liabilities and stockholders' equity $ 550,862 $ 251,032 $ 801,894
====================== ==================== ===================
6
American Campus Communities, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2005
(unaudited, dollars in thousands, except share and per share data)
Company
Year Ended Completed Royal
December 31, Transactions Portfolio Pro Forma Pro Forma
2005 (a) (b) Adjustments Consolidated
------------- ------------- ---------- ------------ -------------
Revenues $87,474 $2,784 $26,636 $- $116,894
Operating expenses:
Property operating expenses 35,876 1,128 11,931 - 48,935
Third party development and
management services 6,969 - - - 6,969
General and administrative 6,714 - - - 6,714
Depreciation and amortization 16,471 549 - 7,758 (c) 24,778
Ground/facility lease 873 - - - 873
------------- ------------- ---------- ------------ -------------
Total operating expenses 66,903 1,677 11,931 7,758 88,269
------------- ------------- ---------- ------------ -------------
Operating income 20,571 1,107 14,705 (7,758) 28,625
Nonoperating income and (expenses):
Interest income 825 - - - 825
Interest expense (17,368) (734) - (10,586) (d) (28,688)
Amortization of deferred financing
costs (1,176) (15) - (206) (e) (1,397)
Other nonoperating income 1,279 - - - 1,279
------------- ------------- ---------- ------------ -------------
Total nonoperating expenses (16,440) (749) - (10,792) (27,981)
------------- ------------- ---------- ------------ -------------
Income before income taxes
and minority interests 4,131 358 14,705 (18,550) 644
Income tax provision (186) - - - (186)
Minority interests (164) - - (106) (f) (270)
------------- ------------- ---------- ------------ -------------
Income (loss) from continuing
operations 3,781 358 14,705 (18,656) 188
------------- ------------- ---------- ------------ -------------
Discontinued operations 5,881 - - (588) (f) 5,293
------------- ------------- ---------- ------------ -------------
Net income $9,662 $358 $14,705 $(19,244) $5,481
============= ============= ========== ============ =============
Income per share
Basic $0.65 $0.32
============= =============
Diluted $0.65 $0.32
============= =============
Weighted average common shares
outstanding:
Basic 14,882,944 2,318,836 (g) 17,201,780
============= ============ =============
Diluted 15,047,202 4,522,983 (h) 19,570,185
============= ============ =============
7
American Campus Communities, Inc. and Subsidiaries
Notes to Pro Forma Condensed Consolidated Financial Statements
For the Year Ended December 31, 2005
1. Adjustments to Pro Forma Condensed Consolidated Balance Sheet
(A) Reflects the purchase price of the Royal Portfolio and related
acquisition costs incurred.
(B) Reflects a $67.0 million draw made on our revolving credit facility to
fund the acquisition, of which approximately $65.1 million was
utilized for the acquisition of the Royal Portfolio.
(C) Reflects the assumption of escrow accounts required by the lenders of
the fixed-rate mortgage debt assumed.
(D) Reflects approximately $2.3 million recorded to reflect the intangible
asset associated with the value of in-place leases assumed and
approximately $1.2 million in deferred financing costs incurred in
connection with the assumption of fixed-rate mortgage debt. Also
reflects a reduction of approximately $3.9 million related to the
reclassification of earnest money deposits and acquisition costs paid
prior to closing to investments in real estate upon closing of the
transaction.
(E) Reflects approximately $123.6 million in fixed rate mortgage debt
assumed at a weighted average interest rate of 5.95%, approximately
$0.2 million in principal payments made at closing, and approximately
$2.9 million of debt premiums (net of discounts) recorded to reflect
the fair market value of debt assumed.
(F) Reflects approximately $2.7 million in cash and secured promissory
notes retained at closing and payable one year after the acquisition
date upon expiration of the survival period related to the seller's
representations and warranties. Also reflects approximately $0.1
million of miscellaneous liabilities assumed at closing.
(G) Reflects approximately $2.2 million of deferred income and prepaid
rent and approximately $0.5 million of security deposits assumed at
closing.
(H) Reflects the fair value of common and preferred units of limited
partnership interest in the Operating Partnership issued to entities
affiliated with Royal Properties as partial consideration for the
acquisition. Approximately 10% of the Company's pro forma net assets
is reflected as minority interests, representing the unit holders'
ownership interest in the Operating Partnership.
2. Adjustments to Pro Forma Condensed Consolidated Statement of Operations
(a) Reflects the historical operations as well as certain pro forma
adjustments for the following properties acquired in 2005, prior to
our ownership:
o Proctor Portfolio - four properties acquired on February 7, 2005,
one property acquired on March 30, 2005
o City Parc at Fry Street - acquired on March 19, 2005
o The Estates (formerly Exchange at Gainesville) - acquired March
29, 2005
(b) Reflects the historical operations of the Royal Portfolio for the year
ended December 31, 2005.
(c) Reflects depreciation expense on the Royal Portfolio tangible fixed
assets acquired and recorded at fair value and the amortization of
intangible lease assets recognized upon the acquisition of the Royal
Portfolio.
(d) Reflects an increase in interest expense from the Royal Portfolio debt
assumed by the Company and valued at fair market value. Also reflects
an increase in interest expense incurred under the Company's revolving
credit facility for borrowings made to complete the 2005 acquisitions
and the Royal Portfolio acquisition at rates ranging from 4.0% to
6.3%, representing the actual interest rates incurred for such
borrowings.
(e) Reflects the amortization of financing costs incurred in connection
with the Royal Portfolio debt assumed by the Company.
(f) Represents the approximate 10% share of income from continuing
operations and discontinued operations allocable to certain entities
affiliated with Royal Properties that received common and preferred
units of limited partnership interest in the Operating Partnership as
partial consideration for the acquisition of the Royal Portfolio.
8
American Campus Communities, Inc. and Subsidiaries
Notes to Pro Forma Condensed Consolidated Financial Statements
For the Year Ended December 31, 2005
(g) Assumes that shares issued in connection with our July 2005 equity
offering were issued on January 1, 2005.
(h) Assumes that shares issued in connection with our July 2005 equity
offering were issued on January 1, 2005. Also assumes that common and
preferred units of limited partnership interest in our Operating
Partnership issued as partial consideration for the acquisition of the
Royal Portfolio were issued on January 1, 2005.
9