Q2 2021 American Campus Communities Inc Earnings Call
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Good day and welcome to the American campus communities second quarter 2021, the earnings conference call.
All participants will be in listen only mode should you need assistance. Please signal and conference specialist by pressing Star then zero. After today's presentation, there will be an opportunity to ask questions to ask a question.
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Now I'd like to turn the conference over to Ryan Dennison Senior Vice President of capital markets and Investor Relations. Please go ahead.
Thank you.
Good morning, and thank you for joining the American campus communities 2021 second quarter Conference call.
Press release was furnished on form 8-K to provide access to the widest possible audience in the release the company has reconciled the non-GAAP financial measures to those directly comparable GAAP measures in accordance with Reg G requirements.
Also posted on the cash.
Aside from the Investor Relations section you will find an earnings materials package, which includes both the press release and the supplemental financial package. We are hosting a live webcast for today's call, which you can access on the website with the replay available for 1 month.
Our supplemental analyst package and our webcast presentation are 1 and the same.
Company webcast slides may be advanced by you to facilitate following along.
Management will be making forward looking statements today as referenced in the disclosure in the press release in the supplemental financial package and in the SEC filings.
I would like to inform you that certain statements made during this conference call, which are not historical fact may be deemed forward looking statements within.
Well, having a section 27 a of the Securities Act of 1933.
Section 21 E of the Securities and Exchange Act from $19.34, as amended by the private Securities Litigation Reform Act 1995.
Although the company believes the expectations reflected in any forward looking statement are based on reasonable assumptions they are subject.
In the meantime, it risks and uncertainties.
We can provide no assurance that its expectations will be achieved and actual results may vary.
Factors and risks that could cause actual results to differ materially from expectations are detailed in the press release and from time to time in the Companys periodic filings with the SEC.
Company undertakes.
No obligation to advise or update any forward looking statements to reflect events or circumstances. After the date of this release.
Having said that our chief Executive Officer, Bill Bayless, we'll be providing our opening comments today. He is joined by the following members of senior management for our call.
Tim Hockey President.
Jennifer Beese chief.
Waiting Officer, William Talbot, Chief Investment Officer, Daniel Perry, Chief Financial Officer, Kim Voss, Chief Accounting Officer, Brian Winger General Counsel, and Jamie Wilhelm our EVP of public private partnerships with that I'll turn the call over to Bill for his opening remarks Bill.
Thank.
Good morning, and thank all of you for joining us as we discuss our 2021 second quarter results and the improving operating environment.
As we've noted on previous calls 2021 is a Europe transition toward a return to normalcy.
The fundamentals of our sector continue to strengthen and we're quite pleased.
Pleased with our progress this quarter.
In Q2, our operational and financial results significantly exceeded our expectations with NOI and earnings per share, beating our projections, specifically quarterly rental revenue and ancillary income, including parking fees utility retail income among others. We're.
Ryan than anticipated.
This was primarily driven by a higher volume of students signing leases for the spring and summer 2021 terms.
Secondly, the ramp up of initial occupancy at our communities serving the Disney College program has been very strong.
Since the DCP program recommit.
Strongest only 2 months ago, we have already moved in over 3200 students.
And we continue to project, 85% occupancy by the fall for the 4996 beds delivered through phase 5.
And finally rent collections have largely.
<unk> turned to normal historical levels.
On campus rent refunds and request for rent relief under a resident hardship program continued to decline and are anticipated to be insignificant in the 2021.22 academic year.
Turning to pre leasing velocity for the 2022 same.
<unk> group surpassed the prior year's pace in early July and is now 310 basis points ahead of the prior year.
The guidance, we have provided for the academic year 'twenty, 1 lease up assumes strong opening rental revenue growth of 5.1 to 7.6%.
Based on an occupancy.
The range of 92% to 94% and an average rent per occupied bed growing at 3 to 3.5% for the 22 same store group.
As we presented at the National interface student housing conference 2 weeks ago. The long term fundamentals of the student housing sector are strong.
While we're extremely pleased with the progress we have made as we discussed in last Night's press release lingering short term impacts of the Covid pandemic are hindering a full return to normalcy. This fall.
As evidence of the strengthening fundamentals in our space. We're once again seeing significant demand for on campus housing.
For our on campus Ace properties, where the University administers the lease up we are nearly 98% pre leased.
We will be closely monitoring move in and attrition rates at these communities as these universities are administering their first full capacity move in since the commencement of the Covid.
With pandemic.
Looking forward, we remain optimistic and continue to anticipate a return to our historic range of occupancy for.
For the 2022.2023 academic year as the long term fundamentals of our sector are strong and appear to be gaining tailwind.
Specifically these tailwind.
Yeah.
Record admission applications at the 4 year public and private universities, we serve and target.
Universities nationwide resuming in person academic and social activities and reinstating their on campus housing policies for first year students in the fall of 'twenty 1.
This will once.
<unk> allow us the opportunity to implement our in person and exclusive sports marketing program activities as we kick off the 2022.
Leasing season.
The <unk> also include a significant downward trend in national new supply continuing at least through the 2000.
Again to 2023 academic year.
Including our currently projected decrease of over 20% in ACC markets and.
And finally University public private partnership opportunities to modernize on campus housing have returned and are exceeding pre pandemic levels.
This environment.
20 provides the company a unique opportunity for earnings growth and net net asset value creation based on the prospect of robust internal growth and high quality external growth in the years ahead.
Turning to capital activities during the quarter, we renewed our corporate revolver extending the maturity to 2025.
And improved our borrowing costs by 15 basis points to LIBOR plus 85 bps.
Further the updated facility demonstrates our long standing commitment to ESG by introducing a sustainability linked pricing whereby the borrowing rate improves if the company meet certain ESG performance targets.
Current each year in.
In fact, we believe that we're the first U S listed REIT to have included a performance component tied to each of the 3 pillars of environmental social and governance.
Also we raised $60 million of equity proceeds during the second quarter at a.
A weighted average price of $49 <unk> per share, which was in line with analyst Day Navy estimates at the time and was allocated to the funding of the ongoing construction of our 6.8% high yielding Disney development.
We thought it prudent to derisk, our balance sheet given that our pre leasing status was lagging the prior.
Sure at that time.
There was and continues to be uncertainty that existed around derivative COVID-19 strains and the lingering impacts of Covid as previously noted.
In closing, we'd like to announce our plans to host an investor day at our Disney College program housing development in Orlando on September.
Prior year 20, <unk> of this year.
We're very excited to showcase the project and other important initiatives underway within the company.
With that I'd like to turn it back to the operator to start the question and answer portion of the call.
Thank you we will now begin the question and answer session to ask a question you made from.
September then 1 on your Touchtone from Covid.
If you are using a speakerphone please pick up your handset before pressing the keys COVID-19.
Anytime Youre question has been addressed and we would like to withdraw. Your question. Please press Star then 2 at this time, we will pause momentarily to assemble our roster.
From the first question today will come from Neil Malkin with capital 1 Securities. Please go ahead.
Hello, everyone. Good morning.
Good morning cleaner snacking. Thank you from your stock and the Green After you report earnings.
Always good.
Yes.
Yes, the first 1 you talked about.
Starting in 94% for.
The fall academic your 'twenty, 1 'twenty 2.
You're at 91.7 now.
The data, we're looking at with <unk>.
<unk>, which I'm sure you see it.
No the pacing from sequentially month over month continues.
To be very strong.
It seems like things like that's a pretty conservative estimate, England. It wouldnt be too hard for you guys to get to the high end can you just maybe talk about what goes into your 92 to 94.
Range, and if you could actually get to the high end or maybe higher.
Taking in et cetera.
Hey, Neil Thank you.
The 92 to 94 range is where we believe based on the current trending in the data we have a force at this moment. It is probable that we wind up.
We're very pleased as we've talked about on the last couple of calls the critical thing was that inflection point, where we were able to cross over last year's.
You can start to trend ahead.
We've talked previously at NAREIT.
Prior calls about that 2.5 times rate that we were prior year velocity that has slowed a little bit as you expect at the end of the leasing season as if it was about 2.0 last week.
Over the next 4 weeks going forward last year, we brought in about 1000.
Applications and so the training is we should do a little better than that and so the last part of that obviously is then managing no shows which you know in a typical year is 40% to 50 bps.
Last year bumped up over 1 we expect that to return to normal when you take all those things into consideration and do the math, we're doing on the current statistics.
Years paid that 92 to 94 is where we fall in and would expect to be.
The other thing that we are very.
Pleased with but we're watching cautiously is the ace properties that we have on campus to colleges and universities, where the university's administer the assignment.
Happen in the process in that particular case, we're very pleased in that were leased to near 98% on those.
And this is the first.
Moving the universities will be orchestrating to full capacity in since Covid commenced and so we're watching that moving closely across the country.
The move in terms of the university's effectiveness of getting everybody and properly managing attrition there is probably a little more risk in that category than there would be in a normalized year given some of the lingering concerns and so all those things combined is why we think that range of occupancy of 92 to 94 is a high probability of where we expected.
<unk>.
Okay. Thank you the other 1 from me is related to.
Acquisitions or internal growth.
Okay.
The first part as some other real estate asset classes are have talked about very strong or accelerating.
<unk>.
Expected activity, just due to sort of more certainty people, bringing things to market due to potential tax.
Changes.
So I'm wondering.
If you guys are seeing that if you expect to see that kind of pick up.
Towards the end of the year and how you are.
The JV growth 2030 plays into that.
Yeah.
Certainly the other sectors, we have been following the multifamily and the incredible progress that Youre seeing there just student housing is lagging that sector real estate for sure and it's what we've talked about for the last 3 calls everybody is waiting to complete this lease up have NOI improved to the point the valuations are.
And then we would expect to see more.
More transactions coming into the marketplace and so <unk> been very patient.
Our shareholders and they asked and following us and we're close to getting beyond this fall to where I think we will put to bed. Many of the concerns over what were short term impacts on COVID-19.
And we will start to see valuations begin to firm back up as NOI improved this fall.
And certainly I'm sorry, the second part of your point as it relates to our plans. We certainly continue to move forward with our strategic capital platform initiatives and we'll be in a position when it makes sense to to execute on.
On when there may be advantageous opportunities in the marketplace to create value for you all.
Thank you.
And the next question will come from Jeff Spector with Bank of America. Please go ahead.
Great Good morning, and congratulations on the quarter.
I just.
I guess as you know.
About the 'twenty 2 'twenty 3 school year.
I don't know if it's too early to ask.
Any key initiatives anything different in any way to approach the school here versus let's say last year or the prior year, maybe the cap.
Wanted to take some of this.
This pop in demand this past quarter.
Yes, Jeff Great Great question.
The 1 thing and analyzing all of the data related to this year's lease up versus historical lease up and I mentioned this in my comments in the script.
With.
<unk> is just now being back on campus and University on campus housing being back at full capacity versus last year. The mid sixties, where it was having students back on campus, having the ability to resume in person marketing, having the opportunity to implement our exclusive sports marketing program.
And where do you see us in the stadiums around the country and are our larger markets.
We did see a diminishment in early leasing velocity as compared to our peers typically we outperform in that area in November through February about 12% to 16% in a given year this year, our spread and velocity over our.
Our peers was lower as more 5 to 6 and we directly attribute that to not being able to implement all the programs. We have an on campus in person and sports marketing and so having the students back on campus, especially those first year students gives us the chance to more aggressively implement 1 of the marketing areas.
Areas, where we have unique proprietary advantages and so 1 of the things coming out and we talked to you on past calls in terms of.
We're saving marketing dollars, because we're doing completely social online.
We're seeing that the in person and sports marketing program really did pay dividends to us as we look at the velocity in the periods of those first year students.
As being on campus and so we're really happy to kick that back off again, and why we mentioned in our comments.
Yeah.
Thank you very good great to know and then I'm sorry, if I missed this I know at NAREIT in June.
In June you discussed.
60 plus opportunities.
To work with universities.
Looking to modernize housing I'm, sorry did you mention already or if not can you discuss the pipeline as of today.
And we Havent issued any additional numbers, but what that the 60 number that you saw in the presentation there at NAREIT.
Also that I covered it in interface couple of weeks ago.
And as we've said.
Definitely we have now seen the universities as their management of the Covid period is.
Much more an ordinary day to day operation for them and they are now focusing on the future and we have seen you know the awards that we were working on free Covid kicked back into full swing and we see the vibrant pipeline that was representing representing.
Presenting those 60, which is significantly above what we had seen in the pre COVID-19 environment, taking place and so that particular sector of our business.
We do see post COVID-19 as emerging with equal or better opportunities than we had prior to.
Great. Thank you.
And the next question will come from Nick Joseph with Citi. Please go ahead.
Thanks, how are you thinking about ATM equity issuance versus asset sales going forward.
Capital allocation commodity and equity issuance decisions.
Yes, Nick I'll jump in on that this is Daniel.
Certainly.
When you look at what we did during this quarter, we've talked about having a capital plan as part of our recent development deliveries and ongoing under construction development of raising $60 million to $120 million a year in equity type capital.
Whether that be through dispositions or or common equity.
When when we were active on the ATM this quarter.
We were looking at where we were in the lease up prior to.
Kind of at the end of the quarter, we were still trailing the prior year.
Certainly.
<unk> had some uncertainty around it for what the ultimate outcome for this fall would be and what the disposition environment would be like.
If things didn't go.
Didn't return as much as we had hoped for the fall and so we thought it was prudent.
At that point to go ahead and get it leased.
The bottom end of our capital plans for this year addressed with the $60 million.
At a valuation that we think represented a good value relative to <unk> at that time of course.
Now that it is looking like things are going to continue their march towards normalcy. This.
This fall I think everyone, including our own opinion of Nov's is changing which certainly.
Changes that calculus, a little bit.
We do believe that capital recycling through dispositions.
Is going to be an important part of our longer term capital allocation.
And we think that theres going to be a strong bid for student housing assets will which will provide an attractive opportunity as we go forward.
To use that so.
Of course as always we'll continue to evaluate stock.
Stock versus dispositions and the cost.
Cost us 2 different options represent to the company in which.
Source of capital provides the best balance of achieving good value creation, while also allowing us to manage towards our longer term leverage targets.
But we.
We do think that it is important to include capital allocation.
Allocation of our capital recycling as part of our longer term capital allocation strategy going forward, especially when you look at what we can.
Monetize assets relative to the development pipeline that that would be used for and to answer. Your question. Yes. All of that is a significant.
Conversation that.
I have with the capital allocation committee on the board.
Thanks that was very helpful. And then I know recollections have moved up a lot, but can you just remind us on the bad debt policy what amount of non collected rent is included in revenue in a given quarter.
Okay.
So you know we typically run.
We had the kind of 90 mid 97%, 98% in terms of uncollected rent during a quarter of course as you move on from the quarter you continue to collect and those those ultimate collections do climb in a normalized environment. We ultimately ended up annually about 80 to 90 bps.
1 in terms of bad debt.
Right now for 2021, we think ultimately will probably be in the range of 120 to 130 bps and bad debt, but quickly see that.
Returning to our more normal historical levels, 1 of the things that allowed us to outperform.
During this quarter was we were expecting.
To have about 1 million 5 in.
<unk> potential abatements under our resident hardship program, especially as we moved into the summer months.
And we only had about $300000 in requests for.
Bps and under the resident hardship program. So we've really seen a diminishment in the need for that and are very hopeful that that will diminish to really negligible levels as we move into the new academic year.
Thanks, Brian.
If youre looking at what.
What's the outstanding delinquency that hasn't been collected but has been assumed.
Assumed in earnings do you have that number.
Yeah, well I mean.
As we reported we had collections of 96, 8% this quarter. It was a little higher in the first quarter a little over 97%.
That is not abnormal to see collections, a little lower in the second quarter, because you are moving into those summer months.
And you have kids that leave for the summer and as you can imagine that sometimes results in their ramp being late and so so not anything out of the ordinary but.
Ultimately, we still believe that those collections will.
Sure.
Net 96, 8 and collections will drive ultimately about.
30 bps of ultimate bad debt for the year.
Thanks.
Yes.
And the next question will come from Derek Johnson with Deutsche Bank. Please go ahead.
Hi, good morning, everybody.
Given what you're seeing in the market with your University.
100 partners as well as the lease up at Disney do you feel confident that acc's pre COVID-19.
<unk> January 2020 that your pre Covid 2022 earnings power is fully intact at this juncture.
Okay.
So sorry.
Derek I Miss you a little bit there you were saying buy when it would be back in line with January 2020.
No. So back in January 2020, before Covid hit clearly you had expectations of what your earnings power would look like in 2022. So the question is what youre seeing in the business now between.
Our city partners and Disney are you confident that ACC is pre Covid 2022 earnings power is fully intact.
Yeah, I mean I'd say.
By the time.
It's hard to compare and I know this isn't how youre completely asking it but if you look at where we were in January.
Unit 2020 in terms of what kind of <unk>, we would be producing on a run rate basis.
That was of course before we had delivered the fall 2020 developments that started delivering Disney so as we come out of Covid, we're really going to leapfrog.
Where we were at that point.
<unk> time.
Because of those new development delivery when you get to December or fourth quarter, I guess I would say of January 2022, because of our comments around expecting to be returning to more of a normal level.
<unk> earnings are of occupancy in the portfolio.
In time, we think that we will be on a same same basis.
Back in line with what we had originally.
Targeted for.
For the portfolio by that quarter, we've continued to have decent rental revenue growth throughout COVID-19. So it's really about getting that occupancy rate back.
Due to historical levels, and then obviously on top of that the accretion that we've added from the new developments, we've delivered throughout the Covid time period.
<unk> Disney as you referenced.
Yes.
That's very very helpful. And then just sticking on Disney how is the tenant reception at Flamingo village.
Back to trending any anecdotal surveys or feedback that kind of gives you confidence that the roughly 5000 units and stabilize around year end this year and.
Yes, I mean from a tenant satisfaction perspective, the residents are elated.
And as you all will see with what we've announced in terms.
Terms of an Investor day in September.
This is a new phase of quality and living environment for the Disney College participants versus the historical housing that the universe.
Disney had been master leases and so we were actually the executive team was just there are several weeks ago.
And.
The basically what we have done and you all will see this for yourself.
We have now provided the type of customer service and living environment that the Disney in terms of delivering that mission for Disney, we're giving them each and every day when they come home and so it's really taking a little bit of the Disney magic and bring it into the community in which.
They live and honestly my words won't do it Justice you all need to show up in September and see for yourself and talk some of those restaurants.
Thanks Bill.
And our next question will come from John Pawlowski with Green Street. Please go ahead.
Thanks, 1 follow up to Nick's question, maybe for William can you give me a sense for how anticipated pricing on dispositions was shaking out of your way selling assets versus issuing common stock.
And we've talked about in the market cap rates and student housing have held pretty consistently through COVID-19 at that.
Low to mid force and in most cases that was off a slightly impacted COVID-19 NOI.
Now as we look forward and we start to talk about this increase in transaction volume that bill referenced there is deep investor base.
And when we look at it relative to what's happening with the multifamily.
Cap rates do we think forward you could see that compression in cap rates coming.
Yes, that's something we're going to be watching very carefully as we can make future decisions from a capital recycling and disposition versus versus equity or other costs that are the things, we're going to be wing, but they've really held in kind of been pretty consistent and that the core.
Core pedestrian type in that low fours, but we do think going forward there could be an opportunity to see that compression and thats, obviously something that we'll be weighing when we way how we look at capital recycling in the future and for US John It's about increasing the NOI going forward into the fall. So that we can maximize valuation on dispositions from the recovery that were in.
So conductor.
Sure, but the products you brought or potentially would have brought to market on a value just total value perspective, what kind of price and did you see it versus pre COVID-19 values.
Yeah, I mean consistent.
Certainly cap rates were consist.
And like you said, you're in a wise could be slightly impacted by Covid as you solve the overall portfolio, but those valuations and cap rates have maintained fairly consistent.
Okay last 1 from me.
If supply growth moderates as you expect that I believe you referenced 20% decline next.
In the military and the positive tailwind on demand continue.
Is there a reasonable scenario, where you can push rental rate growth above that historical track record of plus or -3% is there anything different this time around for the typically coupon clipping nature of the portfolio.
Yes, let me answer that short.
<unk> long term.
From a longer term perspective over the next 3 to 5 years or 1 to 5 years, rather you do have tailwind given the supply situation and also these record admissions continue beyond 1 year to where from a pure supply demand perspective.
We're going to profit.
Terminally have more pricing power than we have in the prior 5 years.
Net next year for us, we got to wait and see where the vacancies ended up in the portfolio. This year in terms of how our average rent per bed growth going into 2022 pans out.
Part of that benefit you've seen the 3 to 3.5%. This year that we've been talking about is that.
Average rent per occupied bed drove that number up as our more expensive beds and the while.
While on campus <unk> 3 beds returned in their occupancy.
So when we're looking at the projection of occupancy that we have a 92 to 94 at the end of the lease up we got to look at where those vacancies exist and as we recover occupants.
Occupancy, where the average rent per better those vacant beds are as we move into 'twenty 2 there could be a little bit of a drag on overall rent growth next year as we push forward. So that's a question will be much more apt to answer once the lease up is complete we see what beds are filled what beds remain vacant to get a better picture going into 'twenty 2.
But long term certainly the diminishing supply coupled with the admissions and enrollment that we're seeing should lead to a better pricing environment for the industry.
Alright, thank you.
Okay.
And the next question will come from Alexander Goldfarb with.
Piper Sandler. Please go ahead.
Hey, good morning down there and.
Totally agree I mean, the drop in supply the growing enrollments and all that stuff that we heard the interface is pretty incredible for the industry.
So bill along those lines. The first question is.
Gray Star had announced that they.
They sold a 49 interest 4.9% interest in the former Edr UK stuff.
As you guys look at dispositions or capital recycling, and especially with the amount of capital that we hear all wants to come into the sector et cetera, do you guys see an opportunity now to maybe include some of your ace.
Ace deals as part of that whether it's not outright sales, probably but joint venturing is that something that you would now consider based on the <unk>.
Execution.
That is certainly something that is in our realm of consideration.
And doing it in the manner is very important because again as we've talked about over the years.
Universities are entering to these partnerships. It is very much qualitative who they're choosing a partner that they're hoping to be a long term.
Partner through.
The life of that relationship and so being able to capitalize the value in those transactions and selling a minority joint venture interest.
Where you maintain control and in the eyes of the University, who their partner is not changing is absolutely the preferred way to do that.
And so yes to answer your question simply.
Okay. So you may we may see you guys actually joint venture some of your race.
Yes, that's very much possibility as we look at how to best raised capital.
Most efficiently going forward, but what again would always be in a situation, where we're maintaining control position for our university partners to be able to rely upon us.
Okay, and then second is and Bill I understand that youre, not making any comments on next year until you see how this year goes but your outlook that you guys provided certainly exceeded the consensus same for third.
Third quarter.
As you guys look at your outperformance in the second quarter and what you see that goes into those numbers for third quarter and for the full year is it more debt things are better from a topline growth perspective, meaning better Disney better rents better ancillary income or is it that a lot of the negatives that you guys endure.
Endured over the past year, a lot of those negatives quickly unwound and therefore, you just had a bigger increase in margin because the negatives were removed I'm trying to understand is this more topline that's really driving everything or the elimination of a lot of the negatives that were a drag over the past year.
It's combination of both.
As you heard in.
Of our script comments I mean, the outperformance in this quarter.
First and foremost just driven by the sheer volume of students leasing for the spring and the summer.
We also we were very pleased we've been talking about nextgen over the years also.
1 of the things that we were very pleased with this quarter is we backfill at about 85%.
Our short term may ending leases, where typically that has historically been about 50% and so part of that we believe is good demand coming back. The other part of it is we are getting more sophisticated in that current period leasing administration.
That you've always seen in our fall re leasing.
Competencies.
And so certainly top line, but then also as Daniel was talking about the resident hardship program and some of the lingering cost impacts.
We have seen those.
Start to evaporate now this is something going back in on Alex I know you were at.
The National student housing business conference last week or 2 weeks ago.
The investment.
Thesis for this space, which has always been on the stability of cash flows and the resiliency.
As you go through our comments you know the first time, we pointed this out was in fall of 'twenty. When you saw our collections from July of 'twenty by September of 'twenty rebound 500 basis points back to 98% collections.
Right in the midst of the pandemic and now you see this quick diminishment, what that speaks to is the ability of students and parents to re capital.
Jumping up their education through loans grants from the life.
So we think the long term investment thesis youre seeing prove out through the challenges that COVID-19 has put out there.
Okay. Thank you Bill.
Okay.
The next question will come from Steve <unk> with Evercore ISI. Please go ahead.
Yeah. Thanks, a lot of my questions have been asked and answered, but I'm just curious bill.
Lot of your apartment peers have been using a lot of smart home.
Home technology to drive incremental revenue and also cut down on operating costs and I'm. Just curious what you guys are looking at or testing within the current portfolio and how do you see that unfolding over the next couple of years.
Yeah, and certainly when you are building a new portfolio.
Our new facility for example, when you when you get into Disney you again, some of our modern buildings the amount of technology and operations management that we're allowed we're able to build them from the design phase of substantial.
Which really also helps drive the ESG, obviously that when the older portions of your portfolio that is a little bit more difficult to do.
Do so.
The previously mentioned, Steve as we look at technology in the areas of operations the customer experience. Obviously COVID-19 did help advance a lot of those interactions in terms of how we speak to our existing residence on a daily basis and communicate how they are able to transact and do.
Orders with us and so those things do can continue to advance as I did mentioned, although the 1 thing that we have kind of had an affirmation of is given the unique aspect of our student that is in the college market for 4 years, and how we reach them and how the cycle comes the face to face in person interaction with them.
You work with and leasing process is something that statistics, we're seeing the value and the dividends that the debt is paid and so we will continue like that.
All of the companies and real estate to look at from an operations and the customer experience perspective, where we can continue to employ those systems.
And how we can use star benefit.
1 of the ones just top of the mind.
1 of the things in our business, where technology has always come into place ahead of multifamily is key management and electronic locks and that is how you deal with that and the customer experience for lockouts things of that nature and so we'll continue to explore those anywhere then it makes sense and is good.
Good for customers and good for us.
Great. Thank you.
Again, you are right to ask a question. Please press Star then 1 on your Touchtone phone.
Next question will come from Austin <unk> with Keybanc. Please go ahead.
Hey, good morning, guys.
<unk>.
With.
The equity capital being more attractive today.
Now reach sort of the low end of your range in terms of the equity capital raise debt at $60 million to $120 million you referenced Daniel.
Do you in the capital allocation Committee you still think it makes sense to move forward with the joint venture platform.
Platform this year or could we see that announcement push in 2022.
No.
That is something that we are committed to and continue to move forward and think it is a very prudent move given the types of opportunities that are going to be before us and so that's something that continues on pace.
So I know you just mentioned kind of SaaS.
Assets are a consideration to sell into the joint venture, but but how are you prioritizing what assets may go into that new platform and then I'm also curious have you guys had any inbound inquiries to acquire any of your ace assets and just trying to really gauge what the demand is from the open market for those types of assets.
Sure Juan.
Anything we talk about a joint venture regarding ace assets would be more in line with for example, with the joint venture we have with all of you on the $55.40 fiber. We're in control when we talk about the strategic capital platform. That's the addition of a $90.10.95, 5 joint venture where we are.
A minority non controlling partner in that regard.
<unk> always said people enquiring and showing interest in those assets.
As you all know they are a high highly attractive to institutional investors, it's coupon clipping consistent resilient income.
Income growth and so that's something that if and when we decide to transact on a joint venture fashion, there will be no shortage of desiring suitors.
Got it and then just last 1 from me on sort of.
The leasing and attrition I am just curious bill I appreciate the range that you've given us.
Come in your last year's attrition and historically, what that's been but can you put a finer point on what you've assumed for the 92% to 94%.
And have you started to see any signs of early cancellations at this point and then I was also wondering if there's any differentiation across across the 68 universities you guys are.
Both from a leasing perspective, yes, as we've talked about on numerous occasions and cost prior to this 1.
Data and business intelligence and this lease up is more difficult than it's ever been because last year was such an anomaly and you can't utilize the pre COVID-19 historical data to draw any type of future.
Future trending.
So as I mentioned in my earlier comments, when we talked about that 92 to 94.
All of the real time assessments that we do in terms of what is our current outpacing a prior year velocity, what did that prior year velocity last year.
Look like and apply assumed the debt.
Multiplier holds true, which we have no way to know what's going to whole true. That's why we are so nervous up until it crossed over in July.
And then we look at putting on that trend backing into what we believe will be a more normalized no show management I mean, when we look at our expectations for no shows this year, we do think that.
Particular segment of our business should return to normal and we should be at them in that area of about 50 basis points and so when we look at the current statistics, where we are now and what the trend is at the time. We did this release the math turns into that 92 to 94 and so we are giving you the most analytical sophisticated approach.
So that projection that we can in this unique environment based on the data and the training we have at the moment, we're putting it out.
Got it and then any differentiations across schools worth noting.
No.
The 1 thing and I think this is where we're probably the most optimistic.
As of <unk>.
A return to normalcy being in full swing and that's the statistic, we gave where our mla's or sorry, our on campus Ace properties that are administered under MLA as marketing and license agreements by the University being at 98% that encompasses schools from Cal Berkeley across.
The country and so seeing that type of geographic resurgence, regardless of what the classification or what their methods of managing COVID-19 work throughout the year. That's the 1 indicator to me that is the most profound in terms of okay with all those students coming back across the country and being.
In person in their housing on campus.
That begins to the normalization of the theater cycle into leasing as it usually exist as I mentioned about being able to get in person those marketing activities back in place and should begin the normal cycle and so that's why we continue to be bullish on 'twenty.
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The other thing I'll point out that we are monitoring is we do geographically we will see how things go forward, we are a little slower in Portland, and Minneapolis and as some of the places where there was civil disruption and so we're certainly monitoring that to make sure. There's no long term impacts from that that linger beyond this.
Got it thank you.
This will conclude today's question and answer session I would now like to turn the conference back over to Bill Bayless for any closing remarks.
Yes, and certainly want to thank all of you.
For joining us and as always I want to give a huge shout out and thank the American campus team for all their hard work.
I'd say, thank you in advance for everything that you're doing right now to prepare and implement turn to complete this lease up and to do everything you can to make a wonderful experience for the more than 130000 students that will call an owned or managed American campus community home. This fall and we also hope to many of you.
Who will join us at our Investor day at Disney on September 23.
The conference.
<unk> has now concluded. Thank you for attending today's presentation and you may now disconnect.