American Campus Communities, Inc. (ACC) on Q1 2021 Results - Earnings Call Transcript
Operator: Good day, and welcome to the American Campus Communities Q1 2021 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Ryan Dennison, Senior Vice President of Capital Markets and Investor Relations for American Campus Communities. Please go ahead.
Ryan Dennison: Thank you. Good morning, and thank you for joining the American Campus Communities 2021 first quarter conference call.
Bill Bayless: Thank you. Ryan. Good morning, and thank all of you for joining us as we discuss our 2021 Q1 results, an evolving operating environment.
Operator: Our first question comes from Derek Johnston with Deutsche Bank. Please go ahead.
Derek Johnston: Are any of your colleges or universities requiring the vaccine? And do you see this as an enrollment hinderance? Do you worry about a broadening of vaccine mandate for students? And then as part of this question lastly, are these vaccination requirements being driven by student wishes or instructors, professors, and staff?
Bill Bayless: Yes, thank you, Derek. Currently, only two of our 64 universities are requiring a vaccine. It's important to note, we do think you'll see more schools follow that trend. The way that it is being done is in the context of students needing a vaccine to attend classes in-person on campus. And so, when we look at what occurred last year, where in many of our universities no students were able to attend classes at all, but yet still 90% came back.
Derek Johnston: Thank you. That's very, very helpful. Given the growth in application rates nationwide, is there a potential upside to growth in admissions, and do you think it's taking students a little longer in the side where to attend given that most students are applying to numerous or more universities than historically, and are the elevated applications and COVID possibly delaying University offers?
Bill Bayless: Yes. And certainly, when we look at Common App, which is the company that helps universe students apply to universities, there is indeed an uptick in applications this year. When you look at unique applications in terms of the actual physical number of applicants, thereof nationally about 2.3%, which is a good growth number. Good for us. And when you look at where the larger increases are in the increase in applications, certainly public large institutions with enrollments above 20,000 are doing very well. The applications there are up 13% to 15%. And so, in the universe where we operate, we do see double-digit submission of application. Certainly, the increase in applications is from an administrative perspective, there's more processing that the universities need to do. And so, while we do see them operating on their normal timeline and typically by the end of May, is when you see all the application and acceptances play out. We don't see a slowdown in that process, but there is a little more processing for schools to do. How it all plays out at our particular universities, ultimately we have to wait to the fall when those final enrollment numbers come in. But the trending is positive, both in a small uptick with a 2.3% and double-digit submission of applications at our universities. And when you look out we're students are applying on in a pre-COVID environment, they were typically applying at 5.3 universities per student and now it's 5.8. So, there is a small uptick in terms of the number of institutions they're applying to, at an average of about one more, if you round up.
Derek Johnston: And just one last one if I may. What are investors missing? I mean, why do you think ACC shares significantly lags the broader multifamily REITs year-to-date. I mean, especially has your company booked the bulk of the pandemic pain upfront in real time versus apartment REITs where it likely takes years to get back to pre-COVID earnings power.
Bill Bayless: First, I think that you know, just when we look at the initial impacts on COVID that occurred last year, I think there was more concern and fear around student housing than multifamily at the beginning. When we saw University, starting with Harvard, taking very significant draconian actions, closing the campuses when we didn't know what COVID yet was. And so, certainly I think that the initial impacts in terms that concerned our sector were greater than multifamily. Certainly, I think that we have over time now demonstrated long-term thesis of student housing has always been the stability of cash flows and the fact that we are more resilient in times of macroeconomic uncertainty. And I think we started to build that story back in showing the reality of it in the context of the progress that was made this fall in terms of the 90.3% occupancy, and more importantly a return in the payment structure and the collection rates going back up to that 97%-98%, showing that students and parents can recapitalize the funding of their education in economic hard times with guaranteed student loans and grants and the like. And so, we think the market is seeing firsthand a demonstration of the resiliency of the sector there - we've got to prove out this year's lease up, and that's we're focused right now. We're chopping wood and getting back on that road to normalcy and returning to the sector. And I do think there's going to be some geographic variations as we see the reopenings in university systems across the country and on the coast as we build that back. And so, I don't know that the market is per se missing anything just in terms of watching the demonstration of the long-term thesis of our sector being proven out in one of the most unique circumstances we faced as a company and in the industry.
Operator: Our next question comes from Neil Malkin with Capital One. Please go ahead.
Neil Malkin: Nice quarter. Nice start to the year. First, kind of a housekeeping. In terms of, like Arizona, Texas, Florida, like the states with your largest exposures, most of those schools have announced or do you expect them to announce a plan or I guess a formula for a full-time in-person curriculum in the fall, in terms of just - again as a learning implementation and as well as a COVID protocol?
Bill Bayless: Yes. Those three states in particular have done very well even through this first year in terms of their models of education delivery and their policies on campus and continue. Now the good news is, when you look at all of the data, of all the markets that we're operating in, is that all state systems are making positive statements toward a return toward in-person activities. Certainly, those three where we have the highest concentration are already states and systems where we have seen more open policies as it relates to in-person activities.
Neil Malkin: Yes. Okay, makes sense. And then in terms of your, I believe it's growth 20:30, If I remember correctly that you're initiatives with joint ventures and growth outside of the normal business lines, I suppose you could say. Any update there? I mean, I know things have gotten a little bit better since sort of that was announced. But do you think that you're going to have more to announce there? Are you in talks? Have you potentially established partners you're going to announce something with, any updates there would be great?
Bill Bayless: Yes. No. And we certainly continue that process as we talked about. We had engaged a consultant later in their brokerage firm later in last year. We moved that process along. We're into the final stages of selection. We're very pleased with the interest and the amount of capital that is out there that is entering such program. As I mentioned previously, the entire industry is in the focus right now of returning our values as we move through this fall's lease up. And so, as we get closer to the transaction environment, which we think in Q4 of this year and Q1 of next year, we'll be in a position to talk more about that and bring finality to it.
Operator: Our next question comes from Nick Joseph with Citi. Please go ahead.
Nick Joseph: Thanks. Bill, I appreciate the commentary on pre-leasing and understand the uncertainty is still there. But just in general, why couldn't occupancy come back to fall 2019 levels this year, just given the application trends you've talked about, as in-person enrollment or need for kind of continued social distancing or something else that could hold back on it and versus that long-term average?
Bill Bayless: Nick, we think we talked a lot about this at the Investor Conference that you all put on. In that, it's really on the margins. Just for everyone on the call, think about your circle of friends in the quintessence - the 20 to 30 families that you interact with. And then you know, how many of those families are 100% returning to normalcy in all their decision makings. There is always that you know on the margins, two to three that are going to continue to have a consumer behavior that's different. Last year we had 9.3 out of 10 students that came back. This year its going to be 9.5, 9.6. I mean, it's really that on the margins. The other thing that we - when you look at our performance historically over the years, and one of the things that we always talk about is the spread of occupancy, where we outperform the rest of the industry in the axial metrics 175. And a lot of that benefit that we bring, the full maximization of revenue in our portfolio, we always talk about how we manage the wait list and no-show process. And you know, some degree, filling student housing beds in the fall was like running an airline, in filling those, maximizing the seats in that process. And when you're in that overfill and over book situation, is where we really utilize our proprietary systems to fill every last bed, do every last roommate matching to efficiently work that process. And so, the maximum benefit that we bring is when you're in an oversold situation in the majority of your markets. And so, when you look at a normal year - fall of '19, we had 93 assets that were over 98%, 76 that were virtually 100% full, where we were able to nurture that process to maximize. You look in the COVID environment, we only had 46 assets that were 98% and above, and so you have a little less opportunity across the portfolio geographically across the entire nation to have that type of outperformance. And so, when you look at consumer behavior on the margin and the ability to fully take advantage of our systems in a normal situation of overflow, we think that's the reason we probably won't see a full return to normalcy.
Nick Joseph: Thanks, that's very helpful.
Bill Bayless: This fall. Yes, right.
Nick Joseph: And then, given more clarity on the Disney College Program, as the Disney phases deliver this year, how are you thinking about leasing those in the open market versus waiting for the program to resume.
Bill Bayless: Yes, we're in discussions with Disney on that right now as they advance their plant and thinking about the reinstatement of the College Program. As we mentioned in my comments, and certainly, Mr. Chapek, at their Annual Meeting, talking about what the Disney College Program means to them and that they hope it will be reinstated this year. In the internal conversation that we have with them, we do believe that, and I mentioned this also, as the reinstatement takes place, which you know is Mr. Chapek, that they hope will be by the end of this year. That the potential for the ramp up of occupancy may more emulate closer to our original pro forma as we're bringing phases back on, to where we now believe that we may indeed be able to hit the stabilized yield of 6.8, ultimately by May of 2023 between now and that point in time, while the reinstatement is still in question is exactly when it will occur. Once it does, it may ramp up more in line with what our original expectations were. And so certainly because of that, while we've leased, I think we said 148 beds to-date at the time of the release, we are, because those leases are typically 12 months and would extend to the period in which Mr. Chapek has said the College Program will come back. We are monitoring that to make sure we make the right decision, that we're ready for the higher revenue generating beds to be available to the College Program.
Operator: Our next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.
Alexander Goldfarb: You guys seem to be in pretty high spirits today, so that's a good thing. So, two questions here. One, freshman, where the - were they laggards last year? I think that we're 80% pre-lease. Do you have any sense Bill of how the freshman are doing this year because that seems to be sort of the mixed question? That seems to be the real variable in getting back to normalcy.
Bill Bayless: Yes. And Alex, when you say first year students, are you referencing the ones coming in from high school this year or the ones that came in last year continuing on with leasing.
Alexander Goldfarb: No, no, the new to school. It was - because last year had been up, these were the kids that were first going to school who were the ones that will then come back and actually live on campus, so trying to gauge that same group, the people who are going to school for the first time.
Bill Bayless: Yes. No. And this is where we're - again all of our preliminary indications are positive. But we continue cautious optimism as it relates to the ultimate outcomes. We continue to see good velocity among that group and all others and as it is, we mentioned, we're now at about 2.5 times weekly activity of what we had in the prior year. And so certainly, we did see a slower pace of decision making toward housing initially in the fall and over the holiday break period, but we have seen that acceleration continue. So they are indeed making decisions a little later. When you look at prior years, people that entered the market, the sense of urgency that existed to retain your housing. For that particular group coming in, they never experienced that. And so their decision making is just more on a comfortable pace of own, Alex time for me to do this. We always attempt to create that sense of urgency in some markets. We continue to have that sense of urgency. But it has been a slower decision making process. We have seen with that two at a times velocity, and this is where I mentioned. Hopefully, by the time we get on the call next quarter, we'll be able to give you a real comparison of this year to prior year, that will enable us to start to have a feeling or a projection of where we're going to end up. But with that particular group of freshman and as well as sophomores and juniors, we now see a velocity that 2.5 times trending by the end of June, July, we should be at a point we should be able to have some indications as to how far we're exceeding last fall, and that goes across the board. As it relates to new incoming first year students, there is two positive things. One, the Common App data that we mentioned, in terms of an increase in applications of the first-time students. And secondly, and probably more importantly in our partnerships, is colleges and universities returning to their housing expectations and requirements that they had waved during COVID, which should be the bolster in that particular category.
Alexander Goldfarb: Okay, perfect Bill. So that leads into my second question. From across your portfolio, especially the comment about the geographic differences and return to normalcy, what are you seeing from the schools as far as full restoration of sports, extracurricular, yes allowing fraternities, and facilities to rush. Basically, how much are you seeing schools go back to full operations? Or is your view that maybe some of your portfolio would be full operations, some will be sort of limited number, I'm just trying to create - get a sense for how much the schools are doing on their part to try and really restore the fun college experience that's ?
Bill Bayless: The most important policy we're seeing first is housing, and the schools are going to a restoration of normal housing activity and policy. Secondly, when you look at major athletic events, and I do think you know was a pretty successful year overall for collegiate athletics from where we started at the beginning of the pandemic to what we saw in the completion of your major athletics, especially with March Madness just having finished up and having a successful college football season, where they actually crowned the champion. Some schools have announced full occupancy at sporting events. And so, we have seen some begin to go all the way back to normalcy. Others, we're seeing that are now staging that coming in line, but everything is positive movement more toward normalcy. This is where you may see some of the vaccine requirement help universities put these back into action. And so, it's still somewhat influx geographically. The good news is every announcement that has been made has been positive, whether it's in Texas, Florida, California and Massachusetts, all announcements have been incrementally positive in moving back more toward in-person activities of all kinds versus where they were.
Operator: Our next question comes from Austin Wurschmidt with KeyBanc. Please go ahead.
Austin Wurschmidt: Bill, to that the one of those last points, can you just put a finer point on what percent of your schools have reinstated through the on-campus housing mandate for first year students.
Bill Bayless: Yes. Every - all the - we are in formal partnership with are going back to their normal expectations and requirements. And so within our portfolio, at this moment in time, barring any changes, we have seen a 100% that they're going back.
Austin Wurschmidt: Thank you. And then as far as DPC, you discuss the potential to reach the underwritten yield by May 2023, which I think is when the final kind of 10 phases delivered, but at what point do you think you could achieve the targeted yield on those phases one through five that deliver by the end of this year to the extent that the program is reinstituted later this year?
Bill Bayless: Yes, we don't have clarity at this point in time on that. And again, certainly, looking at Mr. Chapek comments, we think that by the end of this year we can begin to see the reinstatement. What that ramp up is through '22 and how it may hit pro forma is just too soon for us to have clarity into being able to convey to you what that might be.
Austin Wurschmidt: And then just last one for me on the balance sheet and sort of leverage. We've seen it tick higher. But as we start to lap some of the comps and refunds of last year, how do you see that ratcheting down and how do you plan to manage that as new development opportunity start to emerge for maybe 2023 and beyond?
Daniel Perry: Yes. Austin, this is Daniel. First, just on the normal recovery in those leverage ratios. We continue to lay out what we believe our pro forma leverage ratios will be as we fund out the development pipeline. The current development pipeline, which currently all that is remaining is the Disney Project. Throughout '22 and into the fall of '22 is when we actually expect to see that full recovery in EBITDA to bring it back down to the pre-COVID levels, which at this time if you were to eliminate the negative impacts of COVID, we'd be around seven times, low sevens, debt to EBITDA. But with the capital recycling and/or other types of equity type capital raises that we lay out in that $177 million and $377 million range between now in 2023, that would bring us on down to the low-sixes, high-fives that we plan. So we don't have - we're willing to be patient and allow that recovery in EBITDA to occur and to execute on attractive cost of capital transactions that will move that debt to EBITDA and debt to assets ratio back into our targeted ranges, and not do something that overly dilutes the NAV of the company just to get there more quickly.
Operator: Our next question comes from Anthony Paolone with JPMorgan. Please go ahead.
Anthony Paolone: Bill, just wondering if you can walk us through your view on when the core NOI of the company gets back to 2019 levels? I'm just trying to size up, like you've actually had some rent growth even if you have some occupancy slippage. So I'm just trying to get a sense maybe as we look past 2021 as a transitional year?
Bill Bayless: Yes, we certainly - we certainly believe as we get to fall of '22 that we believe will be very close to a complete return to normalcy in that - and by that time with some - hopefully rent growth and revenue growth in that area will certainly be back to the pre-COVID numbers. Again, it's just too soon for us in terms of being able to build in a reliable expectation for this fall through the first three quarters of '22 that are relying upon this lease up to be able to have full clarity. But certainly, as we think about the lease up in fall of '22, and where the University policies have been and what we've seen in consumer behavior, we do think by that time it is reasonable to expect that we should be in that position.
Anthony Paolone: Right. Do you need for occupancy to come back, you've had some rent growth over the last few years?
Bill Bayless: Yes. And obviously, it's the combination of rent and occupancy to get to that number. We will always utilize the LAMS program to do that. We have mentioned that the on-campus beds, where we had the vacancy this fall were at a higher rate, so we should get an average revenue per bed uptick from that as you see the recovery. And so, certainly, the combination of the two, but to granularly say how much is going to come from each one, we can't do with this time, but certainly I think by fall of '22 we should be there.
Anthony Paolone: Okay, and then just on the supply side, can you comment on what the supply picture looks like for '21, '22 in your markets? And also whether there is - whether the developers are starting new projects? Or there is capital available for that right now?
Bill Bayless: Yes, let me let William Talbot answer that question. William, go ahead.
William Talbot: Yes. So as we've talked about in the past couple of calls for fall '21, we are seeing a slight decrease in supply, about 1.3% is where that ended up at the end of the day, and that's coming off a year where we saw 20% decline of supply, so continue to see that decrease in supply. And it's really driven by - most developers are focusing on those pedestrian sites in the Tier 1 major markets. And as you all know, if you've been to college - those are typically very difficult sites, require assemblage, difficult entitlement - environments typically are going up, so higher construction costs certainly in a more difficult, construction environment. So those really - those barriers to entry that are naturally in close to universities is what's really constricting that development we're seeing in our market.
Operator: Our next question comes from Eric Noll with Evercore ISI. Please go ahead.
Eric Noll: I guess, Bill or Daniel, can you provide an update on what you're seeing as it relates to the summer camps on the conference businesses. I think, Daniel you've talked about the sort of $4.5 million in revenue kind of split between the second and third quarter, kind of based on kind of what you're seeing on the ground. How should we think about that segment over the next two quarters?
Daniel Perry: Yes, assuming you're right, in a normal year we had commented that we typically produce about $4.5 million of summer camp and conference business. And as we discussed, obviously that went away last year when we were in the middle of the early part of COVID. Schools have started to think about that, but honestly with the real goal in mind being keep an eye on the ball for return this fall and making sure that they don't do anything to derail that, we don't expect really much of any this summer. We do think that that will return in the summer of 2022. If there is any of year, we expect it to be very minimal and not a big dial mover in terms of earnings.
Eric Noll: Thanks for that. And then I guess my second one is, just from a modeling perspective. I know you've talked about expense growth being in the high single digits, especially next quarter and maybe into the third quarter. How should we think about maybe the sort of the items within expenses, whether it's G&A, utilities, payroll, kind of in the broader context of that high single-digit growth?
Bill Bayless: Yes, I mean, if you think back to, or if you were to go back and look at expenses during the midst of COVID, all of those controllable items, so excluding insurance and property taxes, we had significant savings across the board, honestly in the second and third quarter due to just a lot of activities ceasing, and so we would expect in the controllable areas to see significant growth pretty much across the board as we return activities to normal levels. We are continuing to deploy a lot of asset management initiatives across the portfolio that will help keep in our utilities expenses, but you're going to see the return or that higher growth level just because of the absolute savings we had due ceased activity in the second and third quarter, and then start to maybe normalize a little bit into Q4. I'll remind you that when we talked on last quarter's call, our expenses, when we looked at our internal budgeting for this year, overall, we're pretty much in line with what we had budgeted for 2020 pre-COVID, and that's with $2 million to $3 million of anticipated spend on additional COVID cleaning costs, and then of course, normal increases that are uncontrollable in property taxes, really significant increases in insurance, as you're hearing from a lot of operators just due to the insurance market we're all dealing with. So even despite those increased costs to be able to come in, in line with where we were expecting going into 2020, we've really taken a lot of benefit from the efficiencies we learned during COVID and are bringing those forward into the more normal operating environment we're in right now.
Operator: Our next question comes from John Pawlowski with Green Street. Please go ahead.
John Pawlowski: William one follow-up on the supply question. In terms of the shadow supply market post COVID, do you expect any meaningful shift, either higher or lower from kind of shadow supply, perhaps apartments repurposed into the traditional apartment market.
Bill Bayless: No, really don't - I mean, I think the majority of our university markets are in these smaller college towns that don't have that shadow multifamily supply in the traditional sense that's catering to the conventional multifamily renters. So in the majority of our university markets, you don't have that flex. And then when you look - take for example in market where we do have that, Austin, Texas, I mean the multifamily market continues to be on fire, and we have the benefit of being that location to Campus. So we'll always have that premium even if the Austin multifamily market were to soften, you've got that great benefit of being walk to class, whereas the further from campus properties could maybe see some softness from that.
John Pawlowski: Okay. And then second question for me on the Berkeley master plan development. Could you give us a sense as the plans are evolving kind of a minimum capital needs required from ACC's balance sheet and maximum needs these next few years, as you guys go about the project?
William Talbot: And again, this is Billy. At this point in time, on the Berkeley master plan, what transactions are third-party, what transactions are ACE, how those play out. And again, this is a long-term planning process. This work is - we look at the total scope could be over the next decade. And so, how much of that actually turns into ACE and equity requirement is yet to be determined. We have a long runway. Is it relates to as those decisions are made with the institution to announce that and to think about it in those context. But at this point, it's still too early.
Bill Bayless: Yes, and John, I guess that reminds me. I think somebody asked a somewhat related question earlier that I didn't fully answer in terms of how we think about our funding and our leverage as additional developments become - come to fruition beyond the current pipeline. And of course, we will look to match fund those, match time those, as we've talked about historically doing a better job of - to maintain a more stable earnings growth trajectory. And so, we will look at all the forms of capital available to us. We continue to have a great partnership with Allianz in that 45, 55 JV structure we have with them. And we think that's a great alternative as part of our set of capital raising options to be able to contribute assets into and really match time, any kind of development activity we might have.
Operator: Our next question comes from Rick Skidmore with Goldman Sachs. Please go ahead.
Richard Skidmore: Just a question on the comment that you made in the press release around rent rates and in line to slightly ahead of a year ago. Can you just talk about how you think about rent rate growth as you go into the fall academic year?. And going back to your analogy on the airplane, do rent rates go up as you get closer to that or do they go down?
Bill Bayless: Yes. And certainly, the first comment that I would make is asset by asset, unit type by unit type, market by market, we look at what that velocity is and adjust rates accordingly. And so for example, I mentioned, we had several three to four dozen properties that were full this year, virtually at 98 plus percent. That's a different pricing matrix where we can still be aggressive as you would in a pre-COVID environment. However, if you look at the broader portfolio as a whole, with approximately 100 basis points of occupancy diminishment from a normal year, first and foremost, we look at making sure that we make the occupancy gains and don't damage velocity by being too aggressive in rate. And we also mentioned that the market as a whole, and in Jennifer's comments in the release, are being patient in terms of understanding the difference in velocity. And so when you look at the portfolio as a whole, we do look at that more of a flattening of rents in this year as people are focused on making up those occupancy gains. So I would say it's very cautious, where you have occupancy upside and only being implemented in a normal fashion in the several dozen assets where we have normal fee based on fortress locations in demand for our lease up. We do, as I mentioned, to have a little bit more potential in that the return of occupancy in our on-campus assets that are higher price typically lead to an average rent per bed, it's a little bit of an increase over just the straight rental rate growth.
Operator: Our next question is a follow-up from Nick Joseph with Citi. Please go ahead.
Michael Bilerman: It's Michael Bilerman here with Nick. So I was wondering if you can talk a little bit about, there is a number of student housing portfolios, some small, some larger on the market, deal activity is picking up. How in the reconstituted Capital Allocation Committee on the Board and management, how are you now evaluating those portfolios on the market today?
Bill Bayless: Yes, first and foremost, Michael. At this point in time, we are chopping wood and we're focused on putting the value of our own portfolio back in place in this lease-up. Well, sometimes you should. But certainly, as we look, and the current focus is on returning that value in our own portfolio. We do believe that the bulk of transaction activity that you're going to see is going to be coming in Q4 of this year, in Q1 of next year as you see those values return. And so, we will underwrite transactions as we always do looking at what is the growth rate of opportunities that there are before us based upon how much upside continues to be on an asset by asset, portfolio by portfolio in a post COVID world and implement proper in investment when we can create outsized returns for our investors.
Michael Bilerman: I guess, are you looking at maybe activating more disposition activity today to put yourself in a position to - if you wanted to be active in those acquisitions to have the balance sheet and all the capital necessary. So I don't know if that's part of the plan today in terms of selling more assets, looking at institutional joint ventures to really gain that capital and maybe also gain insights about where the market pricing assets today?
Bill Bayless: Yes, I'll jump in on that real quick, Michael. I think the first thing is we do have a capital recycling plan that we've laid out, obviously we would increase that if our cost of equity does make sense for investment. If we think there is an appropriate match funding, we can do with additional dispositions for external growth opportunities that have upside as Bill talked about. Right now, the important part is to let the student housing market re-stabilize. We have seen cap rates hold in throughout the pandemic, but we have seen values that on stuff that has transacted, impacted by the current in place NOI, and so both ourselves and the broader market want to wait and let that re-leasing occur for this fall and improve out more stabilized values that we aren't giving away value just based on short-term disruptions to NOI. And so, I think you'll see us be able to be more specific about amounts and timing of dispositions as we get into this fall. And of course, any external growth opportunities that we would think makes sense from an upside standpoint, we would - we would match fund with what we think - whatever we think is the most appropriate cost of capital to create value.
Michael Bilerman: In terms of just being an operator as well as an owner, are you finding basically this institutional capital calling on you for some of these portfolio that in the marketplace where they're willing to be the 70%, 80% equity, but they need industry expertise and operational expertise, so I'm just wondering if there is - are you being asked to partner in some of these deals to go forward?
Bill Bayless: Yes, Michael, there is always strong institutional capital interest in this space and certainly people that want to partner with American Campus. As you know, we are running our own process and that we are very selective in terms of the partners that we will pick in terms of joining - doing institutional joint ventures, and that we want to make sure that we're aligned in terms of asset characteristics and term and whole periods, the line with us. And so, we get quoted all the time by the capital that's coming in, but we are very selective in terms of who we are looking to partner with.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Bill Bayless for any closing remarks.
Bill Bayless: We'd like to thank you all for joining us for this update. This is a quarter again of keeping focused on what the task we have before us and the lease-up, and hoping again to continue down that road to normalcy toward fall of '21. We thank you, and we'll look forward to talking to you at NARIET in June.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
