American Campus Communities, Inc. (ACC) on Q2 2021 Results - Earnings Call Transcript
Operator: Good day and welcome to the American Campus Communities’ Second Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. 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. Please go ahead.
Ryan Dennison: Thank you. Good morning and thank you for joining the American Campus Communities 2021 second quarter conference call. The press release is 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 company website in the Investor Relations section, you will find an earnings materials package, which includes both the press release and a 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 one month. Our supplemental analyst package and our webcast presentation are one and the same. 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 SEC filings. Management 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 the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Although, the company believes the expectations reflected in any forward-looking statement are based on reasonable assumptions, they are subject to economic risks and uncertainties. The company 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 company's periodic filings with the SEC. The 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, will be providing our opening comments today. He's joined by the following members of senior management for our call. Jim Hopke, President; Jennifer Beese, Chief Operating 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?
Bill Bayless: Thank you, Ryan. 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 year of transition toward a return to normalcy. The fundamentals of our sector continue to strengthen and we're quite 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 were stronger 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 community serving the Disney College Program has been very strong. Since the DCP program recommenced only two months ago, we have already moved in over 3,200 students. And we continue to project 85% occupancy by the fall for the 4,996 beds delivered through phase five. And finally, rent collections have largely returned to normal historical levels. On-campus rent refunds and request for rent relief under our Resident Hardship Program continued to decline and are anticipated to be insignificant in the 2021-2022 academic year. Turning to preleasing. Velocity for the 2022 same-store 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 2021 lease-up assume strong opening rental revenue growth of 5.1% to 7.6%, based on an occupancy range of 92% to 94% and an average rent per occupied bed growing at 3% to 3.5% for the 2022 same-store group. As we presented at the National InterFace Student Housing conference two 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'll be closely monitoring move in and attrition rates of these communities as these universities are administering their first full capacity move in since the commencement of the COVID pandemic.
Operator: Thank you. We will now begin the question-and-answer session. The first question today will come from Neil Malkin with Capital One Securities. Please go ahead.
Neil Malkin: Hello everyone, good morning.
Bill Bayless: Good morning.
Neil Malkin: Nice to see your stock in green after you report earnings.
Bill Bayless: Always.
Neil Malkin: Yes. The first one, you talked about 92% to 94% for the fall academic year 2021, 2022. And you're at 91.7% now. Data we're looking at with ACC, which I'm sure you see is – that the pay thing from sequentially month-over-month continues to be very strong. It seems like that's a pretty conservative estimate, like things – it wouldn't 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 what you're baking in, et cetera?
Bill Bayless: Hey Neil, thank you. The 92% to 94% range is where we believe based on the current trending and the data we have a force at this moment that is probable that we wind up. We're very pleased as we've talked about on the last couple of calls, that the critical thing was that inflection point where we were able to cross over last year's pace and start to trend ahead. We had talked previously, it may read in prior calls about that 2.5x rate that we were prior year velocity, that has slowed a little bit as you expect at the end of the leasing season, it was about 2.0 last week, over the next four weeks going forward last year, we brought in about a 1,000 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 in a typical year is 40 bps to 50 bps. Last year bumped up over one, we expect that to return to normal. When you take all those things into consideration and do the math as we’re doing on the current statistics we have, that 92% to 94% is where we fall in and would expect to be. The other thing that we are very pleased with, or we're watching cautiously is the ACE properties that we have on-campus at colleges and universities, where the universities administer the assignment, the move in and the process. In that particular case, we're very pleased in that we're least to near 98% on those. And this is the first move in, the universities will be orchestrating to full capacity in – since COVID commenced. And so we're watching that move in closely across the country in terms of the university's effectiveness of getting everybody in 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 expect to be.
Neil Malkin: Okay, thank you. The other one for me is related to acquisitions or external growth. So I guess the first part is, some other real estate asset classes are – I have talked about very strong or accelerating transaction 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 pickups towards the end of the year and how your – the JV growth 2030 plays into that?
Bill Bayless: Yes. And certainly, the other sectors we've been following the multifamily and the incredible progress that you're seeing there. So student housing is lagging that sector real estate for sure, and it's what we've talked about for the last three calls. Everybody is waiting to complete this lease-up, have been always improved to the point, evaluations are stronger, and then we would expect to see more transactions coming into the marketplace. And so, you all been very patient, our shareholders – following us, and we're close to getting beyond this fall to where I think we'll put to bed, many of the concerns over what were short-term impacts on COVID and we'll start to see valuations begin to firm backup as NOIs improve this fall. And certainly, I'm sorry, the second part of your point is 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 execute on when there may be advantageous opportunities in the marketplace to create value for you all.
Neil Malkin: Thank you.
Operator: And the next question will come from Jeff Spector with Bank of America. Please go ahead.
Jeff Spector: Great, good morning; and congratulations on the quarter. Just wanted to ask, I guess, thinking about the 2022, 2023 school year. I don't know if it's too early to ask, any key initiatives, anything different, any way to approach the school year versus let's say last year or the prior year maybe to capture some of this pop-in demand this past quarter?
Bill Bayless: Yes. Jeff, a great question. The one thing in 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 students now being back on campus and university on-campus housing being back at full capacity versus last year the mid 60s 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 where you see us in the stadiums around the country and our larger markets, we did see a diminishment in early leasing velocity as compared to our peers. Typically we outperform in that area November through February, about 12% to 16% in a given year. This year, our spread and velocity over our peers was lower, more 5% to 6%. And we directly attribute that to not being able to implement all the programs we have in on-campus, in-person and sports marketing.
Jeff Spector: Thank you. Very good. Great to know. And then, I'm sorry if I missed this, I know at Nareit 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?
Bill Bayless: Yes. And we haven't issued any additional numbers, but what that – the 60 number that you saw on the presentation there at Nareit and also that I covered in InterFace a couple of weeks ago. And as we have said, that 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're now focusing on the future. And we have seen the awards that we were working on pre-COVID kick back into full swing, and we see the vibrant pipeline that was representing those 60, which is significantly above what we had seen in the pre-COVID environment taking place. And so, that particular sector of our business, we do see post-COVID as emerging with equal or better opportunities than we had prior to.
Jeff Spector: Great. Thank you.
Operator: And the next question will come from Nick Joseph with Citi. Please go ahead.
Nick Joseph: Thanks. How are you thinking about ATM equity issuance versus asset sales going forward? And then if the capital allocation committee involved in equity issuance decisions.
Daniel Perry: 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 developments of raising $60 million to $120 million a year, an equity type capital, whether that be through dispositions or common equity. Certainly, when we were active on the ATM this quarter, we were looking at where we were in the lease-up prior to kind of the end of the quarter we were still trailing the prior year. We certainly 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 or 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 at least 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 NAVs at that time. Of course, now that it is looking like things are going to continue their march towards normalcy this fall. I think everyone, including our own opinion of NAVs 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 strategy. And we think that there is going to be a strong bid for student housing assets which will provide an attractive opportunity as we go forward to use that. So of course, as always, we'll continue to evaluate stock versus dispositions and the costs of two different options represent to the company and 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 do think that it is important to include capital allocation – 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 would be used for. And to answer your question, yes, all of that is a significant conversation that we have with the capital allocation committee on the board.
Nick Joseph: Thanks. That was very helpful. And then I know rent collections 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?
Bill Bayless: So we typically run in the kind of 90s – mid 97% to 98% in terms of uncollected rent during a quarter, of course, as you move on from the quarter you continue to collect and those ultimate collections do climb. In a normalized environment, we ultimately end up annually about 80 bps to 90 bps in terms of bad debt. Right now for 2021, we think ultimately we'll probably be in the range of 120 bps to 130 bps in bad debt, but quickly see that returning to our more normal historical levels. One of the things that allowed us to outperform during this quarter was, we were expecting to have about 1.5 million in potential abatements under our Resident Hardship Program, especially as we moved into the summer months. And we only had about $300,000 in request for abatement 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.
Nick Joseph: Thanks. Then if you're looking at what's the outstanding delinquency that hasn't been collected, but has been assumed in earnings, do you have that number?
Daniel Perry: Yes. 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're moving into those summer months and you have kids that leave for the summer. And as you can imagine that sometimes results in their rent being late. And so not anything out of ordinary, but ultimately we still believe that those collections will – that 96.8% in collections will drive ultimately about 130 bps of ultimate bad debt for the year.
Nick Joseph: Thanks.
Operator: And the next question will come from Derek Johnston with Deutsche Bank. Please go ahead.
Derek Johnston: Hi, good morning, everybody. Given what you're seeing in the market with your university partners, as well as the lease up at Disney, do you feel confident that ACC’s pre-COVID? So January, 2020, that your pre-COVID 2022 earnings power is fully intact at this juncture.
Bill Bayless: Sorry, Derek. I miss you a little bit there, you were saying by when that would be back in line with January 2020.
Derek Johnston: 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 you're seeing in the business now between university partners and Disney? Are you confident that ACC’s pre-COVID 2022 earnings power is fully intact?
Bill Bayless: Yes, I mean, I think by the time – it's hard to compare, and I know this isn't how you're completely asking it. But if you look at where we were in January, 2020, in terms of what kind of FFO we would be producing on a run rate basis, that was, of course, before we had delivered the fall 2020 developments and started delivering Disney. So as we come out of COVID, we're really going to leapfrog where we were at that point in 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 of earning or of occupancy in the portfolio, we think that we will be on a same, same basis back in line with what we had originally targeted for the portfolio by that quarter. We’ve continued to have decent rental revenue growth throughout COVID, so it's really about getting that occupancy rate back 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, including Disney as you referenced.
Derek Johnston: Yes. No, that's very, very helpful. And then just sticking on Disney. How has the tenant reception at Flamingo village been trending? Any anecdotal surveys or feedback that kind of gives you confidence that the roughly 5,000 units can stabilize around year end – this year end?
Bill Bayless: Yes, I mean, from a tenant satisfaction perspective when the residents are elated and as you all will see with what we've announced in 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 Disney had been master leasing. And so we were – actually the executive team was just there several weeks ago, and the – basically what we have done, you all will see this for yourself. We have now provided the type of customer service and living environment that the Disney interns are 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 to some of those residents.
Derek Johnston: Thanks, Bill.
Operator: And the next question will come from John Pawlowski with Green Street. Please go ahead.
John Pawlowski: Thanks. One follow-up to Nick's question, maybe for William. Can you give me a sense for how anticipated pricing on dispositions was shaking out as you weighed selling assets versus issuing common stock?
William Talbot: Well, and we've talked about in the market, cap rates and student housing have held pretty consistently through COVID at that low-to-mid 4s. And in most cases that was off a slightly impacted COVID 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 then 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. And as we can make future decisions from a capital recycling and disposition versus equity or other costs, those are the things we're going to be weighing. But they've really held and kind of been pretty consistent in that the core pedestrian type in that little force but we do think going forward, there could be an opportunity to see that compression. And that's obviously something that we'll be weighing when we weigh how we look at capital recycling in the future.
Bill Bayless: 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 we're in the midst of the pandemic.
John Pawlowski: Sure. The product you brought or potentially would have brought to market on a value, just total value perspective. What kind of price did you see versus pre-COVID values?
Bill Bayless: Yes, I mean, consistent, certainly cap rates were consistent. Like we said, your NOIs could be slightly impacted by COVID, as you saw the overall portfolio, but those valuations and cap rates have maintained fairly consistent.
John Pawlowski: Okay. Last one for me, if supply growth moderates, as you expect, I believe you referenced 20% decline next year and the positive tailwinds on demand continue. Is there a reasonable scenario where you can push rental rate growth above the historical track record of plus or minus 3%? Is there anything different this time around for the typically coupon clipping nature of the portfolio?
Bill Bayless: Yes. Let me answer that short-term and long term. From a longer term perspective over the next three to five years or one to five years rather, you do have tailwinds given the supply situation. And also if these record admissions continue beyond one year to where from a pure supply demand perspective, we're going to probably have more pricing power than we have in the prior five years. Next year for us, we got to wait and see where the vacancies ends up in the portfolio this year, in terms of how our average rent per bed growth going into 2022 pans out. And 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 on-campus P3 beds returned in their occupancy. And so when we're looking at the projection of occupancy that we have in 92 to 94, at the end of the lease up, we've got to look at where those vacancies exist. And as we recover occupancy, where the average rent per bed of those vacant beds are, as we move into 2022, there could be a little bit of a drag on overall rent growth next year as we push forward. So that's a question we'll be much more apt to answer once the lease up is complete. We see what beds are filled, what beds remained vacant to get a better picture going into 2022. But long-term, certainly the diminishing supply coupled with the admissions and enrollments that we're seeing should lead to a better pricing environment for the industry.
John Pawlowski: Thank you.
Operator: And the next question will come from Alexander Goldfarb with Piper Sandler. Please go ahead.
Alexander Goldfarb: Hey, good morning down there. And totally agree. I mean, the drop in supply, the growing enrollments and all that stuff that we heard at InterFace is pretty incredible for the industry. So Bill, along those lines, first question is Greystar had announced that they sold a 49% 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 deals as part of that whether it not outright sale probably, but joint venturing. Is that something that you would now consider based on, on the Greystar execution?
Bill Bayless: Yes, 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 when these universities are entering into these partnerships, it is very much qualitative who they're choosing as 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 in selling a minority joint venture interest where you maintain control and in the eyes of the university who their partner is, is not changing, is absolutely the preferred way to do that. And so, yes, to answer your question simply.
Alexander Goldfarb: Okay. So we may see you guys actually joint venture some of your ACE?
Bill Bayless: Yes. That's very much possibility as we look at how to best raise capital most efficiently going forward, but again would always be in a situation where we're maintaining control position for our university partners to be able to rely upon us.
Alexander Goldfarb: Okay. And then second is, and Bill, I understand that you're 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 quarter. So 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 that things are better from a top line growth perspective, meaning better Disney, better rent, better ancillary income, or is it that a lot of the negatives that you guys 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. But trying to understand, is this more of a top line that's really driving everything or the elimination of a lot of the negatives that were dragged over the past year?
Bill Bayless: It's combination of both. And as you heard in 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 we've been talking about next-gen over the years also. And one of the things that we were very pleased with this quarter is we back-filled about 85% of our short-term May-ending leases where typically that's historically been about 50%. And so part of that we believe is good demand coming back. The other part of it is, we're getting more sophisticated in that current period leasing administration that you've always seen in our fall releasing 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. And this is something going back, Alex, I know you were at the national Student Housing Business conference last week or two weeks ago. The investment thesis for this space, which has always been on the stability of cash flows in the resiliency. As you go through our comments, the first time we pointed this out was in fall of 2020, when you saw our collections from July of 2020, by September of 2020 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 recapitalize the funding of their education through loans, grants, and the like. And so we think the long-term investment thesis you're seeing prove out through the challenges that COVID has put out there.
Alexander Goldfarb: Okay. Thank you, Bill.
Operator: The next question will come from Steve Sakwa with Evercore ISI. Please go ahead.
Steve Sakwa: Yes. Thanks. So a lot of my questions have been asked and answered, but I'm just curious, Bill, a lot of your apartment peers have been using a lot of smart home technology to drive incremental revenue and also cut down on operating costs. 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?
Bill Bayless: Yes. And certainly, when you're building a new portfolio or a new facility, for example, when you get into Disney, you're getting some of our modern buildings. The amount of technology and operations management that we're allowed – we're able to build in from the design phase is 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 so. I previously mentioned, Steve, as we look at technology in the areas of operations, the customer experience, obviously COVID did help advance a lot of those interactions in terms of how we speak to our existing residents on a daily basis and communicate how they're able to transact and do work orders with us. And so those things do continue to advance. As I did mention, but one 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 four years and how we reach them and how the cycle comes. The face-to-face in-person interaction with them in the marketing and leasing process is something that statistics we're seeing the value in the dividends that the debt is paid. And so we'll continue like all the companies in real estate to look at from an operation and the customer experience perspective, where we can continue to implore those systems and how we can use it to our benefit. We’re one of the ones, just top of the mind, one of the things in our business where technology has always come into place ahead of multifamily is key management and electronic locks and 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 that it makes sense and is good for customers and good for us.
Steve Sakwa: Great. Thank you.
Operator: The next question will come from Austin Wurschmidt with KeyBanc. Please go ahead.
Austin Wurschmidt: Hey, good morning, guys. With the equity capital being more attractive today and you guys have now reached sort of the low end of your range in terms of the equity capital raise at $60 million to $120 million, you referenced, Daniel. Do you and the capital allocation committee still think it makes sense to move forward with the joint venture platform this year? Or could we see that announcement push in 2022?
Bill Bayless: No and 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.
Austin Wurschmidt: So I know you just mentioned kind of ACE assets are a consideration to sell under the joint venture, but how are you prioritizing what assets may go into to 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?
Bill Bayless: Sure. Well, one the – 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 Allianz, the 55/45 but 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. We've always had people inquiring and showing interest in those ACE assets. As you all know, they are highly attractive to institutional investors. It's coupon, clipping, consistent, resilient income and 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.
Austin Wurschmidt: Got it. And then just last one for me on sort of the leasing and attrition. I'm just curious Bill, I appreciate the range that you've given us both 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 the 68 universities you guys are at from a leasing perspective?
Bill Bayless: Yes. As we have talked about on numerous occasions in calls prior to this one, data and business intelligence in 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 historical data to draw any type of future trending. And so, as I mentioned in my earlier comments, when we talk about that 92% to 94%, all over 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, assume that that multiplier holds true, which we have no way to know what's going to hold true. That's why we were 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 a – in that area 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 to 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.
Austin Wurschmidt: Got it. And then any differentiations across schools worth noting?
Bill Bayless: The one thing and I think this is where we're probably the most optimistic in terms of a return to normalcy being in full swing. And that's the statistic we gave where our MLAs – sorry, our on-campus ACE properties that are administered under MLAs, marketing and licensed increased 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 work throughout the year, that's the one 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 the normalization of the theater cycle and the leasing as it usually exists. 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 2022. The only other thing I'll point out that we are monitoring is we do – geographically, we'll see how things go forward. We are a little slower in Portland and Minneapolis and some of the places where there was a civil disruption. And so we're certainly monitoring that to make sure there's no long-term impacts from that and the number beyond this and stuff.
Austin Wurschmidt: Got it. Thank you.
Operator: 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.
Bill Bayless: Yes. And certainly, we 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 and 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 130,000 students that will call an owner managed American Campus Community home this fall. And we also hope that many of you will join us at our Investor Day at Disney on September 23. Thank you.
Operator: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
