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General Body Meeting 10.13.11

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Page 1: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

General Body Meeting 10.13.11

Page 2: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

2

Agenda

Announcements Various Recruiting Events

News Updates TTM Update Unemployment, European Rate Cuts Volcker Rule Leak, Drexia, Occupy Wall

Street Annaly Capital Mini-pitch ACC Real Estate Pitch

Page 3: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

3

Recruiting Events

UBS: Intro to Global Capital Markets 4:30pm – 5:30pm - Wednesday, October 26th

Phillips 219 Goldman Sachs: An Inside Look at Wall Street

10:00am – 11:00am – Thursday, October 27th

Statler Hotel, Amphitheater Morgan Stanley: Firmwide Presentation

6:00pm – 7:30pm – Thursday, October 27th

Statler Hotel, Ballroom NYC Trip

Fill out Survey!

Page 4: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

4

News Updates

Page 5: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

5

TTM Update

Page 6: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

6

Unemployment

Unemployment rate holds steady at 9.1%

Non-Farm payroll increased by 103,000 exceeding expectations

July and August estimates were revised upwards

Senate killed Obama’s job bill, but President Obama will keep fighting

Initial jobless claims above 400K

Page 7: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

7

European Rating Cuts

Fitch downgraded Spain & Italy “the intensification of the euro zone

crisis” ECB buying debt in secondary market Spain and Italy passed austerity plans Growth concerns Elections in Spain on November 20

Page 8: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

8

Financials Update

Page 9: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

9

Volcker Rule

On Tuesday the FDIC unanimously approved an initial version of the Volcker rule Limits proprietary trading at banks

Issues associated with the Volker Rule Reduce revenue generated through trading Constrain liquidity It is difficult to enforce Competitive Disadvantage

Impact: Would hit GS and MS the hardest 48% and 27% of total revenues respectively

Most people believed that this version of the Volcker Rule is too stringent, and won’t be passed

Page 10: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

10

Drexia Bank Bailout

Belgium plans to bailout Dexia Bank Purchasing $5.4 billion in assets Providing tens of billions of dollars in new guarantees Passed a stress test three months ago

Triggered by other banks’ reluctance to lend to it due to its exposure to highly toxic entities ( Greece, Italy etc.)

Many European governments are reluctant to offer money to save the financial sector as they are already facing rising debts

This bank-rescue mission could be a model to save all the European banks from the risk of catastrophic meltdown and contagion

Page 11: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

11

Occupy Wall Street

Protests have been going on for the past few weeks in large cities, namely New York and Washington D.C. Social inequality, corporate greed,

corporate payments to lobbyists etc. Has gained support from students,

unions and some politicians Very preliminary phase

Politicians response? Follow-up

Page 12: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Annaly Capital

QuanTeam

Page 13: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

REITs

Investors

Lenders

REITsMortgage Backed

Securities

Borrows money at low rates

Lends money at

high yielding

rates

Page 14: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

REITs

Investors

Lenders

REITsMortgage Backed

Securities

Receives money at 1%

Lends money at

6%

Profit:Lending Profits -- Borrowing Costs6% -- 1% = 5%

Profit: 5%

Page 15: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

REITs

ProfitsShareholder

s

Shareholders

Shareholders

Shareholders

Shareholders

Dividends:Pays out 90% of their profits as Dividends to Shareholders

Dividends Yield: 15.5%

Page 16: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Profits

Page 17: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Mortgage Backed Securities

Page 18: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Comparisons

Interest Rate Spread: 2.45%

Interest Rate Spread: 4.20%

Page 19: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Comparisons

Interest Rate Spread: 2.45%

Interest Rate Spread: 2.23%

Page 20: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Thesis

Annaly’s underlying business model has not been changed

Sovereign Debt Crisis has no effect on Annaly Operation Twist has had a minimal impact on

borrowing and lending rates

Vast selling indicates we are Technically Oversold Fear has been unwarranted

Page 21: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Operation Twist

Page 22: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Reasons For Price Drop

Fear that sovereign debt crisis will filter to the REITs Liquidity will slow down Costs of borrowing will rise dramatically

SEC Regulations Chance that the SEC will place more

regulations on the REITs

Page 23: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Sovereign Debt Crisis

Page 24: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Sovereign Debt Crisis

Page 25: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Best of Breed

Ultra-Safe mortgage backed securities Insured by Government Fannie Mae, Freddie Mac, Ginnie Mae

Industry Leading Name Liquidity Public Awareness

Page 26: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Analyst Valuations

Page 27: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Proposal

Sell Every other Position in the Club and buy this stock ;)

Page 28: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Derek CreadoreArsham MemarzadehMargaret Szczerbicki

Nick HosseiniAlex Friedman

American Campus Communities

Page 29: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Company Summary

Name American Campus Communities Inc

Ticker ACC (NYSE)

Price $38.71 (10/12/11)

Market Cap. $2.69 Billion

52-Week High/Low  $30.03 - $41.09

Page 30: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Thesis

Stagnant economy and weak job market encouraging more people to go back to school

School room & board costs are increasing at unreasonable levels causing students to house off campus

Largest REIT focused on residential student housing properties

Consistent dividend yield currently at ~3.50%

30

Page 31: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Company Overview

Develops, manages, and acquires student housing assets

Leader in third-party development and management of on-campus student housing – possess 50 on-campus projects

Developed over $2.8 billion in properties since 1996

The first publicly traded student housing REIT

31

Page 32: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Company Overview (2)

As of June 30, 2011, property portfolio contained 107 student housing properties with approximately 66,400 beds in approximately 21,200 apartment units

Over 40,000 beds acquired since 2005

32

Page 33: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Business Segments

Wholly-Owned Properties On-Campus Participating Properties

(ACE) American Campus Equity (ACE) projects

will have premier on-campus locations with marketing and operational assistance from the university

Subject university benefits by increasing housing capacity with minimal impacts to their credit ratios

Development Services Property Management Services

33

Page 34: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Industry Overview

College Type

2005-06 to 06-07 increase

06-07 to 07-08 increase

07-08 to 08-09 increase

08-09 to 09-10 increase

Public 5.1% 5.3% 5.2% 5.4%Private 5.0% 5.0% 4.8% 4.2%

34

On campus college housing prices have been constantly increasing

Very few REITS focused solely on campus properties

Source: Source: Collegeboard.org – Trends in College Pricing

Page 35: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Competitors

Campus Crest Communities Inc. (CCG) 15,000 beds Only are involved in off-campus housing

Education Realty Trust Inc. (EDR) Properties in 23 states and total of over

$2.4 billion in collegiate housing transactions

Currently owns about 25,400 beds

35

Page 36: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Property Portfolio36

Own property in 37 states and parts of Canada

Majority of properties are in the Sun Belt

Page 37: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Recent News

August 8, 2011 Beat analysts consensusSeptember 15, 2011 ACC to be added to the S&P MidCap

400 index

37

Page 38: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Strengths

Short term lease: change w/ market rent increases

Little credit risk: leases backed by parents Fin aid

Properties 95.2% pre-leased for 2011/2012 yr 98.2% occupancy rate forecast

Affected differently than other residential REITs by low interest rates Traditional rent vs. buy decision Students can only rent Lower I.R. for ACC means lower borrowing

costs

38

Page 39: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Weaknesses

Limited land directly surrounding campuses

Biggest competitors (universities) can avoid RE taxes and borrow at lower rates

Housing demand impacted by universities Number of students accepted to

university Requiring that a certain class to live on

campus Greater tenant improvement costs as

college students usually trash the places they live in

39

Page 40: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Opportunities

Strong backlog of projects As of 6/30/11, $456.6M in projects under

construction, all scheduled for completion by Fall 2012

Continuous growing college enrollment, stimulated as economy remains weak

Operation Twist and the Feds continuous policies should keep long term I.R. low for a decent while

40

Page 41: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Growing College Population41

Fall

1990

Fall

1991

Fall

1992

Fall

1993

Fall

1994

Fall

1995

Fall

1996

Fall

1997

Fall

1998

Fall

1999

Fall

2000

Fall

2001

Fall

2002

Fall

2003

Fall

2004

Fall

2005

Fall

2006

Fall

2007

Fall

2008

Fall

2009

Fall

2010

Fall

2011

Fall

2012

Fall

2013

Fall

2014

Fall

2015

Fall

2016

Fall

2017

Fall

2018

Fall

2019

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

Enrollment in Post-Secondary Educational

Enro

llm

ent

(thousands)

Source: http://nces.ed.gov

Page 42: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Threats

Trend towards online schools Private construction of on-campus

housing from universities Availability of financing in tough

economic environment to continue growing portfolio of properties

42

Page 43: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Sources of Revenue

Wholly-Owned Properties Operations

(87.5%)

On-Campus Participating

Property Operations

(6.9%)

Third-Party Development

Services (2.7%)

Third-Party Management

Services (2.5%)

Resident Services (0.4%)

Page 44: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Income Statement

2010 2009 2008 2007 2006

Total Revenues

344,991 309,590 235,413 147,135 118,953

Total Operating Expenses

(258,049) (243,678) (195,187) (119,968) (89,153)

Total Nonoperating Income (Expenses)

(61,281) (67,764) (52,610) (27,842) (26,072)

Income (loss) from income taxes and discontinued operations

(8,563) (10,608) (671) (1,011) 18,869

Net Income (loss)

17,098 (12,460) (13,055) (1,686) 22,597

(all values in thousands of dollars)

Page 45: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

2010 2009 2008 2007 2006

Operating Margin

25.2% 21.3% 17.1% 18.5% 25.1%

Net Profit Margin

5.0% -4.0% -5.5% -1.1% 19.0%

Income Statement Analysis

Page 46: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Balance Sheet—Assets2010 2009 2008 2007 2006

Land 313,005 250,044 242,653 102,109 75,263

Buildings 2,177,780 1,825,915 1,706,184 768,551 579,906

Furniture, fixtures, and equipment

129,175 112,831 87,633 42,225 28,111

Construction in Progress

54,244 -- 63,715 104,540 56,958

Less accumulated depreciation

(240,360) (173,820) (113,352) (70,363) (46,041)

On-campus properties, net

62,486 65,690 69,302 72,905 76,688

Cash/Cash Equivalents

113,507 66,093 25,600 12,073 79,107

Investments and other assets

83,647 88,228 102,174 44,256 34,389

Total Assets 2,693,484 2,234,981 2,183,909 1,076,296 884,381

Page 47: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Balance Sheet—Liabilities and Equity2010 2009 2008 2007 2006Secured Mortgage, Construction & Bond Debt

1,144,103 1,029,455 1,162,221 533,430 432,294

Secured Term Loan

100,000 100,000 100,000 -- --

Secured Revolving Credit Facilities

101,000 94,000 14,700 9,600 --

Capital Lease Obligations

911 2,314 2,555 2,798 2,348

Accounts Payable and Accrued Expenses

34,771 26,543 35,440 14,360 13,616

Other Liabilities 60,100 43,173 53,497 40,480 27,088Total Liabilities 1,440,885 1,295,485 1,368,413 600,668 475,346Total Equity 1,213,962 899,030 785,119 428,562 321,944Leverage Ratio 1.18 1.44 1.74 1.40 1.48

Page 48: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Investing Activities

2010 2009 2008 2007 2006Cash Paid for Property Acquisitions

154,461 -- 11,287 42,760 69,697

Cash Paid for Land Acquisitions

16,050 7,385 3,226 10,445 --

Investments in Wholly-Owned Properties

76,854 114,729 139,570 131,820 81,597

Investments in On-Campus Properties

1,141 739 719 480 483

Purchase of Corporate Furniture, Fixture, and Equipment

2,182 606 2,178 486 986

Page 49: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Contractual Obligations

Total 2011 2012 2013 2014 2015 ThereafterLong-term

$1,581,024 $422,213 $185,165 $129,874 $265,673 $218,868 $359,231

Owned Development projects

80,821 80,821 -- -- -- -- --

Operating leases

84,102 3,217 3,384 2,624 2,498 2,482 69,897

Capital Leases

960 668 292 -- -- -- --

Total $1,746,907 $506,919 $188,841 $132,498 $268,171 $221,350 $429,128

Plan to meet requirements through revolving credit line, selling properties, issuing common stock ($150M ATM Equity Program), utilizing cash flow from operations.

Page 50: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Dividend History50

AFFO = net income+deprecation-recurring CapEx

AFFO (2010) = 16,210k + 80,253k - 10,136k

AFFO (2010) = 86,327k Dividend payout = 78,588k / 86,327k =

91%

Page 51: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Q2 2011Financial Summary51

FFOM = “Funds From Operations – Modified”Interest coverage = (EBIT)/(Interest Expense)*Dollars in Thousands

Page 52: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Q2 Financial Summary Highlights 48% increase in Q2 2011 FFOM

compared to Q2 2010 FFOM Revenues from 14 joint venture properties ACC acquired from

Fidelity in late 2010 Continued strong performance from same store properties

(existing properties opened for over a year)

17% increase in interest coverage ratio for 2Q 2011 Improvement in the GMH portfolio (ACC acquired GMH in June

2008)

Continued payoff of maturing fixed rate debt Paid off $71M in debt with cash on hand

52

Page 53: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Wholly Owned Property Results from Operations in 2Q 2011: $ in thousands

53

*-0.10% decrease in operating expenses due to tax appeals resulting in tax savings

Page 54: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Portfolio Overview as of June 30th 2011

54

*Increases in occupancies across the board

Page 55: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

2011/2012 Leasing Status55

*Improvements in demand across the board.

Page 56: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Q2 ACC On Campus Owned Development Efforts

Commenced the 864 bed Logo Village project at University of New Mexico

144 bed University Village Northwest Project at Prairie View A&M was completed and fully leased for Fall 2011

978 bed Portland State University is under construction and remains on track for fall 2012 delivery

56

Page 57: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Q2 ACC On Campus Owned Development Efforts Continued…

Awarded an On Campus Development Award at Drexel University and are in predevelopment of an 850 bed community scheduled for a Fall 2013 delivery

57

Additional Owned On Campus Projects in the Pipeline:

Shows Strength of On Campus Owned Strategy…

Page 58: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

3rd Party and Off Campus Construction efforts during Q2 2011

Construction commenced/continued at University of Wyoming, Edinboro University, Cleveland University, and Illinois State

Initiated predevelopment of graduate student housing at Princeton University with expected Fall 2013 delivery

Off Campus development projects at University of Houston and San Antonio State are on track for completion in 2012

58

Page 59: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Overall Signs from Q2 2011

Advanced current relations and awards Developed a solid pipeline of

institutions expressing interest in both public and private partnerships

Continue to deliver new or redeveloped On Campus Housing assets

16% increase in portfolio bed count from current and planned projects will add strong future portfolio yields

59

Page 60: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Multiple Analysis 60

ACC EDR CCG

Market Cap 2.69B 661.43M 309.44M

Profit Margi

n

Most Recen

t14.8% -32.4% -15.97%

2010 4.7% -35.2% -16.8%

2009 -3.8% -6.2% -6.3%

Share Price 38.71 9.13 10.08

EPS 0.84 -0.62 0.02

P/E 45.97 N/A (Negative) 560.00

P/E (Forward) 19.92 18.92 11.76

P/B 2.09 1.60 1.3352-Week

High 41.09 9.52 14.36

Page 61: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Residual Income Model61

PARAMETERS FY1 FY2 LtgEPS Forecasts 1.78 1.94 9.30% Model 1: 12-year forecast horizon (T=12).Book value/share (last fye) 17.52 and a 5-year growth period.Discount Rate 7.0%Payout Ratio 90.0%Next Fsc Year end 2011Current Fsc Mth (1 to 12) 10.00Terminal Growth 3.5%Target ROE (industry avg.) 13.0%

Implied price (date adjusted) 43.60

Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Long-term EPS Growth Rate (Ltg) 0.0930 0.0930 0.0930Forecasted EPS 1.78 1.94 2.12 2.32 2.53 2.55 2.56 2.57 2.58 2.60 2.61 2.62Beg. of year BV/Shr 17.52 17.69 17.89 18.10 18.33 18.59 18.84 19.10 19.35 19.61 19.87 20.13Implied ROE 0.102 0.110 0.119 0.128 0.138 0.137 0.136 0.135 0.134 0.132 0.131 0.130Abnormal ROE 0.032 0.040 0.049 0.058 0.068 0.067 0.066 0.065 0.064 0.062 0.061 0.060required rate (r) 0.070 0.070 0.070 0.070 0.070 0.070 0.070 0.070 0.070 0.070 0.070 0.070discount rate 1.070 1.145 1.225 1.310 1.402 1.500 1.605 1.717 1.837 1.965 2.102 2.249PV of future Residual Income 0.52 0.61 0.71 0.80 0.89 0.83 0.77 0.72 0.67 0.62 0.58 0.54

Implied Price of $43.60

Page 62: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

RIM Assumptions + Sensitivity

62

Valuation Assumptions

Risk-free Rate 2.20%

Equity Risk Premium 5.77%

Beta (Adjusted) 0.83

Cost of Equity 6.99%

Terminal Grow th 3.50%

Capitalization Rate 3.49%

Valuation Date 10/12/2011

B/S Date 12/31/2010

Days Since 285

Portion of year elapsed 0.78

Partial Year Adjustment 105.42%

Shares Outstanding 69,530

$43.60 2.5% 3.0% 3.5% 4.0% 4.5%5.99% 50.38 53.91 58.87 66.31 78.76 Confidence6.49% 44.53 46.86 49.98 54.34 60.90 72%6.99% 39.97 41.55 43.60 46.33 50.15 7.49% 36.30 37.41 38.79 40.57 42.95 7.99% 33.30 34.08 35.03 36.23 37.76

Terminal Growth

Co

st o

f E

qu

ity

Page 63: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Recommendation

45 shares @ $36 for $1,620 Hold off until a pull back Stock has risen 6.3% since initially

selected Price target of $43.60 represents 12.5%

premium from current stock price Mean analyst target of $40.29 (12

analysts)

63

Page 64: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

Time to Buy?64

Look to buy around $36 range

Page 65: General Body Meeting 10.13.11. Mutual Investment Club of Cornell Agenda  Announcements  Various Recruiting Events  News Updates  TTM Update  Unemployment,

Mutual Investment Club of Cornell

65

Thanks for coming by!