Good day, and welcome to the American Campus Communities Q4 2021 Earnings Call. My name is Rica, and I'll be today's event specialist. You will have an opportunity to ask a question. To do so, please press star one on your telephone keypads. I would like to hand the call over to Ryan to begin. Thank you. Good morning, and thank you for joining the American Campus Communities Full Year 2021 and Fourth Quarter Conference Call. The press release was furnished on Form 8-K to provide access to the widest possible audience. In the release, the company has reconciled the non-GAAP financial measures to those directly comparable GAAP measures in accordance with Reg G requirements. Also posted on the 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 the call. Jennifer Beese, President and Chief Operating Officer. William Talbot, Chief Investment Officer. Daniel Perry, Chief Financial Officer. Kim Voss, Chief Accounting Officer. Brian Winger, General Counsel. Jamie Wilhelm, EVP of Public-Private Partnerships. With that, I'll turn the call over to Bill for his opening remarks. Bill? Thank you, Ryan. Good morning, and thank all of you for joining us as we discuss our Q4 and Full Year 2021 Financial and Operating Results. 2021 was an outstanding year for the company and our shareholders. The ACC team executed and successfully advanced our long-term strategy on many fronts. We signed more spring and summer term leases than any prior period in our history, employing the enhanced capabilities of our NextGen operational systems. We also outperformed the high end of our expectations for fall leasing, achieving 95.8% opening occupancy and 3.8% average rental rate growth. We delivered nearly 4,000 beds at our development serving the Disney College Program on schedule and within budget, despite the national labor shortage and widespread supply chain constraints, bringing our total beds delivered at Disney to more than 6,000. We expect to achieve originally targeted yields beginning in 2022 and to hit our 6.8% stabilized yield in 2023. With regard to our current portfolio, the company's performance eclipsed expectations. In addition to our total portfolio's NOI returning to pre-pandemic levels, during the fourth quarter, property NOI for our 2021 same store property grouping also surpassed pre-pandemic levels, both of which occurred a full year earlier than expected. With regard to capital allocation activities, we successfully executed a well-timed $400 million bond offering, issuing 7-year senior unsecured notes at a yield of 2.26%. To cap the year off, we formed a joint venture with Harrison Street's social infrastructure platform to recapitalize a 45% interest in our existing 8-property Arizona State University student housing portfolio. The transaction represented a 3.75 economic cap rate based on in-place rental revenue, escalated trailing operating expenses, including ground rent, and historic average capital expenditures. The transaction produced an unlevered IRR of approximately 16%. It also provided price discovery for our on-campus ACE portfolio and demonstrates that on-campus assets developed via properly structured public-private partnerships can be valued on par with private off-campus assets that reflect comparable market and product attributes. Importantly, the transaction exemplifies our ability to capitalize on our ACE investments while simultaneously maintaining the spirit of our university partnerships, illustrating the net asset value creation opportunity in both our existing ACE portfolio and our future pipeline of on-campus transactions. The two-phase closing of the transaction is also beneficial as it mitigates earnings dilution, satisfies our 2022 capital needs, and provides additional proceeds moving into 2023, further positioning us to execute on our value-enhancing development pipeline. Our solid operational execution and prudent capital allocation activities resulted in earnings per share cumulatively exceeding quarterly expectations throughout the year by 18 cents per share, or almost 10%. Full year FFOM per share of $2.14 exceeded the high end of our most recent guidance by $0.2. In addition, our stock ended the year at an all-time closing high of $57.29. As we look forward, our optimism continues given our current momentum and the strong fundamentals the sector is experiencing. In stark contrast to the media's headlines pointing out that college enrollment has been decreasing with regard to the broadest universe of institutions of higher education, student demand to attend America's tier one flagship universities, the ones we currently serve and target to do business, continues to experience growth and to set record levels of enrollment. This includes first-year student enrollment growth at the highest levels in over 30 years. The strong enrollment demographics, coupled with new supply for fall 2022 being at the lowest levels in over a decade, provides a highly attractive supply-demand environment. As Jennifer commented in our release, industry-wide pre-leasing is tracking in a manner more consistent with the sector's traditional pre-pandemic fall leasing velocity, and we are targeting normalized occupancy levels and attractive rent growth for the 2022/2023 academic year. With our guidance including same store rental revenue growth of 3.2%-4.6% for the fourth quarter of 2022. Touching briefly on our on-campus public-private partnership business, our prior statements that opportunities for on-campus transactions may well be greater in a post-COVID environment appear to be coming to fruition. Since the end of Q3, we have commenced the third-party development of four university projects, MIT, Princeton, UC Irvine, and Drexel University. We were awarded a new development with Purdue Research Foundation. As a recognized leader, ACC remains uniquely positioned to capitalize on this expanding opportunity. As we moved into 2022, the company is firing on all cylinders with accelerating momentum, as represented by our 2022 guidance, which represents earnings per share growth in the range of 12%-16%. This is even more impressive when considering that our guidance includes the effect of the $270 million first phase closing of the ASU transaction, and the fact that this growth is coming off of earnings for 2021 that exceeded the high end of our expectations. In closing, I'd like to reiterate my remarks from the beginning of this call. 2021 was an outstanding year for the company and its shareholders. As we turn to the question and answer portion of today's call, we'll not be answering any questions regarding our recent disclosures regarding Land & Buildings. Instead, we'll focus on the strong performance of the company, our 2022 outlook, industry fundamentals, and our business strategy. With that, I'll turn it back to the operator to begin the Q&A. Thank you. As a reminder, if you would like to ask a question, please press star followed by the number one on your telephone keypad. We now have our first question on the phone lines from Alexander Goldfarb of Piper Sandler. Alexander, please go ahead. Hey, morning down there. Bill, maybe just focusing first on margins. You know, I think you guys had said that from 2014 to 2019, you improved margins by about 300 basis points. I'm guessing that some of that was given up in COVID. One, how much margin degradation did you suffer with COVID? Two, you know, where do you think that you'll end up? Do you think that you will return to the 300-point exceed? Finally on that, given that you guys are doing less external, like you're not doing the big portfolio trades and all that that you used to do, are there any savings corporately that could also be layered on top of the portfolio margin efficiencies? Yeah. Alex, as you appropriately pointed out, and our investors will recall, we had a significant initiative starting in 2014 to improve margin. From 2014 to 2019, we drove 300 basis points from 52.7% up to 55.8%. We did have a diminishment last year due to COVID, where it dipped down to 53.7%. When you look at our guidance for 2022, it implies a margin of 55.4%, so just about 40 basis points off of the improvement that we had gotten to in 2019. Of course, that's trending with only, you know, 4 months of what we expect to be an excellent lease-up in fall of 2022. We won't get the full benefit of that margin improvement until we move into 2023. Certainly, our expectation is to surpass the margin improvement that we had developed and achieved through 2019 and improve it going forward. I'll let D-P talk a little bit or Daniel talk about that a little more in regard to your follow-up question on. Yeah. Alex, if you look at 2022 guidance, you know, really on the headline G&A number, we are looking to experience about a 6%-9% decrease. In terms of our guided G&A. Now, granted that does include in 2021 some, you know, what we would call not in the ordinary course of business charges, specifically related to, Jim Hopke's retirement and the vesting of his, unvested shares, and also some costs we incurred as part of the activism work with Land & Buildings. If you exclude those, we're still only increasing G&A in 2022 by 2%, and so certainly we are seeing a slowdown in that growth that we've incurred here recently. But we also, you know, focus on G&A every year with the board. We do a lot of productivity studies, some benchmarking studies to see where we are. If you look at our productivity statistics in terms of G&A as a% of revenues, as a% of assets, I think we rank very well with regard to that, and specifically when you consider the size of our company relative to other REITs, and where our ratio sits relative to all of those REITs. The second question is on the fee development guidance, I think, you know, it's bigger, you know, in this coming year. I think, Bill, you referenced the number of schools getting back into the normal scheme of third-party development. I guess again, sorry for the two-parter. One, you know, give us a little color on, you know, if those were only third-party considerations or if any of those were potential ACE. Two, the upside in the fee development that you're guiding for 2022, is that sort of a one-timer, meaning in 2023 it's gonna go back down to some normal level, or is 2022 a return. I'm trying to figure out how many of these projects were pent-up and now the schools are doing them, but in 2023 it would go back down. What you see in 2022 for third party, that's actually what a normal run rate should be. Sure. First, let's talk about the increase in the third-party aspect of those transactions. We look at the four transactions we talked about commencing development on. Drexel and UC Irvine, which are long-term clients. UC Irvine has always been a third-party client. That's been the financing mechanism they've used since 2002. Drexel, the protocol has been we utilize ACE on upper-division housing and third-party on first-year residence halls, which they want to have a more vested interest in, which both of those products are. When you then look at Princeton and MIT, this is a little trend that we're seeing that we think is a positive for third-party revenue moving forward, that we hope will begin to be able to build a profile in years to come that will be above the prior levels. That is, you look both at Princeton and MIT, and then also look at the announcements made previously on the award at UT and Emory. All four of those transactions are graduate housing. In part, what we believe is happening, when we look at those particular institutions, Boston, Austin, Atlanta, the cost of housing in metropolitan America is forcing universities to look at graduate housing and having to provide solutions. Graduate housing has always been the most price-sensitive student housing market. Typically, you've lost the support of mom and dad, you're more price-conscious. In those particular transactions, the universities always want to use the lowest cost of capital available. In that case, there's a pretty good differentiation in terms of the cost of capital they can float bonds at and/or that you can do credit enhancement on the project base that enable to get much lower rents for the graduates. You know, UT, Princeton, MIT are all AAA, Emory's double A too. We do see a trend of more graduate projects coming beyond what the pre-COVID expectation was, and those tend to be third party. As it relates to what the trend becomes post this year, we hope that you will see an escalation that continues to create a new stable bar, but that has to be proven out as we go. Thank you. Thank you. We now have the next question from Neil Malkin from Capital One. Neil, please go ahead when you're ready. Thank you. Hello, everyone. Great quarter, great guide. Well done. You know, first one, you had some success. You called out, you know, in your sort of full fourth quarter occupancy, obviously, subsequent to the start of the year at 95.8%, and you were at 96%. You know, I was just wondering, you know, to keep Alex's two-parter alive, you know, one, what are some of the things that you did to achieve those occupancies? And then can you apply that, you know, especially with your sort of NextGen operating platform and techniques, to future lease-ups and fourth quarters to maybe get to new highs in occupancy? Yeah, Neil, you just answered the first part of your question with the second by bringing up NextGen. One of the things that you are seeing in terms of incremental, a little bit of a paradigm shift from our history that last year we thought may just be a COVID blip, but now having two years of outperformance related to maintaining that fall occupancy and driving spring occupancy is a direct result of NextGen. As those of you that have followed the story long term, as you know, NextGen originally was a, LMS was originally a system that was solely focused on the very intense lease-up for the fall each year. Part of the development of NextGen was to improve the current period leasing, the interim backfilling of properties throughout the fall, the spring lease-up, the May backfilling, with the same level of business intelligence and corporate support that went into the annual fall lease-ups. We've now seen two years of improvement in terms of, you know, historically, we've been running about a 50% success rate of backfilling December ending leases. This year, that was a 91% economic backfill. Last year, we saw May leases go from 50% to 85%. We had to go through spring to see if we have that level of success again. Then also you've seen no-shows improve by about 10 basis points. You really look, there's been about $6 million of incremental revenue enhancement through the intensity of NextGen's systems, which create significant value for us in that regard. also tied a little bit into Daniel talking about G&A, and that a lot of that G&A investment over the last several years has been in that NextGen system. Now you're starting to see some of the benefits of that come to bear. No, that's great. Thank you, Bill. The other one, you talked about, you know, growth initiatives. Obviously you were successful at, you know, selling the 45% interest. You also talked about, you know, where you'd be a 10%, you know, partner in sort of like a fund-like structure that something like Prologis does, and that was something that you wanted to grow, and just to sort of take advantage of your skill set and the fact that, you know, asset pricing is very aggressive. I was just wondering if you could maybe talk about how that's trended, if anything has changed in your mind and if you expect to announce anything, you know, from that fund or line of investments in sort of the Tier 1 schools, the Power Five schools, in 2022. That initiative has moved forward at full speed. We have final partners selected in that regard. We're now starting to see some of the acquisition activity come to the market, and so we are beginning to actively underwrite transactions again. Any updates related to that particular venture, we would expect to announce when we have real transactions to talk about. Okay. Well, listen, thanks for the time, and I look forward to seeing you at our Flamingo Crossing event in Orlando on March 23rd. We look forward to hosting you there. We now have a question from Nick Joseph of Citigroup. Nick, your line is open. Hey, it's actually Michael Bilerman here with Nick. Bill, I was wondering if you can just go through. You talked a little bit about starting to underwrite transactions again. You obviously had the significant transaction with Harrison Street towards the end of the year and selling assets. I guess how are you thinking about now that the stock is, you know, pulled off from that end-of-year high. How do you plan to close the gap to NAV versus using capacity to go out and deploy capital? I guess what is management and the board doing today to really get at that discount? And what initiatives do you have going on to do that? Yeah. Certainly, Michael, I would say that, you know, let me quote you in your write-up last night, and that I think you said it perfectly. That is strong business execution is the best course of action to close the valuation gap. Certainly, you know, we were very pleased in terms of the acceleration and momentum you saw in terms of the stock at the end of next year moving very much closer to NAV. I think we were actually at a 2.4% premium to your current NAV at the end of December. Certainly, you know, the geopolitical environment that has had an impact on the broader market and on the U.S. REIT index down about 11%, we certainly are there with them. Obviously, that's created a momentary disconnect. Certainly with the announcement that we have today and the acceleration that we have and the industry fundamentals, pending the geopolitical environment getting resolved and correcting itself, we would expect to pick up on the momentum we saw at the end of last year and expect to see the performance of the stock move in concert with that. Obviously, every decision that we make from an individual capital allocation perspective, whether it's in our own development pipeline or in the joint venture structure, will be handled in the context of how accretive to our investors in the long term and the capital allocation committee is intimately involved in those reviews and processes. I guess how do you think about obviously executing Harrison Street gave you not only the mark on on-campus assets, but it also provided 2 years of funding for all the development and redevelopment. It secured those goals. I would say now that your financials and the capital capacity and liquidity are in place, I guess, are you interested at all in buying back stock to help narrow the discount or accelerating additional asset sales or joint ventures, just to continue down that path and continue to provide very strong capital costs to your shareholders? Yeah. I think, starting with the end of your question. The one thing that we have heard from shareholders consistently over the last several months, they have been very appreciative of the thoughts that we are taking toward our capital allocation plan in terms of accretively self-funding, but at prudent levels that don't negatively impact the earnings per share growth profile that they have been waiting on for the last several years. We feel as though we've been balancing that very well, and the ASU transaction really gave us the opportunity to exemplify our ability to do that on the longer term. I do want to comment a little bit on your point related to the ASU transaction, and that we are very pleased that we were able to undertake that. A couple notations about it. The price discovery as it relates to the on-campus ACE assets that we have, first and foremost, the comment that I made in my script, it demonstrates that a well-structured on-campus equity transaction can be priced on par with off-campus, which we think was very important to demonstrate. The other thing that it pointed out, there's great diversity in the ASU products among those 8 assets. There's 2 upperclassmen apartments, there's 2 fully immersed academic living learning centers, there's a 1960s high-rise building redevelopment and renovation, there's a private off-campus apartment complex, and there's a Greek village. It really demonstrated throughout the entire product range of student housing that price point that can be achieved on par. We think there, you know, there's a lot of good discovery that took place in that. As it relates to your question about how much or more of that would we undertake, again, at this point in time, our focus is on accretively self-funding and maintaining our earning growth profile. Okay. Just as a second topic, can rent growth in student housing keep up if inflation stays elevated? You know, is there a difference in practice in capturing higher rent growth for your on-campus versus your off-campus assets? You know, obviously you want to be a good partner to the schools, and so I wasn't sure if that imposed a restraint that may not exist for off-campus for the properties you own. Maybe just talk about the ability as you roll into the 2023-2024 season, your ability to capture that excess rent growth that the multifamily landlords are certainly being able to capture today. Yeah. Excellent question, Michael, in the context of the inflationary environment that we're in. I'd start by saying at the highest general level, the one thing we'd like to point out, and certainly when you look at COVID's impact on rents overall in the residential sector, as a whole, and certainly you had geographic differences and product classification differences, but as a whole, multifamily was relatively flat for the couple of years during COVID and now is seeing that explosive growth. Student housing, and as we've always talked about, which is the investment thesis, is even through COVID, you saw 1% rent growth and then 3.8% rent growth, and we have implied rent growth in, of course, this guidance. The thesis continues to be the same of the consistency of stability of cash flows without the volatility that you see in the revenue stream of multifamily, which we also saw through the Great Recession. As you talk about your the inflation question, you know, the downside of student housing is that your rates are locked in for 12 months. To the extent in the next 3 to 6 months you see excessive inflationary growth, we're not able to reset that month to month like apartments can as they slowly roll on 8% a month. We do, however, and as you pointed out, in the off-campus market, we have all of the same abilities for open market pricing that you do in any other sector of real estate. In the on-campus one of the things and this is why you saw ASU trade at the price it did. In all of our on-campus transactions, we always protect margin. In the case of ASU, there's no pricing limitations. We're able to price rents as we choose based on the economic environments. Even at institutions where they were concerned about pricing and there are some collars in terms of how much rates can rise, in every one of those ground leases, we have margin protection to where we have a 12-month look back on inflationary expenses and also a look forward on budgets and have the rights to raise rents to protect the margin equal to those increases. In actuality, how we will implement that if it comes into effect will be market by market assessing, you know, the ability to do so. We do have the flexibility in how we structure the on-campus deals to treat them consistent with how we would off-campus. Just, you mentioned NAV a couple times. You know, Street NAV is at $59, using about a mid-4 cap rate. It would seem that, you know, your joint venture and certainly things going on in the industry would put that cap rate probably on the higher end of where real market is. And obviously you have a lot of other different pieces of the company other than just the asset value that could be attractive to others. I guess, is there any plans to sort of put out a very detailed look at what you believe NAV is when you take into account your development and redevelopment, your existing assets, the ventures, the fees, the management platform, all the things that are embedded in the entity? I guess, is your plan to sort of put out a little bit more detail about where you sort of see value overall of the enterprise? Obviously, that's a board decision to what level we would go through that process and have public disclosure. Certainly it's something we're always looking at internally. Again, as we look at NAV is not something we think about at a moment in time. Again, I would point out to where we were at 12/31 in the context of NAV and the trending. Obviously, the market is impacted today. We're always looking at the NAV of the company in the context of future value that we would expect to be reflected in the stock versus where we're trading. All right. Well, maybe there's some opportunities as we get to our conference in a couple of weeks to provide investors a little bit more granularity as to various values, you know, and whether The Street's accurate or not. Yeah. Appreciate it. Thank you. Thank you, Michael. Thank you, Michael. We now have another question on the line from Austin Wurschmidt from KeyBanc Capital Markets. Austin, please go ahead when you're ready. Great. Good morning, everyone. As you guys set the fall 2022 rental revenue guidance range, you know, how did you think about the varying components? You know, maybe you know, the first year residence halls in particular. Mm-hmm ... which I think kinda were at elevated, you know, occupancy levels last fall relative to where you've been historically. Curious if you kinda, you know, assume those sustained at elevated levels or reverted back. You know, just sort of backing into, you know, a mid kind of 2% rate growth and occupancy around 97%. Can you just give us some of the components of that and how you drew that up? Sure. As it relates to the on-campus ACE, rental rate pricing was really unaffected by COVID and remains consistent this year and going forward. In that, in the recovery you saw was largely driven by the recovery of occupancy as the students on the first year basis came back to campus. Most universities that we serve have always operated near full capacity in those residence halls. We saw that with the first year increase in students maintained, and we believe it will be consistent. There's been stability as what you said, the returns you saw this year in terms of rate and occupancy on campus to pre-COVID levels, and now we expect it to continue on in normalcy. As it relates to the off-campus market, that is all, you know, again, as we always say, property by property, unit type by unit type, market to market, and maximization of rent in each case on a driven by our systems. We do see the one thing. You know, Jennifer commented in her remarks in the press release that we do see the national trend in leasing has reverted to its pre-COVID velocity. Part of that is being driven by the fact that those large first year classes that are on campus are now back to the normal cycle. They're all on campus. They're attending all the sporting events. They're having all the extracurricular activities, and they're also back to the normal cycle of when they're looking for off-campus housing. With the return of that market, that gives us the ability to utilize our systems off campus to drive rents to the maximum level we can. You see that vary from inflationary. We always have several properties and markets we're able to drive rates as much as 5%-7%. You can see that our guidance implies, I think, at a midpoint about a 3.9% rental revenue increase. We would expect to be a healthy year in that regard. No, that's helpful. I wanted to switch over. When you guys last quarter provided the internal NAV, you know, I think you said high 50s, low 60s range, and then, you know, you completed the ASU transaction, you know, late last year. I'm just curious if, you know, there's been any movement, you know, in terms of how you've thought about the cap rate you apply to the portfolio based on, you know, the price discovery in that transaction or, you know, what you're seeing. I think you said sort of, you know, off-campus trading, you know, in line with that, you know, high-quality schools in good locations. Any change to kind of that internal estimate, you know, or range that you provided just last quarter? Yeah. As you know, Austin, we have always believed and always spoken that we believe ACC should trade on par with off-campus assets in that vein. The price discovery was to demonstrate to the broader investment community that the way that we structure our ACC transac. You know, remember years ago when you all would say, "How did you lose that deal? How did you lose that deal?" I said, "Because we never give on the premise of structuring these transactions so that they trade as real estate." Well, we demonstrated that with ASU. For us, that was proving up a value that we believe always existed. Now, when you look at that 3.75% cap rate, and you look at ASU, it is a Power Five institution, a Carnegie R1 institution, happens to also be U.S. News & World Report's 1 most innovative university in America. It is in a metropolitan area, and it is fully integrated into their on-campus programs. You know, that does not. That cap rate obviously does not translate to every asset of ACC, nor in our portfolio. You know, when we look at breaking down the valuation of NAV internally, how we've always looked at it, you certainly have the components that are trophy assets like an ASU at your best institutions. You then have to look at, you know, we certainly have products then once you move off campus that emulate Power Five and Carnegie R1, but then we also have assets that are more rural college towns that aren't as well located as some of the other. There's a great diversification in terms of those product attributes that we go through asset by asset. I will tell you that for us, the ASU transaction firmed up what we have always believed is the value of ACE. Got it. Just last one for me. I mean, with sort of the Harrison Street and Allianz, you know, joint venture vehicles, available to you know, seemingly, you know, an attractive, means of recycling capital, how large should we think about those, you know, those two vehicles relative to the size of the, fully owned portfolio? You know, Austin, this is Daniel. I'd say that, you know, there is certainly appetite with both joint venture partners to do more. I wouldn't say that there's a specific size targeted, but more, looking at it in terms of our annual capital recycling program that we've talked about in that $200 million-$400 million a year range. Of course, as you know, right now we've got this year and 2023 addressed with the ASU transaction. As we look to the future, we'll look to do more with them and we might look to even expand the base of partners that we're doing stuff with. Certainly more appetite from them, and I wouldn't say there's a specific size or limit on size that we're targeting with them, but more of an annual program. Understood. Thanks, Daniel. Yep. Thank you. We now have Chandni Luthra from Goldman Sachs. Sir, please go ahead. Hi. Good morning. Congratulations on a strong quarter, and thank you for taking my question. As we start to think about the next leg of development, you know, looking beyond Disney now that that's sort of towards the latter stages, how are you evaluating on-campus versus off-campus? What I'm trying to understand is, you know, is off-campus the... Is the appeal of off-campus perhaps, you know, a touch higher given inflationary environment and sort of just more room to perhaps raise rents there? You know, looking out into 2023, how are you evaluating what the next leg of development could look like? Certainly, as we have previously communicated, our first priority from a capital allocation perspective, and certainly in this environment it is appropriate, is on-campus P3 transactions. We still have some excellent pipeline of off-campus development transactions. It's more competitive right now off-campus. You have construction pricing pressures and, of course, entitlement costs. As we've always said, when you're looking at the on-campus transactions, you have a vested partner in the university. They are bringing the land to the table, and that land value is determined by the university based on their criteria of wanting to provide affordable rents to students. They're not looking to maximize the value of the parcel. They also, in most cases, are the entitlement governance entity and control that process very cost effectively. They also, in many cases, bring a real estate tax exemption given its use or benefit for higher education. Certainly in this environment, there's more. They also tend to be larger, which gives you scale in helping accomplish the affordable rents and meeting feasibility. The current environment, and as you also saw through the Great Recession when we were doing more on-campus ACE development than off, brings great benefit to being able to achieve our targeted yields, provide affordable student rents, and to meet the university's objectives. There's still some great opportunities off-campus. We're very selective in that arena and only look at the type of development that we reference would be equal to an ASU-type on-campus transaction, trophy assets on legacy sites where we can accomplish affordable rents and get our return. There'll be fewer of those, but it's not a situation where there won't be any. Got it. Understood. You know, in your previous question, you guys addressed how you might be looking to see more opportunity with JV programs, and there might be more appetite there. On your 3Q call, obviously, you know, dispositions, outright dispositions were also discussed. Is that something that, you know, you guys are still evaluating? Or do you think that given you still have sort of the fee pipeline coming in from these JVs, outright dispositions are no longer on the table? I would say, you know, we wouldn't say it's no longer on the table, and certainly there's going to be times when we think it's appropriate to monetize, you know, assets that we consider to be, you know, towards the lower end of the NOI growth profile or lower end of quality in our, you know, longer term refinement of the portfolio. Right now, we really like the idea of using joint ventures in terms of monetizing a minority interest in assets, and being able to replace any lost efficiency or scale with the management fees, asset management fees that we can get off of that portion of selling to a joint venture partner. I think, you know, most commonly, you will see us using this minority joint venture partnership structure like we did with the Austin- Allianz joint venture and the ASU- Harrison Street joint venture. Great. Thank you so much. Thank you. As a reminder, if you would like to ask any further questions today, please press star followed by one on your telephone keypads now. If you change your mind at any time, please press star two to remove the question. But as a reminder, it is star one for any questions today. We now have our next question on the line from John Pawlowski from Green Street. John, please go ahead. Thanks very much. William, if you went out and sold the bottom tier of your portfolio, pick a number, bottom 10%, type of cap rate do you think that would fetch at a second tier university a little further away from campus? You know, obviously you've seen a lot of the investment activity primarily focused at the major universities core, and that's where that's trading in that sub-4%. You've still seen compression across student housing investment, and you're seeing investment across a wide array. A couple of the large portfolios that you saw trade at the Harrison Street sold at the end of the fourth quarter, where I would say probably had assets that were consistent with what I call our bottom 10%. You know, we think that range is probably compressed down into that mid-4% range. You know, obviously a premium or a higher cap rate than what you're seeing for the core stuff, but still has seen pretty significant compression, and there's a pretty deep investor base for that. Because if you think about it's a very relatively attractive cap rate in return compared to the significant compression you've seen on multifamily. Sure. In terms of the buy and hold decision, I mean if you give me a decision, I'd rather own ASU at a 3.75% versus the bottom 10% of your portfolio at a mid-4%. Why not use the bottom tier of your portfolio as a source of funds versus ASU irrespective of the price discovery? Well, yeah, that price discovery we feel is critical. Obviously as we go forward, we look at what you just said in terms of evaluating the alternatives. You know, we have spoken on this call for over a decade of people asking, "Can you trade ACE in equity and at what cap rate?" We felt that it was very important to put that out. The other thing I want to point out is, I mean, we love Arizona State and they are a wonderful partner, and there's probably more to do there. We also had a high degree of concentration. One of the things Morgan R. Olsen, their CFO, was excited about is that we talked about diversifying and taking some of the risk of a single market off the table, we have the ability to invest more at ASU. There were a lot of strategic reasons why that transaction made sense. Certainly as we go forward, John, whenever we're looking at our capital allocation plan, we're looking at our entire portfolio and what is the most accretive trade that we can make, that also enhances long-term sustainable cash flows. Okay. Thank you. Final question from me for Jennifer, back to the inflation discussion. Enrollment is up, supply is down, and baseline inflation is well above recent history. I guess I've never run a student housing portfolio, but I don't understand why you can't push rental rates, you know, 5, 7, 8% on the off-campus portfolio versus the kind of 3% that's implied in the guidance. Yeah. John, I actually answered that previously in the context of we can at certain assets in certain markets. You know, we have a very eclectic, geographically diverse portfolio. When you bring all the rental rate growth together, you get that average we've always had over the years, 2.5%-3%. But within that 2.5%-3%, you have a range of flat growth to 8%, sometimes negative growth to get the occupancy. It's always about the revenue maximization every cycle. You know, this is also when you look at ACE versus off-campus, another thing that we think about in terms of the long-term profile of those opportunities. You can achieve prolific IRRs off-campus where you have the ability at times. Take our Callaway House asset, you know, where our rate growth in the first 5 years was well in excess of 7% on average versus the stability coupon clipping on campus, that 2.5%-3%, very little downside. When you look at setting rates and stability of cash flows, you absolutely have the opportunity off-campus to have that type of prolific rate growth, but not across the portfolio of 170 assets in 32 different states and 92 different markets. You have the protection of diversity. Yeah. I guess the follow-up, again, supply across the portfolio is down, enrollment across the portfolio is up. Your portfolio is well located. Why are certain assets we're seeing 0% rate growth? If a property has 0% rate growth, they're probably not in a market that has 0 supply, and the supply dynamics are different. Again, this is a very large, diverse portfolio with different product types. You know, the thesis of student housing, and this reminds me of some of the conversations we're having today that remind me of 2012, 2013, when apartments were just starting to come off of the Great Recession, where they had had significant rental rate diminution, and people were saying, "Why can't you? Why can't you?" As we have always said, the benefit of student housing in a large, diverse portfolio such as ours is the consistent stability of rental rate growth and cash flows. The one thing, the question that you're asking, is not true. On an individual asset and investment basis, absolutely you can have years of 5%-7% rate growth, and it occurs within our portfolio all the time. You know, 17 years in a row of never having negative growth is the story of what that consistency of rental revenue equates to. Yep. Thank you for the time. You got it. Thank you. Thank you, John. We now have a question on the line from a follow-up from Neil Malkin from Capital One. Neil, please go ahead. I have opened your line. Yeah. Thanks. Just two quick ones. First, William, and I'm sorry if you answered this before, but you know, after Disney, just wondering about the pipeline of actual ACE, not third party. I know you said off-campus, you know, land values are increasing, but you know, just you know, obviously, most of these things went to third party and not ACE. And I know you talked about the schools kind of, you know, shifting focus from COVID to sort of the core of their business. You know, when do you think we're gonna see that? And you know, do you expect to announce some things, you know, near term, to kind of build that pipeline? And that kind of leads into my next question. Yeah, sure. Bill talked about this a little bit earlier. Yeah, we've seen, you know, a lot of third party projects that they're very specifically related to the goals of those universities and the type of housing, a lot of focus on grad, where affordability is the key, and finding that lowest cost of capital, which usually is through those universities' balance sheets, is there. We have no different change in what we believe the appetite is overall for P3, and that relates to both the equity ACE deals as well as the third party. There's a vibrant pipeline, and if you look within our supplemental, you know, Cal Berkeley, there's an ACE project within there. Northeastern is still targeted to be, and there's a number of that are TBD that based on what the goals of those universities and what the potential financing is, that could be ACE. When you look at that large pipeline we've been talking about, and you're seeing the fruition of that come with these recent closings and announcements, that still includes a large mix of both ACE and third party. What ultimately turns out to be ACE and equity and what becomes third party depends on the university, depends on our investment criteria, and the product. That pipeline is as vibrant ahead as it has been, and we'll continue to pursue it and hopefully win those projects, and you'll see more ACE projects come along. Okay. I assume that pipeline is growing in terms of RFPs, right? Seems like every quarter it's more. Yes. It continues to grow and be strong. Okay. Then the last one, I think this is kind of tying a lot of people's questions together is, you know, with rent growth, you know, obviously being less than multifamily, you know, you talk about the lower risk, for example, cash flows, and I think the other part of it is, you know, the growth is gonna come from external, right? It's the value of the oligopoly, so to speak, of the development and the on-campus revitalization that very few people have the skill to do. Maybe with that in mind, can you just talk about, you know, as we look past COVID, you know, how are you thinking about long-term capital allocation and value creation, sort of over the next, you know, several years? Oh, sorry. My mic was off. Certainly, we are in a position to really implement an accretive self-funding plan, you know? I wanna point out since you brought up, you know, the recovery from COVID, one of the untold stories that we put in our investor presentation at NAREIT. If you actually pull up that presentation, it's page 28 of our NAREIT presentation. You know, we in 2016 and 2017 did a lot of asset sales where we refined the portfolio. We exited a lot of markets. We made the portfolio enhanced it to where now it's all on-campus or pedestrian to campus for with a rare exception. You know, as we tracked the markets that we exited prior. During that period of time, one thing that we saw is that the markets that we continued to be in grew their enrollment by 840 basis points over the markets we exited over the last five years. Also, the occupancies at the markets we exited were 600 basis points more impacted by COVID than we were in our own markets. They were at 85% versus our 90.3%. The bottom line is we have now repositioned this company, and the shareholders are now. We really appreciate the long-term shareholders that were patient through those years as we were implementing that long-term strategy to reposition the portfolio. You're now seeing the benefits of that being reaped in the context of strong earnings per share, but also what you saw with ASU and what we will continue to do with our portfolio is to very accretively self-fund. With cap rates now being proven up in all aspects of our portfolio, on an asset-by-asset basis in the, you know, 3s, as William said, probably we had a couple that are mid-4s. But as you've seen that shore up, we now have the availability. We've got about 200 basis points of upside in net asset value accretion in the development pipeline that we have before us. As you mentioned, we are in the best competitive position as it relates to on-campus P3 than we have ever been in in the company's history. We see a very bright future and a lot of tailwinds and a lot of accelerating momentum for the company as we are able to move forward in taking advantage of the opportunities that are before the company. Appreciate that. Thank you. Thank you. We have no further questions on the line, so I'd like to hand it back to Bill. I wanna thank all of you for joining us, and I really wanna thank the American Campus Communities team. What you saw in today's or last night's release is the cumulative effort and collaboration of the industry's most dedicated, hardworking team. I wanna give a big shout-out to them. I also wanna, for those of you that are attending the upcoming Citi conference, unfortunately I won't be able to attend because of their vaccination policy. I've had COVID twice. I just had Omicron, and I've got a very high level of antibodies, and my doctor has told me not to get the vaccine at this time. I would've loved to attend. Daniel and William will be there, and they'll answer all of your questions and give you a good outlook of what's going on. Thank you all so much. Thank you. This does conclude today's call. Thank you for joining. You may now disconnect your line.