UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 
 FORM
10-Q
 
 x Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 
 For the
quarterly period ended March 31, 2009.
 
 o Transition Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For the
Transition Period From ______________________ to
_________________________.
 
  Commission
file number 001-32265
  AMERICAN
CAMPUS COMMUNITIES, INC.
 (Exact
name of registrant as specified in its charter)
 
 Maryland
                76-0753089(State
      or Other Jurisdiction of
                  Incorporation
      or Organization)
                (IRS
      Employer Identification No.)805
      Las Cimas Parkway, Suite 400
                  Austin,
      TX
                  (Address
      of Principal Executive Offices)
                78746
                  (Zip
      Code)
 
 (512)
732-1000
 Registrant’s
telephone number, including area code
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x  No o
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).
 Yes o   No o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
 Large
      accelerated filer x
                        
                        Accelerated
      Filer  oNon-accelerated
      filer o
                        (Do
      not check if a smaller reporting company)
                        Smaller
      reporting company o
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act)
 Yes o  No x
 
 Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.
 
 There
were 42,405,493 shares of American Campus Communities, Inc.'s common stock
with a par value of $0.01 per share outstanding as of the close of business on
May 1, 2009.
  
  FORM
10-Q
 FOR
THE QUARTER ENDED MARCH 31, 2009
 
 TABLE
OF CONTENTS
 
 PAGE
                  NO.PART
      I.Item 1.
                Consolidated Financial
StatementsConsolidated Balance Sheets as of March 31, 2009
      (unaudited) and December 31, 2008
                1Consolidated Statements of Operations for the three
      months ended March 31, 2009 and 2008 (all unaudited)
                2Consolidated Statement of Changes in Equity for
      the three months ended March 31, 2009 (unaudited)
                3Consolidated Statements of Cash Flows for the three
      months ended March 31, 2009 and 2008 (all unaudited)
                4Notes to Consolidated Financial
    Statements
                5Item 2.
                Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
                24Item 3.
                Quantitative and Qualitative Disclosure about Market
      Risk
                39Item 4.
                Controls and Procedures
                39PART
      II.Item 6.
                Exhibits
                39SIGNATURES
                40
  
  AMERICAN CAMPUS COMMUNITIES, INC. AND
SUBSIDIARIES
 CONSOLIDATED
BALANCE SHEETS
 (in
thousands, except share and per share data)
 
 March
      31, 2009
                              
                              
                              December
      31, 2008(Unaudited)AssetsInvestments
      in real estate:Wholly-owned
      properties, net
                              
                              $
                              2,008,723
                              
                              
                              $
                              1,986,833On-campus
      participating properties, net
                              
                              
                              68,250
                              
                              
                              
                              69,302Investments
      in real estate, net
                              
                              
                              2,076,973
                              
                              
                              
                              2,056,135Cash
      and cash equivalents
                              
                              
                              26,196
                              
                              
                              
                              25,600Restricted
      cash
                              
                              
                              29,680
                              
                              
                              
                              32,558Student
      contracts receivable, net
                              
                              
                              4,113
                              
                              
                              
                              5,185Other
      assets
                              
                              
                              52,975
                              
                              
                              
                              64,431Total
      assets
                              
                              $
                              2,189,937
                              
                              
                              $
                              2,183,909Liabilities
      and equityLiabilities:Secured
      debt
                              
                              $
                              1,132,751
                              
                              
                              $
                              1,162,221Secured
      term loan
                              
                              
                              100,000
                              
                              
                              
                              100,000Unsecured
      revolving credit facility
                              
                              
                              78,300
                              
                              
                              
                              14,700Accounts
      payable and accrued expenses
                              
                              
                              26,465
                              
                              
                              
                              35,440Other
      liabilities
                              
                              
                              52,209
                              
                              
                              
                              56,052Total
      liabilities
                              
                              
                              1,389,725
                              
                              
                              
                              1,368,413Redeemable
      noncontrolling interests
                              
                              
                              24,571
                              
                              
                              
                              26,286Equity:American
      Campus Communities, Inc. stockholders’ equity: Common stock, $.01 par
      value, 800,000,000 shares authorized, 42,405,493 and 42,354,283 shares
      issued and outstanding at March 31, 2009 and December 31, 2008,
      respectively
                              
                              
                              423
                              
                              
                              
                              423Additional
      paid in capital
                              
                              
                              903,265
                              
                              
                              
                              901,641Accumulated
      earnings and dividends
                              
                              
                              (126,117
                              )
                              
                              
                              (111,828
                              )Accumulated
      comprehensive loss
                              
                              
                              (5,900
                              )
                              
                              
                              (5,117
                              )Total
      American Campus Communities, Inc. stockholders’ equity
                              
                              
                              771,671
                              
                              
                              
                              785,119Noncontrolling
      interests
                              
                              
                              3,970
                              
                              
                              
                              4,091Total
      equity
                              
                              
                              775,641
                              
                              
                              
                              789,210Total
      liabilities and equity
                              
                              $
                              2,189,937
                              
                              
                              $
                              2,183,909
  See
accompanying notes to consolidated financial statements.
 1
  AMERICAN CAMPUS COMMUNITIES, INC. AND
SUBSIDIARIES
  CONSOLIDATED
STATEMENTS OF OPERATIONS
 (Unaudited,
in thousands, except share and per share data)
 
 Three
      Months Ended March 31,2009
                      
                      
                      2008Revenues:Wholly-owned
      properties
                      
                      $
                      67,332
                      
                      
                      $
                      31,681On-campus
      participating properties
                      
                      
                      6,874
                      
                      
                      
                      6,744Third
      party development services
                      
                      
                      1,016
                      
                      
                      
                      1,620Third
      party development services – on-campus participating
      properties
                      
                      
                      36
                      
                      
                      
                      36Third
      party management services
                      
                      
                      2,242
                      
                      
                      
                      922Resident
      services
                      
                      
                      240
                      
                      
                      
                      438Total
      revenues
                      
                      
                      77,740
                      
                      
                      
                      41,441Operating
      expenses:Wholly-owned
      properties
                      
                      
                      31,486
                      
                      
                      
                      13,885On-campus
      participating properties
                      
                      
                      2,030
                      
                      
                      
                      2,295Third
      party development and management services
                      
                      
                      2,977
                      
                      
                      
                      2,108General
      and administrative
                      
                      
                      2,748
                      
                      
                      
                      2,134Depreciation
      and amortization
                      
                      
                      20,102
                      
                      
                      
                      8,029Ground/facility
      lease
                      
                      
                      552
                      
                      
                      
                      359Total
      operating expenses
                      
                      
                      59,895
                      
                      
                      
                      28,810Operating
      income
                      
                      
                      17,845
                      
                      
                      
                      12,631Nonoperating
      income and (expenses):Interest
      income
                      
                      
                      40
                      
                      
                      
                      162Interest
      expense
                      
                      
                      (15,886
                      )
                      
                      
                      (6,979
                      )Amortization
      of deferred financing costs
                      
                      
                      (801
                      )
                      
                      
                      (311
                      )Loss
      from unconsolidated joint ventures
                      
                      
                      (554
                      )
                      
                      
                      (126
                      )Total
      nonoperating expenses
                      
                      
                      (17,201
                      )
                      
                      
                      (7,254
                      )Income
      before income taxes and redeemable noncontrolling
interests
                      
                      
                      644
                      
                      
                      
                      5,377Income
      tax provision
                      
                      
                      (135
                      )
                      
                      
                      (60
                      )Redeemable
      noncontrolling interests share of income (Note 6)
                      
                      
                      (54
                      )
                      
                      
                      (306
                      )Net
      income
                      
                      
                      455
                      
                      
                      
                      5,011Net
      income attributable to noncontrolling interests (Note 6)
                      
                      
                      (178
                      )
                      
                      
                      (102
                      )Net
      income attributable to American Campus Communities, Inc. and
      Subsidiaries
                      
                      $
                      277
                      
                      
                      $
                      4,909Income
      per share – basic:Net
      income per share attributable to American Campus Communities, Inc. and
      Subsidiaries
                      
                      $
                      0.01
                      
                      
                      $
                      0.18Income
      per share – diluted:Net
      income per share attributable to American Campus Communities, Inc. and
      Subsidiaries
                      
                      $
                      0.01
                      
                      
                      $
                      0.18Weighted-average
      common shares outstanding:Basic
                      
                      
                      42,377,638
                      
                      
                      
                      27,331,896Diluted
                      
                      
                      44,031,602
                      
                      
                      
                      29,161,145Distributions
      declared per common share
                      
                      $
                      0.3375
                      
                      
                      $
                      0.3375
 
 See
accompanying notes to consolidated financial statements.
 2
  AMERICAN CAMPUS COMMUNITIES, INC. AND
SUBSIDIARIES
  CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
 (unaudited,
in thousands, except share data)
 
 Common Shares
                      
                      
                      Par
      Value of
                        Common
      Shares
                      
                      
                      Additional
      Paid
                        in
      Capital
                      
                      
                      Accumulated
      Earnings and Distributions
                      
                      
                      Accumulated
      Other Comprehensive Income (Loss)
                      
                      
                      Noncontrolling
      Interests
                      
                      
                      TotalEquity,
      December 31, 2008
                      
                      
                      42,354,283
                      
                      
                      $
                      423
                      
                      
                      $
                      901,641
                      
                      
                      $
                      (111,828
                      )
                      
                      $
                      (5,117
                      )
                      
                      $
                      4,091
                      
                      
                      $
                      789,210Amortization
      of restricted stock awards
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      583
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      583Vesting
      of restricted stock awards
                      
                      
                      50,210
                      
                      
                      
                      -
                      
                      
                      
                      (313
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (313
                      )Distributions
      to common and restricted stockholders
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (14,566
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (14,566
                      )Distributions
      to joint venture partners
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (299
                      )
                      
                      
                      (299
                      )Conversion
      of common units to common stock
                      
                      
                      1,000
                      
                      
                      
                      -
                      
                      
                      
                      12
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      12Reclassification
      of noncontrolling interests
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,342
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,342Comprehensive
      loss:Change
      in fair value of interest rate swaps
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (783
                      )
                      
                      
                      -
                      
                      
                      
                      (783
                      )Net
      income
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      277
                      
                      
                      
                      -
                      
                      
                      
                      178
                      
                      
                      
                      455Total
      comprehensive loss
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (328
                      )Equity,
      March 31, 2009
                      
                      
                      42,405,493
                      
                      
                      $
                      423
                      
                      
                      $
                      903,265
                      
                      
                      $
                      (126,117
                      )
                      
                      $
                      (5,900
                      )
                      
                      $
                      3,970
                      
                      
                      $
                      775,641
  
 See
accompanying notes to consolidated financial statement
 3
 AMERICAN CAMPUS
COMMUNITIES, INC. AND SUBSIDIARIES
  CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (Unaudited,
in thousands)
  Three
      Months Ended March 31,2009
                            
                            
                            2008Operating
      activitiesNet
      income
                            
                            $
                            455
                            
                            
                            $
                            5,011Adjustments
      to reconcile net income to net cash provided by operating
      activities:Redeemable
      noncontrolling interests share of income
                            
                            
                            54
                            
                            
                            
                            306Depreciation
      and amortization
                            
                            
                            20,102
                            
                            
                            
                            8,029Amortization
      of deferred financing costs and debt premiums/discounts
                            
                            
                            739
                            
                            
                            
                            (70
                            )Share-based
      compensation
                            
                            
                            583
                            
                            
                            
                            411Loss
      from unconsolidated joint ventures
                            
                            
                            554
                            
                            
                            
                            126Amortization
      of gain on interest rate swap termination
                            
                            
                            -
                            
                            
                            
                            (60
                            )Income
      tax provision
                            
                            
                            135
                            
                            
                            
                            60Changes
      in operating assets and liabilities:Restricted
      cash
                            
                            
                            2,878
                            
                            
                            
                            (1,609
                            )Student
      contracts receivable, net
                            
                            
                            1,072
                            
                            
                            
                            1,016Other
      assets
                            
                            
                            5,755
                            
                            
                            
                            (906
                            )Accounts
      payable and accrued expenses
                            
                            
                            (9,423
                            )
                            
                            
                            (2,918
                            )Other
      liabilities
                            
                            
                            (3,001
                            )
                            
                            
                            (1,596
                            )Net
      cash provided by operating activities
                            
                            
                            19,903
                            
                            
                            
                            7,800Investing
      activitiesCash
      paid for property acquisitions
                            
                            
                            -
                            
                            
                            
                            (11,285
                            )Cash
      paid for land purchase
                            
                            
                            -
                            
                            
                            
                            (2,998
                            )Investments
      in wholly-owned properties
                            
                            
                            (35,813
                            )
                            
                            
                            (35,322
                            )Investments
      in on-campus participating properties
                            
                            
                            (38
                            )
                            
                            
                            (52
                            )Purchase
      of corporate furniture, fixtures and equipment
                            
                            
                            (146
                            )
                            
                            
                            (190
                            )Net
      cash used in investing activities
                            
                            
                            (35,997
                            )
                            
                            
                            (49,847
                            )Financing
      activitiesRevolving
      credit facility, net
                            
                            
                            63,600
                            
                            
                            
                            27,000Proceeds
      from construction loans
                            
                            
                            3,028
                            
                            
                            
                            29,418Pay-off
      of mortgage loans
                            
                            
                            (29,831
                            )
                            
                            
                            -Principal
      payments on debt
                            
                            
                            (2,603
                            )
                            
                            
                            (1,597
                            )Change
      in construction accounts payable
                            
                            
                            (2,312
                            )
                            
                            
                            (1,774
                            )Debt
      issuance and assumption costs
                            
                            
                            -
                            
                            
                            
                            (93
                            )Distributions
      to common and restricted stockholders
                            
                            
                            (14,477
                            )
                            
                            
                            (9,334
                            )Distributions
      to noncontrolling partners
                            
                            
                            (715
                            )
                            
                            
                            (607
                            )Net
      cash provided by financing activities
                            
                            
                            16,690
                            
                            
                            
                            43,013Net
      change in cash and cash equivalents
                            
                            
                            596
                            
                            
                            
                            966Cash
      and cash equivalents at beginning of period
                            
                            
                            25,600
                            
                            
                            
                            12,073Cash
      and cash equivalents at end of period
                            
                            $
                            26,196
                            
                            
                            $
                            13,039Supplemental
      disclosure of non-cash investing and financing activitiesLoans
      assumed in connection with property acquisitions
                            
                            $
                            -
                            
                            
                            $
                            (6,970
                            )Change
      in fair value of derivative instruments, net
                            
                            $
                            (783
                            )
                            
                            $
                            (1,287
                            )Supplemental
      disclosure of cash flow informationInterest
      paid
                            
                            $
                            17,116
                            
                            
                            $
                            8,000
  See
accompanying notes to consolidated financial statements.
 4
  AMERICAN CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 1.     Organization
and Description of Business
 
 American
Campus Communities, Inc. (the “Company”) is a real estate investment trust
(“REIT”) that was incorporated on March 9, 2004 and commenced operations
effective with the completion of an initial public offering (“IPO”) on August
17, 2004.  Through the Company’s controlling interest in American
Campus Communities Operating Partnership LP (the “Operating Partnership”), the
Company is one of the largest owners, managers and developers of high quality
student housing properties in the United States in terms of beds owned and under
management.  The Company is a fully integrated, self-managed and
self-administered equity REIT with expertise in the acquisition, design,
financing, development, construction management, leasing and management of
student housing properties.
 
 As of
March 31, 2009 the Company’s property portfolio contained 86 student housing
properties with approximately 52,800 beds and approximately 17,200 apartment
units, including 40 properties containing approximately 23,500 beds and
approximately 7,500 units added as a result of the Company’s acquisition on June
11, 2008 of the student housing business of GMH Communities Trust (“GMH”), as
more fully discussed in Note 3 herein.  The Company’s property
portfolio consisted of 80 owned off-campus properties that are in close
proximity to colleges and universities, two American Campus Equity (“ACETM”)
properties operated under ground/facility leases with a related university
system and four on-campus participating properties operated under
ground/facility leases with the related university systems.  As of
March 31, 2009, the Company also owned a noncontrolling interest in two joint
ventures that owned an aggregate of 21 student housing properties with
approximately 12,100 beds in approximately 3,600 units.  The Company’s
communities contain modern housing units and are supported by a resident
assistant system and other student-oriented programming, with many offering
resort-style amenities.
 
 Through
the Company’s taxable REIT subsidiaries (“TRS”), it also provides construction
management and development services, primarily for student housing properties
owned by colleges and universities, charitable foundations, and
others.  As of March 31, 2009, the Company provided third-party
management and leasing services for 32 properties (five of which the Company
served as the third-party developer and construction manager) that represented
approximately 23,800 beds in approximately 8,900 units.  Third-party
management and leasing services are typically provided pursuant to multi-year
management contracts that have initial terms that range from one to five
years.  As of March 31, 2009, the Company’s total owned, joint venture
and third-party managed portfolio included 139 properties with approximately
88,700 beds in approximately 29,700 units.
 
 2.     Summary of Significant Accounting
Policies
 
 Basis
of Presentation
 
 The
accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States (“GAAP”) and
include the financial position, results of operations and cash flows of the
Company, the Operating Partnership and subsidiaries of the Operating
Partnership, including joint ventures in which the Company has a controlling
interest.  Third-party equity interests in the Operating Partnership
and consolidated joint ventures are reflected as noncontrolling interests in the
consolidated financial statements.  The Company also has a
noncontrolling interest in three unconsolidated joint ventures, which are
accounted for under the equity method.  All significant intercompany
amounts have been eliminated.  All dollar amounts in the tables
herein, except share and per share amounts, are stated in thousands unless
otherwise indicated.  Certain prior period amounts have been
reclassified to conform to the current period presentation, including changes
resulting from the adoption of SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS No.
160”).
 
 New
Accounting Pronouncements
 
 In
December 2007, the FASB issued SFAS No. 141(R), "Business Combinations,"which replaces SFAS No. 141, "Business
Combinations."SFAS No. 141(R) applies to all transactions or
events in which an entity obtains control of one or more
businesses.  This standard expands the use of fair value principles as
well as the treatment of pre-acquisition costs.  SFAS No. 141(R)
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008.  Adoption on January 1, 2009 impacts the
Company’s accounting for future acquisitions and related transaction
costs.
  5
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
   In
December 2007, the FASB issued SFAS No. 160 which establishes accounting and
reporting standards for the noncontrolling interest in a subsidiary (previously
referred to as minority interests).  SFAS No. 160 also requires that a
retained noncontrolling interest upon the deconsolidation of a subsidiary be
initially measured at its fair value.  The Company adopted SFAS No.
160 effective January 1, 2009, which required retroactive adoption of the
presentation and disclosure requirements for existing minority
interests.  See Note 6 herein for a more detailed discussion of SFAS
No. 160 and its effects on the Company’s consolidated financial
statements.
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities” (“SFAS No. 161”).  SFAS No.
161 amends and expands the disclosure requirements of SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities” (“SFAS No. 133”), with the intent to
provide users of financial statements with an enhanced understanding of: (a) how
and why an entity uses derivative instruments, (b) how derivative instruments
and related hedged items are accounted for under SFAS No. 133 and its related
interpretations, and (c) how derivative instruments and related hedged items
affect an entity’s financial position, financial performance, and cash
flows.  SFAS No. 161 requires qualitative disclosures about objectives
and strategies for using derivatives, quantitative disclosures about the fair
value of and gains and losses on derivative instruments, and disclosures about
credit-risk-related contingent features in derivative
instruments.  The Company adopted SFAS No. 161 effective January 1,
2009.  See Note 10 herein for an expanded discussion on derivative
instruments and hedging activities.
 
 In
June 2008, the FASB issued FASB Staff Position (“FSP”) 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions are Participating
Securities.” FSP 03-6-1 affects entities which accrue non-returnable cash
dividends on share-based payment awards during the awards’ service
period.  The FASB concluded unvested share-based payment awards which
are entitled to non-forfeitable cash dividends, whether paid or unpaid, are
participating securities and are participants of undistributed
earnings.  Because the awards are considered participating securities,
the issuer is required to apply the two-class method of computing basic and
diluted earnings per share which involves separate computations for common
shares and participating securities.  As we do accrue and pay
non-forfeitable cash dividends on unvested share-based payment awards, these
types of awards are considered participating securities and will be included in
our earnings per share calculation in future periods to the extent the Company
has undistributed earnings.
 
 Interim
Financial Statements
 
 The
accompanying interim financial statements are unaudited, but have been prepared
in accordance with GAAP for interim financial information and in conjunction
with the rules and regulations of the Securities and Exchange
Commission.  Accordingly, they do not include all disclosures required
by GAAP for complete financial statements.  In the opinion of
management, all adjustments (consisting solely of normal recurring matters)
necessary for a fair presentation of the financial statements for these interim
periods have been included.  Because of the seasonal nature of the
Company’s operations, the results of operations and cash flows for any interim
period are not necessarily indicative of results for other interim periods or
for the full year.  These financial statements should be read in
conjunction with the financial statements and the notes thereto included in the
Company’s Annual Report on Form 10-K for the year ended December, 31,
2008.
 
 Use
of Estimates
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States (“GAAP”) requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosures of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting period.  Actual results could differ from those
estimates.
 
 Investments in Real
Estate
 
 Investments
in real estate are recorded at historical cost.  Major improvements
that extend the life of an asset are capitalized and depreciated over the
remaining useful life of the asset.  The cost of ordinary repairs and
maintenance are charged to expense when incurred.  Depreciation and
amortization are recorded on a straight-line basis over the estimated useful
lives of the assets as follows:
 
 Buildings
      and improvements
                    7-40
      yearsLeasehold
      interest - on-campus participating properties
                    25-34
      years (shorter of useful life or respective lease term)Furniture,
      fixtures and equipment
                    3-7
      years
 
 The cost
of buildings and improvements includes the purchase price of the property,
including legal fees and acquisition costs.  Project costs directly
associated with the development and construction of an owned real estate
project, which include interest, property taxes, and amortization of deferred
finance costs, are capitalized as construction in progress.  Upon
completion of the project, costs are transferred into the applicable asset
category and depreciation commences.  Interest totaling approximately
$1.0 million and $1.7 million was capitalized during the three months ended
March 31, 2009 and 2008, respectively.  Amortization of deferred
financing costs totaling approximately $0.1 million was capitalized during the
three months ended March 31, 2008.
  6
 
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 Management
assesses whether there has been an impairment in the value of the Company’s
investments in real estate whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be
recoverable.  Impairment is recognized when estimated expected future
cash flows (undiscounted and before interest charges) are less than the carrying
value of the property.  The estimation of expected future net cash
flows is inherently uncertain and relies on assumptions regarding current and
future economics and market conditions.  If such conditions change,
then an adjustment to the carrying value of the Company’s long-lived assets
could occur in the future period in which the conditions change.  To
the extent that a property is impaired, the excess of the carrying amount of the
property over its estimated fair value is charged to earnings.  The
Company believes that there were no impairments of the carrying values of its
investments in real estate as of March 31, 2009.
 
 The
Company allocates the purchase price of acquired properties to net tangible and
identified intangible assets based on relative fair values in accordance with
SFAS No. 141(R).  Fair value
estimates are based on information obtained from a number of sources, including
independent appraisals that may be obtained in connection with the acquisition
or financing of the respective property and other market
data.  Information obtained about each property as a result of due
diligence, marketing and leasing activities is also considered.  The
value of in-place leases is based on the difference between (i) the property
valued with existing in-place leases adjusted to market rental rates and (ii)
the property valued “as-if” vacant.  As lease terms are typically one
year or less, rates on in-place leases generally approximate market rental
rates.  Factors considered in the valuation of in-place leases include
an estimate of the carrying costs during the expected lease-up period
considering current market conditions, nature of the tenancy, and costs to
execute similar leases.  Carrying costs include estimates of lost
rentals at market rates during the expected lease-up period, as well as
marketing and other operating expenses.  The value of in-place leases
is amortized over the remaining initial term of the respective leases, generally
less than one year.  The purchase price of property acquisitions is
not expected to be allocated to tenant relationships, considering the terms of
the leases and the expected levels of renewals.
 
 Long-Lived
Assets–Held for Sale
 
 Long-lived
assets to be disposed of are classified as held for sale in the period in which
all of the following criteria are met:
 
 a.
                  Management,
      having the authority to approve the action, commits to a plan to sell the
      assetb.
                  The
      asset is available for immediate sale in its present condition subject
      only to terms that are usual and customary for sales of such
      assetsc.
                  An
      active program to locate a buyer and other actions required to complete
      the plan to sell the asset have been initiatedd.
                  The
      sale of the asset is probable, and transfer of the asset is expected to
      qualify for recognition as a completed sale, within one
    yeare.
                  The
      asset is being actively marketed for sale at a price that is reasonable in
      relation to its current fair valuef.
                  Actions
      required to complete the plan indicate that it is unlikely that
      significant changes to the plan will be made or that the plan will be
      withdrawn.
 
 Concurrent
with this classification, the asset is recorded at the lower of cost or fair
value, and depreciation ceases.
 
 Owned
On-campus Properties
 
 The
Company (“Lessee”) entered into two 65-year ground and facility leases with a
university system to finance, construct, and manage two student housing
facilities.  One property was completed in August 2008 and the other
property is currently under construction with a scheduled completion date of
August 2009.  Both leases include the option to extend the lease term
for two additional terms of ten years each.  Under the terms of the
leases, the lessor has title to the land and any improvements placed
thereon.  Pursuant to EITF No. 97-10: The Effect of Lessee Involvement in
Asset Construction, the Company’s involvement in construction requires
the lessor’s post construction ownership of the improvements to be treated as a
sale with a subsequent leaseback by the Company.  However, these
sale-leaseback transactions do no qualify for sale-leaseback accounting based on
guidance provided in SFAS No. 98, Accounting for Leases,
because of the Company’s continuing involvement in the constructed
assets.  As a result of the Company’s continuing involvement, these
leases are accounted for by the deposit method, in which the assets subject to
the ground and facility leases are reflected at historical cost, less
amortization and the financing obligations are reflected at the terms of the
underlying financing.
  7
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
   On-Campus
Participating Properties
 
 The
Company enters into ground and facility leases with university systems and
colleges to finance, construct, and manage student housing
facilities.  Under the terms of the leases, the lessor has title to
the land and any improvements placed thereon.  Each lease terminates
upon final repayment of the construction related financing, the amortization
period of which is contractually stipulated.  Pursuant to EITF No.
97-10: The Effect of Lessee
Involvement in Asset Construction, the Company’s involvement in
construction requires the lessor’s post construction ownership of the
improvements to be treated as a sale with a subsequent leaseback by the
Company.  The sale-leaseback transaction has been accounted for as a
financing, and as a result, any fee earned during construction is deferred and
recognized over the term of the lease.  The resulting financing
obligation is reflected at the terms of the underlying financing, i.e., interest
is accrued at the contractual rates and principal reduces in accordance with the
contractual principal repayment schedules.
 
 The
Company reflects these assets subject to ground/facility leases at historical
cost, less amortization.  Costs are amortized, and deferred fee
revenue in excess of the cost of providing the service are recognized, over the
lease term.
 
 Intangible
Assets
 
 In
connection with property acquisitions completed during 2008, the Company
capitalized approximately $19.0 million, related to management’s estimate of the
fair value of the in-place leases assumed.  These intangible assets
are amortized on a straight-line basis over the average remaining term of the
underlying leases.  Amortization expense was approximately $4.1
million and $0.1 million for the three months ended March 31, 2009 and 2008,
respectively.  The Company also capitalized $1.5 million related to
management’s estimate of the fair value of third-party management contracts
acquired from GMH in June 2008.  These intangible assets are amortized
on a straight-line basis over a period of three years.  Amortization
expense was approximately $0.1 million for the three months ended March 31,
2009.  The amortization is included in depreciation and amortization
expense in the accompanying consolidated statements of
operations.  See Note 3 herein for a detailed discussion of the
property acquisitions completed during 2008.
 
 Deferred
Financing Costs
 
 The
Company defers financing costs and amortizes the costs over the terms of the
related debt using the effective interest method.  Upon repayment of
or in conjunction with a material change in the terms of the underlying debt
agreement, any unamortized costs are charged to earnings.
 
 Amortization
expense, net of amounts capitalized, was approximately $0.8 million and $0.3
million for the three months ended March 31, 2009 and 2008,
respectively.  Accumulated amortization at March 31, 2009 and December
31, 2008 approximated $9.7 million and $8.9 million,
respectively.  Deferred financing costs, net of amortization, are
included in other assets on the accompanying consolidated balance
sheets.
 
 Joint
Ventures
 
 The
Company holds interests in both consolidated and unconsolidated joint ventures.
The Company determines consolidation based on standards set forth in FASB
Interpretation No. 46R,Consolidation of Variable Interest Entities (“FIN 46(R)”) and
Emerging Issues Task Force (EITF) No. 04-5,  Determining Whether a General
Partner, or the General Partners as a Group, Controls a Limited Partnership or
Similar Entity When the Limited Partners HaveCertain
Rights.For joint ventures that are variable interest entities
as defined under FIN 46 where the Company is not the primary beneficiary,
it does not consolidate the joint venture for financial reporting purposes.
Based on the guidance set forth in EITF 04-5, the Company consolidates
certain joint venture investments because it exercises significant control over
major operating decisions, such as approval of budgets, property management,
investment activity and changes in financing.  For joint ventures
under EITF 04-5, where the Company does not exercise significant control
over major operating and management decisions, but where it exercises
significant influence, the Company uses the equity method of accounting and does
not consolidate the joint venture for financial reporting purposes.
  8
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
   Debt
Premiums and Discounts
 
 Debt
premiums and discounts represent fair value adjustments to account for the
difference between the stated rates and market rates of debt assumed in
connection with the Company’s property acquisitions.  The debt
premiums and discounts are amortized to interest expense over the term of the
related loans using the effective-interest method.  As of March 31,
2009 and December 31, 2008, net unamortized debt premiums were $5.1 million and
$5.7 million, respectively, and net unamortized debt discounts were $9.9 million
and $10.4 million, respectively.  Debt premiums and discounts are
included in secured debt on the accompanying consolidated balance
sheets.
 
 Third-Party
Development Services Revenue and Costs
 
 Development
revenues are generally recognized based on a proportionate performance method
based on contract deliverables, while construction revenues are recognized using
the percentage of completion method, as determined by construction costs
incurred relative to total estimated construction costs.  Costs
associated with such projects are deferred and recognized in relation to the
revenues earned on executed contracts.  For projects where the
Company’s fee is based on a fixed price, any cost overruns incurred during
construction, as compared to the original budget, will reduce the net fee
generated on those projects.  Incentive fees are generally recognized
when the project is complete and performance has been agreed upon by all
parties, or when performance has been verified by an
independent third-party.
 
 The
Company also evaluates the collectibility of fee income and expense
reimbursements generated through the provision of development and construction
management services based upon the individual facts and circumstances, including
the contractual right to receive such amounts in accordance with the terms of
the various projects, and reserves any amounts that are deemed to be
uncollectible.
 
 Pre-development
expenditures such as architectural fees, permits and deposits associated with
the pursuit of third-party and owned development projects are expensed as
incurred, until such time that management believes it is probable that the
contract will be executed and/or construction will commence.  Because
the Company frequently incurs these pre-development expenditures before a
financing commitment and/or required permits and authorizations have been
obtained, the Company bears the risk of loss of these pre-development
expenditures if financing cannot ultimately be arranged on acceptable terms or
the Company is unable to successfully obtain the required permits and
authorizations.  As such, management evaluates the status of
third-party and owned projects that have not yet commenced construction on a
periodic basis and expenses any deferred costs related to projects whose current
status indicates the commencement of construction is unlikely and/or the costs
may not provide future value to the Company in the form of
revenues.  Such write-offs are included in third-party development and
management services expenses (in the case of third-party development projects)
or general and administrative expenses (in the case of owned development
projects) on the accompanying consolidated statements of
operations.  As of March 31, 2009, the Company has deferred
approximately $6.1 million in pre-development costs related to third-party and
owned development projects that have not yet commenced
construction.   Such costs are included in other assets on the
accompanying consolidated balance sheets.
 
 Derivative
Instruments and Hedging Activities
 
 As
required by SFAS No. 133, the Company records all derivative financial
instruments on the balance sheet at fair value.  Changes in fair value
are recognized either in earnings or as other comprehensive income, depending on
whether the derivative has been designated as a fair value or cash flow hedge
and whether it qualifies as part of a hedging relationship, the nature of the
exposure being hedged, and how effective the derivative is at offsetting
movements in underlying exposure.  The Company discontinues hedge
accounting when: (i) it determines that the derivative is no longer effective in
offsetting changes in the fair value or cash flows of a hedged item; (ii) the
derivative expires or is sold, terminated, or exercised; (iii) it is no longer
probable that the forecasted transaction will occur; or (iv) management
determines that designating the derivative as a hedging instrument is no longer
appropriate.  In all situations in which hedge accounting is
discontinued and the derivative remains outstanding, the Company will carry the
derivative at its fair value on the balance sheet, recognizing changes in the
fair value in current-period earnings.  The Company uses interest rate
swaps to effectively convert a portion of its floating rate debt to fixed rate,
thus reducing the impact of rising interest rates on interest
payments.  These instruments are designated as cash flow hedges under
SFAS No. 133.  The interest differential to be paid or received is
accrued as interest expense. The Company’s counter-parties are major financial
institutions.  See Note 10 herein for an expanded discussion on
derivative instruments and hedging activities.
  9
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Income
Taxes
 
 The
Company has elected to be taxed as a REIT under the Internal Revenue Code of
1986, as amended (the “Code”).  To qualify as a REIT, the Company must
meet a number of organizational and operational requirements, including a
requirement that it currently distribute at least 90% of its adjusted taxable
income to its stockholders.  As a REIT, the Company will generally not
be subject to corporate level federal income tax on taxable income it currently
distributes to its stockholders. If the Company fails to qualify as a REIT in
any taxable year, it will be subject to federal income taxes at regular
corporate rates (including any applicable alternative minimum tax) and may not
be able to qualify as a REIT for the subsequent four taxable
years.  Even if the Company qualifies for taxation as a REIT, the
Company may be subject to certain state and local income and excise taxes on its
income and property, and to federal income and excise taxes on its undistributed
income.
 
 The
Company owns two TRS entities that manage the Company’s non-REIT activities and
is subject to federal, state and local income taxes.
 
 Earnings
per Share
 
 Basic
earnings per share is computed using net income attributable to American Campus
Communities, Inc. and Subsidiaries  and the weighted average number of
shares of the Company’s common stock outstanding during the period, including
restricted stock units (“RSUs”) issued to outside directors.  RSUs are
included in both basic and diluted weighted average common shares outstanding
because they were fully vested on the date of grant and all conditions required
in order for the recipients to earn the RSUs have been
satisfied.  Diluted earnings per share reflects weighted average
common shares issuable from the assumed conversion of restricted stock awards
(“RSAs”) granted to employees, common units of limited partnership interest in
the Operating Partnership (“Common Units”) and preferred units of limited
partnership interest in the Operating Partnership (“Series A Preferred
Units”).  See Note 6 for a discussion of Common Units and Series A
Preferred Units and Note 9 for a discussion of RSUs and RSAs.
 
 The
following is a summary of the elements used in calculating basic and diluted
earnings per share:
 
 Three
      Months Ended March 31,2009
                        
                        
                        2008Basic
      earnings per share calculation:Net
      income attributable to American Campus Communities, Inc. and
      Subsidiaries
                        
                        $
                        277
                        
                        
                        $
                        4,909Net
      income attributable to American Campus Communities, Inc. and Subsidiaries
      – per share
                        
                        $
                        0.01
                        
                        
                        $
                        0.18Basic
      weighted average common shares outstanding
                        
                        
                        42,377,638
                        
                        
                        
                        27,331,896Diluted
      earnings per share calculation:Net
      income attributable to American Campus Communities, Inc. and
      Subsidiaries
                        
                        $
                        277
                        
                        
                        $
                        4,909Series
      A Preferred Unit distributions
                        
                        
                        46
                        
                        
                        
                        46Net
      income allocated to Common Units
                        
                        
                        8
                        
                        
                        
                        260Net
      income attributable to American Campus Communities, Inc. and Subsidiaries,
      as adjusted
                        
                        $
                        331
                        
                        
                        $
                        5,215Net
      income attributable to American Campus Communities, Inc. and Subsidiaries
      – per share
                        
                        $
                        0.01
                        
                        
                        $
                        0.18Basic
      weighted average common shares outstanding
                        
                        
                        42,377,638
                        
                        
                        
                        27,331,896Common
      Units
                        
                        
                        1,096,047
                        
                        
                        
                        1,448,627Series
      A Preferred Units
                        
                        
                        114,963
                        
                        
                        
                        114,963Restricted
      Stock Awards
                        
                        
                        442,954
                        
                        
                        
                        265,659Diluted
      weighted average common shares outstanding
                        
                        
                        44,031,602
                        
                        
                        
                        29,161,145
  10
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
   3.    
Property Acquisitions
  On June
11, 2008, the Company completed the acquisition of GMH’s student housing
business pursuant to an Agreement and Plan of Merger dated as of February 11,
2008 (the “Merger Agreement”).  Concurrent with the closing of the GMH
acquisition, the Company formed a joint venture with a wholly-owned subsidiary
of Fidelity Real Estate Growth Fund III, LP (“Fidelity”) and contributed 15 GMH
student housing properties to the venture with an estimated value of $325.9
million.  The Company also assumed GMH’s equity interest in an existing
joint venture with Fidelity that owns six properties.  At the time of
closing, the GMH student housing portfolio consisted of 42 wholly-owned
properties containing 24,939 beds located in various markets throughout the
country.  Two of the acquired wholly-owned properties totaling 1,468
beds were sold during the third quarter of 2008.
 
 The total
consideration paid for the GMH student housing portfolio (exclusive of 15
properties contributed to the Fidelity joint venture) was approximately $1,018.7
million, inclusive of transaction costs.  Under the terms of the
Merger Agreement, each GMH common share and each unit in GMH Communities, LP
(the “GMH Operating Partnership”) issued and outstanding as of the date of
closing, received cash consideration of $3.36 and 0.07642 of a share of the
Company’s common stock, or at the election of the GMH Operating Partnership
unitholder, 0.07642 of a unit in the Operating Partnership.  The value
of the Company’s common stock and Common Units issued was based on the closing
price of the Company’s common stock on February 11, 2008.  The Company
issued 5.4 million shares of common stock and 7,004 Common Units, each valued at
$28.43 per share or unit.
 
 In
February 2008, the Company acquired a 144-unit, 528-bed property (Pirate’s
Place) located near the campus of East Carolina University in Greenville, North
Carolina, for a purchase price of $10.6 million, which excludes $0.8 million of
transaction costs, initial integration expenses and capital
expenditures.  As part of the transaction, the Company assumed
approximately $7.0 million in fixed-rate mortgage debt with an annual interest
rate of 7.15% and remaining term to maturity of 14.9 years.
 
 In
February 2008, the Company also acquired a 68-unit, 161-bed property (Sunnyside
Commons) located near the campus of West Virginia University in Morgantown, West
Virginia, for a purchase price of $7.5 million, which excludes $0.6 million of
transaction costs, initial integration expenses and capital
expenditures.  The Company did not assume any debt as part of this
transaction.
 
 The
acquired properties’ results of operations have been included in the
accompanying consolidated statements of operations since their respective
acquisition closing dates.  The following pro forma information for
the three months ended March 31, 2008, presents consolidated financial
information for the Company as if the property acquisitions discussed above, the
April 2008 equity offering, and the $100 million secured term loan borrowing,
had occurred at the beginning of the earliest period presented.  The
unaudited pro forma information is provided for informational purposes only and
is not indicative of results that would have occurred or which may occur in the
future:
 
 Three
      Months Ended March 31, 2008Total
      revenues
                          
                          $
                          73,070Net
      income
                          
                          $
                          2,560Net
      income per share – basic
                          
                          $
                          0.06Net
      income per share – diluted
                          
                          $
                          0.06
  11
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 4.     Investments
in Wholly-Owned Properties
 
 Wholly-owned
properties consisted of the following:
 
 March
      31, 2009
                  
                  
                  December
      31, 2008Land
      (1)
                  
                  $
                  242,653
                  
                  
                  $
                  242,653Buildings
      and improvements
                  
                  
                  1,709,271
                  
                  
                  
                  1,706,184Furniture,
      fixtures and equipment
                  
                  
                  95,263
                  
                  
                  
                  87,633Construction
      in progress
                  
                  
                  89,495
                  
                  
                  
                  63,7152,136,682
                  
                  
                  
                  2,100,185Less
      accumulated depreciation
                  
                  
                  (127,959
                  )
                  
                  
                  (113,352
                  )Wholly-owned
      properties, net
                  
                  $
                  2,008,723
                  
                  
                  $
                  1,986,833
 
 (1)
                The
      land balance above includes undeveloped land parcels valued at $18.2
      million as of March 31, 2009 and December 31,
  2008.
 
 5.     On-Campus
Participating Properties
 
 The
Company is a party to ground/facility lease agreements (“Leases”) with certain
state university systems and colleges (each, a “Lessor”) for the purpose of
developing, constructing, and operating student housing facilities on university
campuses. Under the terms of the Leases, title to the constructed facilities is
held by the applicable Lessor and such Lessor receives a de minimus base rent
paid at inception and 50% of defined net cash flows on an annual basis through
the term of the lease.  The Leases terminate upon the earlier to occur
of the final repayment of the related debt, the amortization period of which is
contractually stipulated, or the end of the lease term.
 
 Pursuant
to the Leases, in the event the leasehold estates do not achieve Financial Break
Even (defined as revenues less operating expenses, excluding management fees,
less debt service), the applicable Lessor would be required to make a rental
payment, also known as the Contingent Payment, sufficient to achieve Financial
Break Even.  The Contingent Payment provision remains in effect until
such time as any financing placed on the facilities would receive an investment
grade rating without the Contingent Payment provision.  In the event
that the Lessor is required to make a Contingent Payment, future net cash flow
distributions would be first applied to repay such Contingent Payments and then
to unpaid management fees prior to normal distributions.  Beginning in
November 1999 and December 2002, as a result of the debt financing on the
facilities achieving investment grade ratings without the Contingent Payment
provision, the Texas A&M University System is no longer required to make
Contingent Payments under either the Prairie View A&M University Village or
University College Leases.  The Contingent Payment obligation
continues to be in effect for the Texas A&M International University and
University of Houston leases.
 
 In the
event the Company seeks to sell its leasehold interest, the Leases provide the
applicable Lessor the right of first refusal of a bona fide purchase offer and
an option to purchase the lessee’s rights under the applicable
Lease.
 
 In
conjunction with the execution of each Lease, the Company has entered into
separate five-year agreements to manage the related facilities for 5% of defined
gross receipts. The five-year terms of the management agreements are not
contingent upon the continuation of the Leases. Upon expiration of the initial
five year terms, the agreements continue on a month-to-month basis.
  12
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 On-campus
participating properties are as follows:
 
 Historical
      CostLessor/University
                                      
                                      Lease
                                        Commencement
                                      
                                      
                                      Required
      Debt
                                        Repayment(1)
                                      
                                      
                                      March
      31, 2009
                                      
                                      
                                      December
      31, 2008Texas
      A&M University System / Prairie View A&M University (2)
                                      
                                      2/1/96
                                      
                                      
                                      9/1/23
                                      
                                      
                                      $
                                      38,748
                                      
                                      
                                      $
                                      38,732Texas
      A&M University System / Texas A&M International
                                      
                                      2/1/96
                                      
                                      
                                      9/1/23
                                      
                                      
                                      
                                      6,168
                                      
                                      
                                      
                                      6,163Texas
      A&M University System / Prairie View A&M University(3)
                                      
                                      10/1/99
                                      
                                      
                                      8/31/25  /  8/31/28
                                      
                                      
                                      
                                      24,198
                                      
                                      
                                      
                                      24,191University
      of Houston System / University of Houston(4)
                                      
                                      9/27/00
                                      
                                      
                                      8/31/35
                                      
                                      
                                      
                                      34,909
                                      
                                      
                                      
                                      34,899104,023
                                      
                                      
                                      
                                      103,985Less
      accumulated amortization
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      (35,773
                                      )
                                      
                                      
                                      (34,683
                                      )On-campus
      participating properties, net
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      68,250
                                      
                                      
                                      $
                                      69,302
 
 (1)
                Represents
      the effective lease termination date.  The Leases terminate upon
      the earlier to occur of the final repayment of the related debt or the end
      of the contractual lease term.(2)
                Consists
      of three phases placed in service between 1996 and
1998.(3)
                Consists
      of two phases placed in service in 2000 and 2003.(4)
                Consists
      of two phases placed in service in 2001 and
  2005.
  6. 
   Noncontrolling Interests
 
 Noncontrolling interests per SFAS
No. 160:  In December 2007, the FASB issued SFAS No. 160,
effective for fiscal years beginning on or after December 15,
2008.  The Company has adopted SFAS No. 160 effective January 1,
2009.  Per SFAS No. 160, the portions of equity (net assets) in
subsidiaries that are held by owners other than the parent are referred to as
noncontrolling interests (formerly minority interests).  Under SFAS
No. 160, such noncontrolling interests are reported on the consolidated balance
sheets within equity, separately from the Company’s
equity.  Additionally, revenues, expenses and net income or loss from
less-than-wholly-owned subsidiaries are reported on the consolidated statements
of operations at the consolidated amounts, including both the amounts
attributable to the Company and to noncontrolling interests.
 
 The
Company has determined that the minority equity interests of unaffiliated joint
venture partners in four joint ventures meet the definition of noncontrolling
interests per SFAS No. 160.   These joint ventures own and
operate the Company’s Callaway House, University Village at Sweet Home,
University Centre and Villas at Chestnut Ridge owned-off campus
properties.  The Company has therefore reclassified the portion of net
assets attributable to these joint venture partners to equity (referred to as
“noncontrolling interests”) on the accompanying consolidated balance
sheets.  Accordingly, these partners’ share of the income or loss of
the joint ventures is reported on the consolidated statements of operations as
“noncontrolling interests share of net income / loss.”
 
 Redeemable
noncontrolling interests per FASB Emerging Issues Task Force Topic No. D-98,
“Classification and Measurement of Redeemable Securities” (“EITF
D-98”):In
addition to SFAS No. 160, the company consults the guidance in EITF
D-98.  Under EITF D-98, securities that are redeemable for cash or
other assets at a fixed or determinable price on a fixed or determinable date,
at the option of the holder, or upon the occurrence of an event that is not
solely within the control of the issuer, must be classified outside of permanent
equity in the mezzanine section of the consolidated balance
sheets.  Additionally, with respect to noncontrolling interests for
which the Company has a choice to settle the contract by delivery of its own
shares, the Company considered the guidance in EITF 00-19 “Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company’s Own Stock” to
evaluate whether the Company controls the actions or events necessary to issue
the maximum number of shares that could be required to be delivered under share
settlement of the contract.
  13
 
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 The
Company has determined that Common Units and Preferred Units in the Operating
Partnership meet the requirements under D-98 to be classified outside of
permanent equity in the mezzanine section on the consolidated balance sheets
(referred to as “redeemable noncontrolling interests”).  Common Units
and Series A Preferred Units are exchangeable into an equal number of shares of
the Company’s common stock, or, at the Company’s election, cash.  A
Common Unit and a share of the Company’s common stock have essentially the same
economic characteristics, as they effectively participate equally in the net
income and distributions of the Operating Partnership.  Series A
Preferred Units have a cumulative preferential per annum cash distribution rate
of 5.99%, payable quarterly concurrently with the payment of dividends on the
Company’s common stock.  The Company made this determination based on
terms in applicable agreements, specifically in relation to redemption
provisions.  The value of redeemable noncontrolling interests on the
consolidated balance sheets is reported at the greater of fair value or
historical cost at the end of each reporting period. Accordingly, income or loss
allocated to these redeemable noncontrolling interests on the Company’s
consolidated statements of operations includes the Series A Preferred Unit
distributions as well as the pro rata share of the Operating Partnership’s net
income or loss allocated to Common Units.
 
 During
the three months ended March 31, 2009 and 2008, 1,000 and 53,378 Common Units,
respectively, were converted into shares of the Company’s common
stock.  As of both March 31, 2009 and December 31, 2008, approximately
3%, of the equity interests of the Operating Partnership was held by owners of
Common Units and Series A Preferred Units.
 
 7.     Investment
in Unconsolidated Joint Ventures
 
 As of
March 31, 2009, the Company’s investments in unconsolidated joint ventures
accounted for utilizing the equity method consisted of three joint
ventures.  The Company’s TRS entities provide property management
services to the joint ventures and also provide development management services
for one of the joint ventures owning a property currently under
development.  As discussed in Note 2 herein, investments in joint
ventures are evaluated based on FIN 46(R) to determine whether or not the
investment qualifies as a variable interest entity (“VIE”).  If the
investment is determined to fall under the scope of FIN 46(R), management then
determines whether the Company is the primary beneficiary of the VIE by
performing a combination of qualitative and quantitative measures, as
appropriate, including evaluating factors such as the voting rights and
decision-making abilities of each variable interest holder.  If the
investment is determined not to fall under the scope for 46(R), the Company
evaluates the investment in accordance with other guidance such as EITF
04-5.
 
 Fidelity Joint Ventures:Concurrent with the closing of the GMH acquisition, a wholly-owned
subsidiary of the Company formed a joint venture with a subsidiary of Fidelity
and transferred 15 GMH student housing properties to the venture with an
estimated value of $325.9 million.  The Company also assumed GMH’s
equity interest in an existing joint venture with Fidelity that owns six
properties.  The Company serves as property manager for all of the
joint venture properties and owns a 10% equity interest in these joint ventures
(hereinafter referred to collectively as the “Fidelity Joint
Ventures”).
 
 The
Fidelity Joint Ventures are funded in part with secured third party debt in the
amount of $342.4 million.  The Operating Partnership serves as
guarantor of this debt, which means the Company is liable to the lender for any
loss, damage, cost, expense, liability, claim or other obligation incurred by
the lender arising out of or in connection with certain non-recourse exceptions
in connection with the debt.  Pursuant to the respective limited
liability company agreements, the Fidelity Joint Ventures agreed to indemnify,
defend and hold harmless the Operating Partnership with respect to such
obligations, except to the extent such obligations were caused by the willful
misconduct, gross negligence, fraud or bad faith of the Operating Partnership or
its employees, agents or affiliates.  Therefore, the Operating
Partnership's exposure under the guarantees for obligations not caused by the
willful misconduct, gross negligence, fraud or bad faith of the Operating
Partnership or its employees, agents or affiliates is not expected to exceed the
Company’s 10% proportionate interest in the related mortgage
debt.    Additionally, in lieu of depositing required debt
service escrow funds with the lender of the one of the joint venture’s mortgage
notes, the Company has provided an irrevocable standby commercial letter of
credit in the amount of $0.3 million.  The letter of credit was issued
at inception of the joint venture and expires one year subsequent to issuance,
or earlier should the property reach a debt service coverage ratio, as defined,
of at least 1.20:1 for a period of twelve consecutive months on a trailing
basis.  The term of the letter of credit will be automatically
extended for one year periods thereafter until such time the debt service
coverage ratio reaches 1.20:1 or the related mortgage note is repaid or
refinanced.
 
 Management
has determined that the Fidelity Joint Ventures meet the criteria to be
classified as VIEs, although the Company is not the primary
beneficiary.  The Company’s $9.2 million and $9.4 million investment
in these two joint ventures at March 31, 2009 and December 31, 2008,
respectively, is included in other assets in the accompanying consolidated
balance sheets, and the Company’s $0.3 million share in the loss from these two
joint ventures for the three months ended March 31, 2009 is included in loss
from unconsolidated joint ventures in the accompanying consolidated statements
of operations.  For the three months ended March 31, 2009, the Company
earned $0.6 million in property management fees from these joint
ventures.  Due to the respective limited liability company agreements
not providing for maximum capital commitments from the members, the Company’s
maximum exposure to loss stemming from its investment in the Fidelity Joint
Ventures could be unlimited.
  14
 
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 Hampton Roads Joint
Venture:The Company also holds a noncontrolling equity
interest in a joint venture that owns a military housing privatization project
with the United States Navy to design, develop, construct, renovate, and manage
unaccompanied soldier housing located on naval bases in Norfolk and Newport
News, Virginia.  The project is financed through taxable revenue
bonds.
 
 Management
has determined that the Company’s investment in this joint venture does not fall
under the scope of FIN 46(R) and therefore accounts for its investment using the
equity method in accordance with other guidance, including EITF
04-5.  The Company’s $0.7 million and $1.0 million investment in this
joint venture at March 31, 2009 and December 31, 2008, respectively, is included
in other assets in the accompanying consolidated balance sheets, and the
Company’s $0.3 million and $0.1 million share in the loss from this joint
venture for the three months ended March 31, 2009 and 2008, respectively, is
included in loss from unconsolidated joint ventures in the accompanying
consolidated statements of operations.  For the three months ended
March 31, 2009, the Company earned a combined $0.3 million in development and
management fees from this joint venture.
 
 8.    
Debt
 
 A summary
of the Company’s outstanding consolidated indebtedness, including unamortized
debt premiums and discounts, is as follows:
 
 March
      31, 2009
                  
                  
                  December
      31, 2008Debt
      secured by wholly-owned properties:Mortgage
      loans payable
                  
                  $
                  923,480
                  
                  
                  $
                  955,847Construction
      loans payable
                  
                  
                  127,847
                  
                  
                  
                  124,8191,051,327
                  
                  
                  
                  1,080,666Debt
      secured by on-campus participating properties:Mortgage
      loan payable
                  
                  
                  32,924
                  
                  
                  
                  32,991Bonds
      payable
                  
                  
                  53,275
                  
                  
                  
                  53,27586,199
                  
                  
                  
                  86,266Secured
      term loan
                  
                  
                  100,000
                  
                  
                  
                  100,000Revolving
      credit facility
                  
                  
                  78,300
                  
                  
                  
                  14,700Unamortized
      debt premiums
                  
                  
                  5,146
                  
                  
                  
                  5,682Unamortized
      debt discounts
                  
                  
                  (9,921
                  )
                  
                  
                  (10,393
                  )Total
      debt
                  
                  $
                  1,311,051
                  
                  
                  $
                  1,276,921
 
 Pay-off
of mortgage debt
 
 During
the three months ended March 31, 2009, the Company borrowed from the revolving
credit facility to pay off $29.8 million of fixed-rate mortgage debt, secured by
two of our wholly-owned properties (Pirate’s Cove and The Club).  The
Pirate’s Cove and The Club mortgage debt was scheduled to mature in February
2009 and April 2009, respectively.  As of March 31, 2009, the Company
has an additional $51.1 million of outstanding fixed-rate mortgage debt
scheduled to mature throughout the remainder of 2009, all of which we expect to
pay-off on or before their respective maturity dates.
 
 Loans
Assumed or Entered Into in Conjunction with Property Acquisitions
 
 In
connection with the June 11, 2008 acquisition of GMH’s student housing business
(see Note 3), the Company assumed approximately $608.2 million of fixed-rate
mortgage debt.  At the time of assumption, the debt had a weighted
average annual interest rate of 5.43% and an average term to maturity of 6.2
years.  Upon assumption of this debt, the Company recorded debt
discounts and debt premiums of approximately $11.8 million and $2.3 million,
respectively, to reflect the estimated fair value of the debt
assumed.  These mortgage loans are secured by liens on the related
properties.
 
 In
connection with the February 2008 acquisition of Pirate’s Place (see Note 3), a
wholly-owned property, the Company assumed approximately $7.0 million of
fixed-rate mortgage debt with an annual interest rate of 7.15% and January 2023
maturity date.  Upon assumption of this debt, the Company recorded a
debt premium of approximately $0.3 million, to reflect the estimated fair value
of the debt assumed.  This mortgage loan is secured by a lien on the
related property.
  15
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 Revolving
Credit Facility
 
 In May
2008, the Operating Partnership amended its $115 million revolving credit
facility to increase the size of the facility to $160 million, which may be
expanded by up to an additional $65 million upon the satisfaction of certain
conditions.  The maturity date of the facility is August 17, 2009 and
can be extended 12 months through August 2010.  The Company guarantees
the Operating Partnership’s obligations under the facility.
  Availability
under the revolving credit facility is limited to an "aggregate borrowing base
amount" equal to the lesser of (i) 65% of the value of certain properties,
calculated as set forth in the credit facility, and (ii) the adjusted net
operating income from these properties divided by a formula
amount.  The facility bears interest at a variable rate, at the
Company’s option, based upon a base rate or one-, two-, three-, or six-month
LIBOR plus, in each case, a spread based upon the Company’s total
leverage.  Additionally, the Company is required to pay an unused
commitment fee ranging from 0.15% to 0.20% per annum, depending on the aggregate
unused balance.  As of March 31, 2009, the balance outstanding on the
revolving credit facility totaled $78.3 million, bearing interest at a weighted
average annual rate of 2.04%, with remaining availability under the facility
(subject to the satisfaction of certain financial covenants) totaling
approximately $73.5 million.
 
 The terms
of the facility include certain restrictions and covenants, which limit, among
other items, the incurrence of additional indebtedness, liens, and the
disposition of assets. The facility contains customary affirmative and negative
covenants and also contains financial covenants that, among other things,
require the Company to maintain certain minimum ratios of "EBITDA" (earnings
before interest, taxes, depreciation and amortization) to fixed
charges.  The Company may not pay distributions that exceed a
specified percentage of funds from operations, as adjusted, for any four
consecutive quarters.  The financial covenants also include
consolidated net worth and leverage ratio tests.  As of March 31,
2009, the Company was in compliance with all such covenants.
 
 Senior
Secured Term Loan
 
 On May
23, 2008, the Operating Partnership obtained a $100 million senior secured term
loan.  The secured term loan has an initial term of 36 months and can
be extended through May 2012 through the exercise of a 12-month extension
period.  The secured term loan bears interest at a variable rate, at
the Company’s option, based upon a base rate or one-, two-, three-, or six-month
LIBOR plus, in each case, a spread based upon the Company’s total
leverage.  On June 11, 2008, the Operating Partnership borrowed in
full from the secured term loan and used the proceeds to fund a portion of the
total cash consideration for the GMH acquisition.  As of March 31,
2009, the balance outstanding on the secured term loan was $100
million.  The Company guarantees the Operating Partnership’s
obligations under the secured term loan.  The secured term loan
includes the same restrictions and covenants as the revolving credit facility,
described above.
 
 On
February 23, 2009, the Company entered into two $50.0 million interest rate swap
agreements effective March 20, 2009 through February 20, 2012, which are both
used to hedge the Company’s exposure to fluctuations in interest payments on its
LIBOR-based senior secured term loan.  Under the terms of the two interest
rate swap agreements, the Company pays an average fixed rate of 1.7925% and
receives a one-month LIBOR floating rate.  As a result of these two
interest rate swaps, the Company effectively fixed the interest rate on its
senior secured term loan to 3.79% as of March 31, 2009 (1.7925% + 2.0%
spread).  In the event that the swaps at any time have a negative fair
value below a certain threshold level, the Company could be required to post
cash into a collateral account pledged to the interest rate swap
providers.  See Note 10 herein for a more detailed discussion of the
Company’s derivative instruments and hedging activities.
 
 9.    
Incentive Award Plan
 
 The
Company has adopted the 2004 Incentive Award Plan (the “Plan”).  The
Plan provides for the grant to selected employees and directors of the Company
and the Company’s affiliates of stock options, RSUs, RSAs, Common Units, profits
interest units (“PIUs”), and other stock-based incentive awards.  The
Company has reserved a total of 1,210,000 shares of the Company’s common stock
for issuance pursuant to the Plan, subject to certain adjustments for changes in
the Company’s capital structure, as defined in the Plan.  As of March
31, 2009, 349,296 shares were available for issuance under the
Plan.
 
 Restricted
Stock Units
 
 Upon
initial appointment to the Board of Directors and reelection to the Board of
Directors at each Annual Meeting of Stockholders, each outside member of the
Board of Directors is granted RSUs.  For all 2006 and 2007 RSU grants,
no shares of stock were issued at the time of the RSU awards, and the Company
was not required to set aside a fund for the payment of any such award; however,
the stock was deemed to be awarded on the date of grant.  Upon the
Settlement Date, which is three years from the date of grant, the Company will
deliver to the recipients a number of shares of common stock or cash, as
determined by the Compensation Committee of the Board of Directors, equal to the
number of RSUs held by the recipients.  In addition, recipients of
RSUs are entitled to dividend equivalents equal to the cash distributions paid
by the Company on one share of common stock for each RSU issued, payable
currently or on the Settlement Date, as determined by the Compensation Committee
of the Board of Directors.  There were no RSU grants or RSUs settled
during the three months ended March 31, 2009 and there were 11,556 RSUs
outstanding as of March 31, 2009.
  16
 
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 Restricted
Stock Awards
 
 The
Company awards RSAs to its executive officers and certain employees that vest in
equal annual installments over a three to five year period.  Unvested
awards are forfeited upon the termination of an individual’s employment with the
Company.  Recipients of RSAs receive dividends, as declared by the
Company’s Board of Directors, on unvested shares, provided that the recipient
continues to be employed by the Company.  A summary of the Company’s
RSAs under the Plan as of March 31, 2009 and changes during the three months
ended March 31, 2009, is presented below:
  Number
      of
                      RSAsNonvested
      balance at December 31, 2008
                    
                    
                    282,408Granted
                    
                    
                    256,650Vested
                    
                    
                    (50,210
                    )Forfeited
                    
                    
                    (19,235
                    )Nonvested
      balance at March 31, 2009
                    
                    
                    469,613
 
 In
accordance with SFAS No. 123(R), the Company recognizes the value of these
awards as an expense over the vesting periods, which amounted to approximately
$0.6 million and $0.4 million for the three months ended March 31, 2009 and
2008, respectively.
 
 Common
Units
 
 PIUs were
issued to certain executive and senior officers upon consummation of the
IPO.  In connection with the Company’s equity offering in July 2005,
all 121,000 PIUs were converted to Common Units, as contemplated in the OP
Agreement.
 
 The
Outperformance Bonus Plan was adopted upon consummation of the Company’s IPO in
August 2004, and consisted of awards to key employees equal to the value of
367,682 shares of the Company’s common stock.  Such awards vested on
the third anniversary of the IPO (August 2007), upon the Company’s achievement
of specified performance measures.  Upon vesting, the Compensation
Committee of the Board of Directors exercised its permitted discretion and
granted 132,400 of the awards to selected recipients in the form of PIUs, with
the remainder of the awards paid in cash.  As a result of the October
2007 equity offering, a book-up event occurred for tax purposes, resulting in
the 132,400 PIUs being converted to Common Units.
 
 Each
common unit is deemed equivalent to one share of the Company’s common
stock.  Common units receive the same quarterly per unit distribution
as the per share distributions on the Company’s common stock.
 
 10.   Derivatives Instruments and Hedging
Activities
 
 The
Company is exposed to certain risk arising from both its business operations and
economic conditions.  The Company principally manages its exposures to
a wide variety of business and operational risks through management of its core
business activities.  The Company manages economic risks, including
interest rate, liquidity, and credit risk primarily by managing the amount,
sources, and duration of its debt funding and the use of derivative financial
instruments.  Specifically, the Company enters into derivative
financial instruments to manage exposures that arise from business activities
that result in the receipt or payment of future known and uncertain cash
amounts, the value of which are determined by interest rates.  The
Company’s derivative financial instruments are used to manage differences in the
amount, timing, and duration of the Company’s known or expected cash receipts
and its known or expected cash payments principally related to the Company’s
investments and borrowings.
  17
 
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 Cash
Flow Hedges of Interest Rate Risk
 
 The
Company’s objectives in using interest rate derivatives are to add stability to
interest expense and to manage its exposure to interest rate
movements.  To accomplish this objective, the Company primarily uses
interest rate swaps as part of its interest rate risk management
strategy.  Interest rate swaps designated as cash flow hedges involve
the receipt of variable-rate amounts from a counterparty in exchange for the
Company making fixed-rate payments over the life of the agreements without
exchange of the underlying notional amount.
 
 The
effective portion of changes in the fair value of derivatives designated and
that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Income and is
subsequently reclassified into earnings in the period that the hedged forecasted
transaction affects earnings.  During 2009, such derivatives were used
to hedge the variable cash flows associated with the Company’s $100 million
senior secured term loan and the Cullen Oaks Phase I and Phase II
loans.
 
 The
following table summarizes the Company’s outstanding interest rate swap
contracts as of March 31, 2009:
  Date
      Entered
                                          Effective
      Date
                                          Maturity
      Date
                                          
                                          Pay
      Fixed Rate
                                          
                                          Receive
      Floating
                                            Rate
      Index
                                          
                                          Notional
      Amount
                                          
                                          
                                          Fair
      ValueFeb.
      12, 2007
                                          Feb.
      15, 2007
                                          Feb.
      15, 2014
                                          
                                          6.689%
                                          
                                          LIBOR
      – 1 mo. plus 1.35%
                                          
                                          $
                                          33,156
                                          
                                          
                                          $
                                          (4,755
                                          )Feb.
      23, 2009
                                          March
      20, 2009
                                          Feb.
      20, 2012
                                          
                                          1.785%
                                          
                                          LIBOR
      – 1 month
                                          
                                          
                                          50,000
                                          
                                          
                                          
                                          (584
                                          )Feb.
      23, 2009
                                          March
      20, 2009
                                          Feb.
      20, 2012
                                          
                                          1.800%
                                          
                                          LIBOR
      – 1 month
                                          
                                          
                                          50,000
                                          
                                          
                                          
                                          (563
                                          )
 
 The table
below presents the fair value of the Company’s derivative financial instruments
as well as their classification on the consolidated balance sheets as of March
31, 2009 and December 31, 2008:
 
 Fair
Values of Derivative Instruments
 
 Derivative
      LiabilitiesAs
      of March 31, 2009
                        
                        As
      of December 31, 2008Derivatives
      designated as hedging
                          Instruments
      under SFAS No. 133
                        
                        Balance
      Sheet
                          Location
                        
                        Fair
      Value
                        
                        Balance
      Sheet
                          Location
                        
                        Fair
      ValueInterest
      rate swap contracts
                        
                        Other
      liabilities
                        
                        $
                        5,902
                        
                        Other
      Liabilities
                        
                        $
                        5,119Total
      derivatives designated as hedging instruments under SFAS
    133
                        
                        
                        
                        $
                        5,902
                        
                        
                        
                        $
                        5,119
  The table
below presents the effect of the Company’s derivative financial instruments on
other comprehensive income and the consolidated statements of operations for the
three months ended March 31, 2009 and 2008:
  Derivatives
      in SFAS No. 133
                                                    
                                                    Amount
      of Loss Recognized
                                                      in
      OCI on Derivative
                                                      (Effective
      Portion)
                                                    
                                                    Location
      of Gain
                                                      Reclassified
      from
                                                    Amount
      of Gain Reclassified from
                                                      Accumulated
      OCI Into Income
                                                      (Effective
      Portion)Cash
      Flow Hedging
                                                    
                                                    Three
      Months ended March 31,
                                                    
                                                    Accumulated
                                                    
                                                    Three
      Months ended March 31,Relationships
                                                    
                                                    2009
                                                    
                                                    
                                                    2008
                                                    
                                                    OCI
      Into Income
                                                    
                                                    2009
                                                    
                                                    
                                                    2008Interest
      rate swap contracts
                                                    
                                                    $
                                                    (783
                                                    )
                                                    
                                                    $
                                                    (1,287
                                                    )
                                                    Interest
      expense
                                                    
                                                    $
                                                    -
                                                    
                                                    
                                                    $
                                                    60Total
                                                    
                                                    $
                                                    (783
                                                    )
                                                    
                                                    $
                                                    (1,287
                                                    )
                                                    
                                                    
                                                    $
                                                    -
                                                    
                                                    
                                                    $
                                                    60
 
 The
Company reported comprehensive income of $3.6 million for the three months ended
March 31, 2008, which includes net income attributable to American Campus
Communities, Inc. and Subsidiaries of $4.9 million, offset by an unrealized loss
of $1.3 million (reflected in the table above).
 
 11.   Fair
Value Measurements
 
 On
January 1, 2008, the Company adopted SFAS No. 157, which defines fair value,
establishes a framework for measuring fair value and also expands disclosures
about fair value measurements.  SFAS No. 157 applies to reported
balances that are required or permitted to be measured at fair value under
existing accounting pronouncements; accordingly, the standard does not require
any new fair value measurements of reported balances.  The following
table presents information about our liabilities measured at fair value on a
recurring basis as of March 31, 2009, and indicates the fair value hierarchy of
the valuation techniques utilized by us to determine such fair
value.
  18
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 In
general, fair values determined by Level 1 inputs utilize quoted prices
(unadjusted) in active markets for identical assets or liabilities the Company
has the ability to access.  Fair values determined by Level 2 inputs
utilize inputs other than quoted prices included in Level 1 that are observable
for the asset or liability, either directly or indirectly.  Level 2
inputs include quoted prices for similar assets and liabilities in active
markets and inputs other than quoted prices observable for the asset or
liability, such as interest rates and yield curves observable at commonly quoted
intervals.  Level 3 inputs are unobservable inputs for the asset or
liability, and include situations where there is little, if any, market activity
for the asset or liability.  In instances in which the inputs used to
measure fair value may fall into different levels of the fair value hierarchy,
the level in the fair value hierarchy within which the fair value measurement in
its entirety has been determined is based on the lowest level input significant
to the fair value measurement in its entirety.  The Company’s
assessment of the significance of a particular input to the fair value
measurement in its entirety requires judgment, and considers factors specific to
the asset or liability.  Disclosures concerning assets and liabilities
measured at fair value are as follows:
 
 Liabilities
Measured at Fair Value on a Recurring Basis at March 31, 2009
 
 Quoted
      Prices in
                    Active
      Markets for
                    Identical
      Assets
                    and
      Liabilities
                    (Level
      1)
                  
                  
                  Significant
      Other
                    Observable
      Inputs
                    (Level
      2)
                  
                  
                  Significant
                    Unobservable
                    Inputs
      (Level 3)
                  
                  
                  Balance
      at
                    March
      31, 2009Liabilities:Derivative
      financial instruments
                  
                  $
                  -
                  
                  
                  $
                  5,902
                  
                  
                  $
                  -
                  
                  
                  $
                  5,902
 
 The
Company uses derivative financial instruments, specifically interest rate swaps,
for nontrading purposes.  The Company uses interest rate swaps to
manage interest rate risk arising from previously unhedged interest payments
associated with variable rate debt.  Through March 31, 2009,
derivative financial instruments were designated and qualified as cash flow
hedges.  Derivative contracts with positive net fair values inclusive
of net accrued interest receipts or payments, are recorded in other
assets.  Derivative contracts with negative net fair values, inclusive
of net accrued interest payments or receipts, are recorded in other
liabilities.  The valuation of these instruments is determined using
widely accepted valuation techniques including discounted cash flow analysis on
the expected cash flows of each derivative.  This analysis reflects
the contractual terms of the derivatives, including the period to maturity, and
uses observable market-based inputs, including interest rate
curves.  The fair values of interest rate swaps are determined using
the market standard methodology of netting the discounted future fixed cash
receipts (or payments) and the discounted expected variable cash payments (or
receipts). The variable cash payments (or receipts) are based on an expectation
of future interest rates (forward curves) derived from observable market
interest rate curves.
 
 To comply
with the provisions of SFAS No. 157, the Company incorporates credit valuation
adjustments to appropriately reflect its own nonperformance risk and the
respective counterparty’s nonperformance risk in the fair value
measurements.  In adjusting the fair value of its derivative contracts
for the effect of nonperformance risk, the Company has considered the impact of
netting and any applicable credit enhancements, such as collateral postings,
thresholds and guarantees.
 
 Although
the Company has determined the majority of the inputs used to value its
derivative fall within Level 2 of the fair value hierarchy, the credit valuation
adjustment associated with its derivative utilizes Level 3 inputs, such as
estimates of current credit spreads to evaluate the likelihood of default by the
Company and its counterparty.  However, as of March 31, 2009, the
Company has assessed the significance of the impact of the credit valuation
adjustments on the overall valuation of its derivative positions and has
determined that the credit valuation adjustments are not significant to the
overall valuation of the Company’s derivative.  As a result, the
Company has determined its derivative valuations in its entirety are classified
in Level 2 of the fair value hierarchy.
 
 12.  
Commitments and Contingencies
 
 Commitments
 
 Development-related
guarantees:The
Company commonly provides alternate housing and project cost guarantees, subject
to force majeure.  These guarantees are typically limited, on an
aggregate basis, to the amount of the projects’ related development fees or a
contractually agreed-upon maximum exposure amount.  Alternate housing
guarantees typically expire five days after construction is complete and
generally require the Company to provide substitute living quarters and
transportation for students to and from the university if the project is not
complete by an agreed-upon completion date.  Under project cost
guarantees, the Company is responsible for the construction cost of a project in
excess of an approved budget.   The budget consists primarily of
costs included in the general contractors’ guaranteed maximum price contract
(“GMP”).  In most cases, the GMP obligates the general contractor,
subject to force majeure and approved change orders, to provide completion date
guarantees and to cover cost overruns and liquidated damages.  In
addition, the GMP is typically secured with payment and performance
bonds.  Project cost guarantees expire upon completion of certain
developer obligations, which are normally satisfied within one year after
completion of the project.
  19
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 On one
completed project, the Company has guaranteed losses up to $3.0 million in
excess of the development fee if the loss is due to any failure of the Company
to maintain, or cause its professionals to maintain, required insurance for a
period of five years after completion of the project (August 2009).
 
 In the
normal course of business, the Company enters into various development-related
purchase commitments with parties that provide development-related goods and
services.  In the event that the Company was to terminate development
services prior to the completion of projects under construction, the Company
could potentially be committed to satisfy outstanding purchase orders with such
parties.  At March 31, 2009, management does not anticipate any material
deviations from schedule or budget related to third-party development projects
currently in progress.
 
 Guaranty of Joint Venture Mortgage
Debt:As mentioned in Note 7, the Fidelity Joint Ventures are funded in
part with secured third party debt in the amount of $342.4 million.  The
Operating Partnership serves as guarantor of this debt, which means the
Company is liable to the lender for any loss, damage, cost, expense, liability,
claim or other obligation incurred by the lender arising out of or in connection
with certain non-recourse exceptions in connection with the
debt.  Pursuant to the respective limited liability company
agreements, the Fidelity Joint Ventures agreed to indemnify, defend and hold
harmless the Operating Partnership with respect to such obligations, except to
the extent such obligations were caused by the willful misconduct, gross
negligence, fraud or bad faith of the Operating Partnership or its employees,
agents or affiliates.  Therefore, the Operating Partnership's exposure
under the guarantees for obligations not caused by the willful misconduct, gross
negligence, fraud or bad faith of the Operating Partnership or its employees,
agents or affiliates is not expected to exceed the Company’s 10% proportionate
interest in the related mortgage debt.  Additionally, in lieu of
depositing required debt service escrow funds with the lender of the one of the
Fidelity joint venture’s mortgage notes, the Company has provided an irrevocable
standby commercial letter of credit in the amount of $0.3
million.  The letter of credit was issued at inception of the joint
venture and expires one year subsequent to issuance, or earlier should the
property reach a debt service coverage ratio, as defined, of at least 1.20:1 for
a period of twelve consecutive months on a trailing basis.  The term
of the letter of credit will be automatically extended for one year periods
thereafter until such time the debt service coverage ratio reaches 1.20:1 or the
related mortgage note is repaid or refinanced.
 
 The
Company has estimated the fair value of guarantees entered into or modified
after December 31, 2002, the effective date of FASB Interpretation No. 45, Guarantor’s Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others, to be immaterial.  The Company’s
estimated maximum exposure amount under the above guarantees is approximately
$358.4 million.
 
 Contingencies
 
 Litigation:In the
normal course of business, the Company is subject to claims, lawsuits, and legal
proceedings.  While it is not possible to ascertain the ultimate outcome of
such matters, management believes that the aggregate amount of such liabilities,
if any, in excess of amounts provided or covered by insurance, will not have a
material adverse effect on the consolidated financial position or results of
operations of the Company.
 
 Letters of
Intent:  In the ordinary course of the Company’s business, the
Company enters into letters of intent indicating a willingness to negotiate
for acquisitions, dispositions or joint ventures.  Such letters of
intent are non-binding, and neither party to the letter of intent is obligated
to pursue negotiations unless and until a definitive contract is entered into by
the parties.  Even if definitive contracts are entered into, the
letters of intent relating to the acquisition and disposition of real property
and resulting contracts generally contemplate that such contracts will provide
the acquirer with time to evaluate the property and conduct due diligence,
during which periods the acquiror will have the ability to terminate the
contracts without penalty or forfeiture of any deposit or earnest
money.  There can be no assurance that definitive contracts will be
entered into with respect to any matter covered by letters of intent or that the
Company will consummate any transaction contemplated by any definitive
contract.  Furthermore, due diligence periods for real property are
frequently extended as needed.  An acquisition or disposition of real
property becomes probable at the time that the due diligence period expires and
the definitive contract has not been terminated.  The Company is then
at risk under a real property acquisition contract, but only to the extent of
any earnest money deposits associated with the contract, and is obligated to
sell under a real property sales contract.
  20
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  Environmental
Matters:The Company is not aware of any environmental
liability with respect to the properties that would have a material adverse
effect on the Company's business, assets or results of operations. However,
there can be no assurance that such a material environmental liability does not
exist. The existence of any such material environmental liability could have an
adverse effect on the Company's results of operations and cash
flows.
 
 13.   Segments
 
 The
Company defines business segments by their distinct customer base and service
provided.  The Company has identified four reportable segments:
Wholly-Owned Properties, On-Campus Participating Properties, Development
Services, and Property Management Services.  Management evaluates each
segment’s performance based on operating income before depreciation,
amortization, noncontrolling interests and allocation of corporate
overhead.  Intercompany fees are reflected at the contractually
stipulated amounts.
  21
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 Three
      Months Ended March 31,2009
                              
                              
                              2008Wholly-Owned
      PropertiesRental
      revenues
                              
                              $
                              67,572
                              
                              
                              $
                              32,119Interest
      and other income
                              
                              
                              12
                              
                              
                              
                              65Total
      revenues from external customers
                              
                              
                              67,584
                              
                              
                              
                              32,184Operating
      expenses before depreciation, amortization, ground/facility lease, and
      allocation of corporate overhead
                              
                              
                              31,754
                              
                              
                              
                              13,674Ground/facility
      leases
                              
                              
                              260
                              
                              
                              
                              -Interest
      expense
                              
                              
                              14,302
                              
                              
                              
                              6,068Operating
      income before depreciation, amortization, noncontrolling interests and
      allocation of corporate overhead
                              
                              $
                              21,268
                              
                              
                              $
                              12,442Depreciation
      and amortization
                              
                              $
                              18,682
                              
                              
                              $
                              6,801Capital
      expenditures
                              
                              $
                              35,813
                              
                              
                              $
                              38,320Total
      segment assets at March 31,
                              
                              $
                              2,070,872
                              
                              
                              $
                              1,028,445On-Campus
      Participating PropertiesRental
      revenues
                              
                              $
                              6,874
                              
                              
                              $
                              6,744Interest
      and other income
                              
                              
                              24
                              
                              
                              
                              79Total
      revenues from external customers
                              
                              
                              6,898
                              
                              
                              
                              6,823Operating
      expenses before depreciation, amortization, ground/facility lease, and
      allocation of corporate overhead
                              
                              
                              1,897
                              
                              
                              
                              2,105Ground/facility
      lease
                              
                              
                              292
                              
                              
                              
                              359Interest
      expense
                              
                              
                              1,559
                              
                              
                              
                              1,562Operating
      income before depreciation, amortization, noncontrolling interests and
      allocation of corporate overhead
                              
                              $
                              3,150
                              
                              
                              $
                              2,797Depreciation
      and amortization
                              
                              $
                              1,090
                              
                              
                              $
                              1,069Capital
      expenditures
                              
                              $
                              38
                              
                              
                              $
                              52Total
      segment assets at March 31,
                              
                              $
                              82,318
                              
                              
                              $
                              86,386Development
      ServicesDevelopment
      and construction management fees from external customers
                              
                              $
                              1,052
                              
                              
                              $
                              1,656Operating
      expenses
                              
                              
                              2,267
                              
                              
                              
                              2,148Operating
      income before depreciation, amortization, noncontrolling interests and
      allocation of corporate overhead
                              
                              $
                              (1,215
                              )
                              
                              $
                              (492
                              )Total
      segment assets at March 31,
                              
                              $
                              6,277
                              
                              
                              $
                              6,640Property
      Management ServicesProperty
      management fees from external customers
                              
                              $
                              2,242
                              
                              
                              $
                              922Intersegment
      revenues
                              
                              
                              2,696
                              
                              
                              
                              1,225Total
      revenues
                              
                              
                              4,938
                              
                              
                              
                              2,147Operating
      expenses
                              
                              
                              1,831
                              
                              
                              
                              915Operating
      income before depreciation, amortization, noncontrolling interests and
      allocation of corporate overhead
                              
                              $
                              3,107
                              
                              
                              $
                              1,232Total
      segment assets at March 31,
                              
                              $
                              6,209
                              
                              
                              $
                              2,015ReconciliationsTotal
      segment revenues
                              
                              $
                              80,472
                              
                              
                              $
                              42,810Unallocated
      interest income earned on corporate cash
                              
                              
                              4
                              
                              
                              
                              18Elimination
      of intersegment revenues
                              
                              
                              (2,696
                              )
                              
                              
                              (1,225
                              )Total
      consolidated revenues, including interest income
                              
                              $
                              77,780
                              
                              
                              $
                              41,603Segment
      operating income before depreciation, amortization, noncontrolling
      interests and allocation of corporate overhead
                              
                              $
                              26,310
                              
                              
                              $
                              15,979Depreciation
      and amortization
                              
                              
                              (20,903
                              )
                              
                              
                              (8,340
                              )Net
      unallocated expenses relating to corporate overhead
                              
                              
                              (4,209
                              )
                              
                              
                              (2,136
                              )Loss
      from unconsolidated joint ventures
                              
                              
                              (554
                              )
                              
                              
                              (126
                              )Income
      tax provision
                              
                              
                              (135
                              )
                              
                              
                              (60
                              )Redeemable
      noncontrolling interests share of income
                              
                              
                              (54
                              )
                              
                              
                              (306
                              )Net
      income
                              
                              $
                              455
                              
                              
                              $
                              5,011Net
      income attributable to noncontrolling interests
                              
                              
                              (178
                              )
                              
                              
                              (102
                              )Net
      income attributable to American Campus Communities, Inc and
      Subsidiaries
                              
                              $
                              277
                              
                              
                              $
                              4,909Total
      segment assets
                              
                              $
                              2,165,676
                              
                              
                              $
                              1,123,486Unallocated
      corporate assets
                              
                              
                              24,261
                              
                              
                              
                              5,211Total
      assets
                              
                              $
                              2,189,937
                              
                              
                              $
                              1,128,697
 
 22
  AMERICAN
CAMPUS COMMUNITIES, INC.AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 14.  
Subsequent Events
 
 Distributions:  On
April 24, 2009, the Company declared a first quarter 2009 distribution per share
of $0.3375 which will be paid on May 11, 2009 to all common stockholders of
record as of May 1, 2009.  At the same time, the Operating Partnership
will be paid an equivalent amount per unit to holders of Common Units, as well
as the quarterly cumulative preferential distribution to holders of Series A
Preferred Units (see Note 6).
 
 23
 
 Item 2.    Management’s Discussion and Analysis of
Financial Condition and Results of Operations
 
 Forward-looking
Statements
 
 This
report contains forward-looking statements within the meaning of the federal
securities laws. We caution investors that any forward-looking statements
presented in this report, or which management may make orally or in writing from
time to time, are based on management’s beliefs and assumptions made by, and
information currently available to, management. When used, the words
“anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,”
“project,” “should,” “will,” “result” and similar expressions, which do not
relate solely to historical matters, are intended to identify forward-looking
statements. Such statements are subject to risks, uncertainties and assumptions
and may be affected by known and unknown risks, trends, uncertainties and
factors that are beyond our control. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
projected. We caution you that while forward-looking statements reflect our good
faith beliefs when we make them, they are not guarantees of future performance
and are impacted by actual events when they occur after we make such statements.
We expressly disclaim any responsibility to update forward-looking statements,
whether as a result of new information, future events or otherwise. Accordingly,
investors should use caution in relying on past forward-looking statements,
which are based on results and trends at the time they were made, to anticipate
future results or trends.
 
 Some of
the risks and uncertainties that may cause our actual results, performance or
achievements to differ materially from those expressed or implied by
forward-looking statements include, among others, the following: general risks
affecting the real estate industry; risks associated with changes in university
admission or housing policies; risks associated with the availability and terms
of financing and the use of debt to fund acquisitions and developments; failure
to manage effectively our growth and expansion into new markets or to integrate
acquisitions successfully; risks and uncertainties affecting property
development and construction; risks associated with downturns in the national
and local economies, volatility in capital and credit markets, increases in
interest rates, and volatility in the securities markets; costs of compliance
with the Americans with Disabilities Act and other similar laws; potential
liability for uninsured losses and environmental contamination; and risks
associated with our Company’s potential failure to qualify as a REIT under the
Internal Revenue Code of 1986 (the “Code”), as amended, and possible adverse
changes in tax and environmental laws.
 
 The risks
included here are not exhaustive, and additional factors could adversely affect
our business and financial performance, including factors and risks included in
other sections of this report. Moreover, we operate in a very competitive and
rapidly changing environment. New risk factors emerge from time to time and it
is not possible for management to predict all such risk factors, nor can it
assess the impact of all such risk factors on our business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements. Given these
risks and uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual results.
 
 Our
Company and Our Business
 
 American
Campus Communities, Inc. (referred to herein as “the Company,” “us,” “we,” and
“our”) is a real estate investment trust (“REIT”) that was incorporated on March
9, 2004 and commenced operations effective with the completion of our initial
public offering (“IPO”) on August 17, 2004.  Through our controlling
interest in American Campus Communities Operating Partnership LP (the “Operating
Partnership”), we are one of the largest owners, managers and developers of high
quality student housing properties in the United States in terms of beds owned,
developed, and under management.  We are a fully integrated,
self-managed and self-administered equity REIT with expertise in the
acquisition, design, financing, development, construction management, leasing
and management of student housing properties.
 
 As of
March 31, 2009, our property portfolio contained 86 student housing properties
with approximately 52,800 beds and approximately 17,200 apartment units,
including 40 properties containing approximately 23,500 beds and approximately
7,500 units added as a result of our acquisition of the student housing business
of GMH Communities Trust (“GMH”) on June 11, 2008.  Our property
portfolio consisted of 80 owned off-campus properties that are in close
proximity to colleges and universities, two American Campus Equity (“ACETM”)
properties operated under ground/facility leases with a related university
system and four on-campus participating properties operated under
ground/facility leases with the related university systems.  As of
March 31, 2009, we also owned a noncontrolling interest in two joint ventures
that owned an aggregate of 21 student housing properties with approximately
12,100 beds in approximately 3,600 units.  Our communities contain
modern housing units and are supported by a resident assistant system and other
student-oriented programming, with many offering resort-style
amenities.
  24
  Through
our taxable REIT subsidiaries (“TRS”), we provide construction management and
development services, primarily for student housing properties owned by colleges
and universities, charitable foundations, and others.  As of March 31,
2009, we provided third-party management and leasing services for 32 properties
(five of which we served as the third-party developer and construction manager)
that represented approximately 23,800 beds in approximately 8,900
units.  Third-party management and leasing services are typically
provided pursuant to multi-year management contracts that have initial terms
that range from one to five years.  As of March 31, 2009, our total
owned, joint venture and third-party managed portfolio was comprised of 139
properties with approximately 88,700 beds in approximately 29,700
units.
 
 Third-Party
Development Services
 
 Our
third-party development and construction management services as of March 31,
2009 consisted of four projects under contract and currently in progress with
fees ranging from $0.2 million to $7.6 million.  As of March 31, 2009,
fees of approximately $3.8 million remained to be earned by us with respect to
these projects, which have scheduled completion dates of July 2009 through
August 2010.
 
 While we
believe that our third party development/construction management and property
management services allow us to develop strong and key relationships with
colleges and universities, revenue from this area has over time become a smaller
portion of our operations due to the continued focus on and growth of our
wholly-owned property portfolio.  Nevertheless, we believe these
services continue to provide synergies with respect to our ability to identify,
acquire or develop, and successfully operate, student housing
properties.
 
 GMH
Acquisition
 
 On June
11, 2008, we completed the acquisition of GMH’s student housing
business.  At the time of closing, the GMH student housing portfolio
consisted of 42 wholly-owned properties containing 24,939 beds located in
various markets throughout the country.  Two of the acquired
properties totaling 1,468 beds were sold in the third quarter of
2008.  The total consideration paid for GMH was approximately $1,018.7
million, inclusive of transaction costs, which included: (i) the issuance of
approximately 5.4 million shares of our common stock and 7,004 Common Units,
each valued at $28.43 per share or unit; (ii) cash consideration paid of
approximately $239.6 million which represented the payment of $3.36 per share
for each GMH common share and each unit in the GMH Operating Partnership; and
(iii) the assumption of $608.2 million of fixed-rate mortgage debt, which
includes a net debt discount of $9.4 million.
 
 American
Campus Equity (“ACETM”)
Development Activities
 
 An
emerging opportunity in the wholly-owned property segment is the equity
investment and ownership of on-campus housing via traditional long-term ground
leases.  Branded and marketed to colleges and universities as the ACE
program, the transaction structure provides us with what we believe is a
lower-risk opportunity compared to other off-campus projects, as our ACE
projects will have premier on-campus locations with marketing and operational
assistance from the university.  The subject university substantially
benefits by increasing its housing capacity with modern, well-amenitized student
housing with no or minimal impacts to its own credit ratios, preserving the
university’s credit capacity to fund academic and research
facilities.  During the first quarter of 2009, we were selected by
four universities to begin the planning process for the development, ownership
and operation of an ACE project.  These first quarter 2009 awards,
along with the ASU Component III and Boise State University awards, provide the
company the opportunity to exclusively negotiate with the subject universities
with commencement subject to final determination of feasibility, execution and
closing of definitive agreements, and various university and municipal approval
processes.
 
 Barrett Honors
College:As of March 31, 2009, our Barrett Honors College ACE
property was under construction with total development costs estimated to be
approximately $126.5 million.  The project is scheduled to complete
construction and open for occupancy in August 2009 and will serve students
attending Arizona State University.  As of March 31, 2009, the project
was approximately 74% complete, and we estimate that remaining development costs
will be approximately $36.6 million.  As of March 31, 2009, we have
funded 100% of the project’s development costs and will fund the remaining
development costs internally.
  25
 Property
Operations
  As of
March 31, 2009, our property portfolio consisted of the following:
 PROPERTY
                          
                          YR
      ACQUIRED / DEVELOPED(1)
                          
                          LOCATION
                          
                          PRIMARY
      UNIVERSITY SERVED
                          
                          UNITS
                          
                          BEDSWholly-Owned
      properties:1.
      Villas on Apache
                          
                          1999
                          
                          Tempe,
      AZ
                          
                          Arizona
      State University Main Campus
                          
                          111
                          
                          2882.
      River Club Apartments
                          
                          1999
                          
                          Athens,
      GA
                          
                          The
      University of Georgia – Athens
                          
                          266
                          
                          7923.
      River Walk Townhomes
                          
                          1999
                          
                          Athens,
      GA
                          
                          The
      University of Georgia – Athens
                          
                          100
                          
                          3364.
      The Village at Blacksburg
                          
                          2000
                          
                          Blacksburg,
      VA
                          
                          Virginia
      Polytechnic Inst. & State University
                          
                          288
                          
                          1,0565.
      The Callaway House
                          
                          2001
                          
                          College
      Station, TX
                          
                          Texas
      A&M University
                          
                          173
                          
                          5386.
      The Village at Alafaya Club
                          
                          2000
                          
                          Orlando,
      FL
                          
                          The
      University of Central Florida
                          
                          228
                          
                          8397.
      The Village at Science Drive
                          
                          2001
                          
                          Orlando,
      FL
                          
                          The
      University of Central Florida
                          
                          192
                          
                          7328.
      University Village at Boulder Creek
                          
                          2002
                          
                          Boulder,
      CO
                          
                          The
      University of Colorado at Boulder
                          
                          82
                          
                          3099.
      University Village at Fresno
                          
                          2004
                          
                          Fresno,
      CA
                          
                          California
      State University – Fresno
                          
                          105
                          
                          40610.
      University Village at TU(2)
                          
                          2004
                          
                          Philadelphia,
      PA
                          
                          Temple
      University
                          
                          220
                          
                          74911.
      University Club Tallahassee
                          
                          2005
                          
                          Tallahassee,
      FL
                          
                          Florida
      State University
                          
                          152
                          
                          60812.
      The Grove at University Club
                          
                          2005
                          
                          Tallahassee,
      FL
                          
                          Florida
      State University
                          
                          64
                          
                          12813.
      College Club Tallahassee
                          
                          2005
                          
                          Tallahassee,
      FL
                          
                          Florida
      A&M University
                          
                          96
                          
                          38414.
      The Greens at College Club
                          
                          2005
                          
                          Tallahassee,
      FL
                          
                          Florida
      A&M University
                          
                          40
                          
                          16015.
      University Club Gainesville
                          
                          2005
                          
                          Gainesville,
      FL
                          
                          University
      of Florida
                          
                          94
                          
                          37616.
      City Parc at Fry Street
                          
                          2005
                          
                          Denton,
      TX
                          
                          University
      of North Texas
                          
                          136
                          
                          41817.
      The Estates
                          
                          2005
                          
                          Gainesville,
      FL
                          
                          University
      of Florida
                          
                          396
                          
                          1,04418.
      University Village at Sweet Home
                          2005
                          
                          Amherst,
      NY
                          
                          State
      University of New York – Buffalo
                          
                          269
                          
                          82819.
      Entrada Real
                          
                          2006
                          
                          Tucson,
      AZ
                          
                          University
      of Arizona
                          
                          98
                          
                          36320.
      Royal Oaks
                          
                          2006
                          
                          Tallahassee,
      FL
                          
                          Florida
      State University
                          
                          82
                          
                          22421.
      Royal Pavilion
                          
                          2006
                          
                          Tallahassee,
      FL
                          
                          Florida
      State University
                          
                          60
                          
                          20422.
      Royal Village Tallahassee
                          
                          2006
                          
                          Tallahassee,
      FL
                          
                          Florida
      State University
                          
                          75
                          
                          28823.
      Royal Village Gainesville
                          
                          2006
                          
                          Gainesville,
      FL
                          
                          University
      of Florida
                          
                          118
                          
                          44824.
      Northgate Lakes
                          
                          2006
                          
                          Orlando,
      FL
                          
                          The
      University of Central Florida
                          
                          194
                          
                          71025.
      Royal Lexington
                          
                          2006
                          
                          Lexington,
      KY
                          
                          University
      of Kentucky
                          
                          94
                          
                          36426.
      The Woods at Greenland
                          
                          2006
                          
                          Murfreesboro,
      TN
                          
                          Middle
      Tennessee State University
                          
                          78
                          
                          27627.
      Raider’s Crossing
                          
                          2006
                          
                          Murfreesboro,
      TN
                          
                          Middle
      Tennessee State University
                          
                          96
                          
                          27628.
      Raider’s Pass
                          
                          2006
                          
                          Lubbock,
      TX
                          
                          Texas
      Tech University
                          
                          264
                          
                          82829.
      Aggie Station
                          
                          2006
                          
                          College
      Station, TX
                          
                          Texas
      A&M University
                          
                          156
                          
                          45030.
      The Outpost San Marcos
                          
                          2006
                          
                          San
      Marcos, TX
                          
                          Texas
      State University – San Marcos
                          
                          162
                          
                          48631.
      The Outpost San Antonio
                          
                          2006
                          
                          San
      Antonio, TX
                          
                          University
      of Texas – San Antonio
                          
                          276
                          
                          82832.
      Callaway Villas
                          
                          2006
                          
                          College
      Station, TX
                          
                          Texas
      A&M University
                          
                          236
                          
                          70433.
      Village on Sixth
                          
                          2007
                          
                          Huntington,
      WV
                          
                          Marshall
      University
                          
                          248
                          
                          75234.
      Newtown Crossing
                          
                          2007
                          
                          Lexington,
      KY
                          
                          University
      of Kentucky
                          
                          356
                          
                          94235.
      Olde Towne University Square
                          
                          2007
                          
                          Toledo,
      OH
                          
                          University
      of Toledo
                          
                          224
                          
                          55036.
      Peninsular Place
                          
                          2007
                          
                          Ypsilanti,
      MI
                          
                          Eastern
      Michigan University
                          
                          183
                          
                          47837.
      University Centre
                          
                          2007
                          
                          Newark,
      NJ
                          
                          Rutgers
      University, NJIT, Essex CCC
                          
                          234
                          
                          83838.
      Sunnyside Commons
                          
                          2008
                          
                          Morgantown,
      WV
                          
                          West
      Virginia University
                          
                          68
                          
                          16139.
      Pirate’s Place
                          
                          2008
                          
                          Greenville,
      NC
                          
                          East
      Carolina University
                          
                          144
                          
                          52840.
      University Highlands
                          
                          2008
                          
                          Reno,
      NV
                          
                          University
      of Nevada at Reno
                          
                          216
                          
                          73241.
      Jacob Heights I
                          
                          2008
                          
                          Mankato,
      MN
                          
                          Minnesota
      State University
                          
                          42
                          
                          16242.
      Jacob Heights III
                          
                          2008
                          
                          Mankato,
      MN
                          
                          Minnesota
      State University
                          
                          24
                          
                          96
  26
  PROPERTY
                                
                                YR
      ACQUIRED / DEVELOPED(1
                                
                                LOCATION
                                
                                PRIMARY
      UNIVERSITY SERVED
                                
                                UNITS
                                
                                BEDSWholly-Owned
      properties:43.
      The Summit
                                
                                2008
                                
                                Mankato,
      MN
                                
                                Minnesota
      State University
                                
                                192
                                
                                67244.
      GrandMarc – Seven Corners
                                
                                2008
                                
                                Minneapolis,
      MN
                                
                                University
      of Minnesota
                                
                                186
                                
                                44045.
      University Village – Sacramento
                                
                                2008
                                
                                Sacramento,
      CA
                                
                                California
      State University – Sacramento
                                
                                250
                                
                                39446.
      Aztec Corner
                                
                                2008
                                
                                San
      Diego, CA
                                
                                San
      Diego State University
                                
                                180
                                
                                60647.
      University Crossings
                                
                                2008
                                
                                Philadelphia,
      PA
                                
                                University
      of Pennsylvania / Drexel
                                
                                260
                                
                                1,01648.
      Campus Corner
                                
                                2008
                                
                                Bloomington,
      IN
                                
                                Indiana
      University
                                
                                254
                                
                                79649.
      Tower at 3rd
                                
                                2008
                                
                                Champaign,
      IL
                                
                                University
      of Illinois
                                
                                147
                                
                                29550.
      University Mills
                                
                                2008
                                
                                Cedar
      Falls, IA
                                
                                University
      of Northern Iowa
                                
                                121
                                
                                48151.
      Pirates Cove
                                
                                2008
                                
                                Greenville,
      NC
                                
                                East
      Carolina University
                                
                                264
                                
                                1,05652.
      University Manor
                                
                                2008
                                
                                Greenville,
      NC
                                
                                East
      Carolina University
                                
                                168
                                
                                60053.
      Brookstone Village
                                
                                2008
                                
                                Wilmington,
      NC
                                
                                UNC
      – Wilmington
                                
                                124
                                
                                23854.
      Campus Walk – Wilmington
                                
                                2008
                                
                                Wilmington,
      NC
                                
                                UNC
      – Wilmington
                                
                                289
                                
                                29055.
      Riverside Estates
                                
                                2008
                                
                                Cayce,
      SC
                                
                                University
      of South Carolina
                                
                                205
                                
                                70056.
      Cambridge at Southern
                                
                                2008
                                
                                Statesboro,
      GA
                                
                                Georgia
      Southern University
                                
                                228
                                
                                56457.
      Campus Club – Statesboro
                                
                                2008
                                
                                Statesboro,
      GA
                                
                                Georgia
      Southern University
                                
                                276
                                
                                98458.
      University Pines
                                
                                2008
                                
                                Statesboro,
      GA
                                
                                Georgia
      Southern University
                                
                                144
                                
                                55259.
      Lakeside
                                
                                2008
                                
                                Athens,
      GA
                                
                                University
      of Georgia
                                
                                244
                                
                                77660.
      The Club
                                
                                2008
                                
                                Athens,
      GA
                                
                                University
      of Georgia
                                
                                120
                                
                                48061.
      The Edge (formerly Pegasus Connection)
                                2008
                                
                                McKay,
      FL
                                
                                Central
      Florida
                                
                                306
                                
                                93062.
      University Place
                                
                                2008
                                
                                Charlottesville,
      VA
                                
                                University
      of Virginia
                                
                                144
                                
                                52863.
      Southview
                                
                                2008
                                
                                Harrisonburg,
      VA
                                
                                James
      Madison University
                                
                                240
                                
                                96064.
      Stonegate
                                
                                2008
                                
                                Harrisonburg,
      VA
                                
                                James
      Madison University
                                
                                168
                                
                                67265.
      The Commons
                                
                                2008
                                
                                Harrisonburg,
      VA
                                
                                James
      Madison University
                                
                                132
                                
                                52866.
      University Gables
                                
                                2008
                                
                                Murfreesboro,
      TN
                                
                                Middle
      Tennessee State University
                                
                                168
                                
                                64867.
      Campus Ridge
                                
                                2008
                                
                                Johnson
      City, TN
                                
                                East
      Tennessee State University
                                
                                132
                                
                                52868.
      The Enclave I
                                
                                2008
                                
                                Bowling
      Green, OH
                                
                                Bowling
      Green State University
                                
                                120
                                
                                48069.
      Hawks Landing
                                
                                2008
                                
                                Oxford,
      OH
                                
                                Miami
      University of Ohio
                                
                                122
                                
                                48470.
      Willow Tree Apartments
                                
                                2008
                                
                                Ann
      Arbor, MI
                                
                                University
      of Michigan
                                
                                310
                                
                                56871.
      Willow Tree Towers
                                
                                2008
                                
                                Ann
      Arbor, MI
                                
                                University
      of Michigan
                                
                                163
                                
                                28372.
      Abbott Place
                                
                                2008
                                
                                East
      Lansing, MI
                                
                                Michigan
      State University
                                
                                222
                                
                                65473.
      University Centre – Kalamazoo
                                
                                2008
                                
                                Kalamazoo,
      MI
                                
                                Western
      Michigan University
                                
                                232
                                
                                70074.
      University Meadows
                                
                                2008
                                
                                Mt.
      Pleasant, MI
                                
                                Central
      Michigan University
                                
                                184
                                
                                61675.
      Campus Way
                                
                                2008
                                
                                Tuscaloosa,
      AL
                                
                                University
      of Alabama
                                
                                196
                                
                                68476.
      Campus Walk – Oxford
                                
                                2008
                                
                                Oxford,
      MS
                                
                                University
      of Mississippi
                                
                                108
                                
                                43277.Campus
      Trails
                                
                                2008
                                
                                Starkville,
      MS
                                
                                Mississippi
      State University
                                
                                156
                                
                                48078.
      University Pointe
                                
                                2008
                                
                                Lubbock,
      TX
                                
                                Texas
      Tech University
                                
                                204
                                
                                68279.
      University Trails
                                
                                2008
                                
                                Lubbock,
      TX
                                
                                Texas
      Tech University
                                
                                240
                                
                                68480.
      Vista del Sol (3)
                                
                                2008
                                
                                Tempe,
      AZ
                                
                                Arizona
      State University
                                
                                613
                                
                                1,86681.
      Villas at Chestnut Ridge
                                
                                2008
                                
                                Amherst,
      NY
                                
                                State
      University of New York – Buffalo
                                
                                196
                                
                                55282.
      Barrett Honors College (4)
                                
                                2009
                                
                                Tempe,
      AZ
                                
                                Arizona
      State University
                                
                                601
                                
                                1,720Total
      wholly-owned properties
                                
                                
                                
                                
                                
                                
                                
                                15,349
                                
                                48,298
  27
 
 PROPERTY
                  
                  YEAR
      ACQUIRED / DEVELOPED (1)
                  
                  LOCATION
                  
                  PRIMARY
      UNIVERSITY SERVED
                  
                  UNITS
                  
                  BEDSOn-campus
      participating  properties:83.
      University Village – PVAMU
                  
                  1996
      / 97 / 98
                  
                  Prairie
      View, TX
                  
                  Prairie
      View A&M University
                  
                  612
                  
                  1,92084.
      University College – PVAMU
                  
                  2000
      / 2003
                  
                  Prairie
      View, TX
                  
                  Prairie
      View A&M University
                  
                  756
                  
                  1,47085.
      University Village – TAMIU
                  
                  1997
                  
                  Laredo,
      TX
                  
                  Texas
      A&M International University
                  
                  84
                  
                  25086.
      Cullen Oaks – Phase I and II
                  
                  2001
      / 2006
                  
                  Houston,
      TX
                  
                  The
      University of Houston
                  
                  411
                  
                  879Total
      on-campus participating properties
                  
                  1,863
                  
                  4,519Total – all
      properties
                  
                  
                  
                  
                  
                  
                  
                  17,212
                  
                  52,817
 
 (1)
                As
      of March 31, 2009, the average age of our wholly-owned properties was
      approximately 9.2 years.(2)
                Subject
      to a 75-year ground lease with Temple University.(3)
                Subject
      to a 65-year ground/facility lease with Arizona State
      University.(4)
                Currently
      under development with a scheduled completion date of August
      2009.  Subject to a 65-year ground/facility lease with Arizona
      State University.
 
 28
  Results
of Operations
 
 Comparison
of the Three Months Ended March 31, 2009 and March 31, 2008
 
 The
following table presents our results of operations for the three months ended
March 31, 2009 and 2008, including the amount and percentage change in these
results between the two periods:
 
 Three
      Months Ended March 31,2009
                      
                      
                      2008
                      
                      
                      Change
      ($)
                      
                      
                      Change
      (%)Revenues:Wholly-owned
      properties
                      
                      $
                      67,332
                      
                      
                      $
                      31,681
                      
                      
                      $
                      35,651
                      
                      
                      
                      112.5
                      %On-campus
      participating properties
                      
                      
                      6,874
                      
                      
                      
                      6,744
                      
                      
                      
                      130
                      
                      
                      
                      1.9
                      %Third
      party development services
                      
                      
                      1,052
                      
                      
                      
                      1,656
                      
                      
                      
                      (604
                      )
                      
                      
                      (36.5
                      %)Third
      party management services
                      
                      
                      2,242
                      
                      
                      
                      922
                      
                      
                      
                      1,320
                      
                      
                      
                      143.2
                      %Resident
      services
                      
                      
                      240
                      
                      
                      
                      438
                      
                      
                      
                      (198
                      )
                      
                      
                      (45.2
                      %)Total
      revenues
                      
                      
                      77,740
                      
                      
                      
                      41,441
                      
                      
                      
                      36,299
                      
                      
                      
                      87.6
                      %Operating
      expenses:Wholly-owned
      properties
                      
                      
                      31,486
                      
                      
                      
                      13,885
                      
                      
                      
                      17,601
                      
                      
                      
                      126.8
                      %On-campus
      participating properties
                      
                      
                      2,030
                      
                      
                      
                      2,295
                      
                      
                      
                      (265
                      )
                      
                      
                      (11.5
                      %)Third
      party development and management services
                      
                      
                      2,977
                      
                      
                      
                      2,108
                      
                      
                      
                      869
                      
                      
                      
                      41.2
                      %General
      and administrative
                      
                      
                      2,748
                      
                      
                      
                      2,134
                      
                      
                      
                      614
                      
                      
                      
                      28.8
                      %Depreciation
      and amortization
                      
                      
                      20,102
                      
                      
                      
                      8,029
                      
                      
                      
                      12,073
                      
                      
                      
                      150.4
                      %Ground/facility
      leases
                      
                      
                      552
                      
                      
                      
                      359
                      
                      
                      
                      193
                      
                      
                      
                      53.8
                      %Total
      operating expenses
                      
                      
                      59,895
                      
                      
                      
                      28,810
                      
                      
                      
                      31,085
                      
                      
                      
                      107.9
                      %Operating
      income
                      
                      
                      17,845
                      
                      
                      
                      12,631
                      
                      
                      
                      5,214
                      
                      
                      
                      41.3
                      %Nonoperating
      income and (expenses):Interest
      income
                      
                      
                      40
                      
                      
                      
                      162
                      
                      
                      
                      (122
                      )
                      
                      
                      (75.3
                      %)Interest
      expense
                      
                      
                      (15,886
                      )
                      
                      
                      (6,979
                      )
                      
                      
                      (8,907
                      )
                      
                      
                      127.6
                      %Amortization
      of deferred financing costs
                      
                      
                      (801
                      )
                      
                      
                      (311
                      )
                      
                      
                      (490
                      )
                      
                      
                      157.6
                      %Loss
      from unconsolidated joint ventures
                      
                      
                      (554
                      )
                      
                      
                      (126
                      )
                      
                      
                      (428
                      )
                      
                      
                      339.7
                      %Total
      nonoperating expenses
                      
                      
                      (17,201
                      )
                      
                      
                      (7,254
                      )
                      
                      
                      (9,947
                      )
                      
                      
                      137.1
                      %Income
      before income taxes and redeemable noncontrolling
interests
                      
                      
                      644
                      
                      
                      
                      5,377
                      
                      
                      
                      (4,733
                      )
                      
                      
                      (88.0
                      %)Income
      tax provision
                      
                      
                      (135
                      )
                      
                      
                      (60
                      )
                      
                      
                      (75
                      )
                      
                      
                      125.0
                      %Redeemable
      noncontrolling interests share of income
                      
                      
                      (54
                      )
                      
                      
                      (306
                      )
                      
                      
                      252
                      
                      
                      
                      (82.4
                      %)Net
      income
                      
                      
                      455
                      
                      
                      
                      5,011
                      
                      
                      
                      (4,556
                      )
                      
                      
                      (90.9
                      %)Net
      income attributable to noncontrolling interests
                      
                      
                      (178
                      )
                      
                      
                      (102
                      )
                      
                      
                      (76
                      )
                      
                      
                      74.5
                      %Net
      income attributable to American CampusCommunities,
      Inc. and Subsidiaries
                      
                      $
                      277
                      
                      
                      $
                      4,909
                      
                      
                      $
                      (4,632
                      )
                      
                      
                      (94.4
                      %)
 
 Wholly-Owned
Properties Operations
 
 Revenues
from our wholly-owned properties for the three months ended March 31, 2009
compared with the same period in 2008 increased by $35.5 million primarily due
to the acquisition of GMH’s student housing business in June 2008 and the
completion of construction and opening of Vista del Sol and Villas at Chestnut
Ridge in August 2008.  Operating expenses increased approximately
$17.6 million for the three months ended March 31, 2009 compared with the same
period in 2008, primarily due to the same factors which affected the increase in
revenues.
 
 New Property
Operations.  On June 11, 2008, we acquired GMH’s student
housing business, including 42 properties containing 24,939 beds located in
various markets throughout the country.  Of the 42 properties
acquired, two were under contract to be sold on the acquisition date and were
sold in July and August 2008.  For the three months ended March 31,
2009, the remaining 40 properties acquired from GMH contributed an additional
$29.3 million of revenues and an additional $15.5 million of operating
expenses.  In addition, we acquired two properties in February 2008;
Pirate’s Place, located near the campus of East Carolina University in
Greenville, North Carolina and Sunnyside Commons, located near the campus of
West Virginia University in Morgantown, West Virginia.  In August
2008, we completed construction of and opened Vista del Sol, serving students
attending Arizona State University and Villas at Chestnut Ridge, serving
students attending SUNY-Buffalo.  These non-GMH new properties
contributed an additional $5.2 million of revenues and an additional $1.6
million of operating expenses during the three months ended March 31, 2009 as
compared to the three months ended March 31, 2008.
  29
  Same Store Property Operations
(Excluding New Property Activity).  We had 37 properties
containing 20,000 beds which were operating during both the three month periods
ended March 31, 2009 and 2008.  These properties produced revenues of
$32.8 million and $31.9 million during the three months ended March 31, 2009 and
2008, respectively, an increase of $0.9 million.  This increase was
primarily due to an increase in average rental rates during the three months
ended March 31, 2009 as compared to the same period in 2008, as well as the
improved lease up for the 2008/2009 academic year, which resulted in average
occupancy rates increasing to 96.6% during the three months ended March 31, 2009
from 96.1% during the three months ended March 31, 2008.  Revenues in
2009 will be dependent on our ability to maintain our current leases in effect
for the 2008/2009 academic year and our ability to obtain appropriate rental
rates and desired occupancy for the 2009/2010 academic year at our various
properties during our leasing period, which typically begins in January and ends
in August.
 
 At these
existing same store properties, operating expenses increased from $13.7 million
for the three months ended March 31, 2008 to $14.2 million for the three months
ended March 31, 2009, an increase of $0.5 million.  This increase was
primarily due to an increase in marketing costs associated with the 2009/2010
academic leasing year.  We anticipate that operating expenses for our
same store property portfolio for the full year 2009 will increase slightly as
compared with 2008 as a result of expected increases in marketing costs, utility
costs, property taxes and general inflation.
 
 On-Campus
Participating Properties (“OCPP”) Operations
 
 Same Store OCPP
Operations.  We had four participating properties containing
4,519 beds which were operating during both the three month periods ended March
31, 2009 and 2008.  Revenues from our same store participating
properties increased to $6.8 million during the three months ended March 31,
2009 from $6.7 million for the three months ended March 31, 2008, an increase of
$0.1 million.
 
 At these
properties, operating expenses decreased from $2.3 million for the three months
ended March 31, 2008 to $2.0 million for the three months ended March 31, 2009,
a decrease of $0.3 million.  We anticipate that operating expenses for
the full year 2009 will increase slightly as compared with 2008 as a result of
expected increases in utility costs and general inflation.
 
 Third
Party Development Services Revenue
 
 Third
party development services revenue decreased by $0.6 million from $1.7 million
during the three months ended March 31, 2008 to $1.1 million for the three
months ended March 31, 2009.  The decrease as compared to the prior
year primarily related to the closing and commencement of construction of The
Highlands at Edinboro University of Pennsylvania project during the three months
ended March 31, 2008.   This new project contributed
approximately $0.7 million in additional third party development services
revenues during the three months ended March 31, 2008 as compared to
2009.  Additionally, we had four projects in progress during the three
months ended March 31, 2009 with an average contractual fee of approximately
$3.6 million, as compared to the three months ended March 31, 2008 in which we
had five projects in progress with an average contractual fee of $2.1
million.  Closing of additional third-party development services
projects during 2009 will be dependent upon the Company’s university clients
obtaining project financing, which may be adversely affected by current capital
market conditions.
 
 Development
services revenues are dependent on our ability to successfully be awarded such
projects, the amount of the contractual fee related to the project and the
timing and completion of the development and construction of the
project.  In addition, to the extent projects are completed under
budget, we may be entitled to a portion of such savings, which are recognized as
revenue when performance has been agreed upon by all parties, or when
performance has been verified by an independent third-party.  It is
possible that projects for which we have deferred pre-development costs will not
close and that we will not be reimbursed for such costs.  The
pre-development costs associated therewith will ordinarily be charged against
income for the then-current period.
 
 Third
Party Management Services Revenue
 
 Third
party management services revenues increased by $1.3 million from $0.9 million
for the three months ended March 31, 2008 to $2.2 million for the three months
ended March 31, 2009.  This increase was primarily due to an
additional $1.1 million in management fees recognized during the three months
ended March 31, 2009 from third party management contracts assumed as part of
the GMH acquisition, including 21 properties owned in two joint ventures with
Fidelity in which we have a 10% interest.  We anticipate that
third-party management services revenues for the full year 2009 will increase as
compared with 2008, primarily as a result of the previously mentioned contracts
assumed from GMH.
  30
  Third
Party Development and Management Services Expenses
 
 Third
party development and management services expenses increased by $0.9 million,
from $2.1 million during the three months ended March 31, 2008, to $3.0 million
for the three months ended March 31, 2009.  This increase was
primarily due to an increase in payroll and related costs as a result of an
increase in activity for potential ACE projects and new management contracts
assumed from GMH.  Third-party development and management services
expenses for the full year 2009 will be dependent on the level of awards we
pursue, the level of new management contracts obtained, and as previously
mentioned, any pre-development costs charged against income for projects which
do not close.
 
 General
and Administrative
 
 General
and administrative expenses increased approximately $0.6 million, from $2.1
million during the three months ended March 31, 2008, to $2.7 million for the
three months ended March 31, 2009.  This increase was primarily due to
additional staffing, benefits, rent and public company costs related to both the
GMH acquisition and company growth experienced during 2008.  We
anticipate general and administrative expenses to increase for the full year
2009 as a result of the previously mentioned increases in corporate staffing
levels experienced as a result of the recent growth of our wholly-owned
portfolio, including our acquisition of GMH.
 
 Depreciation
and Amortization
 
 Depreciation
and amortization increased by $12.1 million, from $8.0 million during the three
months ended March 31, 2008 to $20.1 million for the three months ended March
31, 2009.  This increase was primarily due to the acquisition of the
GMH student housing business in June 2008, and the completion of construction
and opening of Vista del Sol and Villas at Chestnut Ridge in August
2008.   The GMH properties contributed an additional $10.6
million to depreciation expense for the three months ended March 31, 2009, of
which $4.1 million related to the valuation assigned to in-place leases for such
properties.  We expect depreciation and amortization to increase for
the full year 2009 as a result of the addition of the GMH properties to our
portfolio and a full year of depreciation on properties acquired and placed in
service during 2008.
 
 Ground
Lease Expense
 
 Ground
lease expense increased $0.2 million from $0.4 million during the three months
ended March 31, 2008 to $0.6 million for the three months ended March 31, 2009,
primarily due to ground/facility lease costs incurred for Vista del Sol which
completed construction and opened in August 2008.  We expect ground
lease expense in 2009 to increase due to the timing of Vista del Sol being
placed in service during 2008 and the anticipated completion and opening of
Barrett Honors College in August 2009.
 
 Interest
Expense
 
 Interest
expense increased $8.9 million, from $7.0 million during the three months ended
March 31, 2008, to $15.9 million for the three months ended March 31,
2009.  This increase was primarily due to $598.8 million of mortgage
debt assumed from GMH in June 2008 at a weighted average rate of 5.43%
(including a net discount of $9.4 million to reflect the fair market value of
debt assumed.)  The debt assumed for properties acquired from GMH
contributed an additional $7.7 million of interest expense for the three months
ended March 31, 2009.  We also incurred an additional $0.7 million of
interest expense related to the senior secured term loan entered into in May
2008 to fund a portion of the cash consideration paid for our acquisition of
GMH.  An additional $0.6 million of interest expense was incurred
during the three months ended March 31, 2009 related to the loans for Vista del
Sol and Villas at Chestnut Ridge, which completed construction and were placed
into service in August 2008.  We anticipate that interest expense will
increase for the full year 2009 due to additional interest expense incurred in
connection with our acquisition of GMH’s student housing business as well as the
senior secured term loan entered into in May 2008.
 
 Amortization
of Deferred Financing Costs
 
 Amortization
of deferred financing costs increased approximately $0.5 million from $0.3
million during the three months ended March 31, 2008 to $0.8 million for the
three months ended March 31, 2009, primarily due to the amortization of
additional finance costs incurred to assume debt on properties acquired from GMH
and the senior secured term loan entered into in May 2008.  We expect
amortization of deferred financing costs in 2009 to increase due to debt assumed
in connection with our acquisition of GMH’s student housing business as well as
the senior secured term loan.
  31
  Loss
from Unconsolidated Joint Ventures
 
 Loss from
unconsolidated joint ventures of $0.6 million for the three months ended March
31, 2009 represents our share of the net loss from the Hampton Roads military
housing joint venture of $0.3 million in which we have a minimal economic
interest, as well as our 10 % share of the loss from two joint ventures of $0.3
million with Fidelity owning 21 properties formed or assumed as part of our
acquisition of GMH in June 2008.
 
 Noncontrolling
Interests
 
 Noncontrolling
interests represent holders of common and preferred units in our Operating
Partnership as well as certain third-party partners in joint ventures
consolidated by us for financial reporting purposes.  Accordingly,
these external partners are allocated their share of income/loss during the
respective reporting periods.  See Note 6 in the accompanying Notes to
Consolidated Financial Statements contained in Item 1 herein for a detailed
discussion of noncontrolling interests.
 
 Cash
Flows
 
 Comparison
of Three Months Ended March 31, 2009 and 2008
 
 Operating
Activities
 
 For the
three months ended March 31, 2009, net cash provided by operating activities was
approximately $19.9 million, as compared to $7.8 million for the three months
ended March 31, 2008, an increase of $12.1 million.  This increase was
primarily due to operating cash flows provided from the timing of the
acquisition of the GMH student housing business on June 11, 2008 and the
completion of construction and opening of Vista del Sol and Villas at Chestnut
Ridge in August 2008.
 
 Investing
Activities
 
 Investing
activities utilized $36.0 million and $49.8 million for the three months ended
March 31, 2009 and 2008, respectively.  The decrease in cash utilized
in investing activities during the three months ended March 31, 2009 related
primarily to a $14.3 million decrease in the use of cash to acquire properties
and undeveloped land.  We acquired two properties during the first
quarter of 2008 and no properties during the first quarter of
2009.  In addition cash used to fund the construction of our
wholly-owned development properties decreased by $10.0 million during the first
quarter of 2009.  One wholly-owned property was under development
throughout the first quarter of 2009, while three wholly-owned properties were
under development throughout the first quarter of 2008.  These items
were partially offset by an increase in cash used during the three months ended
March 31, 2009 for capital expenditures at our wholly-owned properties as we
continued with renovations at several GMH properties.  For the three
months ended March 31, 2009 and 2008, our cash utilized in investing activities
was comprised of the following:
 
 Three
      Months Ended March 31,2009
                      
                      
                      2008Property
      and land acquisitions
                      
                      $
                      -
                      
                      
                      $
                      (14,283
                      )Capital
      expenditures for on-campus participating properties
                      
                      
                      (38
                      )
                      
                      
                      (52
                      )Capital
      expenditures for wholly-owned properties
                      
                      
                      (11,392
                      )
                      
                      
                      (888
                      )Investment
      in wholly-owned properties under development
                      
                      
                      (24,421
                      )
                      
                      
                      (34,434
                      )Purchase
      of corporate furniture, fixtures, and equipment
                      
                      
                      (146
                      )
                      
                      
                      (190
                      )Total
                      
                      $
                      (35,997
                      )
                      
                      $
                      (49,847
                      )
 
 Financing
Activities
 
 Cash
provided by financing activities totaled $16.7 million for the three months
ended March 31, 2009 as compared to $43.0 million during the three months ended
March 31, 2008.  The decrease in cash provided by financing activities
was a result of the following:  (i) the pay-off of $29.8 million in
mortgage loan debt that matured during the three months ended March 31, 2009;
(ii) a $26.4 million decrease in proceeds from construction loans used to fund
the construction of wholly-owned properties; and (iii) a $5.1 million increase
in distributions to common and restricted stockholders as a result of our April
2008 equity offering and the issuance of common stock as partial consideration
for the acquisition of GMH.  These items were offset by a $36.6
million increase in proceeds (net of paydowns) received from our revolving
credit facility used to fund the construction of Barrett Honors College, one of
our owned ACE development properties, and for the pay-off of the previously
mentioned mortgage loans.
  32
 Structure
of Owned On-campus Properties
 
 We have
entered into two 65-year ground/facility leases (each with two ten-year
extensions available) with a university system to finance, construct, and manage
two student housing facilities, one of which is currently under construction
with a scheduled completion date of August 2009.  Under the terms of
these ground/facility leases, the university system owns both the land and
improvements, and we will make annual minimum rent payments to the university
system during the first five years of operation for one property and the first
ten years of operation for the other property.  In addition, we will
pay the university system variable rent payments based upon the operating
performance of the properties.
 
 Structure
of On-campus Participating Properties
 
 At our
on-campus participating properties, the subject universities own both the land
and improvements.  We then have a leasehold interest under a
ground/facility lease.  Under the lease, we receive an annual
distribution representing 50% of these properties’ net cash available for
distribution after payment of operating expenses (which includes our management
fees), debt service (which includes repayment of principal) and capital
expenditures.  We also manage these properties under multi-year
management agreements and are paid a management fee representing 5% of
receipts.
 
 We do not
have access to the cash flows and working capital of these participating
properties except for the annual net cash distribution as described
above.  Additionally, a substantial portion of these properties’ cash
flow is dedicated to capital reserves required under the applicable property
indebtedness and to the amortization of such indebtedness.  These
amounts do not increase our economic interest in these properties since our
interest, including our right to share in the net cash available for
distribution from the properties, terminates upon the amortization of their
indebtedness.  Our economic interest in these properties is therefore
limited to our interest in the net cash flow and management and development fees
from these properties, as reflected in our calculation of Funds from Operations
modified for the operational performance of on-campus participating properties
(“FFOM”) contained herein.  Accordingly, when considering these
properties’ contribution to our operations, we focus upon our share of these
properties’ net cash available for distribution and the management fees that we
receive from these properties, rather than upon their contribution to our gross
revenues and expenses for financial reporting purposes.
 
 The
following table reflects the amounts included in our consolidated financial
statements for the three months ended March 31, 2009 and 2008:
 
 Three
      Months Ended March 31,2009
                      
                      
                      2008Revenues
                      
                      $
                      6,874
                      
                      
                      $
                      6,744Direct
      operating expenses (1)
                      
                      
                      (1,897
                      )
                      
                      
                      (2,105
                      )Amortization
                      
                      
                      (1,090
                      )
                      
                      
                      (1,069
                      )Amortization
      of deferred financing costs
                      
                      
                      (46
                      )
                      
                      
                      (46
                      )Ground/facility
      leases (2)
                      
                      
                      (292
                      )
                      
                      
                      (359
                      )Net
      operating income
                      
                      
                      3,549
                      
                      
                      
                      3,165Interest
      income
                      
                      
                      24
                      
                      
                      
                      79Interest
      expense (3)
                      
                      
                      (1,559
                      )
                      
                      
                      (1,562
                      )Net
      income
                      
                      $
                      2,014
                      
                      
                      $
                      1,682
  
 (1)
                    Excludes
      property management fees of $0.3 million for both the three month periods
      ended March 31, 2009 and 2008.  This expense and the
      corresponding fee revenue have been eliminated in
      consolidation.  Also excludes allocation of expenses related to
      corporate management and oversight.(2)
                    Represents
      the universities’ 50% share of the properties’ net cash available for
      distribution after payment of operating expenses, debt service (including
      payment of principal) and capital expenditures.(3)
                    Debt
      service expenditures for these properties totaled $2.1 million and $2.0
      million for the three months ended March 31, 2009 and 2008,
      respectively.
  33
 Liquidity
and Capital Resources
 
 Cash
Balances and Liquidity
 
 As of
March 31, 2009, excluding our on-campus participating properties, we had $45.3
million in cash and cash equivalents and restricted cash as compared to $48.6
million in cash and cash equivalents and restricted cash as of December 31,
2008.  Restricted cash primarily consists of escrow accounts held by
lenders and resident security deposits, as required by law in certain
states.  Additionally, restricted cash as of March 31, 2009 also
included $0.3 million of funds held in escrow in connection with potential
development opportunities.
 
 As of
March 31, 2009, our short-term liquidity needs included, but were not limited
to, the following: (i) anticipated distribution payments to our common and
restricted stockholders totaling approximately $57.9 million based on an assumed
annual cash distribution of $1.35 per share based on the number of our shares
outstanding as of March 31, 2009, (ii) anticipated distribution payments to our
Operating Partnership unitholders totaling approximately $1.7 million based on
an assumed annual distribution of $1.35 per Common Unit and a cumulative
preferential per annum cash distribution rate of 5.99% on our Series A Preferred
Units based on the number of units outstanding as of March 31, 2009, (iii)
payment of approximately $51.1 million of fixed-rate mortgage debt scheduled to
mature in 2009, (iv) remaining development costs for Barrett Honors College in
2009, estimated to be approximately $36.6 million, and (v) funds for capital
improvements at acquired properties and other potential development
projects.  As of March 31, 2009, we had approximately $127.8 million
of outstanding variable rate construction debt and a $78.3 million balance
outstanding on our revolving credit facility, all of which is scheduled to
mature in 2009.  We expect to extend the maturity dates into 2010 for
the construction debt and revolving credit facility by exercising the respective
extension options available to us.  We expect to meet our short-term
liquidity requirements by (a) potentially disposing of properties, (b) borrowing
under our revolving credit facility, and (c) utilizing net cash provided by
operations.
 
 We may
seek additional funds to undertake initiatives not contemplated by our business
plan or obtain additional cushion against possible shortfalls.  We
also may pursue additional financing as opportunities arise.  Future
financings may include a range of different sizes or types of financing,
including the sale of additional debt or equity securities.  These
funds may not be available on favorable terms or at all.  Our ability
to obtain additional financing depends on several factors, including future
market conditions, our success or lack of success in penetrating our markets,
our future creditworthiness, and restrictions contained in agreements with our
investors or lenders, including the restrictions contained in the agreements
governing our revolving credit facility and term loan.   These
financings could increase our level of indebtedness or result in dilution to our
equity holders.
 
 Revolving
Credit Facility
 
 The
Operating Partnership has a $160 million revolving credit facility, which may be
expanded by up to an additional $65 million upon the satisfaction of certain
conditions.  The maturity date of the facility is August 17, 2009 and
can be extended 12 months through August 2010.  We continue to
guarantee the Operating Partnership’s obligations under the
facility.
  Availability
under the revolving credit facility is limited to an "aggregate borrowing base
amount" equal to the lesser of (i) 65% of the value of certain properties,
calculated as set forth in the credit facility, and (ii) the adjusted net
operating income from these properties divided by a formula
amount.  The facility bears interest at a variable rate, at the
Company’s option, based upon a base rate or one-, two-, three-, or six-month
LIBOR plus, in each case, a spread based upon the Company’s total
leverage.  Additionally, we are required to pay an unused commitment
fee ranging from 0.15% to 0.20% per annum, depending on the aggregate unused
balance.  As of March 31, 2009, the balance outstanding on the
revolving credit facility totaled $78.3 million, bearing interest at a weighted
average rate of 2.04% per annum, with remaining availability under the facility
(subject to the satisfaction of certain financial covenants) totaling
approximately $73.5 million.
 
 The terms
of the facility include certain restrictions and covenants, which limit, among
other items, the incurrence of additional indebtedness, liens, and the
disposition of assets.  The facility contains customary affirmative
and negative covenants and also contains financial covenants that, among other
things, require us to maintain certain minimum ratios of "EBITDA" (earnings
before interest, taxes, depreciation and amortization) to fixed
charges.  We may not pay distributions that exceed a specified
percentage of funds from operations, as adjusted, for any four consecutive
quarters.  The financial covenants also include consolidated net worth
and leverage ratio tests.  As of March 31, 2009, we were in compliance
with all such covenants.
  34
  Senior
Secured Term Loan
 
 On May
23, 2008, the Operating Partnership obtained a $100 million senior secured term
loan.  The secured term loan has an initial term of 36 months and can
be extended through May 2012 through the exercise of a 12-month extension
period.  The secured term loan bears interest at a variable rate, at
our option, based upon a base rate or one-, two-, three-, or six-month LIBOR
plus, in each case, a spread based upon the Company’s total
leverage.  On June 11, 2008, we borrowed in full from the secured term
loan and used the proceeds to fund a portion of the total cash consideration for
the GMH acquisition.
 
 On
February 23, 2009, we entered into two $50.0 million interest rate swap
agreements effective March 20, 2009 through February 20, 2012, which are both
used to hedge the Company’s exposure to fluctuations in interest payments on its
LIBOR-based senior secured term loan.  Under the terms of the two interest
rate swap agreements, we pay an average fixed rate of 1.7925% and receive
one-month LIBOR floating rate.  As a result of these two interest rate
swaps, we have effectively fixed the interest rate on our senior secured term
loan at 3.80%.  In the event that the swaps at any time have a
negative fair value below a certain threshold level, we could be required to
post cash into a collateral account pledged to the interest rate swap
providers.  See Note 10 in the accompanying Notes to Consolidated
Financial Statements contained in Item 1 herein for a more detailed discussion
of the Company’s derivative instruments and hedging activities.
 
 Distributions
 
 We are
required to distribute 90% of our REIT taxable income (excluding capital gains)
on an annual basis in order to qualify as a REIT for federal income tax
purposes.  Distributions to common stockholders are at the discretion
of the Board of Directors. We may be required to use borrowings under the credit
facility, if necessary, to meet REIT distribution requirements and maintain our
REIT status. The Board of Directors considers market factors and our Company’s
performance in addition to REIT requirements in determining distribution
levels.
 
 On April
24, 2009, we declared a first quarter 2009 distribution per share of $0.3375, to
be paid on May 11, 2009, to all common stockholders of record as of May 1,
2009.  At the same time, the Operating Partnership intends to pay an
equivalent amount per unit to holders of Common Units, as well as the quarterly
cumulative preferential distribution to holders of Series A Preferred
Units.
 
 Pre-Development
Expenditures
 
 Our
third-party and owned development activities have historically required us to
fund pre-development expenditures such as architectural fees, permits and
deposits.  The closing and/or commencement of construction of these
development projects is subject to a number of risks such as our inability to
obtain financing on favorable terms and delays or refusals in obtaining
necessary zoning, land use, building, and other required governmental permits
and authorizations  As such, we cannot always predict accurately the
liquidity needs of these activities.  We frequently incur these
pre-development expenditures before a financing commitment and/or required
permits and authorizations have been obtained.  Accordingly, we bear
the risk of the loss of these pre-development expenditures if financing cannot
ultimately be arranged on acceptable terms or we are unable to successfully
obtain the required permits and authorizations.  Historically, our
third-party and owned development projects have been successfully structured and
financed; however, these developments have at times been delayed beyond the
period initially scheduled, causing revenue to be recognized in later
periods.  As of March 31, 2009, we have deferred approximately $6.1
million in pre-development costs related to third-party and owned development
projects that have not yet commenced construction.
 
 Indebtedness
 
 As of
March 31, 2009, we had approximately $1,315.8 million of outstanding
consolidated indebtedness (excluding net unamortized debt discounts and debt
premiums of approximately $9.9 million and $5.1 million, respectively),
comprised of a $78.3 million balance on our unsecured revolving credit facility,
a $100.0 million balance on our secured term loan, $1,051.3 million in mortgage
and construction loans secured by our wholly-owned properties, $32.9 million in
mortgage loans secured by two phases of an on-campus participating property, and
$53.3 million in bond issuances secured by three of our on-campus participating
properties.  The weighted average interest rate on our consolidated
indebtedness as of March 31, 2009 was 5.16% per annum.  As of March
31, 2009, approximately 15.7% of our total consolidated indebtedness was
variable rate debt, comprised of our revolving credit facility and our Vista del
Sol and Villas at Chestnut Ridge construction loans discussed
below.
  35
  Wholly-Owned
Properties
 
 The
weighted average interest rate of the $1,051.3 million of wholly-owned mortgage
and construction debt was 5.36% per annum as of March 31, 2009.  Each
of the mortgage loans is a non-recourse obligation subject to customary
exceptions.  Each of these mortgages has a 30-year amortization, and
none are cross-defaulted or cross-collateralized to any other indebtedness. The
loans generally may not be prepaid prior to maturity; in certain cases
prepayment is allowed, subject to prepayment penalties.
  In August
2008, we completed the final stages of construction on Vista del Sol, an ACE
property.  The development and construction of Vista del Sol was
partially financed with a $100.0 million construction loan.  For each
borrowing we have the option of choosing the Prime rate or one-, two-, or
three-month LIBOR plus 1.45%.  The interest rate may be reduced to
LIBOR plus 1.20% once construction of the property is complete and certain
operations hurdles are met.  The loan requires payments of interest
only during the term of the loan and any accrued interest and outstanding
borrowings become due on the maturity date of December 27, 2009.  The
term of the loan can be extended through December 2011 through the exercise of
two 12-month extension periods.  As of March 31, 2009, the balance
outstanding on the construction loan totaled $97.7 million, bearing interest at
a weighted average rate of 1.76% per annum.
  In August
2008, we completed the final stages of construction on Villas at Chestnut Ridge,
an owned off-campus property.  The development and construction of
Villas at Chestnut was partially financed with a $31.6 million construction
loan.  For each borrowing we have the option of choosing the Prime
rate or one-, two-, three-, or six-month LIBOR plus 1.25%.  The loan
requires payments of interest only during the term of the loan and any accrued
interest and outstanding borrowings become due on the maturity date of June 4,
2009.  The term of the loan can be extended through June 2010 through
the exercise of a 12-month extension period.  As of March 31, 2009,
the balance outstanding on the construction loan totaled $30.1 million, bearing
interest at a weighted average rate of 1.81% per annum.
 
 On-Campus
Participating Properties
 
 Three of
our on-campus participating properties are 100% financed with $53.3 million of
outstanding project-based taxable bonds.  Under the terms of these
financings, one of our special purpose subsidiaries publicly issued three series
of taxable bonds and loaned the proceeds to three special purpose subsidiaries
that each hold a separate leasehold interest.  Although a default in
payment by these special purpose subsidiaries could result in a default under
one or more series of bonds, the indebtedness of any of these special purpose
subsidiaries is not cross-defaulted or cross-collateralized with indebtedness of
the Company, the Operating Partnership or other special purpose
subsidiaries.  Repayment of principal and interest on these bonds is
insured by MBIA, Inc.  The loans encumbering the leasehold interests
are non-recourse, subject to customary exceptions.
 
 Cullen
Oaks Phase I and Phase II loans are currently encumbered by mortgage loans with
balances as of March 31, 2009 of approximately $16.4 million and $16.5 million,
respectively.  In February 2007, we extended the maturity date of
these loans to February 2014.  The loans bear interest at a rate of
LIBOR plus 1.35% and required payments of interest only through May 2008 and
monthly payments of principal and interest from May 2008 through the maturity
date.  In connection with these loan extensions, we terminated the
existing interest rate swap agreement on the Cullen Oaks Phase I loan and
entered into a new interest rate swap agreement effective February 15, 2007
through February 15, 2014, that is designated to hedge our exposure to
fluctuations on interest payments attributed to changes in interest rates
associated with payments on the Cullen Oaks Phase I and Phase II
loans.  Under the terms of the interest rate swap agreement, we pay a
fixed rate of 6.69% per annum and receive a floating rate of LIBOR plus
1.35%.  Pursuant to the Leases, in the event the leasehold estate does
not achieve Financial Break Even (defined as revenues less operating expenses,
excluding management fees, less debt service), the applicable Lessor would be
required to make a rental payment, also known as the Contingent Payment,
sufficient to achieve Financial Break Even.  The Contingent Payment
provision remains in effect until such time as any financing placed on the
facilities would receive an investment grade rating without the Contingent
Payment provision.  In the event that the Lessor is required to make a
Contingent Payment, future net cash flow distributions would be first applied to
repay such Contingent Payments and then to unpaid management fees prior to
normal distributions.  We have guaranteed payment of this property’s
indebtedness.
 
 The
weighted average interest rate of the indebtedness encumbering our on-campus
participating properties was 7.17% at March 31, 2009.
  36
 Off
Balance Sheet Items
 
 As
discussed in Note 7 in the accompanying Notes to Consolidated Financial
Statements contained in Item 1 herein, we hold a 10% equity interest in two
unconsolidated joint ventures with mortgage debt outstanding of approximately
$342.4 million as of March 31, 2009.  Our Operating Partnership
serves as guarantor of this debt, which means we are liable to the lender
for any loss, damage, cost, expense, liability, claim or other obligation
incurred by the lender arising out of or in connection with certain non-recourse
exceptions in connection with the debt.  Pursuant to the  limited
liability company agreements of the joint ventures, the joint ventures agreed to
indemnify, defend and hold harmless the Operating Partnership with respect to
such obligations, except to the extent such obligations were caused by the
willful misconduct, gross negligence, fraud or bad faith of the Operating
Partnership or its employees, agents or affiliates.  Additionally, in
lieu of depositing required debt service escrow funds with the lender of the one
of the joint venture’s mortgage notes, the Company has provided an irrevocable
standby commercial letter of credit in the amount of $0.3
million.  The letter of credit was issued at inception of the joint
venture and expires one year subsequent to issuance, or earlier should the
property reach a debt service coverage ratio, as defined, of at least 1.20:1 for
a period of twelve consecutive months on a trailing basis.  The term
of the letter of credit will be automatically extended for one year periods
thereafter until such time the debt service coverage ratio reaches 1.20:1 or the
related mortgage note is repaid or refinanced.
 
 Funds
From Operations
 
 As
defined by NAREIT, FFO represents income (loss) before allocation to
noncontrolling interests (computed in accordance with GAAP), excluding gains (or
losses) from sales of property, plus real estate related depreciation and
amortization (excluding amortization of loan origination costs) and after
adjustments for unconsolidated partnerships and joint ventures. We present FFO
because we consider it an important supplemental measure of our operating
performance and believe it is frequently used by securities analysts, investors
and other interested parties in the evaluation of REITs, many of which present
FFO when reporting their results. FFO is intended to exclude GAAP historical
cost depreciation and amortization of real estate and related assets, which
assumes that the value of real estate diminishes ratably over time.
Historically, however, real estate values have risen or fallen with market
conditions. Because FFO excludes depreciation and amortization unique to real
estate, gains and losses from property dispositions and extraordinary items, it
provides a performance measure that, when compared year over year, reflects the
impact to operations from trends in occupancy rates, rental rates, operating
costs, development activities and interest costs, providing perspective not
immediately apparent from net income.
 
 We
compute FFO in accordance with standards established by the Board of Governors
of NAREIT in its March 1995 White Paper (as amended in November 1999 and April
2002), which may differ from the methodology for calculating FFO utilized by
other equity REITs and, accordingly, may not be comparable to such other REITs.
Further, FFO does not represent amounts available for management’s discretionary
use because of needed capital replacement or expansion, debt service obligations
or other commitments and uncertainties. FFO should not be considered as an
alternative to net income (loss) (computed in accordance with GAAP) as an
indicator of our financial performance or to cash flow from operating activities
(computed in accordance with GAAP) as an indicator of our liquidity, nor is it
indicative of funds available to fund our cash needs, including our ability to
pay dividends or make distributions.
 
 The
following table presents a reconciliation of our FFO to our net income
attributable to American Campus
Communities, Inc. and Subsidiaries:
 
 Three
      Months Ended March 31,2009
                        
                        
                        2008Net
      income attributable to American Campus Communities, Inc. and
      Subsidiaries
                        
                        $
                        277
                        
                        
                        $
                        4,909Noncontrolling
      interests
                        
                        
                        232
                        
                        
                        
                        408Loss
      from unconsolidated joint ventures (1)
                        
                        
                        554
                        
                        
                        
                        126FFO
      from unconsolidated joint ventures (1)
                        
                        
                        (39
                        )
                        
                        
                        (126
                        )Real
      estate related depreciation and amortization
                        
                        
                        19,732
                        
                        
                        
                        7,848Funds
      from operations (“FFO”)
                        
                        $
                        20,756
                        
                        
                        $
                        13,165FFO
      per share – diluted
                        
                        $
                        0.47
                        
                        
                        $
                        0.45Weighted
      average common shares outstanding –  diluted
                        
                        
                        44,031,602
                        
                        
                        
                        29,161,145
 
 (1)
                    Represents
      our share of the FFO from three joint ventures in which we are a
      noncontrolling partner.  Includes the Hampton Roads Military
      Housing joint venture in which we have a minimal economic interest as well
      as our 10% noncontrolling interest in two joint ventures formed or assumed
      as part of the company's acquisition of
GMH.
  37
  While our
on-campus participating properties contributed $6.9 million and $6.7 to our
revenues for the three months ended March 31, 2009 and 2008, respectively, under
our participating ground leases, we and the participating university systems
each receive 50% of the properties’ net cash available for distribution after
payment of operating expenses, debt service (which includes significant amounts
towards repayment of principal) and capital expenditures. A substantial portion
of our revenues attributable to these properties is reflective of cash that is
required to be used for capital expenditures and for the amortization of
applicable property indebtedness. These amounts do not increase our economic
interest in these properties or otherwise benefit us since our interest in the
properties terminates upon the repayment of the applicable property
indebtedness.
 
 As noted
above, FFO excludes GAAP historical cost depreciation and amortization of real
estate and related assets because these GAAP items assume that the value of real
estate diminishes over time.  However, unlike the ownership of our
owned off-campus properties, the unique features of our ownership interest in
our on-campus participating properties cause the value of these properties to
diminish over time.  For example, since the ground/facility leases
under which we operate the participating properties require the reinvestment
from operations of specified amounts for capital expenditures and for the
repayment of debt while our interest in these properties terminates upon the
repayment of the debt, such capital expenditures do not increase the value of
the property to us and mortgage debt amortization only increases the equity of
the ground lessor. Accordingly, when considering our FFO, we believe it is also
a meaningful measure of our performance to modify FFO to exclude the operations
of our on-campus participating properties and to consider their impact on
performance by including only that portion of our revenues from those properties
that are reflective of our share of net cash flow and the management fees that
we receive, both of which increase and decrease with the operating measure of
the properties, a measure referred to herein as FFOM.
 
 Funds
From Operations—Modified for Operational Performance of On-Campus Participating
Properties:
 
 Three
      Months Ended March 31,2009
                        
                        
                        2008Funds
      from operations
                        
                        $
                        20,756
                        
                        
                        $
                        13,165Elimination
      of operations of on-campus participating properties and unconsolidated
      joint venture:Net
      income from on-campus participating  properties
                        
                        
                        (2,014
                        )
                        
                        
                        (1,682
                        )Amortization
      of investment in on-campus participating properties
                        
                        
                        (1,090
                        )
                        
                        
                        (1,069
                        )FFO
      from unconsolidated joint venture (1)
                        
                        
                        236
                        
                        
                        
                        12617,888
                        
                        
                        
                        10,540Modifications
      to reflect operational performance of on-campus participating
      properties:Our
      share of net cash flow (2)
                        
                        
                        292
                        
                        
                        
                        359Management
      fees
                        
                        
                        323
                        
                        
                        
                        308Impact
      of on-campus participating properties
                        
                        
                        615
                        
                        
                        
                        667Funds
      from operations – modified for operational performance of on-campus
      participating properties (“FFOM”)
                        
                        $
                        18,503
                        
                        
                        $
                        11,207FFOM
      per share – diluted
                        
                        $
                        0.42
                        
                        
                        $
                        0.38Weighted
      average common shares outstanding – diluted
                        
                        
                        44,031,602
                        
                        
                        
                        29,161,145
 
 (1)
                Our
      share of the FFO from the Hampton Roads Military Housing unconsolidated
      joint venture is excluded from the calculation of FFOM, as management
      believes this amount does not accurately reflect the company's
      participation in the economics of the transaction.(2)
                50%
      of the properties’ net cash available for distribution after payment of
      operating expenses, debt service (including repayment of principal) and
      capital expenditures. Represents amounts accrued for the interim
      periods.
  This
narrower measure of performance measures our profitability for these properties
in a manner that is similar to the measure of our profitability from our
services business where we similarly incur no initial or ongoing capital
investment in a property and derive only consequential benefits from capital
expenditures and debt amortization. We believe, however, that this narrower
measure of performance is inappropriate in traditional real estate ownership
structures where debt amortization and capital expenditures enhance the property
owner’s long-term profitability from its investment.
  38
  Our FFOM
may have limitations as an analytical tool because it reflects the unique
contractual calculation of net cash flow from our on-campus participating
properties, which is different from that of our off campus owned
properties.  Additionally, FFOM reflects features of our ownership
interests in our on-campus participating properties that are unique to us.
Companies that are considered to be in our industry may not have similar
ownership structures; and therefore those companies may not calculate a FFOM in
the same manner that we do, or at all, limiting its usefulness as a comparative
measure. We compensate for these limitations by relying primarily on our GAAP
and FFO results and using our modified FFO only supplementally.
 
 Inflation
 
 Our
leases do not typically provide for rent escalations.  However, they
typically do not have terms that extend beyond 12 months. Accordingly, although
on a short term basis we would be required to bear the impact of rising costs
resulting from inflation, we have the opportunity to raise rental rates at least
annually to offset such rising costs. However, a weak economic environment or
declining student enrollment at our principal universities may limit our ability
to raise rental rates.
 
 Item 3.    Quantitative and Qualitative Disclosures
About Market Risk
 
 Market
risk is the risk of loss from adverse changes in market prices and interest
rates.   Our future earnings and cash flows are dependent upon
prevailing market rates.  Accordingly, we manage our market risk by
matching projected cash inflows from operating, investing and financing
activities with projected cash outflows for debt service, acquisitions, capital
expenditures, distributions to stockholders and unitholders, and other cash
requirements.  The majority of our outstanding debt has fixed interest
rates, which minimizes the risk of fluctuating interest rates.  Our
exposure to market risk includes interest rate fluctuations in connection with
our revolving credit facility and variable rate construction loans and our
ability to incur more debt without stockholder approval, thereby increasing our
debt service obligations, which could adversely affect our cash
flows.   No material changes have occurred in relation to market
risk since our Annual Report on Form 10-K for the year ended December 31,
2008.
 
 Item 4.    Controls and Procedures
 
 Evaluation
of Disclosure Controls and Procedures
 
 As
required by SEC Rule 13a-15(b), we have carried out an evaluation, under
the supervision and with the participation of management, including our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures as of the end of
the quarter covered by this report. Based on the foregoing, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures for the quarter covered by this report were effective at the
reasonable assurance level.
  There has
been no change in our internal controls over financial reporting during our most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal controls over financial reporting.
 
 PART II.   OTHER INFORMATION
 
 Item 6.    Exhibits
 
 ExhibitNumber
                        
                        Description of Document31.1
                        
                        Certification
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.31.2
                        
                        Certification
      of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.32.1
                        
                        Certification
      of Chief Executive Officer Pursuant to 18 U. S. C. Section 1350, as
      Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.2
                        
                        Certification
      of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.
  39
  SIGNATURES
  Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
 
 Dated:
                  May
      1, 2009
 
 
 
 AMERICAN
      CAMPUS COMMUNITIES, INC.By:
                            /s/ William C. Bayless,
      Jr.William C. Bayless,
      Jr.President
      and Chief Executive OfficerBy:
                            /s/ Jonathan A.
      GrafJonathan A.
    GrafExecutive
      Vice President,Chief
      Financial Officer and
Treasurer
    40