American Campus Communities Management Discusses Q4 2013 Results - Earnings Call Transcript

| About: American Campus (ACC)

American Campus Communities (NYSE:ACC)

Q4 2013 Earnings Call

February 13, 2014 11:00 am ET

Executives

Ryan Dennison

William C. Bayless - Chief Executive Officer, President, Executive Director and Chairman of Executive Committee

Greg A. Dowell - Chief Operating Officer and Senior Executive Vice President

James E. Wilhelm - Executive Vice President of Public-Private Transactions

William W. Talbot - Chief Investment Officer and Executive Vice President

Jonathan A. Graf - Chief Financial Officer, Executive Vice President, Treasurer and Secretary

Daniel Perry - Executive Vice President of Capital Markets

Analysts

Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division

Derek Bower - UBS Investment Bank, Research Division

Jeffrey Pehl - Goldman Sachs Group Inc., Research Division

Nicholas Joseph - Citigroup Inc, Research Division

Karin A. Ford - KeyBanc Capital Markets Inc., Research Division

David Bragg - Green Street Advisors, Inc., Research Division

Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division

Ryan Meliker - MLV & Co LLC, Research Division

Nicholas Yulico - UBS Investment Bank, Research Division

Operator

Good morning, and welcome to the American Campus Communities Fourth Quarter and Year-End 2013 Conference Call. [Operator Instructions] Please note, this event is being recorded. And I would now like to turn the conference over to Ryan Dennison, Vice President of Investor Relations. Please go ahead, sir.

Ryan Dennison

Thank you, Emily. Good morning, and thank you for joining the American Campus Communities 2013 Fourth Quarter and Year-End Conference Call. The press release is furnished on Form 8-K to provide access to the widest possible audience. In the release, the company has reconciled the non-GAAP financial measures to those directly comparable GAAP measures in accordance with Reg G requirements.

If you do not have a copy of the release, it's available on the company's website at americancampus.com in the Investor Relations section under Press Releases. Also posted on the company website in the Investor Relations section, you'll find a supplemental financial package. We're also hosting a live webcast for today's call, which you can access on the website with the replay available for 1 month. Our supplemental analyst package and our webcast presentation are one and the same. Webcast slides may be advanced by you to facilitate following along.

Management will be making forward-looking statements today, as referenced in the disclosure in the press release, in the supplemental financial package and in SEC filings. Management would like to inform you that certain statements made during this conference call, which are not historical fact, may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995.

Although the company believes the expectations reflected in any forward-looking statement are based on reasonable assumptions, they are subject to economic risks and uncertainties. The company can provide no assurance that its expectations will be achieved, and actual results may vary.

Factors and risks that could cause actual results to differ materially from expectations are detailed in the press release and from time to time, in the company's periodic filings with the SEC. The company undertakes no obligation to advise or update any forward-looking statements to reflect events or circumstances after the date of this release.

Having said all that, I would now like to turn the call over to Bill Bayless, Chief Executive Officer, for his opening remarks. Bill?

William C. Bayless

Good morning, and thank all of you for joining us as we discuss our Q4 and full year 2013 results. As many of you know, 2013 was a challenging year for American Campus as we undertook a large-scale integration that was uniquely complex. And then we were simultaneously integrating properties from 7 different operating platforms that were managed by 7 different companies. As we discussed many times last year, we believe that the disruption associated with that unique complexity was the cause of the slow start that we had to pre-leasing last year and the subsequent rental rate reductions and expense overages, which ultimately caused us not to meet the expectations that we had set for the market. Unfortunately, missing those expectations overshadowed what was truly another solid year for the company, culminating with FFOM per share increasing 16.2% over the prior year.

As I stated our last call, the close of the third quarter of 2013 represented the end of that integration and the corresponding disruption. The Q4 results and the pre-leasing progress that we're about to discuss were produced by the same ACC team using the same ACC systems and the same historical strategies that we have always implemented. The only change was the absence of that unique complex integration that had caused last year's disruption. We now hope to demonstrate just how strong our industry fundamentals are.

With that, I'll turn it over to Greg Dowell, our COO, to discuss our operational results and to provide a pre-leasing update.

Greg A. Dowell

Thanks, Bill. We are pleased to report internal growth in both our Q4 and full year 2013 results. If you turn to Page 6 of the supplemental package, you will see that our fourth quarter same-store NOI increased by 0.8% over Q4 2012. This was the result of a 0.9% increase in revenue and an increase in operating expenses of just 1%. These results are somewhat adversely impacted by the increase in property taxes at our 2012 development properties, which have now been fully assessed. These properties become part of our same-store grouping in the fourth quarter of their first full calendar year of operation, and the first full year tax assessment negatively impacts same-store NOI growth in that quarter.

When excluding this increase in property taxes on the development properties, our quarterly same-store expenses actually decreased by 1.5%, and our quarterly same-store NOI increased by 2.7%. You will also see our full year same-store NOI growth was 0.7% as a result of a 1.7% increase in revenues and a 2.7% increase in expenses. It is worth noting that since our IPO in 2004, this is our ninth straight year of positive same-store growth in the areas of rental rates, rental revenue and NOI.

The 2.7% increase in expenses is largely the result of marketing expense overages due to our slow releasing velocity last year and an expected increase in property taxes. The annual same-store marketing expenses increased $2.4 million, which is slightly less than projected in our revised guidance due to an efficient marketing spend in Q4.

On Page 7 of the supplemental, you will see our new disclosure providing annual detail of the major line items that make up our same-store operating expenses. We believe this disclosure provides greater insight into the nature of our operating expenses and will provide analysts and investors with a better understanding of our annual operating results in the future.

The most notable line item for 2013 is the 26.7% increase in marketing expenses over the prior year. As you know, we increased our marketing spend to address the slower velocity we experienced in our 2013 lease-up. We were pleased that during Q4, our focus on solid execution of historical marketing activities allowed us to achieve higher leasing velocity with an efficient marketing spend that was largely in line with our historical levels for that quarter.

We ended the calendar year at the same-store marketing spend of $205 per bed and a total portfolio spend of $208 per bed. This is compared to our 2012 normalized run rate of $162 per bed, which, when adjusted for 2% inflation over 2 years, would be $169 per bed. Our 2014 marketing expense budget is $187 per bed, showing that we expect to eliminate more than half of last year's overage in 2014. We would then expect to return to an inflation-adjusted $172 per bed as we move into 2015.

As you can see on Page 11 of the supplemental, occupancy at our total wholly owned portfolio was 96.8% as of December 31 with the same-store wholly owned properties reporting 96.7% compared to 96.8% for the same date prior year.

While the 2014/15' academic year is shaping up to be a very good year, we will continue to expect only modest revenue increases in the first 2.5 quarters of 2014, resulting in projected same-store NOI growth for the next 2 quarters that will likely range from slightly negative in Q1 to slightly positive in Q2. Based upon a successful fall lease-up, we would hope to see a return to normalized and improving revenue and NOI growth in Q4, setting the stage for 3% to 6% NOI growth in 2015 and improvement in our operating margin.

If you turn to Page 12 of the supplemental, we will review our leasing progress for the upcoming 2014/15' academic year. As of Monday, February 10, our total same-store wholly owned portfolio was 57.7% applied for and 50.9% leased compared to 49% applied for and 44.5% leased for the same date prior year.

While we are pleased to be 640 basis points ahead in leasing, we would like to emphasize that given our final fall 2013 lease-up of 96.7%, this pre-leasing velocity will naturally diminish as we continue to the end of the leasing season. Our 2014 Q4 same-store portfolio currently has a projected rental run rate increase for the 2014/2015 academic year of 2.1%. As we move through the leasing season, we would utilize our LAMS system to maximize revenue via the proper combination of rental rate and occupancy.

We're pleased to see that our developments being delivered for occupancy in fall of 2014 have been very well received in their respective markets. You will see on Page 17 of the supplemental that these assets are 78% pre-leased with 3 of the new development properties already over 90%. You will also see that the Stanworth Commons, our ACE development on the campus of Princeton University, is not yet leasing. This project is a faculty housing project, and the assignment process to live in this community commences much later than the student housing -- than the typical student housing lease-up cycle.

And now I will turn the call over to Jamie to discuss our on-campus investment activity.

James E. Wilhelm

Thank you, Greg. During the quarter, our on-campus team continued to focus on delivering our current developments, conducting pre-development activities relating to existing transactions, qualifying new on-campus ACE investment opportunities and pursuing new third-party fee development engagements. As you can see on Page 19 of the supplemental, our fall 2014 and 2015 ACE delivery pipeline remains on schedule. Our owned on-campus projects at Northern Arizona University, Drexel University, Texas A&M and both phases of our faculty and staff project at Princeton University account for 3,021 beds and a combined development cost of $305.8 million.

With regard to our proposed 460-bed, $49 million ACE investment on the University of California Health Sciences Campus, predevelopment activities remain ongoing. The commencement of the project construction and anticipated delivery will be determined later this year and are directly related to the cumbersome City of Los Angeles entitlement process.

Now continuing with our on-campus third-party fee developments, our fall 2014 deliveries include a 715-bed graduate residential community on the campus of Princeton University and a 567-bed apartment community at West Virginia University in Morgantown. The West Virginia community is structured as an on-campus participating property the company and the university share in net distributable cash flow. Both projects are well under construction, and we anticipate deliveries in the third quarter of this year.

As previously announced, during the quarter, the company executed an interim services agreement with the University of Toledo for the development of an approximately 500-bed modern residence hall that will house the university's honors program. The proposed project is expected to commence construction in the second quarter of 2014 for a fall 2015 delivery.

And finally, subsequent to quarter's end, the company executed an interim services agreement with Texas A&M University-Corpus Christi for the development of an approximately 500-bed modern apartment-style project. The project represents the first phase of an expected 2,000-bed master-planned community, and we expect to commence construction in second quarter of 2014 for a fall 2015 delivery.

We continue to experience strong demand for university public-private partnerships and are optimistic we'll be able to grow our on-campus development pipeline. The pipeline for both ACE-owned and third-party fee developments at universities remains robust.

Having summarized our on-campus activities, I'd like to turn the presentation to William to discuss our overall investment activity.

William W. Talbot

Thanks, Jamie. 2013 was a measured year of external growth for the company. Starting with acquisitions. During the fourth quarter, we closed on the remaining $110 million pipeline we announced earlier in the year, totaling 1,159 beds and 44,000 square feet of retail. U Club on Fry Street serves students at the University of the North Texas in Denton and was built in 2012. While Cardinal Towne serves students of the University of Louisville, was built in 2 phases between 2011 and 2012.

These 2 core properties are currently 99% occupied, offer highly competitive units and amenity packages that are both on unmatched pedestrian to campus locations within their tier 1 University markets. We are targeting a pro forma 5.9% nominal and 5.5% economic cap rate for the 2 acquisitions. However, residual adjustments from acquisition accounting for all 4 of the 2013 acquisitions will reduce their 2014 FFOM contribution by $885,000.

As we discussed on the last earnings call, in the near term, we are primarily focused on our higher-yielding owned and mezzanine presale development pipeline and on funding that pipeline with capital recycling via dispositions.

With regards to owned development, we continue to make progress on our 5 2014 deliveries that total 3,047 beds and $230 million in development cost. And we are projecting a stabilized nominal yield of 7% for the 2014 owned deliveries.

For fall 2015, we have begun construction on the 734 bed owned off-campus development across the street from the University of Oregon in Eugene. The mixed-use project will feature highly competitive unit plans and amenities and a pedestrian location. With the addition of the Oregon property, our announced fall of 2015 owned developments now consist of 4 projects totaling 2,925 beds and $314 million in development costs, and we are targeting a stabilized overall nominal yield in the range of 6.75% to 7% for the 4 owned developments.

Subsequent to year end, we completed the acquisition of the Boulder Outlook Hotel located across the street from the campus of the University of Colorado for $9.3 million. The hotel will continue to be operated by a third-party hotel manager until approximately year-end 2014, at which time we will demolish the hotel and construct a 400-bed Class A student housing project with an anticipated delivery for fall 2016. Our total owned developments for fall 2014 through 2016 now total 10 projects, 6,372 beds over $500 million in development, all at an average distance of 1/10 of a mile to their respective tier 1 universities.

With regards to the strategic dispositions, we completed the sale of our 481-bed University Mills property during the fourth quarter for a gross sales price of $14.5 million. The property, serving students at the University of Northern Iowa, a tier 2 university market with an enrollment of just over 12,000, was 87% occupied for academic year '13, and the sale represented a 5.7% economic and 6.4% nominal cap rate on in-place academic year '13 revenue and trailing '12 expenses.

The company paid off an existing $8.1 million loan at closing. Subsequent to year end, we completed the sale of the 484-bed Hawks Landing, a 20-year-old property serving students at Miami University in Oxford, Ohio, for a gross sales price of $17.25 million. The asset was 97% occupied, and the sale represented a 6.4% economic and 6.9% nominal cap rate on in-place revenue and trailing '12 expenses. The sale includes the assumption of $15.6 million of in-place debt.

Since June 2013, the company has sold 7 assets, totaling 4,563 beds and gross sales proceeds of $201.4 million. Through our strategic dispositions, we have continued to fine tune the quality of our portfolio. Of the 7 assets we sold, 3 were a result of strategically exiting tier 2 university markets.

Two assets were related to aging capital investment concerns being 23 years old. One was located in a submarket without barriers to entry at Georgia Southern University. And Northgate Lakes at UCF was sold in order to strategically reinvest proceeds in our 2014 development Plaza on University located in a irreplaceable premier location within the market. For the remainder of 2014, we are targeting $100 million to $200 million of dispositions to occur in the fourth quarter, and we'll update the market as we make progress in that area.

With regards to private market valuations and institutional interests in the student housing sector, CB Richard Ellis' student housing group recently reported that during 2013, 122 properties traded totaling over $3.5 billion of student housing product. The 3 public REITS accounted for only 8% of all acquisitions during the year and with institutional capital significantly increasing their investment in the sector during 2013. There continues to be strong demand for new institutional capital investment sector heading into 2014.

In our discussions with leading brokers and sellers currently in the market, we have been told that demand is strong for one-off and portfolio offerings and that core pedestrian product is attracting qualified offers in the area of 5% to 5.25% cap rate range, while drive properties in tier 1 markets are in the mid-6% range. These cap rates remain unchanged from what we have seen over the past 18 months.

With that, I will now turn it over to Jon to discuss our financial results and 2014 guidance.

Jonathan A. Graf

Thanks, William. For the fourth quarter of 2013, we reported total FFOM of $70.7 million or $0.66 per fully diluted share. Excluding $2.1 million of acquisition expenses, fourth quarter 2013 FFOM increased 15.3% to $0.68 per fully diluted share, which met our internal expectations. This compares to FFOM of $60.4 million or $0.59 per fully diluted share for the comparable quarter in 2012, which excludes acquisition expenses of $3.3 million.

Full year 2013 FFOM, excluding acquisition expenses of $2.4 million, was $239 million, a 10.9% increase in FFOM per fully diluted share to $2.24. This was above the midpoint of our 2013 FFOM guidance range of $2.26 to $2.20. As compared to the prior year, the 2013 results benefited from the 65 growth properties placed into service over the last 18 months, which was partially offset by the previously communicated integration from our major 2012 acquisitions, in which we incurred greater-than-anticipated marketing expenses, corporate travel-related integration and increased repairs and maintenance.

As a result of the timing of the 6 dispositions this year, FFOM contribution from these properties was $6 million less this year as compared to 2012. Additionally, the weighted average share count reflects the impact of the 2 equity offerings completed in association with the 2 portfolio acquisitions in 2012.

For third-party fees, we were near the high end of our 2013 guidance range of $10.5 million to $11.4 million, as we earned $11.3 million in third-party fees during 2013, consisting of $7.5 million in management fees, $2.5 million in development-related fees and $1.3 million of cash fees from our WVU development, which is accounted for as an on-campus participating property.

Third-party expenses for the year were $10.8 million, which was above our communicated guidance of $10 million, primarily due to transfer taxes paid by the company in connection with our 2013 conversion of a wholly owned property from off-campus into an on-campus ACE structure via a ground lease with Drexel University.

Corporate G&A for the year of $16.7 million was below communicated guidance of $16.9 million. This was primarily due to a $1.7 million decrease in executive cash incentive, in which approximately 33% of this impacted corporate G&A, with the rest allocated to the various business segments.

As of December 31, 2013, the company's debt to total asset value was 43.4%, and the net debt to run rate EBITDA was 7.5x. During 2013, we completed our inaugural $400 million bond offering of 10-year notes at a 3.79% yield. We entered into a new $250 million term loan. We expanded our revolver by $50 million and extended the maturity date of both our revolver and our existing $350 million term loan. And we also paid off $82 million of maturing fixed-rate debt. This allowed us to fund our 2013 growth opportunities while maintaining strong credit ratios.

Additionally, the average term to maturity of our outstanding debt went from 4.2 years to 4.8 years. Fixed-rate debt maturities for 2014 are $147 million or 5.5% of the company's total indebtedness. Management believes the remaining capacity on our credit facility, along with cash generated from operations and property dispositions and the ability to raise funds in an unsecured bond market, provide ample capital for our wholly owned development projects being delivered in 2014 and 2015.

As of year end, we had approximately $3.4 billion in unencumbered asset value, which is over 55% of the company's total asset value. Our total interest expense for 2013, excluding $5.5 million from the on-campus participating properties, was $72.6 million compared to $48.8 million in 2012, and the company's cash interest coverage ratio for the year was 3.3x.

Interest expense for 2013 includes a net increase of $17.7 million related to debt assumed from 2012 acquisitions and $11.3 million from our unsecured notes issued in early 2013. Additionally, interest expenses is net of approximately $14 million in debt premium amortization and $9.6 million in capitalized interest related to owned projects in development.

We are providing guidance for FFO in the range of $2.31 to $2.39 per fully diluted share for 2014, FFOM in the range of $2.27 to $2.35 per fully diluted share and 2014 per share net income in the range of $0.48 to $0.56 per fully diluted share. Pages 22 and 23 of the supplemental detail the components of 2014 guidance.

Some of the major guidance assumptions to note are: For total owned property NOI, excluding the on-campus participating properties, our guidance includes a range of $356.6 million to $362.6 million. No acquisitions are assumed within this range, and at the low end of the NOI range, we assume lost NOI of $5 million from $217 million of dispositions, all of which are assumed to occur in the fourth quarter of 2014, except for the recently completed $17 million sale of Hawks Landing. At the high end, we assume lost NOI of $3 million from $117 million of dispositions. It should be noted that the 2013 results include $9 million in NOI and $7.3 million of FFOM contribution from dispositions completed during 2013.

For interest expense, excluding the on-campus participating properties, we're projecting $87.6 million to $89.9 million, net of capitalized interest. The interest expense range is primarily driven by our assumption with regard to interest rate fluctuations, the timing and size of dispositions and the timing of an anticipated mid-year unsecured bond offering.

For G&A, we are projecting $18.4 million at the midpoint for 2014 compared to $16.7 million during 2013. This increase is related to increased payroll and benefits expense, including cash incentive compensation and restricted stock award amortization, increases in health care costs, increased public company costs and increased property taxes on our land bank that is not currently under development.

The remaining cash fees of $1.1 million from our WVU development are reflected in 2014 guidance within our $4.5 million to $4.9 million range of contribution from on-campus participating properties. Based on our current shares, units and stock awards outstanding, we assume a weighted average share count of 107.1 million shares.

With that, I'll turn it back to Bill.

William C. Bayless

Thank you, Jon. In closing, I'd like to discuss the fundamentals of our sector. As you've just heard, we produced positive results in what many consider the worst year in American Campus' history as a public company. Same-store growth in rental rate, rental revenue and NOI for the ninth straight year combined with double-digit earnings per share growth. If this represents our worst, then it only speaks to the strength and vitality of this sector, as there are a few companies or sectors of real estate that have produced 9 consecutive years of growth in each of these areas, including through the economic downturn.

And as we talked about in our Investor Day last September in Austin, the industry -- this industry is truly in its infancy, and the development that is taking place represents modernization in a sector that was neglected for decades. Modernization does not mean oversupply. Modernization means opportunity. On that note, in our 76 same-store markets, we have new supply coming in fall of 2014 in 41 of those markets. The new supply totals 43,525 new beds or roughly 3.3% of the total enrollment in those 41 markets. In those 41 markets, we are currently leased at 56.1%, ahead of the overall portfolio average at a rental rate of 2.4% growth, also ahead of the total portfolio average.

Just as you saw here in Austin on Investor Day, these numbers demonstrate that core pedestrian assets in tier 1 university markets are not negatively impacted. As new modern products replace substandard products, this should be forced out of the marketplace.

And finally, with regard to private market demand and valuation, as William discussed, we saw record private market sales approaching $3.5 billion in 2013; and more importantly, we're being told that bona fide offers for core pedestrian assets in tier 1 markets are coming in at 5% to 5.25% cap rates in a rising interest rate environment at a time when the 3 public companies are largely on the sideline. Bottom line, our industry fundamentals are fully intact and as strong as they have ever been.

With that, we will open it up for Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question is from Alexander Goldfarb of Sandler O'Neill.

Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division

First, on, obviously, a great -- it was awesome to see the results out last night. And also, Daniel, thanks for Page 23, the guidance breakout, very helpful. A few quick questions here, first off, on the same-store revenue, you guys are up 1.6% to 2.5%, and yet, if you think about it, 2/3 of the year is already sort of prebaked at 1.1% from last year's pre-leasing. So can you just help get to the -- get how you get to that range of 1.6% to 2.5%? And if that's excluding a chunk of properties, if you could just comment on what your expectation is for the group of properties that may not be in that bucket.

Ryan Dennison

Yes, no, Alex, that's for the same-store group, which is reflected on Page 9 of the supplemental also, a new page this quarter that we're providing to build up to the 2014 annual same-store group. That in -- for the first 8 months of the year, as you referenced, rental revenue growth should be about 1% based on the prior year's lease-up. We're assuming a 2% rental rate increase at the midpoint for the fall, with about a 20-basis-point increase in occupancy. So a total of 2.2% increase in rental revenue for those last 4 months of the year. When you combine those, that's about 1.4% for the year. But remember, we also have the filling of the revenue deferral hole from last fall, which brings that up to 2% for the year in total.

Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division

Okay. And then the next question is, Bill, you spoke about the issue of the complexity of having 7 different property managers as far as why the preleasing was off last year, and that core ACC on its own is fine on preleasing. As you guys go forward, presumably at some point, you'll be back in the market for large portfolios, should we think that anytime you guys do a large trade like that, there's going to be some pre-leasing disruption? Is that sort of inevitable whenever you integrate multiple management platforms or is there a view internally as you chat to the folks in the field that there's a way to not have it be so disruptive?

William C. Bayless

Yes. And Alex, I would first point to all prior integrations that took place before this unique one, and then, of course, the company is fully skilled at integrating large M&A transactions or large portfolio of transactions. And it was the unique aspect of the 7 different platforms, 7 different companies and literally all of the truly time and effort and differentiation of process that you have to implement in coming off of those platforms. Now we did learn valuable lessons in terms of how to approach that if we ever would have to do that again, although we do think that's a really unique situation you won't see often when we're undertaking major growth. I think also, independent private funds that heard of the issues that we had off of that also have looked at it and said strategically, "Hey, this may be an impediment to our ability to sell." And we've seen a little bit of consolidation of how many management companies people are out there are using because they realize that created something that was very high profile in this space. And so I think that, one, as it relates to normal and ordinary M&A and large-scale transactions that you saw us do when going from $300 million to $6 billion, we are still extremely well skilled in the blocks, no proficiency whatsoever in that area. If we find ourselves in situations down the road where we indeed have to undertake those unique, complex integrations, we have changed structuring internally in terms of bifurcating team functions of who continues to work on the core lease-up in business and who handles those unique aspects. And so we don't see it in any way, shape or form being something that we should. Now let me say this also though, but we as the management team and I hope this came across in our conversations last year at our Investor Day, we attempted to be very, very reflective in terms of how we analyze in the future in identifying the unique aspects of those integrations and planning for any impacts that may occur. But I don't think this is something you're going to see systemically repeat itself whenever we have a large M&A deal.

Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division

Okay. And then just the final question is the $5 million cost saves target, is that a goal or you guys already have $5 million of identified savings? And then is that something that we should back end weight or you think we'll see that ratably through the year?

Ryan Dennison

Alex, yes, it's definitely -- it's not a pie in the sky number. Those are areas that we've specifically identified that we can eliminate. For example, about $1 million or so of that $5 million is acquisition integration costs that we incurred throughout that integration period. Obviously, those will not be recurring. Within marketing, we have gone through with a fine tooth comb, the stuff that we did throughout 2013 as part of our marketing efforts and identified specific advertisements, different online and print advertisements and what we don't think is appropriate to do going forward. And some of that, it's not just eliminating, it's reallocating and being more efficient with the dollars. So those are definitely identified amounts. As far as the timing throughout the year, you would certainly expect that it's going to be more heavily weighted towards the second and third quarter when we were still leasing late into the leasing season, much more than we ever have in the past. And as we talked about on our Investor Day, a much more expensive portion of the marketing and leasing cycle. As Greg mentioned in his prepared remarks, one thing to keep in mind when you think about our NOI -- same-store NOI growth as you go through this year, it's going to be an easier comp in the second quarter. First quarter, not as much. We didn't have quite as many -- quite as much overspending in the first quarter, and so that's why we say, there's a chance with the 1% revenue growth that we can be slightly negative on same-store NOI in that first quarter, where the second quarter is where you have a little easier comps and we expect it to be more slightly positive.

Operator

Our next question is from Derek Bower of ISI Group.

Derek Bower - UBS Investment Bank, Research Division

How soon do you expect the preleasing spread to begin to diminish versus last year? And does the better preleasing number mean that you'll attempt to push rate even more in certain markets, or are you just focused on achieving 97%-plus occupancy as fast as you can, and could even reduce rate to get there?

Jonathan A. Graf

And Derek, this is something where I think if you go back over the last 9 years and listen to what we have consistently said in terms of our ultimate goal every year to maximize rental revenue through that combination of occupancy and rate. Certainly we have seen that we have better pricing power and more ability to push and maintain rates the earlier that we can drive with velocity. And so we certainly will continue through Q1 to maintain as much of that spread as we can, but there has to be a natural diminishment. And so I mean, I would not expect to get onto the next call and to have the same spread. I would expect it to start to be cut into in each quarter. As I don't want create that there's something wrong in the market diminishing and it has to, we can't finish the year 105% leased based on the current overage. But we will focus on, as Daniel said, continuing to try to drive velocity through Q1 to where the real opportunity is that we have fewer beds left in Q2 and Q3. And when you have fewer beds left, then you are able to hold onto that rate. And again, you guys saw the inverse of that last year.

Derek Bower - UBS Investment Bank, Research Division

Great. And then as a follow-up, now that you have a handle on preleasing so far, where do you go from here? Do you see internal growth from any of the primary focus for the next year or 2, or does your attention soon shift back to external growth assuming the stock price allows you to do so?

William C. Bayless

Well, first and foremost, and again as we talked about, even if the stock price wasn't where it is today and it was more attractive to go and grow, we're doing right now exactly what we need to as an organization. And then after undertaking that large integration, we -- it is very appropriate to do just what we have done and to focus in, and make sure that we are well geared to create internal value creation. So that is indeed priority #1. We also, as William talked about, we've got a great development pipeline in place, there are 590 million identified through 2016. And I think one of the most exciting parts of this story that sometimes doesn't get really, really highlighted, when you look at the quality of hundreds of million of assets we've been bringing online each and every year and continue to through this development, it is the core of the core, the best pedestrian locations, the best markets. And when you couple that with the dispositions that we're undertaking, the fine-tuning of the asset quality is just wonderful at this time. Certainly, given the infancy of this sector, down the road, there's going to be great opportunities for us to continue to grow through acquisitions and to create the type of value that we have. Right now, we have always prided ourselves on being a patient organization and doing what we should do and making strategic moves when we should. And so certainly, market conditions, our own stock's performance, coupled with our priorities internally, will dictate when we strategically adjust our business plans.

Derek Bower - UBS Investment Bank, Research Division

Got it. And then just lastly, circling back on the discussion of cap rates, what percentage of your NOI now would you deem to be core pedestrian in that 5% to 5.25% cap rate range, and what percentage is that second bucket of 6% to 6.5% cap rate range?

William C. Bayless

We were -- especially when you look at the growth properties that we have announced in the development, and then backing out the dispositions that are typically as you're seeing non-core tertiary and older, we are looking more in the area of 80%-plus of our portfolio is being located inside of those core earnings that we talk about. And more importantly, those are our very high priced assets that when you talk about a percentage of NOI, it is actually starting to get above those levels.

Operator

Our next question is from Jeffrey Pehl at Goldman Sachs.

Jeffrey Pehl - Goldman Sachs Group Inc., Research Division

I just want to turn back to leasing. For the leases you've signed so far this year, can you provide maybe a little more color on how many were renewals and how many were new leases?

William C. Bayless

Absolutely. And it's actually -- I love it because the more you all want to dig down into the leasing numbers, just better the story is and very consistent with some of the things we talked about last year. When you look at this year's current lease up, of the 50.9% that we are currently leased, 21.2% of that is from existing renewal tenants and 29.7% is from new. That compares to last year, 20.3% of that occupancy being from renewals. So we're 90 bps ahead in renewals. We are currently at the 29.7% compares last year to 24.2%. So we are 550 bps ahead in new. Now, I don't know if you remember on Investor Day, but we had talked specifically that the market that we felt that we had lost market share through the disruption was where we target new freshmen, or what we refer to as next year's rising sophomores, which we said we felt made up the bulk of the 310 bps that we were behind in leasing. In this year, in that group, we were 350 bps ahead. And then also we're 200 bps ahead in rising juniors and seniors too. And so statistically, it pretty much played out exactly the way we fell last year. I think the most exciting thing, renewals are right on track. They were right on track last year, and so this really speaks to the new penetration in attracting new residents.

Jeffrey Pehl - Goldman Sachs Group Inc., Research Division

Great. And how much does that mix between those 2 change over the course of the year?

William C. Bayless

Typically, you will see the renewal stabilize between 30% and 35%. And we tend not to set targets internally as to what is a successful renewal rate. And then sometimes success may not be offering preferred pricing to drive renewals, but rather if you can fill it in the open market at a higher rate, you may price more aggressively. But typically, you will see that renewal number end up between 30% and 35%.

Operator

Our next question is from Nick Joseph of Citigroup.

Nicholas Joseph - Citigroup Inc, Research Division

Does the large private market demand for assets make you more likely to sell additional assets this year?

William C. Bayless

Yes, and this is something as we've talked about with you all in the past. We want to be better recyclers. Dan Burck, the independent Chairman of our Board is sitting here. And every time I talk about this, he's over there shaking his head. Yes, and that the Board has really over the last 3 to 4 years, driven us to be strategic to be better recyclers of our own capital. And I think it as William went through that script today, I think you'll see that it's not just recycling our capital, but really strategically recycling the way we are able to sell those properties that were part of larger portfolios that don't meet some of that more stringent criteria that is associated with everything that we developed that we're reinvesting that money into. And so it is indeed an opportunity for us to continue to recycle and we see that being an important part of what we do ongoing.

Nicholas Joseph - Citigroup Inc, Research Division

And then now, what's the current expected initial yield on the development pipeline, I guess both for '14 and '15?

William W. Talbot

Yes, this is William. For '14, it's 7%, and for '15, we're looking at a range between 6.75% and 7%.

William C. Bayless

And I do want to comment. When you look at the -- one of the most exciting things, and you folks as we get to do some property tours with you I know, one of the most exciting things taking place right now in the American Campus is anything that we are putting a shovel in the ground on is absolutely the best locations, the best core products and just fantastic marketplaces.

Operator

And our next question is from Karin Ford of KeyBanc Capital Markets.

Karin A. Ford - KeyBanc Capital Markets Inc., Research Division

Just another question on the disposition front. Given over $500 million in the pipeline today, and what you said was a pretty robust pipeline of additional opportunities. Is the $100 million to $200 million of dispositions in the guidance this year, is that enough to fund, or are you guys thinking -- and does that include levering up to help fund those expenditures?

William C. Bayless

First, Karin, the beauty is as of those development come online, the $590 million number that I mentioned is through 2016 openings. And so you have of course a staggered funding over the next couple of years of those. And so when you are doing $200 million, $150 million to $225 million a year, you do have the ability to match fund through that without having to lever up too much.

Karin A. Ford - KeyBanc Capital Markets Inc., Research Division

Okay. But do you think that there's possibly that you could exceed the $200 million upper end of the range?

William C. Bayless

Each and every year it's always possible. We go through as part of our annual process of setting rental rates and looking at supply perspective. For example, William mentioned the property was sold to Georgia Southern, to where more of than saying there's a specific target we look at where is this strategically proven to maximize and harvest value in an asset and redeploy it somewhere else. And so there may be years where that's a $115 million or may be years it's $350 million. We will let the process drive the prudent level versus just a numerical target.

Karin A. Ford - KeyBanc Capital Markets Inc., Research Division

Same question just on expenses, you mentioned the marketing cost per bed going from $205 in 2013 down to $187 in your budget for 2014. How much risk do you think there is to the leasing velocity with that reduction and does fourth quarter expense result give you confidence that you're not going to lose velocity by trailing that down?

William C. Bayless

We were really pleased that when you look at our fourth quarter spend on marketing, it was pretty much right in line with prior years' Q4 spend. So again, it's where we talk about the focus on implementation and not having that disruption versus it wasn't going out and spending the bunch of more money. Certainly, as we go into the first quarter of next year, as I mentioned, we're going to be -- we continue to be a little bit conservative. We haven't eliminated going all the way back to a more historical run rate like Greg talked about, which would be $170 in 2014, $175 in 2015, and that we want to be conservative and how we're going about it. We want to make sure that we continue to drive that velocity. But certainly, we think the target that we have set this year is very realistic to achieve.

Karin A. Ford - KeyBanc Capital Markets Inc., Research Division

Great. And Daniel, I know you mentioned, you've started to break down the $5 million reduction. Can you just break it down fully to what all the different components are of it on your expense line?

Daniel Perry

Sure. Just going from the 208 total portfolio spend that we had in 2013, down to the 183 on our total portfolio basis will be about $2 million. When you look at repairs and maintenance, that was an area that we talked about throughout the year, we were spending some money on during 2013. We think that we can cut that by about $1.2 million. Now that's $1.2 million that you're going to have areas of your repairs and maintenance that you have just normal inflationary growth. And so normally, where you would expect to see some growth in your repairs and maintenance, we're expecting a few hundred thousand dollars of savings overall resulting on a same-store basis resulting in that net savings of $1.2 million or so. The rest of it is about $2 million, $2.3 million is in acquisition and integration cost, and the marketing and leasing and other corporate professionals traveling out to the properties to help them with the leasing season, with this being a more normalized leasing season, we don't expect to have as much travel there, so that's going to represent the remainder of it.

Operator

Our next question is from Dave Bragg of Green Street Advisors.

David Bragg - Green Street Advisors, Inc., Research Division

A question about the composition of the same-store pool, looking at Page 12. I see that the new same-store pool is based on rentable beds of roughly 88,000 because over the past couple of quarters, you've rolled in the 2012 acquisitions, and in 2Q '13 that same-store pool was about 60,000 beds. So as we talk about the pre-leasing progress, can you provide the spread on that prior same-store pool too?

Greg A. Dowell

Yes, the legacy properties?

William C. Bayless

Yes, we sure can, Dave. When you look at the legacy assets, we are running about 2.7% ahead of last year. We are running 0.7% ahead of 2 years ago and 0.8% ahead of 3 years ago. Those numbers are little different because we've had some dispose in that category this is what you would have seen, both in campus acquisition in Kayne, we're double-digit in terms of our velocity in those areas. One of the other things that we look at is we track in -- what we call informal leasing groups. If we take all of the properties that currently make up that same-store and look at leasing data that we have for all of them, if you look at a 2-year same-store property group and we're 5.1% ahead, and if you look at a 3-year same-store property group and we're 5.2% ahead. And so virtually, in every metric this year, renewal, new, by every category property, we are ahead not only of last year, but prior years.

David Bragg - Green Street Advisors, Inc., Research Division

That's very helpful. And a related question is, when you think about that legacy pool, what would be the same-store revenue growth expectations for that pool in 2014 as compared to your guidance for the entire new same-store portfolio?

Jonathan A. Graf

I don't know that we have that broken down right in front of us right now, Dave. That's certainly something that we can get back to you. As you would expect, the Campus Acquisitions portfolio only getting to -- I think it was 92.2% in occupancy last year. We have good opportunity there. The Kayne Anderson portfolio was just over 96%, so good opportunity there. So -- and then obviously not quite as much occupancy upside in the legacy portfolio. I don't think you're going to see drastic ranges in the rental rate growth, maybe a little better on the Kayne and campus portfolios, but...

William C. Bayless

You see the legacy right around those 2, the Kayne and campus a little above that.

Operator

Our next question is from Paula Poskon of Robert W. Baird.

Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division

I have a couple of questions on the transaction environment for William. Would you say that you're not being active in the acquisition market is more about where your stock price has been or more about the quality or the volume of product coming to market, and do you feel like you've missed out on any really great opportunities because the stock price wasn't there to support it?

William W. Talbot

Hey, Paula, as far as missing out on opportunities, we still are actively in the market looking at things out there. But don't really think we missed opportunities, we obviously have been focusing internally and actively chasing acquisitions, but you look at the 2 acquisitions we did do at the end of the 2013, very high quality, very core. However, that continued focus on integration is where we're going to making our focus through '14 and we'll continue to evaluate those opportunities.

William C. Bayless

Yes. It's first internal value creation. Secondly, when you look -- certainly we have some -- we've got to think about the capital sources we currently have available and right now we have been lining up those own developments and those much higher-yielding mezzanine in presale deals. And again, at some point in time, we'll certainly look at our cost of capital, what the market is out there on the acquisition front, and when it does make sense, look at it.

Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division

Are you guys still seeing, considering presale arrangements and are those opportunities waning at all, or are private developers taking their foot off the gas pedal?

William W. Talbot

Hey, this is William. No, we see as many of those, if not more, than we have in the past. People are very attracted by that pre-sale structure and we're very attracted by it because we can take operational lift -- the leasing risk that we'd like on these corporate SG&A assets, and get a very attractive yield for doing so. And we see as many of those as we've seen in the past, if not more.

William C. Bayless

And we've also been very pleased, is that folks have been bringing them to us early enough that we have been able to be more involved in the product design, material specifications to where they're really representing much more of an ACC product and standard, which makes it more marketable, more operationally efficient and better CapEx numbers. And so we've been getting a little bit of both worlds in diminishing some of the development delivery risk, while not sacrificing what would be a typical product standards for us.

William W. Talbot

And a good thing to add to that, I will say is we look at our development pipeline, our presale pipeline, that is, by far, the best product we're seeing in the market. So that is where our focus has been.

Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division

And what are you hearing in the world of academia about their propensity to continue outsourcing their housing functions? Are you seeing still accelerating opportunities set for ACE projects?

William C. Bayless

And we would say, it's remained consistent with what we've said in the past. First, in terms of wholesale outsourcing of entire campuses, we believe you're going to see very few and far between. And when schools are looking at all the alternatives related to privatization, I'll let Jamie speak to what kind of pipeline of vibrancy is right now. It is going to continue to be more of the incremental benefit to their campus adding new products, some redevelopments. There will be some opportunities to take over campuses. Right now, we've completely taken over 2 or 3 where we run the whole operations, but it will be more of the ASU model from our perspective. Jamie, you want to talk about kind of the growth right now, what's out there?

James E. Wilhelm

Sure. Good morning, Paula. We continue to see plenty of interest from all sectors of the higher education community, both public and private. We're chasing presently -- we're involved in more than a dozen procurements and direct negotiations for a wide variety of schools, very similar to our experience in the past about 40% of those, we would say we can identify early as ACE candidates of the balance of those would be third-party development opportunities. And many of the ACE candidates that we are continuing to pursue represent large multiple phase opportunities as well. So we're not seeing any diminishment in the interest by colleges and universities in utilizing private sector assistance.

Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division

And just one final question for you, Bill. How are the internal structure changes that you made in terms of elevating Jennifer and putting asset management with Greg, how is that working out relative to your expectations and what's different?

William C. Bayless

It is absolutely fantastic. And Greg Dowell, Jennifer Beese and Jim Hopke, first of all, who are all seasoned veterans, who all have a wonderful working relationship, and it has just brought a great focus, invigoration and strategic thrust to everything that we're doing. Greg, as you've all had great experience to, as a very strategic analytical individual. Jennifer Beese, is just in for those of you who will meet her in the future, is just a dynamo of positivity, and culture, and accountability and driving results. And Jim Hopke, as we mentioned when we did the realignment, his entire historical background is in operations and asset management. So I have to tell you, the 3 of them together and then also rounded out team with functional support from Kim Voss and George De Cardenas who are on the team. It has just been -- I see what they are taking in -- putting in place in analyzing how we do business. But if someday this is -- and -- I'm not, not giving projections, but if someday this is a $20 billion company with 350 properties, we're laying the groundwork and infrastructure to be able to assimilate into that.

Operator

Our next question is from Ryan Meliker of MLV & Co.

Ryan Meliker - MLV & Co LLC, Research Division

Most of my questions have been answered. But just a couple of quick ones. With regards to the sales and marketing spend, and I think the color you gave at 1Q NOI growth is probably going to be negative, and 2Q will click positive. Is there some seasonality in the marketing spend that we should expect? Do you see typically a lot more in the 3Q than you do other years? Just trying to understand exactly how we should balance that out within our models.

William C. Bayless

Ideally, how you would expect it to balance out, Q4 is actually a pretty efficient marketing spend because there's a lot of effort focused on renewal and then also we do -- without giving away trade secrets we do some very efficient direct target marketing that is -- I know we mentioned on Investor Day, it's the most efficient dollars we spend. And it's great when you can just kind of penetration that we did. As you get into Q1, you're entering a little bit more of a competitive environment as it seems to be more folks are really gearing up competitors their marketing activity. And so you end up with a more aggressive spend in Q1 than you do in Q4. And that success in your Q1 spend and velocity is really key because your success there then really dictates how much you can pull back the reigns as you move into Q2 and Q3. And so where you really expect to see savings in diminishment of cost is, in putting yourself in a position to where you're just doing normal and ordinary in Q2 and Q3, where your better improving velocities is a big key to that.

Ryan Meliker - MLV & Co LLC, Research Division

And then -- so that's helpful. And then when we look at 2013 and we see marketing spend up 27% on the year, it sounds like what you said was 4Q was roughly flat to the prior year. Where was 3Q? Was that up? We're talking 50%? Any color there?

Jonathan A. Graf

I'd have to check, Ryan. It was certainly a high quarter. And as you may remember in our earnings call, we were above what we had expected when we revised guidance in 3Q. That's -- given what -- where we were in the leasing cycle, and we were really trying to make up -- continue to make up that variance to the prior year, and there was a lot of spending that had to be done during that quarter -- that in the normalized pace, you just wouldn't spend. So I'd have to check and get back to you on that. But...

Ryan Meliker - MLV & Co LLC, Research Division

That's fair. But it sounds like, from what you guys are saying that the majority of that $2 million in savings you're expecting this year is probably going to be in 2Q and 3Q.

Jonathan A. Graf

Yes.

William C. Bayless

Yes, a lot of it will be.

Ryan Meliker - MLV & Co LLC, Research Division

And then the only other question I was hoping you guys would be able to provide some color on is, we've seen over the past few months several large student housing portfolios hit the market. Just wondering if you guys have any color in terms of how those assets transpire? Those assets sales proceeded. Obviously the REITs haven't really been involved in the markets, and we've seen cap rates move higher than say a year ago when similar quality portfolios would have hit the market, or any changes at all from a valuation perspective that you can color -- that you can give us color on?

William C. Bayless

Yes. And this is what William touched on and I discussed in my closing comments. In our conversations with brokers and sellers, and this is what we think is one of the strongest indications of the strength of the sector right now is that we are being told that those product offerings on the market that for core pedestrian asset in Tier 1 markets there receiving bona fide offers between 5% and 5.25%, which are right in line with where this market has been for 2 years. And so I think when you talk about the 3 publics being largely on the sideline through 2013 in this process, and then you're in a rising interest rate environment, the fact that you are seeing student housing cap rates not move at all, for core pedestrian Tier 1, again, speaks to the interest in the amount of capital that wants to be in this space.

Jonathan A. Graf

Ryan, just a follow-up. We did pull some information real quick while we were sitting here, you were asking about the marketing spend for Q3. It was about 50%, just a little less than that in Q2, but similar type spend where in Q1, you are only 12% over the prior year. And that's on a same-store basis.

Operator

[Operator Instructions] And our next question is from Nick Yulico of UBS.

Nicholas Yulico - UBS Investment Bank, Research Division

I just want to go back to the issue you guys had, I think in the third quarter, where it was a deferred revenue issue where you booked essentially -- you had an impact from deferred revenue in the third quarter from acquisitions, that were done, I think, in 2012. And I think if I remember correctly, the benefit for 2014 was going to be about $4 million to your GAAP revenue. Is that right?

Jonathan A. Graf

$3.8 million.

Nicholas Yulico - UBS Investment Bank, Research Division

Sorry?

Jonathan A. Graf

It was $3.8 million.

Nicholas Yulico - UBS Investment Bank, Research Division

$3.8 million?

Jonathan A. Graf

Yes, it's the benefit that you were just referencing.

Nicholas Yulico - UBS Investment Bank, Research Division

Okay. So that's included in your same-store revenue guidance, right?

Jonathan A. Graf

Correct. That's what we were talking about earlier in the call that if you go through the 1% for the first 8 months of the year, driven off of last year's lease up and then the 2.2% rental revenue that we're currently projecting at the midpoint for this fall's lease up, for the last 4 months of the year, you get about 1.4% increase in same-store rental revenue. With the positive impact of the $3.8 million revenue deferral hole being filled, that takes you up to a 2% for the year of rental revenue increase.

Nicholas Yulico - UBS Investment Bank, Research Division

Okay. So it's about something like a 50, 60 basis point benefit to your same-store revenue this year.

Jonathan A. Graf

Correct.

Nicholas Yulico - UBS Investment Bank, Research Division

Okay. And then -- just one other thing. Is it possible to get the marketing expenses per quarter in 2013?

Jonathan A. Graf

On a per-bed basis or...

Nicholas Yulico - UBS Investment Bank, Research Division

No, just on a total dollar amount, or in particular definitely for the fourth quarter?

Jonathan A. Graf

Yes, hang on. We will get them for you here. We have the data on the table in front of us. We're just moving through all the papers.

Nicholas Yulico - UBS Investment Bank, Research Division

And then I just have one other question on the expense side. Is there any other issue with your accounting treatment of expenses where you guys are -- I mean, you guys are always booking expenses on a cash basis or is there any sort of issue where you're booking -- if you're incurring marketing expenses for leases in 2013 that don't take place until 2014. Is there any sort of expense recognition issue?

Greg A. Dowell

No, everything that we book is on an accrual basis. So if it relates to, if you go to the year end as a 12/31/'13, anything that we incurred right into marketing was accrued as of year end, so it's on an accrual basis, not a cash basis.

Nicholas Yulico - UBS Investment Bank, Research Division

Okay. And then just the fourth quarter marketing dollars.

Greg A. Dowell

Yes, we're looking at that up right now.

Jonathan A. Graf

Nick, let us follow-up with you on that just to make sure I don't give you incorrect numbers on a quarterly basis.

Nicholas Yulico - UBS Investment Bank, Research Division

Yes, no, that's fine. I'm just trying to figure out how much of your marketing spend was in second half of the year in 2013, and how much of that might have related to leasing for essentially this year.

Jonathan A. Graf

I mean, obviously, in the second half of the year, I'd say that the last quarter is primarily -- last 1.5 quarters is going to be related to the new leasing, the first 2.5 quarters is related to last year. So -- let us get back to you with those numbers.

Nicholas Yulico - UBS Investment Bank, Research Division

Okay. I guess I'm just trying to figure out, is I mean, you guys had outsized marketing expenses in 2013, and some of that benefit is flowing through to your leased statistics for 2014. So --

William C. Bayless

Well, all of '13 does not flow through at all for the benefit of '14. The only quarter that of marketing spend that benefits this lease up is our Q4 number. And in Q4, our marketing spend was right in line with historicals, $37 to $39 per bed. And so the Q4 spend that has produced the leasing results that you see in front of you was that historical -- with levels consistent with our Q4 historical numbers. There was not an excess of spend.

Nicholas Yulico - UBS Investment Bank, Research Division

Okay. Yes, it would be helpful to get the quarterly numbers. You guys did a great job on the full year property expense items, but there's no quarterly numbers. So...

Jonathan A. Graf

Yes, let me -- I actually have that now real quick Nick, I'm sorry. So if you look at throughout the year and I'll get to the concept that you're talking about the benefits, and I'm not sure I didn't hear Bill's discussion on benefits to this current leasing statistics. It was about $2.7 million in Q1, $3.2 million in Q2, about $2.6 million in Q3 and then about $1.4 million in Q4. So what's important for you to realize is that most of that leasing velocity for the '14-'15 academic year that we're presenting today is based on or driven by that marketing spend in Q4, the $1.4 million. Those extra dollars spent in Q1, 2 and 3, those higher dollars spend were all driving the '13, '14 lease up. And so this current leasing traffic that we're talking about has nothing to do with that spend from earlier in the year.

William C. Bayless

Yes, I think one of the most impressive facts of this call that I hope does come out in that comment is that the leasing numbers that you see before you today for next year are based on more of a normalized historical Q4 marketing spend.

Operator

And this concludes our question-and-answer session. I'd like to turn the conference back over to Bill Bayless for any closing remarks.

William C. Bayless

Well, folks, we thank you sincerely for joining us. As we officially close out 2013, I think that I would say the year overall was uncharacteristic of what you had expected from American Campus and received over the last 9 years. We are very pleased that, that complex integration is behind us. I hope that what you saw today is a return to what you have always seen from American Campus in the 8 years prior. And we certainly look forward to continuing to finish out the lease-up strong. We've got a lot of wood to chop in delivering that and in getting our portfolio to position both in occupancy and rental rates, and finalizing all of our expense control efforts back to normalized efforts so that you start to see that consistent 3% to 6% same-store NOI growth as we move into 2015. We look forward to seeing many of you at some of the investor conferences that are upcoming and then talking to you in the next call. Thank you so much.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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