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American Campus Communities Inc (NYSE:ACC)
Q2 2020 Earnings Call
Jul 21, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning and welcome to the American Campus Communities' Second Quarter 2020 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Ryan Dennison, Senior Vice President of Capital Markets and Investor Relations. Please go ahead.

Ryan Dennison -- Investor Relations

Thank you.

Good morning and thank you for joining the American Campus Communities' 2020 second quarter conference call.

The press release was furnished on Form 8-K to provide access to the widest possible audience. In the release, the Company has reconciled the non-GAAP financial measures to those directly comparable GAAP measures in accordance with Reg G requirements. Also posted on the Company website in the Investor Relations section, you will find an earnings materials package, which includes both the press release and a supplemental financial package. We are hosting a live webcast for today's call, which you can access on the website with the replay available for one month. Our supplemental analyst package and our webcast presentation are one and the same. Webcast slides may be advanced by you to facilitate following along.

Management will be making forward-looking statements today as referenced in the disclosure in the press release, in the supplemental financial package and in SEC filings. The management would like to inform you that certain statements made during this conference call which are not historical facts may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934 as amended by the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forward-looking statement are based on reasonable assumptions, they are subject to economic risks and uncertainties. The Company can provide no assurance that its expectations will be achieved, and actual results may vary. Factors and risks that could cause actual results to differ materially from expectations are detailed in the press release and from time to time in the Company's periodic filings with the SEC. The Company undertakes no obligation to advise or update any forward-looking statements to reflect events or circumstances after the date of this release.

Having said that, I'd now like to introduce the members of senior management joining us on the call: Bill Bayless, Chief Executive Officer; Jim Hopke, President; Jennifer Beese, Chief Operating Officer; William Talbot, Chief Investment Officer; Daniel Perry, Chief Financial Officer; Kim Voss, Chief Accounting Officer; and Jamie Wilhelm, EVP of Public-Private Partnerships.

With that, I'll now turn the call over to Bill for his opening remarks. Bill?

Bill Bayless -- Chief Executive Officer

Thank you, Ryan.

Good morning, and thank all of you for joining us as we discuss our Q2 2020 financial and operating results and provide a comprehensive update related to the current and potential impacts of the COVID-19 pandemic on our business.

As we discussed on our first quarter call, from the outset of this black swan event, our overriding objective has been to do the right thing by all of our stakeholders and, as we reiterated in our earnings press release, to follow the eight principal objectives we established to guide us through this crisis. Consistent with those objectives, our communities under the leadership of our field staffs have continued to operate and serve our residents while adhering to the CDC's guidelines and complying with local, municipal and state guidelines.

Our corporate team members have also adapted well to the new work environment and have continued to support our field staffs and to advance all of our strategic business objectives. On behalf of the entire executive team, I'd like to thank all American Campus team members for their commitment, hard work and perseverance over the last four months. I truly believe that we have collectively done some of the best work in our Company's 27-year history during what has certainly been its most challenging period.

And with many of our team members still working remotely, we want to acknowledge and take our hats off to all our working parents that are playing the roles of an ACC team member, teacher, camp counselor and parent. The next generation of ACC team members appear to be learning a lot about our business for mom and dad each day. I'd also like to acknowledge and thank our Board of Directors for their engagement, guidance and the meaningful support they have provided during this time.

As you know, at the outset of this pandemic, consistent with our Company values and the previously mentioned eight guiding objectives, we made a pledge that no resident would go without a home because of an inability to pay rent on a timely basis. We also committed to be compassionate to the financial hardships that our residents and their parents may be experiencing due to COVID and the corresponding government shutdowns. And we committed to be the best partner possible to our long-term ACE university partners.

Staying true to our pledge and these commitments did indeed cause short-term financial impacts that are reflected in the quarter. At our off-campus apartment communities and those on-campus apartment communities that American Campus leases in the open market, on a monthly average basis for April, May and June, 93.7% of our residents made their rent payments. For those that were not able to meet their financial obligations due to hardship, through our resident hardship program we provided nearly $9 million of direct financial relief to more than 6,500 of our residents and their parents. We also provided an additional $15 million of financial relief to students and parents at our ACE on-campus communities where leasing administration, rent collections and residence life are administered by our university partners.

In addition, our waiving of fees associated with the payment and collection of rent resulted in more than $2 million of budgeted revenues not being collected during the quarter. As the team will discuss, this $24 million in financial relief and the waiver of fee income makes up the large majority of our diminished revenue for the quarter. We were able to offset a portion of this through expense reductions that did not diminish our ability to deliver quality service to our residents. With the majority of our current in-place leases ending in the weeks ahead and a new academic year about to begin at universities across the nation, unlike multifamily residents, the financial position and buying power of the student renter has the potential to improve somewhat.

As many of you will recall from your own college years or from being parents of college students, each year students are eligible to apply for needs-based financial aid in the form of grants, scholarships and student loans. In the spring and summer of 2019, when those financial aid assessments were being completed for the current academic year, the US economy was at or near all time highs, with unemployment for nearly every demographic group being at all-time lows.

Incomes from the favorable economic conditions were likely reflected in the students' applications for financial aid based on their and their parents' financial position at that time. As such, when COVID hit in March of 2020, in the middle of this academic year, many of those students and parents saw their income significantly diminish without the benefit of financial aid support.

By contrast, as students have applied for financial aid in the spring and summer of 2020 for the upcoming academic year, those students and parents experiencing financial hardship due to the pandemic are now likely to qualify for more financial aid than they received in the prior year. We believe this needs-based increase in financial aid likely occurs in every US recession and is perhaps one of the reasons the student housing industry has been so resilient over the years during times of macroeconomic stress.

As we look forward to the next academic year, while we do not believe there will be a full return to normalcy in the fall of 2020, we are cautiously optimistic at this time, given the following four variables.

One, universities' focus on policies and procedures to promote a safe environment in the delivery of their academic curriculum, facilitating a return to campus with some component of in-person instruction. As reported in the College -- in the Chronicle -- excuse me, as it reported in the Chronicle of Higher Education, at this time, 63 of our 68 universities served are conducting some component of in-person classes. And it's worth noting, we also continue to have leasing activity of property serving the five universities that have announced predominantly online curriculum delivery, with our four same store properties at these schools being 90% leased and with potential no shows and request for reletting currently representing only 5% potential diminishment in occupancy.

Two, universities now having available data on how COVID impacts the 18 to 22-year-old student demographic and having an improved understanding of how modern apartment style student housing and in-suite bath residence halls facilitate a student's ability to sanitize their own living environment and to isolate in households of two to four residents in times of outbreak.

Three, student sentiment with regard to a desire to be in the college environment with their peers versus at home with mom and dad even if instruction is being delivered predominantly online.

And four, the continued incremental improvement we see in our overall leasing data, coupled with well above normal velocity compared to the same period prior year with regard to traffic, applications, leases and renewals for the last three, 10 and 20 days at our open market properties as of July 17.

As you saw in last night's release, with a range of five to 11 weeks left before the commencement of classes, we are now 90% pre-leased for the upcoming academic year, only 340 basis points behind the prior year. While the variance to prior year increased from the 230 basis points in our May 31 leasing update, it is worth noting that the variance to prior year at our open market leasing properties have decreased since that time. And when you review page S8 in our supplemental, the three, 10 and 20-day velocity trends in traffic, applications, leases and renewals would suggest that variance to the prior year should continue to decrease for that core category of properties.

I'd now like to further break down our cautious optimism in terms of the ongoing risk and opportunities that may negatively or positively impact our final leasing numbers. First focusing on risk. There are three normal and ordinary risk categories that we routinely manage in each and every annual lease-up. Those components are: one, renewal skips; two, students who have asked us to attempt to relet their accommodations so that they may be released from their financial responsibility; and three, no shows. In all three of these risk categories, each year it is our goal to relet prior to the beginning of classes any accommodations that become available due to any of these three reasons.

A renewal skip is a current period leaseholder that has also signed a renewal lease for the upcoming academic year, but has vacated their apartment and quit paying current rent, thus having skipped out on their current lease and the future lease. Given the definitive actions that they have taken and the certainty that they are not returning for the next academic year, these students are actively removed from our pre-leasing statistics and are not counted as leases in our pre-leasing reports. Thus, they are not counted in as leases in the 90.1% reported in this earnings release. Thus far, throughout this lease-up, we have had 178 renewal skips, which is consistent with our historical levels.

With regard to potential no shows and relet request, we commenced our no show management and reletting process in late May, early June versus our normal timing in July in an attempt to ferret out, earlier than usual, the number of students who may not be planning to show up in the fall as well as to proactively identify students who wish to have us help them release their accommodations. These potential no shows and relet leases are included in our pre-leasing numbers as they have always been at this time in the lease-up.

Our normal and ordinary annual process is to diligently attempt to release accommodations subject to both no show and relet request until the very end of the lease-up process. At the very end of the annual lease-up process, we then remove from our final leasing statistics any actual no shows and unsuccessful relets that also never took possession of their accommodations and essentially became a no show.

As we have commented to the market over the years, we typically only lose a total of 35 basis points to 60 basis points of final occupancy, with that net loss always having been reflected in the final leasing statistics we report each year. To be clear, our final fall lease-up occupancy average of 97.5% over the years has always been net of the impacts of the process as we just discussed.

We've also often commented over the years that we believe one of the reasons our fall occupancies typically exceed the industry average by 200 basis points is our diligent administration of this process versus our peers. As part of this year's efforts to expedite this process, we have undertaken an exhaustive communication process to facilitate engagement with our residents, giving them the opportunity to let us know if there is a possibility that they are not coming. We do not proactively ask directly, are you going to take possession of the unit or are you planning to no show. But rather, we undertake communication and discussions related to the steps and actions required with regard to roommate matching, move-in and other coordinating informational items. This process includes a series of email communications to each resident and their guarantor as well as an attempt to call and actually speak to each resident guarantor.

At our properties leased in the open market, we currently have a total of 72,009 leases for fall, with 28,057 being returning renewal residents that have already taken -- already have possession of their units and 43,952 being new incoming leases, with this latter category representing a greater no show risk. In addition to our standard email protocols, which again were implemented earlier than usual this year, we, as of this date, have made a total of 64,029 phone calls and successfully have had direct in-person dialog with 68% of our new incoming leases and 20% of our returning renewals.

At this time, our numbers do reflect an increase over the prior year's potential no show and requested relet activity. While we do know some portion of this increase is due to COVID, we do not yet know to what degree the increase over the same day prior year is directly due to our efforts to expedite the process. As of yesterday, July 20, we have identified 689 potential no shows as compared to 135 in the prior year. With regard to relet request, we currently have 1,563 for the current year as opposed to 956 in the prior year. The combined current year total potential no show relet at this time represents approximately 230 basis points of potential lost occupancy versus 110 basis points in the prior year.

In addition, historically, the no show -- the number of no shows typically increase in the first week of August in concert with the first rent installment being due. As an example, last year, the 135 potential no shows as of July 20 hit a high of 446 on August 5 of last year. Through our normal processes, we successfully managed the final impact to only 38 basis points of diminishment due to actual no shows and successful reletting. We will closely monitor rent payments and increases in potential no shows during the first week of August to determine if historical or above normal increases occur or if our efforts to expedite these processes did in fact accelerate identification of potential no shows and relets earlier than usual.

Well, as of July 20, the combined no show and relet net variance to last year's is 1,161, representing 120 basis points of potential lost occupancy. The ability to relet both no show and relet request in the COVID environment will likely be more challenging. This year, with fewer properties being leased and in many cases -- I'm sorry, this year, with fewer properties being fully leased and in many cases not having a wait list to facilitate this process, we will have to rely mostly on increased traffic, applications and leasing velocity to the prior year that we previously discussed to backfill these potential no shows and relet requests.

With regard to opportunities that may further accelerate our leasing velocity beyond historical levels in the late stages of our lease-up, I'd like to discuss universities' fall housing de-densification activities due to COVID. As we have discussed earlier in the summer, of the approximately 470,000 on-campus beds in the 68 owned markets we serve, over 180,000 of those beds are largely in older traditional residence halls with community bathrooms where as many as 20 to 40 students share common sinks, toilets and showers in small confined spaces, a less than ideal product with regard to consumer preference and the ability to control sanitization to minimize the spread of viruses.

With many universities looking to de-densify this product type by converting double bedrooms to singles, thus cutting in half the number of students sharing these common restroom and bathing facilities, the potential existed for on-campus capacity to be reduced by as much as 90,000 beds. Based upon our tracking of these de-densification activities by the universities we serve, at this time, 48 of the 68 universities served are de-densifying their on-campus housing, resulting in a reduction of 45,800 on-campus beds.

In addition, a total of 50 of the 68 universities are taking an additional 9,735 on-campus beds offline to use as quarantine housing should a second wave of coronavirus occur, resulting in an actual total reduction of more than 55,500 beds on campus this fall. As universities are in the final stages of administering these plans and given the fact that to date we have not yet seen a positive variance in velocity in the 48 markets where de-densification is occurring as compared to the 20 where it is not, we are hopeful that we have yet to see the additional off-campus demand that yet may occur.

With regard to on-campus densification impacting our own portfolio via compliance with any mandates covering on-campus university housing, we're pleased to report that we have only 1,061 beds impacted at this time, representing only 110 basis points of capacity lost to our portfolio's designed beds.

I'd also like to briefly touch on the average rental rate increase for the upcoming academic year. At this time, the 90.1% of leases in place are at an average rent of $807 per bed for a 1.6% increase over the prior year in place average rent. Whether or not that rate growth increases, decreases or stays largely intact depends upon the rent levels associated with the mix of remaining vacant beds leased, the rent levels associated with leases ultimately not reflected on our final leasing statistics due to final no shows and relapse.

With that, I'll turn it over to Jennifer to discuss our results further and how we have adjusted our operations in response to COVID.

Jennifer Beese -- Executive Vice President, Chief Operating Officer

Thanks, Bill.

As expected, this quarter the operations team was focused on our response to and preparations for operating the portfolio under eight core objectives as outlined by Bill last quarter addressing COVID-19. Page S5 of the supplemental highlights our financial performance, which was impacted on the revenue side by rent relief to our residents made either directly or through our university partnerships, followed by wait fees, revenues foregone in our summer camp and conference business and increased reserves for bad debt for our residents. This resulted in property same-store revenues decreasing by 14.2% which we were able to partially offset with savings and operating expenses of 5.7% for a combined NOI decrease of 20.9%.

In mid-March, since the virus was officially designated a pandemic, the American Campus team has been transitioning our operational systems to accommodate the new norms amid the coronavirus crisis. Understanding the different property types in our portfolio was essential to creating mitigation strategies for each properties based on how students circulate through the communities. Over 60% of our portfolio is garden style apartment or townhome units which typically feature exterior unit entries and by nature have less interior circulation and common area interaction. The balance of our communities consist of 30% mid-rise products and 9% high-rise buildings that rely on the use of common elevator banks and single point entries which require additional mitigation.

As part of our COVID operational plan, we are collaborating with RB, the maker of Lysol, and implementing a comprehensive Be Safe, Be Smart, Do Your Part program. Our approach to operating in a pandemic environment can be broken down to four key components: material specifications, operational policies, staff and student education and the promotion of resident accountability and responsibility. In addition to following CDC and EPA guidelines, ACC's collaboration with RB-Lysol will greatly enhance areas of the operational plan.

The Be Safe, Be Smart, Do Your Part program began with a touch point analysis of the public spaces in each of our communities. Simply put, our operations team evaluated every public area from the building entry throughout the community and identified the high-touch surface areas, in areas where close interaction would occur. This essential analysis, which highlighted single-point entries, door handles, reception desks, elevators, public bathroom fixtures, among others, gave us the information needed to begin implementation of all aspects of the program.

Antimicrobial surface overlays, which have a chemical response that continuously self-cleans contaminants off the surface were applied to door handles, touch-screens and elevator buttons. To further minimize touch points, ACC has also incorporated door foot pools at some public restrooms, touch-less trash and recycling receptacles, touch-less paper towel dispensers and touch-less soap dispensers. Hand sanitization stations were placed at entries, amenities and elevator lobbies while sanitization white stations were strategically placed promoting student involvement in the disinfecting of high-touch surface areas. The annual operation expense on these items is approximately $2.5 million to $3 million.

Signage has been installed to highlight policies that will promote physical distancing, maximum recommended occupancies and best practices. We are also providing our residents at every community with updated rules and regulations addressing COVID-19 resident responsibilities, a student code of conduct that addresses the use of amenity spaces and education for residents to perform a daily wellness self-checklist to assess their health before leaving their student unit.

ACC has also comprehensively overhauled our cleaning policies and procedures. We are proud to have co-written these cleaning policies and procedures with RB-Lysol as the US Environmental Protection Agency recently approved Lysol disinfectant spray as the first product to test effective against the virus that causes COVID-19 when used on hard nonporous surfaces. Our revised cleaning regimen, including the frequency of deep clean and high touch-point surface areas has customized products and procedures for each type of functional space in our student housing communities.

As we turn in make ready units, we will disinfect with Lysol products and prepare each student unit and bedroom according to the co-written Lysol protocols, and we will place a Lysol clean and confident room seal on the unit and bedroom doors, which will not be broken until the resident renters their unit and bedroom. As we welcome our students, we strive to make our move-in process touch-free and decentralized in order to promote physical distancing.

Our operational staff have new policies for safe engagement with residents as well as each other, and have been issued masks, gloves and other equipment along with guidelines for their use. We will also reach out and educate our residents through a healthy living email campaign, virtual brochures and virtual resident life programming. Our residence life programming initiatives will support the health and wellness and academic and personal success of our residents.

While education is key to understanding the current environment, perhaps the most critical part of the Be Safe, Be Smart, Do Your Part program is promoting self-accountability and responsibility among our residents. As such, the most important part of collectively mitigating the spread of the virus is the individual actions of our residents. For this unprecedented fall semester, we have physical distancing, sanitization knowledge and personal responsibility practices will become the new behavioral norms for our student residents. Already, we are delighted to see our residents embrace the new personal responsibility policies at our communities.

With that, I'd like to thank the entire ACC team and particularly our on-site teams for the tremendous work that has been done so far for our fall 2020 residents have a college home during these unprecedented times.

I will now turn the call over to William, who will discuss our investment activity.

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

Thanks, Jennifer.

Beginning with our 2020 owned development deliveries, I'm pleased to report that we have received all necessary permits for occupancy for all projects expected to be completed for this August, including the second phase of our Disney College Program housing and projects at San Francisco State and USC Health Sciences. While those developments are targeted to open on time and on budget despite the potential disruption from COVID-19, we are experiencing impacts to targeted occupancy for fall of 2020.

With regards to the Disney project, Flamingo Crossings, while Walt Disney World has reopened to limited capacity, based on discussions with Disney, we do not currently anticipate occupancy of the project in 2020 based on their current reopening schedule and labor onboarding. While the situation remains fluid, we will have 1,600 beds available in August, increasing to 2,600 beds in January 2021 ready to occupy DCP participants once the program recommences.

Through the terms of the ground lease, our project has a first fill provision for all DCP participants in the program. To the extent the interim program continues to be suspended for a prolonged period of time, we have the right in the ground lease to open the project to all of Walt Disney World's Orlando based employees along with the additional backup provisions where we have the right to convert the project to a hotel and which Disney has the right to offer and manage as part of their hospitality portfolio. Each of these alternate uses has pro forma returns equal to or greater than the development's intended primary use.

With regards to San Francisco State University, the university officials have mandated to significantly reduce the amount of on-campus housing available for fall 2020 as part of de-densification efforts. Our project is operating under a marketing and license agreement, with San Francisco State performing the leasing administration duties for this academic year. After discussions with the University, we anticipate that the project will open at 60% capacity and a single occupancy configuration for this fall. There remains the potential to return to fully designed bed capacity for spring and summer 2021, and we will continue to monitor the situation and work closely with the University.

With regards to USC Health Sciences phase two, we are currently 72% pre-leased and are working through continued leasing activity and the no show process for fall. We will provide a comprehensive update on all fall deliveries on the Q3 call.

Moving to our on-campus P3 business. We have a strong pipeline of on-campus development of 10 projects in various levels of pre-development. First, we anticipate closing and commencement of construction on our third-party project at Georgetown University in Q3 of this year as originally planned. However, due to the disruptions caused by COVID-19, our third-party projects at Concordia, University of California, Berkeley, Upper Hearst and University of California, Irvine, are anticipated to be delayed until next year. We currently expect to close and commence construction on all three projects in 2021, with Concordia delivering -- with Concordia targeting delivery in fall of 2022 and UC Berkeley and UC Irvine targeting delivery in fall of 2023.

And we continue to make progress in the early stages of pre-development on our previously announced awards at MIT, Virginia Commonwealth University, Princeton, Northeastern, UC Berkeley and West Virginia University. The final structure, scope, feasibility, fees and timing for all projects in pre-development have not yet been finalized.

Overall, while we have seen some procurement and housing initiatives temporarily delayed and suspended through COVID-19, we continue to pursue numerous active procurements and see a vibrant future pipeline of on-campus development opportunities. As Bill mentioned in his remarks, universities across the country have had to de-densify on-campus housing, with beds impacted consisting primarily of older traditional dorms with community baths. Consumer preferences also weighted heavily to more modern apartment and suite style accommodations that more easily allow sanitization and, if needed, isolation to occur within the unit.

In addition, due to de-densification, other reduced revenue streams and related financial impacts, universities will utilized off-balance sheet financing structures in order to update their housing stock, including both project based financing as well as equity based models like our ACE program. We expect that the combination of these facts will further accelerate the need for the modernization of outdated on-campus housing, utilizing the P3 financing method, and believe ACC is well positioned as the established best-in-class partner to capitalize on this expanding opportunity.

In addition to what we believe will be an expanding opportunity on-campus, ACC is also positioning itself to execute on opportunistic investments that may arise from the COVID-19 crisis and corresponding economic environment. Given that our recent cost of public equity continues to be at disconnect to private market valuations, it is prohibitive for us to execute on the many investments in the current environment. As such, we are expanding our joint venture equity strategy in order to pursue external growth. We have engaged [Indecipherable] financial advisor and are currently in the market to identify equity sources for joint venture or fund in which ACC would invest minimal equity or contribute existing assets as minority GP.

In addition to our existing partnership with Allianz, the identification of external equity partners will allow ACC to pursue external growth, off-balance sheet, while also offering further access to liquidity via dispositions if the current economic crisis continues. We plan to utilize this off-balance-sheet structure to execute on our proven core competency of identifying and executing on investment opportunities that drive outsized returns for both ACC and our strategic capital partners. ACC will benefit in the form of EPS and FFO growth to the generation of fees and potential promotes upon outperformance while requiring minimal equity investment to preserve our balance sheet for more accretive investments. We will keep the market up to date as we make progress.

Finally, looking forward to the fall 2021 academic year, we continue to see favorable reductions in new supply across our owned markets. Within ACC's 68 markets, we are tracking 17,600 beds currently under construction for 2021, with a potential additional 1,200 beds planned, but not yet under construction, reflecting a decline of 14% to 20% in new supply off the current year's decline of 20%. Even if all planned beds were delivered for fall of 2021, this is the lowest number of beds delivered in our markets since 2011. We will update the market with respect to these potential deliveries on our third quarter call.

I'll now turn it over to Daniel to discuss our financial results.

Daniel Perry -- Executive Vice President, Chief Financial Officer, Treasurer

Thanks. William.

As we reported last night, total FFOM for the second quarter of 2020 was $50.9 million or $0.37 per fully diluted share. As has been discussed, Q2 was a quarter significantly impacted by the effects of COVID-19 and the associated governmental shelter in place orders put into effect across the country. While we cannot completely isolate every item related to the pandemic, we believe approximately $23 million to $24 million in FFOM was lost due to situations surrounding the pandemic this quarter.

Overall, owned property revenue was $32.4 million negatively impacted by COVID related rent relief, lost summer camp revenue, increased bad debt and waived fees and other items. Somewhat offsetting the lost revenue, owned property operating expenses were $8 million lower than originally budgeted as we were able to reduce spend in each area except for the uncontrollables of insurance and property taxes.

As a result of the lower than originally budgeted property NOI, ground lease expense was approximately $500,000 less due to a reduction in outperformance rent being paid to our university ground lessor partners. And joint venture partners' noncontrolling interest in earnings was approximately $1.2 million lower. Additionally, third-party management fee income was approximately $1 million lower and FFOM contribution from our on-campus participating properties was also almost $800,000 lower due to universities refunding a portion of spring rents at properties in both of these business segments. Lastly, we were able to create approximately $800,000 in G&A and third-party overhead expense savings relative to our original plan for the quarter.

Due to the continued uncertainty created by the pandemic and the ultimate effect of any actions taken by universities with regard to curriculum delivery for the 2021 academic year, we are not issuing new 2020 earnings guidance at this time. We do however want to make you aware of some additional impacts of the pandemic that you should expect as we close out the current academic year in the first couple of months of the coming quarter.

July will represent the last month of the current in-place leases at a substantial majority of our properties, and we expect delinquencies will not materially differ from recent months. We also have some additional anticipated refunds in our on-campus ACE portfolio for the remainder of the summer term, expected to be in the range of approximately $1.5 million to $2.5 million, which should still keep us within the originally communicated range of expected refunds.

And finally, with regards to other income, we continue to expect a little to no summer camp business, and we are continuing to waive late fees and convenience fees through the remainder of the current academic year, which, combined, is expected to result in the loss of $5 million to $6 million in other income in the third quarter.

As William discussed, we now believe it is likely that the three third-party development projects at the University of California, Irvine, Berkley and Concordia University originally scheduled to commence in 2020 will be delayed until 2021. These projects were expected to contribute a combined $4 million in development fee income in 2020. While there will be some continued financial impacts of the pandemic into the immediate future, the consumer sentiment and university policies Bill discussed give us confidence that longer-term, our operating results will return to normalized levels.

In the meantime, we have a strong and healthy balance sheet and substantial liquidity to allow us to absorb the disruption. We further improved the Company's balance sheet liquidity in June with a well-received 10 year $400 million bond offering, using the proceeds to reduce the outstanding balance on the Company's $1 billion revolving credit facility. As of June 30, we had over $800 million of availability on our revolver, with no remaining debt maturities in 2020 and a manageable $167 million in secured mortgage debt maturing in 2021.

As detailed on page S15 of our earning supplemental, including all projects currently under development for delivery through 2023, we have only $279 million in remaining development capital needs.

As of June 30, the Company's debt to total asset value was 40.9% and net debt to EBITDA was 7.6 times. Although our leverage ratios are temporarily elevated at this time relative to the targets we have historically communicated due to the short-term COVID related disruption discussed, we feel confident about the capital plan we continue to lay out on page S15, which will bring the Company's debt to total assets back into the mid-30% range and debt to EBITDA back to the high-5 times to low-6 times range.

With that, I'll turn it back to the operator to start the question-and-answer portion of the call.

Questions and Answers:

Operator

[Operator Instructions] Our first question will come from John Pawlowski with Green Street Advisors. Please go ahead.

John Pawlowski -- Green Street Advisors -- Analyst

Hey, thanks so much. William, has Disney given you a best case scenario on just the timing around the reinstatement of the internship program? And just curious what -- to give you time to plan -- what's a prolonged period where you would look to pivot into the open market employees or a hotel like framework for the project?

Bill Bayless -- Chief Executive Officer

Yeah. And this is actually Bill going to go and take that one. It is -- and obviously Disney, and you can pretty much publicly follow their statements in terms of their approach to it to how they're undertaking it. As it relates to exactly when the Disney College Program comes back into play and what prolonged is, certainly, as William said in our prepared remarks, we have looked at this year as likely not having occupancy. And so when we think about prolonged, we think beyond the period that we have stated.

The one thing we want to be careful, and I want to remind everyone, we were very thoughtful when we structured this transaction from a design perspective and a ground lease perspective to anticipate something like this occurring. And so, when we look at the backup alternatives to the Disney College Program that William referenced, being employee housing for the broader Disney cast members or to convert it to a hospitality offering as part of their portfolio rather than doing the typical college design we do with dividing privacy walls, and that we really develop traditional multifamily units and achieve those things through furniture and how we made it more adaptable in terms of the College Program participants. And so from physical perspective, we're well positioned for that.

From an actual decision to make that transition, first and foremost, the last thing we want to do is not be available when the Disney College Program comes back. And that we do have a first fill. The historical levels of that program are usually thousands of participants, up to 10,000. We're only going to have a -- over just over 2,000 beds available in January. And so we don't want to be in a position where the intended use is not there for Disney and for our long-term stabilization.

And so we're already in ongoing conversations on all on an ongoing basis with Disney on what their timelines are, what their perspectives are, how we think about that. And we continue those conversations as things evolve for them, always having the ability to make a prudent decision any time to switch over to that if it were prudent. But the last thing we want to do in these early stages is to circumvent the original intended use and long-term stabilization to continue.

John Pawlowski -- Green Street Advisors -- Analyst

Okay. Understood. And last question from me. Bill or Jennifer, I understand the leasing trajectory or velocity is going well and cancellations and reletting risk seems pretty modest right now. But things are changing on the ground pretty quickly in terms of university decisions. And so, could you give us some examples of schools where you've seen notice of cancellations spike in recent weeks so we kind of have a playbook going for these next few months as things on the ground change? Trying to understand geography, just the pain points within the portfolio which is healthy to date.

Bill Bayless -- Chief Executive Officer

Yeah. The -- and there is no really immediate short-term trends that we can point you to draw any conclusions as it relates to the coming weeks. We'll will go ahead and break down some of the statistics accordingly, though. When you look for example at our no show and relet request and you look at the schools category for are they in-person, hybrid or online, you don't see a great relative variation in those categories to no show and relet request. For example, the 689 potential no shows we have identified, 208 at in-person universities, 440 at hybrid universities and 23 at online universities. And when you look at the percentage those beds represent in our portfolio, they pretty much mirror that breakdown.

When you get into reletting, we have the same type of balance across those areas. And so we have not -- we have to direct examples that we can speak to where a university actually publicly went out early in the month of June and said, hey, we're going to go predominantly online, and those are Fresno and also Phase I of Curry Hall with USC. And in both of those situations, where they had both announced in early June, we did see some cancellation activity, but we also saw continued leasing activity, so those two properties from the time of announcement, at Fresno, we actually have held our ground and had equal new leasing to cancellations.

And so, we were 75% pre-leased when they announced. We're still right at actually 74.8% today. At USC, we were 98%; we're now at 89%. And as we mentioned in the earnings release and in the portfolio, when you look at that online category as a whole, we've only had a total since time of announcement at our four same-store properties a 5% potential occupancy hit when you add all potential no shows and all relets.

And so there's -- we -- cautious optimism is certainly the proper word and that we are absolutely as bit cautious as we are optimistic. And managing those no shows and relet activity all the way through the end, John, and looking for any trends that do evolve is what we're highly focused on at this point in time. Leasing progress itself, leasing velocity trends in the three, 10 and 20 days, those things are all very positive. The administration of no show or potential no shows and relets, that is where we're daily uber-focused on watching that data, looking for trending in the nature of the question you asked.

But we just haven't seen it yet and there doesn't seem to be the spirit. And I guess that's the good news. When -- if there is -- when you look at the data we just said and how it crosses over, the universities' classification of curriculum delivery, we're not seeing significant variations and trending. So I think that's probably the most positive thing we could hope for in an uncertain environment related to COVID.

John Pawlowski -- Green Street Advisors -- Analyst

Okay. Makes sense. Thanks very much.

Bill Bayless -- Chief Executive Officer

Thank you, John.

Operator

Our next question will come from Alexander Goldfarb with Piper Sandler. Please go ahead.

Alexander Goldfarb -- Piper Sandler & Co. -- Analyst

Hey. Good morning down there. So just continuing along that line of questioning. First, Bill, can you just give an update on university thinking? Earlier this year, Cal State came out and then sort of modified their statement, yeah, you had a recent second wave, but the death rate in a lot of those states is still really low, nowhere near as high as it was in the Northeast. So, can you just talk a little bit about what universities are thinking about switching and saying no, we're going to cancel in-person, cancel hybrid, go to online versus what's actually happening? Because we read the headlines with the sports programs, but curious what the universities are actually thinking about as we approach sort of the September 1 school start date.

Bill Bayless -- Chief Executive Officer

Yeah. And this is consistent with the conversation we were just having. And it's almost as though it doesn't matter what the category the university has issued their headline, saying we're in-person or hybrid or we're predominantly online. Candidly, the university thinking in preparation for fall is almost identical in every single case. And it's the first thing that they're doing is they are preparing the classroom and areas of interaction to meet all CDC guidelines on social distancing. And so to the extent that you have online instruction, it is being done in social distance classrooms to where everything is compliant with an active COVID environment.

The second component is that virtually every university -- and candidly I would like to eliminate the word virtual, I think it's every university that we serve, has indeed set up dual capability, that they have the ability to deliver curriculum in-person and they have the ability to deliver that same curriculum online and have flexibility in going between the two, which I think is great. It's not an all or none and a time duration certain. And so they have the ability to modify those things based upon their situation. And then when you look at what most directly impacts us, certainly the thought and the work that has been done and is evidenced in William's discussion on de-densification -- I guess it was myself, I'm sorry, de-densification, what it really gets into is that university have assessed their -- which they had not had time to do in the spring. They had time to assess their housing products and how they are geared toward pandemic. And when we look at those community-based products that really is where you have -- you don't have households of two to four that can self-isolate and in-suite bath, and they're going through the pre-densification areas in that.

And so I think universities have, regardless of category of reporting, have fully set up so the students may come back to their college towns and that the universities may adjust curriculum delivery as they need to in-person online based on circumstances on the ground and not have to have the chaotic situation we had in the spring, but rather have everything set up in order in this COVID environment.

Alexander Goldfarb -- Piper Sandler & Co. -- Analyst

But basically your view is that universities that have set their decisions, those decisions are set, you don't get a sense of some are waffling and some that said they will be in-person are now [Speech Overlap]

Bill Bayless -- Chief Executive Officer

Again, I think the headline is irrelevant. And then when you look at every university's operational administrative plan, I mean, I guarantee there are universities that said, we are hybrid that may have a higher component of in-person class and the university said that we are in-person and the student get their schedule and they have a higher percentage of online. And so it's really the administration of online and in-person -- our components at all three categories of institutions.

Alexander Goldfarb -- Piper Sandler & Co. -- Analyst

Okay.

Bill Bayless -- Chief Executive Officer

And so they don't have to say -- they don't -- they don't necessarily have to change the headline of categorization and that they're just adjusting their operational plans. One of the things that we hear a little bit, a lot of how universities is they're approaching the curriculum of delivery online versus in-person -- if you have a professor that is old or immunocompromised and they say, hey, I'm not comfortable, well, they're saying, hey, we'll allow you to deliver that lecture online, whether the kids are in the classroom or in the rest hall. And so these are -- as universities get into these operating plans, they're very flexible and innovative in how they're putting it together and they're not as focused on what headlines they're categorized under as we obviously are focused given the market's interest in this.

Alexander Goldfarb -- Piper Sandler & Co. -- Analyst

Yeah. And Wall Street's interest as well. So the second question is, just going back to the occupancy has -- I just want to make sure I have the numbers right, you spoke about a 5%, but I thought that was only a potential for the online university exposure. But then I think you mentioned 2.3% potential hit this year versus 1.1% last year. So is the 2.3% versus the 1.1%, are those the headline numbers that we should really focus on? And then this is before the potential that the de-densification may force more students to come your way? I just wanted to make sure [Speech Overlap]

Bill Bayless -- Chief Executive Officer

Yeah. And you are correct. And to clarify that for everybody, the 5% that we discussed related only to the four same store properties at online universities, and that was taking those four properties, looking at the total potential no shows, the total request to relet currently and deducting that from the percent they're pre-leased thus far, going from 90% to a potential of 85%. Those four same-store properties in that 5% are then a subcomponent of the broader portfolio where the total combined no show and relets are currently at 230 basis points versus 110 basis points in the prior year. So the variance is 120 total basis points to a normal year. And as I mentioned, in a normal year, last year, we managed that process down to being only 38 bps of impact.

Now, the other thing that we have cautioned when we talk about cautious optimism is that, this is anything but a normal and ordinary year as it relates to anything that we're administering. And so when we look at our normal and ordinary historic success of managing that -- what was last year 110 bps down to 38 bps, we would assume it's going to be more difficult in this environment with not as many properties fully leased or above 95% leased at this time, which may make it harder to close that gap. So when we're looking at our internal risk assessment, we look at that total 230 bps at this moment of time of total potential no shows as relet as that's our risk bogey out there at this moment in time, those 230 basis points.

And as you appropriately said, that is prior to taking into consideration what we viewed as the optimistic upside that we have. It is the 55,000 on-campus beds being taken offline due to de-densification and quarantine that may indeed lead to a late surge.

Alexander Goldfarb -- Piper Sandler & Co. -- Analyst

Thanks very much, Bill.

Bill Bayless -- Chief Executive Officer

[Speech Overlap] in demand, not COVID.

Alexander Goldfarb -- Piper Sandler & Co. -- Analyst

All right. Yes. Thanks, Bill.

Operator

Our next question will come from Alua Askarbek with Bank of America. Please go ahead.

Alua Askarbek -- Bank of America -- Analyst

Hi everyone, thank you for taking my question. I realize I might be getting ahead of myself here with 2020 and 2021 fall leasing not over yet. But how are you guys thinking about the following school year in 2021-2022 in terms of leasing strategy?

Bill Bayless -- Chief Executive Officer

We love your question because we all like thinking about the world beyond COVID. And we certainly do believe there should be a return to normalcy in the 2021 academic year going forward, next fall's lease-up. A couple of positive things in that regard. And one is that I briefly touched on rental rate growth and still having some intact for this year. And so you saw that the COVID crisis did not really impact the fundamentals of pricing of student housing.

You also heard in William's script an incredibly positive update in terms of the supply picture going into next year, that after this year declining 20%, it's expected to go down another 14% to 20% next year. And so we view that positively also. The other unknown variable is related to the de-densification activity that has taken place on campus in those 55,000 beds. And that one of the things we believe is an opportunity -- and we don't know how quickly it's going to evolve, but as universities have looked at how undesirable that particular component of their on-campus housing is, any of them that choose to take those older facilities out of service to develop new could also have ongoing impact in the years going ahead.

And so, we do -- when we think about a post COVID environment and we think about the business fundamentals that we're really studying throughout this period, it really makes us -- we're very cautious and we all have to deal with the short-term impacts of the crisis that America together is facing, when we look at our business segment beyond this trends or beyond this crisis, we get very bullish on what our optimistic outlook is.

Alua Askarbek -- Bank of America -- Analyst

And following up on that a little bit. In terms of marketing, I thought expenses were significantly down this quarter, just I assume probably from lack of on-campus advertising. But do you think that strategy for marketing, is that going to change in this fall [Speech Overlap] process?

Bill Bayless -- Chief Executive Officer

First of all, that is a fantastic question, because as we go through our own analysis, this is what we are looking at. How we have spent our marketing dollars over the year -- and obviously as you go through our numbers, we had significant savings in our marketing cost in Q2, and we have pretty good leasing progress. Now, ultimately, that 340 basis point gap that we currently have, that's a lot of revenue on a dollar basis, and we don't think it's related to a decrease in marketing activities, but rather obviously the COVID environment.

But this is causing us to appropriately look at all the incremental marketing dollars that we traditionally spend that have been replaced with candidly much more cost effective social media and digital activities to evaluate the real benefit and impact of that. A significant amount of our marketing dollars on an annual basis, the expensive activities that we undertake are what I'll call the on-campus promotional activities, getting out there -- giving away 2,000 T-shirts. Our sports marketing contracts -- our biggest overall marketing expense is our affiliation with colleges and university athletic programs, and when you go into the stadium and the basketball arenas and on the back of every football ticket, see American Campus Communities.

I know there's a lot of benefit of advertising [Indecipherable] the P3 world of that recognition, but those are things that throughout this lease-up we haven't had available to us. And because of the lack of those things -- and so it is giving us the opportunity. We talked about this as one of our eight guiding principles, to evaluate all the unique things that we're learning through COVID to see what may have benefits going forward. But it is causing us to go through that assessment. I can't give you the answer to your question yet, but I can tell you that we're going through that process in an attempt to learn from it and to be more efficient and impactful with our marketing dollars going forward.

Alua Askarbek -- Bank of America -- Analyst

Thank you.

Operator

Our next question will come from Austin Wurschmidt with KeyBanc. Please go ahead.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Hey. Thanks, guys, and thank you for all the data points. But I was hoping for a little more detail on the leasing acceleration -- de-densification. I believe you mentioned that you haven't seen any material acceleration in velocity at schools that have de-densified the on-campus housing. So one, what would you attribute to that recent surge in leasing? And then second, do you have any sense if the schools that would be densified [Phonetic] plan to use other accommodations like hotels to build their housing needs or if they have even communicated at this point to students that they are on their own to find a source of off-campus housing?

Bill Bayless -- Chief Executive Officer

No. And when you look at -- and God bless all the universities that are administering these processes in that there are in the throes of it. The data that we have given you, we only have because of our in-depth proactive relationships with these university officials and them conveying to us the processes that they are implementing. And in many cases, the universities have not been through the administration of that process -- those processes. And so while we have seen an increase in our velocities, we've seen that across the board at all 68 universities versus just at the 48 versus the 20. And that's why we say we haven't seen a differentiation in that trending, which makes us hopeful there is another surge coming.

As an example, and this is over the weekend, since we put together our leasing to Friday's numbers, we got a call from Temple [Phonetic] and did a 100-bed master lease over the weekend related to their de-densification. And so these processes are just taking place, and we're hopeful that that will lead to as they go through and build our beds through the assignment process and issue that out, that we'll then start to see some positive benefit from that. Again, that's one of the places we're hopeful. But we have to see it materialized. But we don't have evidence yet the increased traffic is from that situation. I think it's more from [Technical Issues] delay.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Yeah, no, understood. I appreciate that. And then just secondly on capital allocation. Thinking about where your leverage is today, the capital needs you have remaining for projects that are under construction or that you've committed to. How should we think about, one, the future dispositions versus that annual $100 million to $150 million you pointed to in recent years kind of annually? And then how you're thinking about prioritizing future development starts, the more lease-up transaction deals we've seen you do in the past versus the traditional, just down the fairway acquisitions?

Daniel Perry -- Executive Vice President, Chief Financial Officer, Treasurer

Yeah. Austin, this is Daniel. And you know as we lay out on our capital allocation plan, in the supplemental, we continue to target the same amount of dispositions to fund the current development pipeline that we've been talking about. For our on-balance-sheet external growth, we would continue to reserve that primarily for our development pipeline. William talked about in his prepared remarks our continued expansion and desire to expand our joint venture strategic capital sources really twofold.

One would be to have that partnership in place and opportunity even beyond what we currently have in place with Allianz to be able to sell additional assets into a joint venture partnership to fund additional developments in the future so that we can manage those leverage statistics, but also to put us in a position to take advantage of the opportunistic investment -- opportunities that may come up as the COVID situation unfolds.

So again, we continue to want to reserve our on-balance-sheet capacity for development. And then as far as those upside acquisition investment opportunities, we would look to do that through an off-balance sheet joint venture structure like we've talked about in the past.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Any sense at this point of how large of a JV you're considering or just what the opportunity set is from an acquisition perspective?

Bill Bayless -- Chief Executive Officer

Yeah, I think, well, though -- from an acquisition perspective, we're still assessing. We haven't seen a ton of stress out there yet. Obviously, we have to see where this year's lease-up comes in and what comes off of that, and what comes off of that with regard to properties that would meet the investment criteria we want to pursue. But when you look at a typical joint venture type structure, you're typically looking at a $300 million to $1 billion type size program.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Okay. That's really helpful. And then just last one from me. I was curious how, on the relet and potential no shows, how does that break down from properties that are in the three buckets that you outlined in the pre-leasing, those that are very well leased versus those that maybe have some catch-up potential.

Bill Bayless -- Chief Executive Officer

Yeah. Actually I have that data. And this is one of the items that we raise as an area to be cautious. I have that data on the table in front of me, hang on one second. Hang on one second. Okay. Here we go. At our properties that are 95% or greater, we currently have 38% of our no show and relets, and at the properties that are below 95% pre-leased, we currently have 61.5% of our relets. And so, on those 61% of the current relets at those properties that are currently below 95%, that gives us a little greater exposure in terms of the risk of backfilling those how we do in a typical year. Obviously, at a property where you're already fully leased, every lease you get today eliminates a potential no show or request for relet. And so as we administer through that 60, really closer to 60:40 breakdown is what we're very closely monitoring.

Now, one of the reasons that we attempted to flush out the no shows and relet early is we did want to have all of those beds identified in the hopes of the university de-densification does result in that push of students off-campus that we have -- had those beds identified for that purpose. And so that's kind of where the risk and opportunity we hope line up. But we certainly look at that 230 basis points versus the 110 this year of being in an environment that's harder to backfill because of that.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Got it. Appreciate the detail. Thanks for the time.

Operator

Our next question will come from Nick Joseph with Citi. Please go ahead.

Michael Bilerman -- Citigroup Equity Research -- Analyst

And it's Michael Bilerman here with Nick. Just a couple of questions. Is there any change to the lease language or the structure of how you're doing a leasing for the upcoming academic year in the event that school changes both for off-campus as well as ACE programs? Just thinking if there are any variables or lease language that's changed for the pandemic? Yeah, Mike, when we look at our off-campus and privately marketed apartment communities, the answer is no. And that's a very positive no. Let me explain why. Our leases in no way, shape or form are tied to the actions of any universities nor any activities that they undertake. And when you look at the university shutting down in spring, every single one of our off-campus privately leased properties, every release remained in full force and effect and we had 93.7% collection of rental. And in no way, shape -- this is, you know the way that we explain it. You lease an apartment near a major employer and you move into that apartment. If anything happens with that major employer in your appointment, you're not in any way no longer obligated toward the lease that you have executed. And so we have not added any language, and that we do not want to draw a correlation that our leases are in any way, shape or form contingent upon that. As it relates to our on-campus lease agreements, the majority of the beds and the beds where you saw the refunds take place, we do not have leases with those students. Those are under master lease agreements with the university where the institutions have licensing agreements. And so we do not have the direct relationship there. The other thing that we pointed out on the last call is in our agreements with the universities, we were not obligated to partake in those refunds that the university has made the decision in how they administer those licensing agreements, but rather for us given the duress that they were under, given that they haven't had the chance to go through the facilities assessment that I referenced earlier on an in-suite residents hall versus a community bath and that they were in a sense of urgency and panic of just getting students off-campus and having everybody go and they hadn't done the community bath de-densification in advance like they are now because didn't know it was coming. But we made the partner decision to participate in those refunds. And so the need to, at a resident level, do anything related to some of the economic impacts that we experienced this time were not necessarily for those reasons. As you think about, and you guys have referenced a lot of the safety and security, things you're putting in place to mitigate the spread of the virus within your communities. The kids are kids, keenly interested teenagers. And as we've seen across the US, in a lot of cases, they're not abiding by those things. So how -- in the event that the virus starts to spread with at the universities or the communities that you own in, what are you going to do in terms of refunds and bad debt like what happened in the spring? How do you protect yourself financially or should we expect that let's say 50% of the portfolio, the school have shut down or do other things that we should expect a similar level of revenue impacts and refunds and things like that?

Bill Bayless -- Chief Executive Officer

Yeah. Firstly, let's break it down by segment and first talk about the larger portion of our community, which is the privately leased in the open market apartment communities. And as you saw there, we had 93.7% rent payment throughout the pandemic when schools took the most draconian action out of not having ever faced this before and what they did. So we certainly look at what occurred when no one was prepared for it as the worst case outcomes that you would experience in that regard.

As I mentioned in my prepared remarks, when you look at the students' buying power and the money that they have available for education, at the beginning of last academic year, the economy was at an all-time high, unemployment was at an all-time low and with students build out their financial aid need-based assessment for the academic year we were in when COVID hit, mom and dad, and they had excellent financial income that was part of that financial consideration.

All the people that have been negatively impacted by COVID, parents and students, is securing their financial aid, need-based assessments for this upcoming year now have had the opportunity to access that. So as they go into this academic year, the financial hardship that they have suffered has given them -- has given them the ability to qualify for the normal and ordinary Pell grants, student loans, scholarships that are needs based. And so they have the opportunity unlike a traditional renter to improve their economic profile, where with COVID hit in the middle of the year after a great economy, they didn't have that basis to them. So we would look at the condition of our residents as it relates to financial hardship in a better position now than it was then.

Also, all the running decisions that they are making going -- as for this upcoming year, is based on their financial condition, the price points, things of that nature. And so, we don't look that the -- and the other thing, I think the more important point, is the discussion we were having about how universities are setting up for social distancing and curriculum delivery to where -- we don't think it's going to be a university just, we're shutting down, everybody leave the campus. We think a university may say, hey, OK, we have an outbreak, we're switching these four classes to online curriculum delivery versus in-person, and they have all those mechanism set up.

And so, again, everybody is much better prepared. We live in a COVID environment, and you know -- and we have continued -- I think this is important. We have 12 month leases, and we have continued to operate our properties throughout this COVID environment and search. We have one property where we did have an outbreak in early summer, where in a two-week period, there were 41 students that contracted COVID at that property -- and they quarantined it, did all things they were supposed to do. We weren't directly involved. They worked to the local authorities [Phonetic]. They quarantined. We've had no cases reported in that property since June 29. And so -- it is manageable.

The other thing that I think is as students come back to campus, those that aren't already there, the 18 -- and Dr. Julio Frank, who is the University of Miami President was on CNBC a couple of months ago. And he -- and he's a former Global Health official, so much better credential to speak about this than me, and so I'll reference his comments. And he was talking about the 18 to 22-year-old demographic and how it appears they are much more resilient in terms of the virus and not as many severe cases -- severe cases related to it. And if we're back in fall and you do have surges, I think the last thing any university is going to want to do is tell students to go back home to mom and dad and their grandparents that may be in a higher risk group versus staying right where they are given how they're able to isolate and quarantine in the products like we talked about and work through this.

Michael Bilerman -- Citigroup Equity Research -- Analyst

How do you think about -- and it sounds like you're optimistic about sort of a post COVID world, what's your view in terms of the university system overall getting through this? Right, there is a fair amount of disruption going on in a lot of different markets. Clearly, higher education is one of them. The cost of going to university is significant, and not all universities have large endowments like some of the Ivy League schools that can financially make it to the other side. And so how are you -- how are you thinking about sort of the disruption that's going to come and the likelihood for significant financial difficulties for a number of universities and how that plays in your portfolio, which I recognize higher is better, but it can't -- even the best mall portfolio is going to have an impact from what's going on in the retail environment, as an analogy.

Bill Bayless -- Chief Executive Officer

Yeah. And certainly, as you alluded to there toward the end of your question, the answer that we have always talked about -- this applies more consistent -- certainly, when we look at higher education across America and all the thousands of institutions of higher education that exist, there is no doubt that the economic downturn associated with COVID is going to put significant financial strain on the sector and there are going to be universities and colleges that don't come out of this.

Because of the way that we have positioned our portfolio and focusing on the state flagships, the Tier 1 institution, the Carnegie R1 research and the Power 5, certainly, we don't think the schools that we're at are at risk to go away. Not that they won't have financial strain, and I'm going to back up in a moment, say but on that future financial strain only plays into the need for privatization and use of other people's capital on non-ancillary services. So it actually could drive as it relates to modernizing student housing, an opportunity for us. When you also look at the schools that may end up not making it, may end up going away, that's only going to provide more demand for a smaller group of schools and those that do make it may see increased demand.

The other point I want to point out, and this is something that we continually talk about, is the affordability of education at the private flagship institutions that we serve. And while we agree with you completely, for anyone to spending $90,000 to $150,000 a year on higher ed, which candidly is not the schools we're at or the Princeton which is faculty and staff, but the average tuition at the public institutions that we serve is just over $10,000 a year, and the value of public education schools we serve we think only become more valuable and more attractive in a time of macroeconomic stress and when dollars are more valuable. And so, again we think that the choices we have made in our long-term investment criteria position us well.

Again -- and -- but to acknowledge what you said, make no mistake. The schools we're at, they are feeling the financial pinch, they are feeling the economic pinch. Everybody. No one in this crisis is not.

Michael Bilerman -- Citigroup Equity Research -- Analyst

All right. Thank you.

Bill Bayless -- Chief Executive Officer

Thank you, Michael.

Operator

Our next question will come from Neil Malkin with Capital One. Please go ahead.

Neil Malkin -- Capital One Securities, Inc. -- Analyst

Hey, good morning, guys.

Bill Bayless -- Chief Executive Officer

Good morning.

Neil Malkin -- Capital One Securities, Inc. -- Analyst

I just wanted to go back to the JV. Kind of maybe a little shift obviously with the time. But maybe just, is it -- was it inbound inquiries, anything maybe that you can provide additional color to, as to the need to call this out or to have the desire to grow the JV platform? Obviously, I can understand selling assets to free up some capital. But from the other side, in terms of inbound inquiries and as well distressed opportunities, maybe some distressed development. Can you just maybe talk about what you kind of see as the potential opportunity set over the next couple of years?

Bill Bayless -- Chief Executive Officer

Yeah. First of all, I'd like to address, and this is something we're talking about to the market, given we want you to have clear purview into our ability to create liquidity and how we're thinking about our capital allocation in this crisis. But as it relates to the -- this long-term strategic JV approach, candidly, this is something we had in the works prior to COVID.

As part of our executive plan, we have a program that we call Pursue Growth 2030, which is the 10-year -- the Company's 10-year strategic vision on how we create value for our shareholders. And candidly, with there having been a consistent disconnect between our public cost of capital and in private valuations, we felt like over the last several years that we have been sitting on the sidelines too much when we could -- we look at the Prologis model, where they very successfully view strategic capital to advance beyond their core business and mature debt. Actually, Kim Voss, our Chief Accounting Officer started there when it was AMB, and has contacts there. And she and William have studied that model. But we looked at strategic third-party capital as a means to propel our growth in fee income, and earnings growth and -- without using a lot of our capital as a pre-COVID strategy.

Certainly, now as COVID has evolved, it is only made our own on-balance sheet capital even more precious and more limited. And certainly, with the emergence of potential opportunities that may come out of COVID, it is consistent with the mission that we have to go out. What we don't want to do, I hate when you look back and I've been in this point in my career before where I made those mistakes. When I look back five years and say, oh, only we had executed at that time right after turmoil. And so, that is why we have chosen on this call to make everybody aware of our efforts, and why we're pursuing that. And I think as Daniel very appropriately pointed out, not only this is a strategic growth vehicle on a long-term basis, but it also is an excellent another quiver to create liquidity through dispositions or joint ventures as it relates to any needs for capital as this crisis may be prolonged.

Neil Malkin -- Capital One Securities, Inc. -- Analyst

Yeah. That makes sense. I appreciate that. The -- based on the transfer collections or delinquency from May and then for the second quarter in general and then what July looks like, it looks like delinquencies kind of ticking up kind of gradually, which is expected. But do you think that as you're -- as these leases roll over and you start your new year of leases, call it, August, September, just given all the things you talked about financial aid, etc., is it likely that delinquencies, collections, will sort of trend back to historical levels as opposed to what they are kind of right now?

Bill Bayless -- Chief Executive Officer

Yeah. I mean, our expectation -- I don't know we took [Phonetic] back historical levels immediately with the August, September payments, but our expectation certainly, is that, we will see a migration back to that over the next academic year.

Neil Malkin -- Capital One Securities, Inc. -- Analyst

Okay. And then in terms of the pre-leasing, it looks like the online -- about 90% -- and the total portfolio is about 90%, so that would imply the in-person or hybrid is about 90%. Why is that not higher? Is that more a function of like you said pushing potential no shows out to have room for the de-densifying? Any color on why is that delta isn't bigger?

Bill Bayless -- Chief Executive Officer

And again, the one thing is when you look at that -- the grouping of properties in that category, it's so small. It's only four same-store assets. And so, it's not like portfolio is 50-50, where you can draw meaning correlation and differences between those two numbers.

And again, the other thing that we would point out and this is what we have -- certainly, what the consumer sentiment was we were feeling over the -- throughout this pandemic is that, regardless of what the universities were saying in terms of their curriculum delivery, whether it's going to be online, whether it is going to be on person, whether it's going to be a hybrid, we kept hearing students and their parents say, well, my kids are coming. We don't care how the universe is going to deliver, they're going back to the college town. And so -- and everything that we see, as we look at those three categories and look at leasing, velocity, traffic is -- I previously went through those numbers for no show and relets. We don't see great differentiation in any trending by those breakdowns, which cautiously gives us -- makes us think the hypothesis that we were making there and what we were hearing from consumer sentiment is playing out into that.

Neil Malkin -- Capital One Securities, Inc. -- Analyst

Okay, great. And then last one for me. In terms of the ACE RFPs have in development. I'm going to be talking about this before, but is there -- do you guys believe that there's a chance you'll see an increase in activity over the near term, at least in RFPs or maybe even the percentage of RFPs that want to do full ACE private equity partnerships, just to preserve potential capital given the impact on financial or balance sheets from COVID?

Bill Bayless -- Chief Executive Officer

Yeah. And certainly, no. At the highest level, we believe that there's going to be increased activity and especially, when we talk about the potential of modernization.

The other thing that we're looking at very closely in terms of consumer sentiment, in this case, consumers being the administration of universities is the evaluation of what financial structure models going forward make the most sense to them. We -- and understand, first of all, as it relates to ACE, American Campus Equity, we're going to continue to be stringent and prudent as to where we're willing to invest our capital on campus. And we don't invest our equity in every university. Just as you know as Mr. Bilerman asked the question earlier about how we're positioned as we move forward in the implementation of our growth plan even on ACE. We always want to have that discriminating investment criteria related to where we invest our money, whether it's on our off-campus.

And so, when you look at the universities going forward that want to develop housing, some of which may not be candidates for our equity but we want to do those deals. We continue to have the 501(c)3 project-based step model will be evaluated. And then we also may look for some institutions for a third-party source of equity is willing to invest in those transactions with us as the developer and going forward.

The other thing that I'll point out, the -- and this is something that Jamie Wilhelm and his team are working with universities. As you look at universities making the on-campus decisions as to what structure is best for them and how did those structures perform related to COVID. Earlier, we talked about as their ACE partner and having a long-term investment on their campus. We made a partner decision to step up and share that pain with them and contribute $15 million toward those refunds. At any of the universities that had that 501(c)3 project-based model, where they made those decisions, there was no one with a balance sheet behind those deals to step up and make that contribution. And the universities found themselves in a situation where, well, if we eat [Phonetic] that support and offer that support, now, Moody's and S&P now look at our participation in what was supposed to be perhaps an off-credit deal that maybe doesn't have the comfort and stability of someone with a real balance sheet behind it.

And so, those are things that again -- and going to that principle, what are we learning from COVID in terms of how it impacts our going forward business? We do think there's going to be an uptick in P3 activity, and we think that the desired financing structures may have some evolution. And I think certainly that equity-based transactions may have come across in this more beneficial. Now, let me do say this, not all equity partners throughout this crisis took the approach that American Campus did. And as I mentioned, we didn't have to step up and contribute, but we did. We've heard stories from other universities of other equity partners that didn't step up, even when they were asked to. And so, I think that the goodwill that we have among higher education in the manner in which we behaved as a long-term partner has only probably given us a greater competitive advantage over our peers.

Neil Malkin -- Capital One Securities, Inc. -- Analyst

Appreciate that. Thank you.

Operator

[Operator Instructions] Our next question will come from Rick Skidmore. Please go ahead.

Richard Skidmore -- Goldman Sachs -- Analyst

Hey, Bill. Good morning. Just as you look at the remaining call lease up, how do you think about the trade off of occupancy versus rent rate? And are you using any concessions or reduced rent to drive traffic and occupancy? Thanks.

Bill Bayless -- Chief Executive Officer

Yeah. At this point in time, you always have -- we're always trying to maximize revenue. And so, certainly, this is a period of time where you would trade rates for occupancy and going through that. And I mentioned that we're currently at that 1.6% rental rate increase. But if there is great variation and where that may end up based upon what is the average rent of the remaining leases we sign of vacant beds and also how potential no shows and relets ultimately materialize and rollout based on the rent that may be rolling out. And so, as we look at the portfolio today, as it relates to our vacant beds, and how many of those vacant beds are above that price point, and how many of those vacant beds are below that price point.

Richard Skidmore -- Goldman Sachs -- Analyst

Do I have that number in front of me [Indecipherable]?

Bill Bayless -- Chief Executive Officer

Let me first speak to no shows and relets. On the no shows of the 671 same-store no shows, 268 are at price points above that $807, that if they fall out, bring that number down -- I'm sorry, bring that number up, and 403 are below. As it relates to relets of our same-store number, 1,551 -- 896 of them are priced above -- I'm sorry, yeah, above, and 1,326 are priced below. And so, it really -- we certainly have let the market into how sausage is made in our industry in terms of the final average rental rate in terms of the variation of components that they come into that equation.

But it's really hard to draw a conclusion at this point in time in terms of how the remainder of the lease-up and the administration of no shows and relets impacts that final rent. With 90% in place, I typically wouldn't see anything more than a full percentage basis point at this time. But this year is anything but normal. And so, we draw no real definitive conclusions in terms of giving a clear expectation from our perspective at this time.

Richard Skidmore -- Goldman Sachs -- Analyst

Thank you.

Operator

Our next question will come from Nick Joseph with Citi. Please go ahead.

Michael Bilerman -- Citigroup Equity Research -- Analyst

It's Michael Bilerman. I just have one quick follow-up. On the joint venture that you're looking at to be able to get back into the acquisition market, would you go hard on the transaction before a joint venture you set up so we can hear how is the assets for the eventual contribution to venture? Or are you not going to do that and make sure that you have the capital?

Bill Bayless -- Chief Executive Officer

Yeah. We absolutely will not do that, Michael. And again, we're going to preserve our capital diligently and anything that we would do would be under -- and we're looking -- we're thinking about a 90-10, 95-5 joint venture where we can contribute an asset as our portion and preserve our equity. So, we're not going to go on try to tie step up on our balance sheet, then have transaction risk associated with having to lever up to do so.

Michael Bilerman -- Citigroup Equity Research -- Analyst

And where are you in that process in terms of raising that third-party capital? When should we expect potential deployment?

Bill Bayless -- Chief Executive Officer

Yeah. We have -- the package is just out. And so, we are in the process of procuring parties of interest and we'll be playing through the front part of that process. We'll give you an update on the next call as to where we are in the process. I would not expect to have the process commenced and fully in place by the next time we talk. So, again, we'll update you on the process at that point in time.

Michael Bilerman -- Citigroup Equity Research -- Analyst

And are you presenting actual opportunities that are in the market today to these perspective joint venture partners, or is it just more theoretical at this point?

Bill Bayless -- Chief Executive Officer

It is theoretical. Here's American Campus, you know our track record. This is an overview of the type of opportunities that we think may be coming forth and we want to have partners in place when it is prudent to pursue.

Michael Bilerman -- Citigroup Equity Research -- Analyst

Okay. All right. I appreciate the time. Thanks.

Bill Bayless -- Chief Executive Officer

Thank you, Michael.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Bill Bayless for any closing remarks.

Bill Bayless -- Chief Executive Officer

We would like to thank you all for joining us. And again, we're pleased to update you with our progress and truly give you full insight as to the risk and opportunities that are currently before us. And certainly with the uncertainty of COVID, until the students come and move in and the universities commence their classes, we're all in a period of uncertainty that will continue to key up the speed with.

I'd like to close this call by speaking to and reading the internal statement that we've issued related to supporting the black community and our commitment to anti-racism. And it's from this statement that we will derive the external actions that we'll take in the future.

Dear ACC family, the recent tragic death of George Florida and other examples of injustice against black citizens in our country have sparked outrage, deep grief, intense sadness and pain. We must pass to acknowledge that the pain of racism is very real, and that there are people in this world who consider some lives to be less valuable than others. This is unacceptable. And we all have a responsibility to facilitate change. We must stand up for each and every individual and for the belief that no one is any less worthy of care, safety, protection, dignity, and life itself. It is for this reason, we have renewed our commitment to do our part and to make a difference. While we don't have all the answers today, we know we must use our heartfelt compassion and our collective sense of humanity to cultivate a world that acknowledges and respects every individual.

Our Company and our student communities are defined and strengthened by diversity and inclusion, and we have zero tolerance for racism and discrimination. We will continue to encourage our staff and our residents to speak up and engage in the direct and difficult conversations that must take place to achieve real understanding and drive real change. We will listen and learn, and provide resources that will help us drive this change. We'll engage each of our student communities to actively participate -- to participate and play leading roles in each of the broader university communities we serve to help further this cause. We'll continue to stand for diversity, inclusion, and equality. Together, we'll embrace our core values to do the right thing and to drive evolution toward a world without prejudice, discrimination, and hate.

With that, we look forward to speaking with you on our next update.

Operator

[Operator Closing Remarks]

Duration: 99 minutes

Call participants:

Ryan Dennison -- Investor Relations

Bill Bayless -- Chief Executive Officer

Jennifer Beese -- Executive Vice President, Chief Operating Officer

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

Daniel Perry -- Executive Vice President, Chief Financial Officer, Treasurer

John Pawlowski -- Green Street Advisors -- Analyst

Alexander Goldfarb -- Piper Sandler & Co. -- Analyst

Alua Askarbek -- Bank of America -- Analyst

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Michael Bilerman -- Citigroup Equity Research -- Analyst

Neil Malkin -- Capital One Securities, Inc. -- Analyst

Richard Skidmore -- Goldman Sachs -- Analyst

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