Noncontrolling Interests

6 Months Ended

Jun. 30, 2020

Interests in Consolidated Real Estate Joint Ventures

Noncontrolling interests - partially owned properties: As of June 30, 2020, the Operating Partnership consolidates four joint ventures that own and operate ten owned off-campus properties. The portion of net assets attributable to the third-party partners in these arrangements is classified as “noncontrolling interests - partially owned properties” within equity and capital on the accompanying consolidated balance sheets of ACC and the Operating Partnership, respectively.

Redeemable noncontrolling interests (ACC) / redeemable limited partners (Operating Partnership): The noncontrolling interest holder in the Core Spaces / DRW Real Estate Investment joint ventures (the “Core Joint Ventures”), which were formed in 2017, had the option to redeem its noncontrolling interest in the entities through the exercise of put options. As the exercise of the options was outside of the Company’s control, the portion of net assets attributable to the third-party partner was classified as “redeemable noncontrolling interests” and “redeemable limited partners” in the mezzanine section of the December 31, 2019 consolidated balance sheets of ACC and the Operating Partnership, respectively. The redemption price was based on the fair value of the properties at the time of option exercise. These redeemable noncontrolling interests were marked to their redemption value at each balance sheet date. As the change in redemption value was based on fair value, there was no effect on the Company’s earnings per share. In January and February 2020, the noncontrolling interest holder exercised its option to redeem its remaining ownership interest in the Core Joint Ventures, which reduced the redeemable noncontrolling interest by $77.2 million. As of June 30, 2020, the Company had 100% ownership interest in all five properties initially held by the Core Joint Ventures.

Operating Partnership Ownership

Also included in redeemable noncontrolling interests (ACC) / redeemable limited partners (Operating Partnership) are OP Units for which the Operating Partnership is required, either by contract or securities law, to deliver registered common shares of ACC to the exchanging OP unit holder, or for which the Operating Partnership has the intent or history of exchanging such units for cash. The units classified as such include Series A Preferred Units (“Preferred OP Units”) as well as Common OP Units. The value of OP Units is reported at the greater of fair value, which is based on the closing market value of the Company’s common stock at period end, or historical cost at the end of each reporting period. The OP Unitholders’ share of the income or loss of the Company is included in “net income attributable to noncontrolling interests” on the consolidated statements of comprehensive income of ACC.

As of June 30, 2020 and December 31, 2019, approximately 0.4% of the equity interests of the Operating Partnership were held by owners of Common OP Units and Preferred OP Units not held by ACC or ACC Holdings. During the six months ended June 30, 2020, no Common or Preferred OP Units were converted into an equal number of shares of ACC’s common stock. During the

year ended December 31, 2019, 126,313 Common OP Units and 42,271 Preferred OP Units were converted into an equal number of shares of ACC’s common stock.

Below is a table summarizing the activity of redeemable noncontrolling interests (ACC) / redeemable limited partners (Operating Partnership) for the three months ended March 31, 2020 and 2019 and June 30, 2020 and 2019, which includes both the redeemable joint venture partners and OP Units discussed above:



Balance, December 31, 2019	$	104,381
Net income	311
Distributions	(234		)
Purchase of noncontrolling interests	(77,200		)
Adjustments to reflect redeemable noncontrolling interests at fair value	(9,490		)
Balance, March 31, 2020	$	17,768
Net loss	(32		)
Distributions	(234		)
Adjustments to reflect redeemable noncontrolling interests at fair value	3,410
Balance, June 30, 2020	$	20,912



Balance, December 31, 2018	$	184,446
Net income	259
Distributions	(305		)
Conversion of OP Units into shares of ACC common stock	(252		)
Adjustments to reflect redeemable noncontrolling interests at fair value	2,547
Balance, March 31, 2019	$	186,695
Net income	163
Distributions	(288		)
Adjustments to reflect redeemable noncontrolling interests at fair value	(660		)
Balance, June 30, 2019	$	185,910