General Body Meeting 10.13.11

1. General Body Meeting 10.13.11

2. Agenda • Announcements • Various Recruiting Events • News Updates • TTM Update • Unemployment, European Rate Cuts • Volcker Rule Leak, Drexia, Occupy Wall Street • Annaly Capital Mini-pitch • ACC Real Estate Pitch

3. Recruiting Events • UBS: Intro to Global Capital Markets • 4:30pm – 5:30pm - Wednesday, October 26th • Phillips 219 • Goldman Sachs: An Inside Look at Wall Street • 10:00am – 11:00am – Thursday, October 27th • Statler Hotel, Amphitheater • Morgan Stanley: Firmwide Presentation • 6:00pm – 7:30pm – Thursday, October 27th • Statler Hotel, Ballroom • NYC Trip • Fill out Survey!

4. News Updates

5. TTM Update

6. Unemployment • Unemployment rate holds steady at 9.1% • Non-Farm payroll increased by 103,000 exceeding expectations • July and August estimates were revised upwards • Senate killed Obama’s job bill, but President Obama will keep fighting • Initial jobless claims above 400K

7. European Rating Cuts • Fitch downgraded Spain & Italy • “the intensification of the euro zone crisis” • ECB buying debt in secondary market • Spain and Italy passed austerity plans • Growth concerns • Elections in Spain on November 20

8. Financials Update

9. Volcker Rule • On Tuesday the FDIC unanimously approved an initial version of the Volcker rule • Limits proprietary trading at banks • Issues associated with the Volker Rule • Reduce revenue generated through trading • Constrain liquidity • It is difficult to enforce • Competitive Disadvantage • Impact: • Would hit GS and MS the hardest • 48% and 27% of total revenues respectively • Most people believed that this version of the Volcker Rule is too stringent, and won’t be passed

10. Drexia Bank Bailout • Belgium plans to bailout Dexia Bank • Purchasing $5.4 billion in assets • Providing tens of billions of dollars in new guarantees • Passed a stress test three months ago • Triggered by other banks’ reluctance to lend to it due to its exposure to highly toxic entities ( Greece, Italy etc.) • Many European governments are reluctant to offer money to save the financial sector as they are already facing rising debts • This bank-rescue mission could be a model to save all the European banks from the risk of catastrophic meltdown and contagion

11. Occupy Wall Street • Protests have been going on for the past few weeks in large cities, namely New York and Washington D.C. • Social inequality, corporate greed, corporate payments to lobbyists etc. • Has gained support from students, unions and some politicians • Very preliminary phase • Politicians response? • Follow-up

12. Annaly Capital QuanTeam

13. REITs Investors REITs Mortgage Backed Securities Lenders Lends money at high yielding rates Borrows money at low rates

14. REITs Lends money at 6% Investors REITs Mortgage Backed Securities Lenders Profit: Lending Profits -- Borrowing Costs 6% -- 1% = 5% Profit: 5% Receives money at 1%

15. REITs Shareholders Shareholders Shareholders Profits Shareholders Shareholders Dividends: Pays out 90% of their profits as Dividends to Shareholders Dividends Yield: 15.5%

16. Profits

17. Mortgage Backed Securities

18. Comparisons Interest Rate Spread: 2.45% Interest Rate Spread: 4.20%

19. Comparisons Interest Rate Spread: 2.45% Interest Rate Spread: 2.23%

20. Thesis • Annaly’s underlying business model has not been changed • Sovereign Debt Crisis has no effect on Annaly • Operation Twist has had a minimal impact on borrowing and lending rates • Vast selling indicates we are Technically Oversold • Fear has been unwarranted

21. Operation Twist

22. Reasons For Price Drop • Fear that sovereign debt crisis will filter to the REITs • Liquidity will slow down • Costs of borrowing will rise dramatically • SEC Regulations • Chance that the SEC will place more regulations on the REITs

23. Sovereign Debt Crisis

24. Sovereign Debt Crisis

25. Best of Breed • Ultra-Safe mortgage backed securities • Insured by Government • Fannie Mae, Freddie Mac, Ginnie Mae • Industry Leading Name • Liquidity • Public Awareness

26. Analyst Valuations

27. Proposal • Sell Every other Position in the Club and buy this stock • ;)

28. American Campus Communities Derek Creadore ArshamMemarzadeh Margaret Szczerbicki Nick Hosseini Alex Friedman

29. Company Summary

30. Thesis • Stagnant economy and weak job market encouraging more people to go back to school • School room & board costs are increasing at unreasonable levels causing students to house off campus • Largest REIT focused on residential student housing properties • Consistent dividend yield currently at ~3.50%

31. Company Overview • Develops, manages, and acquires student housing assets • Leader in third-party development and management of on-campus student housing – possess 50 on-campus projects • Developed over $2.8 billion in properties since 1996 • The first publicly traded student housing REIT

32. Company Overview (2) • As of June 30, 2011, property portfolio contained 107 student housing properties with approximately 66,400 beds in approximately 21,200 apartment units • Over 40,000 beds acquired since 2005

33. Business Segments • Wholly-Owned Properties • On-Campus Participating Properties (ACE) • American Campus Equity (ACE) projects will have premier on-campus locations with marketing and operational assistance from the university • Subject university benefits by increasing housing capacity with minimal impacts to their credit ratios • Development Services • Property Management Services

34. Industry Overview • On campus college housing prices have been constantly increasing • Very few REITS focused solely on campus properties Source: Source: Collegeboard.org – Trends in College Pricing

35. Competitors • Campus Crest Communities Inc. (CCG) • 15,000 beds • Only are involved in off-campus housing • Education Realty Trust Inc. (EDR) • Properties in 23 states and total of over $2.4 billion in collegiate housing transactions • Currently owns about 25,400 beds

36. Property Portfolio • Own property in 37 states and parts of Canada • Majority of properties are in the Sun Belt

37. Recent News August 8, 2011 • Beat analysts consensus September 15, 2011 • ACC to be added to the S&P MidCap 400 index

38. Strengths • Short term lease: change w/ market rent increases • Little credit risk: leases backed by parents Fin aid • Properties 95.2% pre-leased for 2011/2012 yr • 98.2% occupancy rate forecast • Affected differently than other residential REITs by low interest rates • Traditional rent vs. buy decision • Students can only rent • Lower I.R. for ACC means lower borrowing costs

39. Weaknesses • Limited land directly surrounding campuses • Biggest competitors (universities) can avoid RE taxes and borrow at lower rates • Housing demand impacted by universities • Number of students accepted to university • Requiring that a certain class to live on campus • Greater tenant improvement costs as college students usually trash the places they live in

40. Opportunities • Strong backlog of projects • As of 6/30/11, $456.6M in projects under construction, all scheduled for completion by Fall 2012 • Continuous growing college enrollment, stimulated as economy remains weak • Operation Twist and the Feds continuous policies should keep long term I.R. low for a decent while

41. Growing College Population Source: http://nces.ed.gov

42. Threats • Trend towards online schools • Private construction of on-campus housing from universities • Availability of financing in tough economic environment to continue growing portfolio of properties

43. Sources of Revenue

44. Income Statement (all values in thousands of dollars)

45. Income Statement Analysis

46. Balance Sheet—Assets

47. Balance Sheet—Liabilities and Equity

48. Investing Activities

49. Contractual Obligations • Plan to meet requirements through revolving credit line, selling properties, issuing common stock ($150M ATM Equity Program), utilizing cash flow from operations.

50. Dividend History • AFFO = net income+deprecation-recurring CapEx • AFFO (2010) = 16,210k + 80,253k - 10,136k • AFFO (2010) = 86,327k • Dividend payout = 78,588k / 86,327k = 91%