2. Meeting Agenda  Announcements  Portfolio Update  Market Update  Lecture: Pitch Terminology  Pitch: ACC  Important Dates

4. Announcements

7. Free Wall Street Journal digital access for paid members Contact treasurer@usiteam.org to receive login information treasurer@usiteam.org

8. Announcements Build and manage your own virtual portfolio Compete with other McCombs students Top three winners receive prizes in January Register at usiteam.org/events Fall Portfolio Challenge $5$5 entry fee

9. First USIT Social Ultimate Frisbee When: Tonight, 8:30 pm Where: South Mall Cost: Free!

10. Announcements The Suggestion Box

11. Announcements Workshops Every Thursday 7-8PM SAC2.120 Topic this week: Cash Flow Modeling

12. Portfolio Update

14. Market Update

15. Twitter-Based WMD’s

16. Market Update Why would TV providers be willing to allow a direct competitor steal away face- time for the commercials they sell?

17. Market Update

19. Pitch Terminology Competitive Advantage

20. What gives the company an sustainable edge over its competitors? Cost Advantages Differentiation Advantages

21. Cost Advantages What creates a cost advantage? Superior Technology/Process (Toyota & Dell) Economies of Scale (Walmart)

22. Differentiation Advantage What creates a differentiation advantage? Entirely Unique Product Similar Product with Key Differentiation (Apple)

23. Competitive Advantage Not all competitive advantages fall into one of the two categories: ReputationStrategic Assets Barriers to EntryFlexibility Brand Popularity Switching Costs

24. Competitive Advantage How does this relate to pitches? Good Investment = Quality Company + Good Price Quality Company = Survival Potential + Outperformance

25. Competitive Advantage Can you invest in companies without a competitive advantage? Good Investment = Quality Company + Good Price Not every investment is built upon a “company will outperform” thesis and focus more on price.

26. University Securities Investment Team Manideep Ravi Tyler Menk Ann Cai Zach Sunderland October 15, 2013 American Campus Communities (NYSE: ACC)

27. Strategic Capital Group Company Overview Largest student housing company 1 st publicly traded student housing REIT Real Estate Investment Trust Distribute 90% of income as dividends Does not pay corporate income tax $4.2 billion worth of developments Partners with universities to build both on and off campus properties Headquartered in Austin

28. Strategic Capital Group Investment Thesis Strong Revenue Growth Highly experienced management Expanding Market

29. Strategic Capital Group Industry Overview: Student Housing REIT Competitive Landscape Threat of New Entrants Bargaining Power of Buyers Threat of Substitutes Bargaining Power of Suppliers

30. Strategic Capital Group Market Overview Near-campus housing for college students More independence Lower Costs Full kitchen units Increasingly cash-strapped universities contract private developers for housing Students paying for housing with student loans

31. Strategic Capital Group Risks & Mitigating Factors Seasonality of leases Competition from on- campus housing Future growth dependent on favorable real estate market Cannibalizat- ion of customers

32. Strategic Capital Group Management William C. Bayless Jr., President & CEO Owns 20% of the company Began student housing career in 1984 President of ACC since October 2003 Jonathan A Graf, Executive VP, CFO, Treasurer and Secretary Owns 8% of the company Extensive background in accounting R.D. Burck, Chairman of the Board Former Chancellor of UT Austin Former VP of ESPN

33. Strategic Capital Group Competitors CompanyTicker Market Cap Current Stock PriceFFOFFO/Share Total Debt/Equity Equity Value/FFO TEV/NTM EBITDA Education Realty TrustEDR1065.5 9.2840.804.400.71 2.1119.91 Equity ResidentialEQR19357.2 53.72993.2018.491.06 2.9119.22 Campus Crest CommunitiesCCG663.2 10.2825.402.470.66 4.1614.66 Industry Average353.138.450.835 3.0617.87 American Campus CommunitiesACC3673.6 35.06168.404.800.91 7.3017.7

34. Strategic Capital Group Valuation Projected (In Millions) 201220132014201520162017 Revenue$491.0$613.8$754.9$921.0$1,123.6$1,348.3 Cost of Sales$237.0$279.7$332.8$399.4$479.2$575.1 Gross Profit$254.0$334.1$422.1$521.6$644.4$773.3 Gross Margin51.7%54.4%55.9%56.6%57.3% SG&A Expenses$23.0$25.72$28.81$32.26$36.14$40.47 Other Income$0.4 $0.5 EBIT$231.4$308.8$393.7$489.8$608.7$733.3 EBIT Margin47.1%50.3%52.2%53.2%54.2%54.4% NOPAT$231.4$308.8$393.7$489.8$608.7$733.3 D&A$115.9$122.8$131.4$140.6$151.9$167.1 CapEx$255.0$280.5$314.2$358.1$408.3$469.5 Change in NWC($0.4)$35.6$15.9$18.6$20.9$22.2 FCF$92.7$115.6$195.1$253.7$331.5$408.6 Present Value of Cash Flows $110.1$176.9$219.2$272.7$320.2 Terminal Value $ 7,232.98 Enterprise Value $ 6,766.31 Assumptions WACC5% Tax Rate0.0% Exit Multiple17.70x Share Price $ 35.20 Calculations Enterprise Value $ 6,766.3 Less Net Debt $ 2,569.9 Equity Value $ 4,196.4 Shares Outstanding104 Value Per Share $ 40.35 Implied Discount14.63%

35. Strategic Capital Group Conclusion

36. Pitch Team Sign-Ups www.usiteam.org/membership