Table of Contents
Washington, D.C. 20549
Charlotte, NC 28211
(704) 496-2500
(Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
Chief Executive Officer
2100 Rexford Road, Suite 414
Charlotte, NC 28211
(704) 496-2500
(Name, Address, Including Zip Code and Telephone Number, Including Area Code, of Agent for Service)
Paul S. Ware J. Andrew Robison Bradley Arant Boult Cummings LLP 1819 Fifth Avenue North Birmingham, AL 35203 (205) 521-8000 | Jonathan Golden Arnall Golden Gregory LLP 171 17th Street NW Suite 2100 Atlanta, GA 30363-1031 (404) 873-8500 | J. Gerard Cummins Bartholomew A. Sheehan III Sidley Austin LLP 787 Seventh Avenue New York, NY 10019 (212) 839-5300 |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ (Do not check if a smaller reporting company) | Smaller reporting company o |
Table of Contents
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
Preliminary Prospectus dated August 17, 2010
![(CAMPUS CREST LOGO)](https://capedge.com/proxy/S-11A/0000950123-10-078464/g23199a3g2319900.gif)
Per | ||||||||
Share | Total | |||||||
Public offering price | $ | $ | ||||||
Underwriting discount(1) | $ | $ | ||||||
Proceeds, before expenses, to us | $ | $ |
(1) | Excludes a structuring fee payable to Raymond James & Associates, Inc. of 0.35% of the total public offering price of our common stock sold in this offering. See “Underwriting.” |
Raymond James | Citi | Goldman, Sachs & Co. | KeyBanc Capital Markets | |||
RBC Capital Markets | Baird |
Table of Contents
![](https://capedge.com/proxy/S-11A/0000950123-10-078464/g23199a3g2319912alo.gif)
Page | ||||
1 | ||||
23 | ||||
55 | ||||
57 | ||||
60 | ||||
68 | ||||
69 | ||||
71 | ||||
76 | ||||
106 | ||||
116 | ||||
157 | ||||
178 | ||||
179 | ||||
183 | ||||
190 | ||||
195 | ||||
201 | ||||
208 | ||||
210 | ||||
215 | ||||
236 | ||||
238 | ||||
245 | ||||
245 | ||||
245 | ||||
F-1 |
i
Table of Contents
ii
Table of Contents
• | 3,920 apartment units; and | |
• | 10,528 beds. |
• | 1,128 apartment units; and | |
• | 3,052 beds. |
• | average occupancy of approximately 89%; and | |
• | average monthly rental revenue per occupied bed of approximately $460. |
1
Table of Contents
2
Table of Contents
3
Table of Contents
• | Developing properties will expose us to additional risks beyond those associated with owning and operating student housing properties, and could materially and adversely affect us. | |
• | Adverse economic conditions and dislocation in the credit markets have had a material and adverse effect on us and may continue to materially and adversely affect us. | |
• | We rely on our relationships with the colleges and universities from which our properties draw student-tenants and the policies and reputations of these schools; any deterioration |
4
Table of Contents
in our relationships with such schools or changes in the schools’ admissions or residency policies or reputations could materially and adversely affect us. |
• | Our results of operations are subject to risks inherent in the student housing industry, such as an annual leasing cycle and limited leasing period, which could materially and adversely affect us. | |
• | Competition from other student housing properties, including on-campus housing and traditional multi-family housing located in close proximity to the colleges and universities from which we draw student-tenants, may reduce the demand for our properties, which could materially and adversely affect us. | |
• | Our success depends on key personnel whose continued service is not guaranteed, and their departure could materially and adversely affect us. | |
• | The current economic environment could reduce enrollment and limit the demand for our properties, which could materially and adversely affect us. | |
• | In each of the past five fiscal years, we have experienced significant net losses; if this trend continues, we could be materially and adversely affected. | |
• | If we are unable to acquire properties on favorable terms, our future growth could be materially and adversely affected. | |
• | Our strategy of investing in properties located in medium-sized college and university markets may not be successful, which could materially and adversely affect us. | |
• | Our indebtedness exposes us to a risk of default and will reduce our free cash flow, which could materially and adversely affect us. | |
• | Joint venture investments could be materially and adversely affected by our lack of sole decision-making authority, our reliance on our co-venturers’ financial condition and disputes between our co-venturers and us. | |
• | Our management team has not previously operated a REIT, and this inexperience could materially and adversely affect us. | |
• | Our performance and the value of our properties are subject to risks associated with real estate and with the real estate industry, which could materially and adversely affect us. | |
• | Provisions of our charter allow our board of directors to authorize the issuance of additional securities, which may limit the ability of a third party to acquire control of us through a transaction that our stockholders believe to be in their best interest. | |
• | Provisions of Maryland law may limit the ability of a third party to acquire control of us, which, in turn, may negatively affect our stockholders’ ability to realize a premium over the market price of our common stock. | |
• | The ownership limitations in our charter may restrict or prevent you from engaging in certain transfers of our common stock, which may delay or prevent a change in control of us that our stockholders believe to be in their best interest. |
5
Table of Contents
• | We may not be able to make our initial distributions or maintain our initial, or any subsequent, distribution rate. | |
• | A public market for our common stock may never develop and your ability to sell your shares of our common stock may be limited. | |
• | Common stock eligible for future sale may adversely affect the market price of our common stock. | |
• | Future offerings of debt or equity securities ranking senior to our common stock may limit our operating and financial flexibility and may adversely affect the market price of our common stock. | |
• | We have not obtained appraisals of our properties in connection with this offering and the price we pay to our existing investors for their interests in our predecessor entities may exceed our properties’ market value. | |
• | Our failure to qualify or remain qualified as a REIT could have a material and adverse effect on us and the market price of our common stock. | |
• | To qualify and remain qualified as a REIT, we will likely rely on the availability of equity and debt capital to fund our business. | |
• | Complying with REIT requirements may cause us to forgo otherwise attractive investment opportunities, which could materially and adversely affect us. |
6
Table of Contents
Occupancy | Average Monthly | |||||||||||||||||||||||||||||||
Fall 2009 | Distance to | Number | Number | as of | Rental Revenue | |||||||||||||||||||||||||||
Year | Overall | Campus | of | of | June 30, | Per Occupied | ||||||||||||||||||||||||||
City | State | Opened | Primary University Served | Enrollment | (miles) | Units | Beds | 2010 | Bed | |||||||||||||||||||||||
Wholly-Owned Properties | ||||||||||||||||||||||||||||||||
1 | Asheville | NC | 2005 | University of NC - Asheville | 3,695 | 0.1 | 154 | 448 | 97 | % | $ | 484 | ||||||||||||||||||||
2 | Carrollton | GA | 2006 | University of West Georgia | 11,500 | 0.1 | 168 | 492 | 99 | % | $ | 426 | ||||||||||||||||||||
3 | Las Cruces | NM | 2006 | New Mexico State University | 18,497 | 0.4 | 168 | 492 | 87 | % | $ | 441 | ||||||||||||||||||||
4 | Milledgeville | GA | 2006 | Georgia College & State University | 6,633 | 0.1 | 168 | 492 | 97 | % | $ | 500 | ||||||||||||||||||||
5 | Abilene | TX | 2007 | Abilene Christian University | 4,838 | 0.5 | 192 | 504 | 81 | % | $ | 442 | ||||||||||||||||||||
6 | Ellensburg | WA | 2007 | Central Washington University | 10,187 | 0.5 | 192 | 504 | 99 | % | $ | 462 | ||||||||||||||||||||
7 | Greeley | CO | 2007 | University of Northern Colorado | 12,711 | 1.0 | 192 | 504 | 79 | % | $ | 439 | ||||||||||||||||||||
8 | Jacksonville | AL | 2007 | Jacksonville State University | 9,351 | 0.2 | 192 | 504 | 85 | % | $ | 424 | ||||||||||||||||||||
9 | Mobile—Phase I (1) | AL | 2007 | University of South Alabama | 14,522 | On- Campus | 192 | 504 | 96 | % | $ | 453 | ||||||||||||||||||||
10 | Mobile—Phase II (1) | AL | 2008 | University of South Alabama | 14,522 | On- Campus | 192 | 504 | 98 | % | $ | 453 | ||||||||||||||||||||
11 | Nacogdoches | TX | 2007 | Stephen F. Austin University | 12,845 | 0.4 | 196 | 522 | 96 | % | $ | 484 | ||||||||||||||||||||
12 | Cheney | WA | 2008 | Eastern Washington University | 11,302 | 0.5 | 192 | 512 | 98 | % | $ | 450 | ||||||||||||||||||||
13 | Jonesboro | AR | 2008 | Arkansas State University | 12,156 | 0.2 | 192 | 504 | 82 | % | $ | 426 | ||||||||||||||||||||
14 | Lubbock | TX | 2008 | Texas Tech University | 30,049 | 2.1 | 192 | 504 | 86 | % | $ | 473 | ||||||||||||||||||||
15 | Stephenville | TX | 2008 | Tarleton State University | 8,598 | 0.8 | 192 | 504 | 99 | % | $ | 451 | ||||||||||||||||||||
16 | Troy | AL | 2008 | Troy University | 6,679 | 0.4 | 192 | 514 | 94 | % | $ | 455 | ||||||||||||||||||||
17 | Waco | TX | 2008 | Baylor University | 14,614 | 0.8 | 192 | 504 | 89 | % | $ | 516 | ||||||||||||||||||||
18 | Wichita | KS | 2008 | Wichita State University | 14,823 | 1.1 | 192 | 504 | 92 | % | $ | 440 | ||||||||||||||||||||
19 | Wichita Falls | TX | 2008 | Midwestern State University | 6,341 | 1.2 | 192 | 504 | 71 | % | $ | 451 | ||||||||||||||||||||
20 | Murfreesboro | TN | 2009 | Middle Tennessee State University | 25,188 | 0.8 | 186 | 504 | 90 | % | $ | 452 | ||||||||||||||||||||
21 | San Marcos | TX | 2009 | Texas State University | 30,816 | 1.7 | 192 | 504 | 97 | % | $ | 528 | ||||||||||||||||||||
Sub Total of Wholly-Owned Properties | 13,327 | (2) | 0.6 | (2) | 3,920 | 10,528 | 91 | % (3) | $ | 460 | (3) | |||||||||||||||||||||
7
Table of Contents
Occupancy | Average Monthly | |||||||||||||||||||||||||||||||
Fall 2009 | Distance to | as of | Rental Revenue | |||||||||||||||||||||||||||||
Year | Overall | Campus | Number | Number | June 30, | Per Occupied | ||||||||||||||||||||||||||
City | State | Opened | Primary University Served | Enrollment | (miles) | of Units | of Beds | 2010 | Bed | |||||||||||||||||||||||
Joint Venture Properties — 49.9% Ownership Interest | ||||||||||||||||||||||||||||||||
22 | Lawrence (4) | KS | 2009 | University of Kansas | 29,242 | 1.6 | 172 | 500 | 70 | % | $ | 444 | ||||||||||||||||||||
23 | Moscow (1) | ID | 2009 | University of Idaho | 11,957 | 0.5 | 192 | 504 | 50 | % | $ | 453 | ||||||||||||||||||||
24 | San Angelo | TX | 2009 | Angelo State University | 6,387 | 0.3 | 192 | 504 | 88 | % | $ | 470 | ||||||||||||||||||||
25 | Conway (5) | AR | 2010 | University of Central Arkansas | 11,781 | 0.4 | 180 | 504 | NA | NA | ||||||||||||||||||||||
26 | Huntsville (5) | TX | 2010 | Sam Houston State University | 16,772 | 0.2 | 192 | 504 | NA | NA | ||||||||||||||||||||||
27 | Statesboro (5) | GA | 2010 | Georgia Southern University | 19,086 | 0.7 | 200 | 536 | NA | NA | ||||||||||||||||||||||
Sub Total of Joint Venture Properties | 15,871 | (2) | 0.6 | (2) | 1,128 | 3,052 | 70 | % (3) | $ | 459 | (3) | |||||||||||||||||||||
Total Properties | 13,892 | (2) | 0.6 | (2) | 5,048 | 13,580 | 89 | % (3) | $ | 460 | (3) | |||||||||||||||||||||
(1) | Property subject to a ground lease. | |
(2) | Average. | |
(3) | Weighted average for the month ended June 30, 2010. | |
(4) | Occupancy based on 300 beds available for the 2009-2010 academic year; the property has been expanded and now has a total of 500 beds available for the 2010-2011 academic year. |
(5) | Property scheduled to open in August 2010. As of June 30, 2010, the percentage of beds leased at Conway, AR, Huntsville, TX and Statesboro, GA was 79%, 100% and 86%, respectively. |
8
Table of Contents
• | consolidate the ownership of our properties and the student housing business of Campus Crest Group into our operating partnership and its wholly-owned subsidiaries; | |
• | facilitate this offering; and | |
• | enable us to qualify as a REIT for federal income tax purposes commencing with our taxable year ending December 31, 2010. |
• | Pursuant to the terms of a contribution agreement, MXT Capital will contribute to our operating partnership its student housing business and interests in the predecessor entities in exchange for approximately $4.5 million (which will immediately be used to make capital contributions to certain entities, which will in turn immediately use such capital contributions solely to repay indebtedness) and OP units, representing a % limited partnership interest in our operating partnership. |
9
Table of Contents
• | Campus Crest Group will distribute to MXT Capital its interests in two parcels of land consisting of 20.2 acres, with associated indebtedness of approximately $1.9 million, on which we have decided not to build student housing properties; MXT Capital has agreed not to build student housing properties on these parcels in the future. | |
• | Campus Crest Group will distribute to MXT Capital its interest in an entity that will own a minority interest in a 1999 Pilatus PC-12 single-engine turboprop airplane. Upon completion of this offering, we will lease this aircraft on payment terms structured to equal our pro rata carrying and operating costs of the aircraft based on our actual usage. | |
• | Pursuant to the terms of a contribution agreement, the Ricker Group will contribute to our operating partnership its interests in the predecessor entities and the entire ownership interest in the entities that own fee interests in certain properties that were subject to ground leases with the Ricker Group prior to the completion of our formation transactions in exchange for approximately $26.7 million and 266,667 OP units, representing a % limited partnership interest in our operating partnership. |
• | Pursuant to the terms of contribution agreements and purchase and sale agreements, certain third-party investors will contribute to our operating partnership all of their interests in the predecessor entities in exchange for approximately $10.7 million and 53,000 OP units, representing a % limited partnership interest in our operating partnership. Under the terms of these agreements, these third-party investors will also provide us with certain limited representations and warranties with respect to their ownership interests being contributed to our operating partnership including authority to enter into the agreement, the absence of claims or litigation involving the contributed interest and the obtaining of any necessary consents to the contribution of the interests. The third-party investors also provide covenants under the agreements, including not to transfer or dispose of any of their contributed interests, and will indemnify us for any losses resulting from breaches of their representations, warranties and covenants. | |
• | In exchange for approximately $28.6 million, HSRE will sell to our operating partnership (i) all of its interests in each of The Grove at Milledgeville and The Grove at San Marcos, |
10
Table of Contents
with the result that we will own a 100% interest in each of these properties and (ii) a 49.8% interest in a joint venture that will own 100% of each of The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Moscow, The Grove at San Angelo and The Grove at Statesboro, with the result that we will own a 49.9% interest in these properties and HSRE will own a 50.1% interest in these properties. |
• | We will purchase the preferred membership interest in our CC-Encore joint venture for approximately $3.9 million and terminate CC-Encore. |
• | we will own approximately % of the outstanding OP units, MXT Capital will own approximately % of the outstanding OP units, the Ricker Group will own approximately % of the outstanding OP units and certain third-party investors will own, in the aggregate, approximately % of the outstanding OP units; | |
• | our operating partnership will own 100% interests in 21 of our properties; | |
• | our operating partnership will own an indirect 49.9% interest in The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Moscow, The Grove at San Angelo and The Grove at Statesboro; and | |
• | we will own each of the entities through which Campus Crest Group conducted its student housing business. |
11
Table of Contents
![(DIAGRAM)](https://capedge.com/proxy/S-11A/0000950123-10-078464/g23199a3g2319901.gif)
(1) | Includes an aggregate of 249,335 shares of restricted common stock to be granted to our independent directors, certain of our executive officers and certain members of our management team. | |
(2) | Represents a limited partnership interest in our operating partnership. |
12
Table of Contents
• | Our operating partnership will issue to MXT Capital OP units in exchange for MXT Capital’s contribution to our operating partnership of the interests owned by MXT Capital in the predecessor entities and its student housing business. |
• | MXT Capital will enter into a tax protection agreement with us. Pursuant to the tax protection agreement, we will agree not to sell, exchange or otherwise dispose of any of our properties for a period of years, or the tax protection period, in a transaction that would cause MXT Capital to realize taxable gain that was “built-in,” or the built-in gain, to such properties at the time of their contribution to our operating partnership. All of our properties will have such built-in gain. If we sell one or more of our properties during the tax protection period, we will be required to pay to MXT Capital an amount equal to the federal, state and local taxes imposed on the built-in gain allocated to it, with the amount of such taxes being computed based on the highest applicable federal, state and local marginal tax rates, as well as any “grossed up” taxes imposed on such payments. Consequently, our ability to sell or dispose of our properties will be substantially restricted by this obligation to make payments to MXT Capital during the tax protection period if we sell a property. This requirement will also restrict our ability to arrange financing for our operations as well as our ability to manage our capital structure. |
• | We will enter into a registration rights agreement with MXT Capital pursuant to which we will agree, among other things, to register the resale of any common stock that may be exchanged for the OP units issued in our formation transactions. This agreement requires us to seek to register all common stock that may be exchanged for OP units effective as of that date which is 12 months following completion of this offering on a shelf registration statement under the Securities Act of 1933, as amended, or the “Securities Act.” | |
• | MXT Capital will receive Campus Crest Group’s interests in two parcels of land consisting of 20.2 acres, with associated indebtedness of approximately $1.9 million, on which we have decided not to build student housing properties. | |
• | We will pay the Ricker Group approximately $26.7 million of the net proceeds from this offering and our operating partnership will issue to the Ricker Group 266,667 OP units in exchange for the Ricker Group’s contribution to our operating partnership of the interests owned by the Ricker Group in the predecessor entities and in the entities that have entered into ground leases with us relating to eight properties. |
13
Table of Contents
• | Approximately $6.0 million of the net proceeds from this offering will be used to repay indebtedness owed by us to RHR, LLC, an entity owned by MXT Capital and the Ricker Group; RHR, LLC will, in turn, immediately repay an equal amount of indebtedness owed by it to an unaffiliated third party on substantially the same terms and conditions as the loan from RHR, LLC to us. | |
• | Approximately $4.0 million of the net proceeds from this offering will be used to repay our indebtedness to Capital Bank, an entity in which the Ricker Group has an ownership interest and of which Carl H. Ricker, Jr. is a director. |
• | Each of Ted W. Rollins, Michael S. Hartnett and Carl H. Ricker, Jr. will be released from certain personal guarantees with respect to mortgage and construction indebtedness with aggregate principal amounts of $ million, $ million and $ million, respectively, and from personal guarantees with respect to the RHR, LLC and Capital Bank indebtedness described above. Each of Messrs. Rollins and Hartnett will be released from certain personal guarantees with respect to the preferred membership interest in CC-Encore. |
• | Indebtedness incurred by two entities through which MXT Capital conducts aspects of its business will be repaid by MXT Capital. MXT Capital will receive $4.5 million of the net proceeds from this offering, which it will immediately use to make capital contributions to these entities. These entities will, in turn, immediately use the capital contributions received from MXT Capital solely to repay indebtedness. | |
• | Our executive officers, directors and certain members of our management team will receive material benefits, including: |
• | a grant of 249,335 shares of restricted common stock pursuant to the Campus Crest Communities, Inc. 2010 Incentive Award Plan, or the “2010 Incentive Award Plan” (including 100,000 shares of restricted common stock granted in exchange for awards outstanding under Campus Crest Group’s deferred compensation plan, 116,000 shares of restricted common stock granted to certain of our executive officers and certain members of our management team and an aggregate grant of 33,335 shares of restricted common stock to our independent directors); | |
• | employment agreements providing for salary, bonus and other benefits, including severance upon a termination of employment under certain circumstances, as described under “Management—Employment Agreements;” | |
• | indemnification by us for certain liabilities and expenses incurred as a result of actions brought, or threatened to be brought, against them as officers; and | |
• | upon the completion of this offering we have agreed to pay to Donald L. Bobbitt, Jr., an executive vice president and our chief financial officer, and Howard J. Weissman, a senior vice president and our corporate controller, cash bonuses of $200,000 and $125,000, respectively. |
• | Each of our non-employee directors will receive material benefits, including: |
• | annual and per-meeting fees described under “Management—Director Compensation;” and | |
• | indemnification by us for certain liabilities and expenses incurred as a result of actions brought, or threatened to be brought, against him as a director. |
14
Table of Contents
15
Table of Contents
16
Table of Contents
17
Table of Contents
Pro Forma Campus | Historical Campus Crest Communities | |||||||||||||||||||||||||||
Crest Communities, Inc. | Predecessor | |||||||||||||||||||||||||||
Six Months | Year Ended | Six Months Ended | ||||||||||||||||||||||||||
Ended | December 31, | June 30, | Year Ended December 31, | |||||||||||||||||||||||||
June 30, 2010 | 2009 | 2010 | 2009 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Student housing leasing | $ | 25,986 | $ | 45,021 | $ | 24,443 | $ | 21,219 | $ | 43,708 | $ | 30,813 | $ | 15,598 | ||||||||||||||
Student housing services | 1,486 | 2,289 | 1,426 | 1,011 | 2,265 | 798 | 110 | |||||||||||||||||||||
Development, construction and management services | 17,311 | 24,540 | 30,738 | 37,258 | 60,711 | 2,505 | — | |||||||||||||||||||||
Total revenues | 44,783 | 71,850 | 56,607 | 59,488 | 106,684 | 34,116 | 15,708 | |||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Student housing operations | 14,229 | 23,707 | 13,455 | 11,416 | 23,155 | 14,890 | 7,470 | |||||||||||||||||||||
Development, construction and management services | 16,140 | 24,847 | 28,644 | 35,693 | 60,200 | 2,147 | — | |||||||||||||||||||||
General and administrative | 3,445 | 6,450 | 2,618 | 2,454 | 5,617 | 5,422 | 3,467 | |||||||||||||||||||||
Ground leases | 94 | 264 | 94 | 96 | 264 | 224 | 40 | |||||||||||||||||||||
Write-off of pre-development costs | — | 1,211 | — | — | 1,211 | 203 | — | |||||||||||||||||||||
Depreciation and amortization | 9,792 | 18,598 | 9,429 | 9,115 | 18,371 | 13,573 | 5,765 | |||||||||||||||||||||
Total operating expenses | 43,700 | 75,077 | 54,240 | 58,774 | 108,818 | 36,459 | 16,742 | |||||||||||||||||||||
Equity in loss of uncombined entities | (1,112 | ) | (565 | ) | (194 | ) | — | (59 | ) | — | — | |||||||||||||||||
Operating income (loss) | (29 | ) | (3,792 | ) | 2,173 | 714 | (2,193 | ) | (2,343 | ) | (1,034 | ) | ||||||||||||||||
Nonoperating income (expenses): | ||||||||||||||||||||||||||||
Interest expense | (4,287 | ) | (8,646 | ) | (10,686 | ) | (7,369 | ) | (15,871 | ) | (14,946 | ) | (6,583 | ) | ||||||||||||||
Change in fair value of interest rate derivatives | 279 | 90 | 178 | 2,680 | 797 | (8,758 | ) | (2,115 | ) | |||||||||||||||||||
Income taxes | (128 | ) | (73 | ) | — | — | — | — | — | |||||||||||||||||||
Other income (expense) | 45 | 44 | 45 | (19 | ) | 44 | (50 | ) | 100 | |||||||||||||||||||
Total nonoperating expenses | (4,091 | ) | (8,585 | ) | (10,463 | ) | (4,708 | ) | (15,030 | ) | (23,754 | ) | (8,598 | ) | ||||||||||||||
Net loss | (4,120 | ) | (12,377 | ) | (8,290 | ) | (3,994 | ) | (17,223 | ) | (26,097 | ) | (9,632 | ) | ||||||||||||||
Net loss attributable to noncontrolling interest | (288 | ) | (864 | ) | (5,025 | ) | (2,060 | ) | (10,486 | ) | (870 | ) | (2,083 | ) | ||||||||||||||
Net loss attributable to Predecessor | $ | (3,832 | ) | $ | (11,513 | ) | $ | (3,265 | ) | $ | (1,934 | ) | $ | (6,737 | ) | $ | (25,227 | ) | $ | (7,549 | ) | |||||||
18
Table of Contents
Pro Forma | ||||||||||||||||
Campus Crest | Historical Campus Crest | |||||||||||||||
Communities, Inc. | Communities Predecessor | |||||||||||||||
As of | As of June 30, | As of December 31, | ||||||||||||||
June 30, 2010 | 2010 | 2009 | 2008 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
(in thousands) | ||||||||||||||||
Student housing properties | $ | 370,400 | $ | 348,466 | $ | 347,157 | $ | 326,217 | ||||||||
Accumulated depreciation | (48,403 | ) | (48,403 | ) | (38,999 | ) | (20,794 | ) | ||||||||
Development in process | 7,868 | 3,641 | 3,300 | 15,742 | ||||||||||||
Investment in real estate, net | 329,865 | 303,704 | 311,458 | 321,165 | ||||||||||||
Investment in uncombined entity | 16,186 | 3,257 | 2,980 | 776 | ||||||||||||
Other assets | 29,048 | 21,412 | 17,358 | 20,214 | ||||||||||||
Total assets | $ | 375,099 | $ | 328,373 | $ | 331,796 | $ | 342,155 | ||||||||
Mortgage and construction loans | $ | 132,304 | $ | 329,374 | $ | 329,102 | $ | 322,426 | ||||||||
Lines of credit and other debt | — | 17,689 | 14,070 | 9,237 | ||||||||||||
Other liabilities | 29,950 | 34,756 | 31,340 | 32,606 | ||||||||||||
Total liabilities | 162,254 | 381,819 | 374,512 | 364,269 | ||||||||||||
Equity | ||||||||||||||||
Owners’ equity (deficit) | 267,020 | (54,245 | ) | (50,090 | ) | (42,502 | ) | |||||||||
Noncontrolling interest | (54,175 | ) | 799 | 7,374 | 20,388 | |||||||||||
Total equity | 212,845 | (53,446 | ) | (42,716 | ) | (22,114 | ) | |||||||||
Total liabilities and equity | $ | 375,099 | $ | 328,373 | $ | 331,796 | $ | 342,155 | ||||||||
Pro Forma | ||||||||
Campus Crest | ||||||||
Communities, Inc. | ||||||||
Six Months | Year Ended | |||||||
Ended | December 31, | |||||||
June 30, 2010 | 2009 | |||||||
(unaudited) | ||||||||
(unaudited) | ||||||||
Funds from operations (“FFO”) (1): | ||||||||
Net loss | $ | (4,120 | ) | $ | (12,377 | ) | ||
Real estate related depreciation and amortization | 9,643 | 18,432 | ||||||
Equity portion of real estate related depreciation and amortization on equity investees | 691 | 355 | ||||||
FFO | $ | 6,214 | $ | 6,410 | ||||
19
Table of Contents
Historical Campus Crest Communities Predecessor | ||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||
June 30, | Year Ended December 31, | |||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | ||||||||||||||||
(unaudited) | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Cash flow information: | ||||||||||||||||||||
Net cash provided by (used in) operations | $ | 2,739 | $ | 2,068 | $ | 4,353 | $ | 1,264 | $ | (1,209 | ) | |||||||||
Net cash used in investing | (2,662 | ) | (12,830 | ) | (23,552 | ) | (148,385 | ) | (113,043 | ) | ||||||||||
Net cash provided by financing | 75 | 5,523 | 11,060 | 144,781 | 126,061 |
As of June 30, | As of December 31, | |||||||||||||||
2010 | 2009 | 2008 | 2007 | |||||||||||||
Units | 4,476 | 4,476 | 3,542 | 1,814 | ||||||||||||
Beds | 12,036 | 12,036 | 9,520 | 4,966 | ||||||||||||
Occupancy | 89 | % | 84 | % | 78 | % | 91 | % |
(1) | FFO is used by industry analysts and investors as a supplemental operating performance measure for REITs. We calculate FFO in accordance with the definition that was adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, or “NAREIT.” FFO, as defined by NAREIT, represents net income (loss) determined in accordance with accounting principles generally accepted in the United States of America, or “GAAP,” excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We use FFO as a supplemental performance measure because, in excluding real estate-related depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating expenses. We also believe that, as a widely recognized measure of the performance of equity REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially and adversely impact our results from operations, the utility of FFO as a measure of our performance is limited. While FFO is a relevant and widely used measure of operating performance of equity REITs, other equity REITs may use different methodologies for calculating FFO and, accordingly, FFO as disclosed by such other REITs may not be comparable to FFO published herein. Therefore, we believe that in order to facilitate a clear understanding of our historical operating results, FFO should be examined in conjunction with net income (loss) as presented in the combined financial statements and the other financial statements included elsewhere in this prospectus. FFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of the properties’ financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. |
20
Table of Contents
Common stock offered by us | shares(1) | |
Common stock to be outstanding after this offering | shares(1)(2) | |
Common stock and OP units to be outstanding after this offering | shares/units(1)(2)(3) | |
Use of proceeds | We will contribute the net proceeds from this offering to our operating partnership, which will use the proceeds as follows: |
• approximately $214.3 million to reduce outstanding mortgage and construction loan indebtedness and pay associated costs; |
• approximately $4.0 million to repay unsecured indebtedness to Capital Bank; | ||
• approximately $6.0 million to repay unsecured indebtedness to RHR, LLC; RHR, LLC will, in turn, immediately repay an equal amount of indebtedness owed by it to an unaffiliated third party on substantially the same terms and conditions as the loan from RHR, LLC to us; | ||
• approximately $4.5 million will be paid to MXT Capital, which will immediately use such amount to make capital contributions to certain entities that will, in turn, immediately use the capital contributions solely to repay indebtedness; | ||
• approximately $28.6 million to acquire interests in our properties from HSRE and satisfy associated obligations to HSRE; | ||
• approximately $26.7 million to acquire interests in our properties from the Ricker Group; | ||
• approximately $10.7 million to acquire interests in our properties from certain third-party investors; |
• approximately $4.2 million to acquire land on which we expect to commence building five properties following the completion of this offering; |
• approximately $3.9 million to acquire the preferred membership interest in CC-Encore; and |
• approximately $ million for working capital and general corporate purposes. | ||
Ownership and transfer restrictions | Our charter, subject to certain exceptions, prohibits any person from directly or indirectly owning more than 9.8% by vote or value, whichever is more restrictive, of either our outstanding common stock or our outstanding capital stock in the aggregate. See “Description of Capital Stock—Restrictions on Ownership and Transfer.” |
21
Table of Contents
Risk factors | Investing in our common stock involves significant risks. You should carefully read and consider the information set forth under “Risk Factors” and all other information in this prospectus before investing in our common stock. | |
Proposed New York Stock Exchange symbol | “CCG” |
(1) | Excludes shares of common stock issuable upon exercise of the underwriters’ overallotment option. | |
(2) | Includes the grant of 100,000 shares of restricted common stock to certain of our executive officers and certain members of our management team in exchange for awards outstanding under Campus Crest Group’s deferred compensation plan, a grant of 116,000 shares of restricted common stock to certain of our executive officers and certain members of our management team and an aggregate grant of 33,335 shares of restricted common stock to our independent directors. | |
(3) | Includes the issuance of an aggregate of OP units to MXT Capital, the Ricker Group and certain third-party investors in connection with our formation transactions. |
22
Table of Contents
• | abandonment of development opportunities after expending significant cash and other resources to determine feasibility, requiring us to expense costs incurred in connection with the abandoned project; | |
• | construction costs of a project exceeding our original estimates; | |
• | failure to complete development projects on schedule or in conformity with building plans and specifications; | |
• | lower than anticipated occupancy and rental rates at a newly completed property, which rates may not be sufficient to make the property profitable; and | |
• | failure to obtain, or delays in obtaining, necessary zoning, land use, building, occupancy and other required governmental permits and authorizations. |
23
Table of Contents
24
Table of Contents
25
Table of Contents
26
Table of Contents
27
Table of Contents
• | an inability to obtain financing on attractive terms or at all; | |
• | competition from other real estate investors; | |
• | increased purchase prices and decreased expected yields due to competition from other potential acquirers; | |
• | the need to make significant and unexpected capital expenditures to improve or renovate acquired properties; | |
• | an inability to quickly and efficiently integrate acquisitions, particularly any acquisitions of portfolios of properties, into our existing operations; | |
• | market conditions may result in higher than expected vacancy rates and lower than expected rental rates at acquired properties; and | |
• | acquisition of properties subject to liabilities but without any recourse, or with only limited recourse, to the sellers, or with liabilities that are unknown to us, such as liabilities for clean-up of undisclosed environmental contamination, claims by tenants, vendors or other persons dealing with the former owners of our properties. |
28
Table of Contents
• | we may be unable to borrow additional funds as needed or on favorable terms; | |
• | we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of the indebtedness being refinanced; | |
• | we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms; | |
• | we may default on our payment or other obligations as a result of insufficient cash flow or otherwise, which may result in a cross-default on our other obligations, and the lenders or mortgagees may foreclose on our properties that secure their loans and receive an assignment of rents and leases; | |
• | to the extent that we incur unhedged floating rate debt, we will have exposure to interest rate risk; and | |
• | foreclosures could create taxable income without accompanying cash proceeds, a circumstance which could hinder our ability to meet the distribution requirements necessary to enable us to qualify and remain qualified for taxation as a REIT. |
29
Table of Contents
30
Table of Contents
31
Table of Contents
32
Table of Contents
33
Table of Contents
• | adverse national, regional and local economic conditions; | |
• | rising interest rates; | |
• | oversupply of student housing in our markets, increased competition for student-tenants or reduction in demand for student housing; | |
• | inability to collect rent from student-tenants; | |
• | vacancies at our properties or an inability to lease our properties on favorable terms; | |
• | inability to finance property development and acquisitions on favorable terms; | |
• | increased operating costs, including insurance premiums, utilities and real estate taxes; | |
• | the need for capital expenditures at our properties; | |
• | costs of complying with changes in governmental regulations; | |
• | the relative illiquidity of real estate investments; and |
34
Table of Contents
• | civil unrest, acts of God, including earthquakes, floods, hurricanes and other natural disasters, which may result in uninsured losses, and acts of war or terrorism. |
35
Table of Contents
36
Table of Contents
37
Table of Contents
38
Table of Contents
39
Table of Contents
• | The Maryland Business Combination Act that, subject to limitations, prohibits certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our voting capital stock) or an affiliate of any interested stockholder for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes special appraisal rights and special stockholder voting requirements on these combinations; and | |
• | The Maryland Control Share Acquisition Act that provides that our “control shares” (defined as shares which, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares. |
40
Table of Contents
41
Table of Contents
42
Table of Contents
43
Table of Contents
44
Table of Contents
45
Table of Contents
46
Table of Contents
47
Table of Contents
• | actual or anticipated variations in our quarterly operating results; | |
• | changes in our financial performance or earnings estimates; | |
• | increases in market interest rates; | |
• | changes in market valuations of similar companies; | |
• | adverse market reaction to any indebtedness we incur in the future; | |
• | additions or departures of key personnel; | |
• | actions by our stockholders; | |
• | speculation in the press or investment community; | |
• | general market, economic and political conditions, including the recent economic slowdown and dislocation in the global credit markets; | |
• | our issuance of additional shares of common stock or other securities; | |
• | the performance of other similar companies; | |
• | changes in accounting principles; | |
• | passage of legislation or other regulatory developments that adversely affect us or our industry; and | |
• | the potential impact of the recent economic slowdown on the student housing industry and related budgets of colleges and universities. |
48
Table of Contents
49
Table of Contents
• | we would not be allowed a deduction for distributions to stockholders in computing our taxable income and we would be subject to U.S. federal income tax at regular corporate rates; | |
• | we also could be subject to the U.S. federal alternative minimum tax and possibly increased state and local taxes; and | |
• | unless we are entitled to relief under applicable statutory provisions, we could not elect to be taxed as a REIT for four taxable years following a year during which we were disqualified. |
50
Table of Contents
• | general market conditions; | |
• | our current debt levels and the number of properties subject to encumbrances; | |
• | our current performance and the market’s perception of our growth potential; | |
• | our cash flow and cash dividends; and | |
• | the market price of our common stock. |
51
Table of Contents
52
Table of Contents
53
Table of Contents
54
Table of Contents
• | the factors discussed in this prospectus, including those set forth under the section titled “Risk Factors;” | |
• | the performance of the student housing industry in general; | |
• | decreased occupancy or rental rates at our properties resulting from competition or otherwise; | |
• | the operating performance of our properties; | |
• | the success of our development and construction activities; | |
• | changes on the admissions or housing policies of the colleges and universities from which we draw student-tenants; | |
• | the availability of and our ability to attract and retain qualified personnel; | |
• | changes in our business and growth strategies; | |
• | our capitalization and leverage level; | |
• | our capital expenditures; | |
• | the degree and nature of our competition, in terms of developing properties, consummating acquisitions and in obtaining student-tenants to fill our properties; | |
• | volatility in the real estate industry, interest rates and spreads, the debt or equity markets, the economy generally or the local markets in which our properties are located, whether the result of market events or otherwise; | |
• | events or circumstances which undermine confidence in the financial markets or otherwise have a broad impact on financial markets, such as the sudden instability or collapse of large financial institutions or other significant corporations, terrorist attacks, natural or man-made disasters or threatened or actual armed conflicts; | |
• | the availability and terms of short-term and long-term financing, including financing for development and construction activities; |
55
Table of Contents
• | the availability of attractive development and/or acquisition opportunities in properties that satisfy our investment criteria, including our ability to identify and consummate successful property developments and property acquisitions; | |
• | the credit quality of our student-tenants and parental guarantors; | |
• | changes in personnel, including the departure of key members of our senior management, and lack of availability of qualified personnel; | |
• | unanticipated increases in financing and other costs, including a rise in interest rates; | |
• | estimates relating to our ability to make distributions to our stockholders in the future and our expectations as to the form of any such distributions; | |
• | environmental costs, uncertainties and risks, especially those related to natural disasters; | |
• | the limitations imposed by the tax protection agreement on our ability to sell or dispose of our properties during the tax protection period; | |
• | changes in governmental regulations, accounting treatment, tax rates and similar matters; | |
• | legislative and regulatory changes (including changes to laws governing the taxation of REITs); and | |
• | limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes and the ability of certain of our subsidiaries to qualify as TRSs for U.S. federal income tax purposes, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules. |
56
Table of Contents
• | approximately $214.3 million to reduce outstanding mortgage and construction loan indebtedness and pay associated costs, as follows: |
• | $32.5 million outstanding under our mortgage loan with Silverton Bank as it relates to two of our properties (this loan, or the Silverton Bank Mortgage Loan, is secured by six of our properties, has an aggregate outstanding principal amount of approximately $104.0 million, as of June 30, 2010, an interest rate of 6.4% per annum and a maturity date of February 28, 2013); |
• | $15.6 million outstanding under our construction loan with Wachovia Bank relating to The Grove at Mobile-Phase II (this loan, or The Grove at Mobile-Phase II Construction Loan, is secured by The Grove at Mobile-Phase II, has an aggregate outstanding principal amount of approximately $15.6 million, as of June 30, 2010, an interest rate of LIBOR plus 300 basis points (with a 5.5% interest rate floor) and a maturity date of October 31, 2010); |
• | $148.9 million outstanding under our construction loan with Wachovia Bank as it relates to nine of our properties (this loan, or the Wachovia Bank Nine Property Construction Loan, is secured by nine of our properties, has an aggregate outstanding principal amount of approximately $148.9 million, as of June 30, 2010, an interest rate of LIBOR plus 280 basis points (with a 6.00% interest rate floor through October 31, 2010 with respect to approximately $136.4 million) and a maturity date of January 31, 2011); |
• | $14.9 million outstanding under our construction loan with Wachovia Bank as it relates to The Grove at San Marcos (this loan, or the Wachovia Bank Three Property Construction Loan, is secured by three of our properties, has an aggregate outstanding principal amount of approximately $14.9 million, as of June 30, 2010, an interest rate of LIBOR plus 250 basis points (with a 5.94% interest rate floor) and a maturity date of May 15, 2011); and |
• | $2.4 million to pay costs associated with the termination of interest rate swaps and hedges relating to the repayment of this debt (based on the settlement value as of June 30, 2010); |
• | approximately $4.0 million to repay indebtedness owed to Capital Bank, which has an interest rate of prime plus 1.0% and a maturity date of October 5, 2010; |
57
Table of Contents
• | approximately $6.0 million to repay unsecured indebtedness owed by us to RHR, LLC, an entity owned by MXT Capital and the Ricker Group, which has an interest rate of 12% and a maturity date of April 30, 2011; RHR, LLC will, in turn, immediately repay an equal amount of indebtedness owed by it to an unaffiliated third party on substantially the same terms and conditions as the loan from RHR, LLC to us; |
• | approximately $4.5 million will be paid to MXT Capital, which will immediately use such amount to make capital contributions to certain entities that will, in turn, immediately use the capital contributions solely to repay indebtedness; |
• | approximately $28.6 million to acquire interests in our properties from HSRE and satisfy associated obligations to HSRE; | |
• | approximately $26.7 million to acquire interests in our properties from the Ricker Group; | |
• | approximately $10.7 million to acquire interests in our properties from certain third-party investors; |
• | approximately $4.2 million to acquire land on which we expect to commence building five properties following the completion of this offering; |
• | approximately $3.9 million to acquire the preferred membership interest in CC-Encore; and |
• | approximately $ million for working capital and general corporate purposes. |
58
Table of Contents
Sources | Uses | |||||||||
(in millions) | (in millions) | |||||||||
Gross offering proceeds (1) | $ | Underwriting discount | $ | |||||||
Structuring fee | ||||||||||
Other fees and expenses | ||||||||||
Reduction of outstanding mortgage and construction loan indebtedness and payment of associated costs | 214.3 | |||||||||
Repayment of unsecured indebtedness (Capital Bank and RHR, LLC) | 10.0 | |||||||||
Payment to MXT Capital for repayment of certain indebtedness | 4.5 | |||||||||
Payment to HSRE for interests in our properties and associated obligations | 28.6 | |||||||||
Payment to the Ricker Group for interests in our properties | 26.7 | |||||||||
Payment to certain third-party investors for interests in our properties | 10.7 | |||||||||
Acquisition of land | 4.2 | |||||||||
Acquisition of CC-Encore preferred membership interest | 3.9 | |||||||||
Working capital (2) | ||||||||||
Total Sources | $ | Total Uses | $ | |||||||
(1) | This amount assumes shares of common stock are sold in this offering and will increase or decrease depending upon whether such shares are sold above or below $ per share (the mid-point of the price range set forth on the cover page of this prospectus). | |
(2) | Working capital needs will be met by utilizing net proceeds from this offering and funds available under our revolving credit facility, which we expect to obtain upon completion of this offering. |
59
Table of Contents
• | fee income from development and construction services that we may provide to future uncombined joint venture properties (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Expected to Affect Our Operating Results—Development and Construction Services”); |
• | cash to be used for capital expenditures, such as development and construction activities and property acquisitions, other than an estimate of recurring capital expenditures at our combined properties and our uncombined joint venture properties; or |
• | cash estimated to be used for financing activities, other than scheduled amortization payments on mortgage indebtedness that will be outstanding upon consummation of this offering. |
60
Table of Contents
61
Table of Contents
Pro forma net loss before noncontrolling interest for the year ended December 31, 2009 | $ | |||||
Less: | Pro forma net loss before noncontrolling interest for the six months ended June 30, 2009 | |||||
Add: | Pro forma net loss before noncontrolling interest for the six months ended June 30, 2010 | |||||
Pro forma net loss for the 12 months ended June 30, 2010 | ||||||
Add: | Depreciation and amortization for the 12 months ended June 30, 2010 | (1) | ||||
Add: | Increase in net income before depreciation from existing development and construction services contracts for the 12 months ending June 30, 2011 compared to the 12 months ended June 30, 2010 | (2) | ||||
Add: | Increase in revenue from existing management services contracts for the 12 months ending June 30, 2011 compared to the 12 months ended June 30, 2010 | (3) | ||||
Add: | Increase in revenue from the anticipated increase in occupancy for the 12 months ending June 30, 2011 compared to the 12 months ended June 30, 2010 | (4) | ||||
Add: | Increase in revenue from the anticipated increase in average rental rate for the 12 months ending June 30, 2011 compared to the 12 months ended June 30, 2010 | (5) | ||||
Add: | Increase in net income before depreciation from a full year’s operation of two combined properties that opened in 2009 | (6) | ||||
Less: | Decrease in net income before depreciation from a full year’s operation of three uncombined joint venture properties that opened in 2009 | (7) | ||||
Add: | Increase in net income before depreciation from initial operations of three uncombined joint venture properties scheduled to open in August 2010 for the 2010-2011 academic year | (8) | ||||
Add: | Decrease in expense from the non-recurring charge related to the write-off of pre-development costs that was recorded in September 2009 | |||||
Estimated cash flows from operating activities for the 12 months ending June 30, 2011 | (9) |
62
Table of Contents
Estimated cash flows used in investing activities: | ||||||
Less: | Annual provision for recurring capital expenditures — combined properties | (10) | ||||
Less: | Pro rata share of annual provision for recurring capital expenditures — uncombined joint venture properties | (11) | ||||
Total estimated cash flow used in investing activities | ||||||
Estimated cash flows used in financing activities: | ||||||
Less: | Scheduled loan principal repayments — combined properties | (12) | ||||
Less: | Pro rata share of scheduled loan principal repayments — uncombined joint venture properties | (13) | ||||
Total estimated cash flows used in financing activities | ||||||
Total estimated cash available for distribution for the 12 months ending June 30, 2011 | $ | (14) | ||||
Total estimated initial annual distribution to stockholders and holders of OP units | $ | (15) | ||||
Estimated annual distribution per share/OP unit | $ | |||||
Payout ratio based on estimated cash available for distribution | % (16) | |||||
Cash from our revolving credit facility utilized to fund the excess of estimated initial annual distribution over estimated cash available for distribution for the 12 months ending June 30, 2011 | $ | |||||
Estimated cash available for distribution to: | ||||||
OP units | $ | |||||
Shares of common stock | $ |
(1) | Includes $ of depreciation and amortization from our combined properties and $ of our pro rata share of depreciation and amortization from our uncombined joint venture properties. |
(2) | The following table reflects the economic impact on the 12 months ending June 30, 2011 resulting from anticipated changes in contractual development and construction services revenue and expenses, as compared to the 12 months ended June 30, 2010. Revenue and expenses from development and construction services for the 12 months ending June 30, 2011 relate primarily to the completion of the three joint venture properties that are scheduled to commence operations for the 2010-2011 academic year. |
Year Ended | Six mos. Ended | Six mos. Ended | 12 mos. Ended | 12 mos. Ending | ||||||||||||||||||||
12/31/09 | 6/30/09 | 6/30/10 | 6/30/10 | 6/30/11 | Increase/ | |||||||||||||||||||
(Pro Forma) | (Pro Forma) | (Pro Forma) | (Pro Forma) | (Existing Contracts) | (Decrease) | |||||||||||||||||||
Revenues from External Customers | ||||||||||||||||||||||||
Operating Expenses (External) | ||||||||||||||||||||||||
Net Income before Depreciation |
(3) | Adjustment reflects the net increase in contractual management fee revenues for the 12 months ending June 30, 2011 compared to the same period ended June 30, 2010 from contracts in place during the 12 months ended June 30, 2010. The increase in revenue from management services for the 12 months ending June 30, 2011 relates primarily to the impact of a full year of management services revenue for the three joint venture properties that opened in 2009 and the initiation of management services for the three joint venture properties that are scheduled to commence operations for the 2010-2011 academic year. |
63
Table of Contents
(4) | The following table reflects the economic impact on the 12 months ending June 30, 2011 resulting from anticipated changes in our economic occupancy based on our executed lease status for our operating properties as of , 2010, as compared to the 12 months ended June 30, 2010 as follows: |
Impact on Net | ||||||||||||||||||||||||||||||||||
Economic | Executed Lease | Pro Forma | Income before | |||||||||||||||||||||||||||||||
Occupancy for | Economic | Status for the | Occupancy for | Depreciation | ||||||||||||||||||||||||||||||
Total Beds | 12 mos. Ended | Occupancy | 2010-2011 AY | 12 mos. Ending | for the 12 mos. | |||||||||||||||||||||||||||||
at Property | 6/30/10(a) | as of | as of (b) | 6/30/11(c) | Ending 6/30/11(d) | |||||||||||||||||||||||||||||
Wholly-Owned Properties | ||||||||||||||||||||||||||||||||||
1 | Asheville, NC | 448 | ||||||||||||||||||||||||||||||||
2 | Carrollton, GA | 492 | ||||||||||||||||||||||||||||||||
3 | Las Cruces, NM | 492 | ||||||||||||||||||||||||||||||||
4 | Milledgeville, GA | 492 | ||||||||||||||||||||||||||||||||
5 | Abilene, TX | 504 | ||||||||||||||||||||||||||||||||
6 | Ellensburg, WA | 504 | ||||||||||||||||||||||||||||||||
7 | Greeley, CO | 504 | ||||||||||||||||||||||||||||||||
8 | Jacksonville, AL | 504 | ||||||||||||||||||||||||||||||||
9 | Mobile, AL Phase I | 504 | ||||||||||||||||||||||||||||||||
10 | Mobile, AL Phase II | 504 | ||||||||||||||||||||||||||||||||
11 | Nacogdoches, TX | 522 | ||||||||||||||||||||||||||||||||
12 | Cheney, WA | 512 | ||||||||||||||||||||||||||||||||
13 | Jonesboro, AR | 504 | ||||||||||||||||||||||||||||||||
14 | Lubbock, TX | 504 | ||||||||||||||||||||||||||||||||
15 | Stephenville, TX | 504 | ||||||||||||||||||||||||||||||||
16 | Troy, AL | 514 | ||||||||||||||||||||||||||||||||
17 | Waco, TX | 504 | ||||||||||||||||||||||||||||||||
18 | Wichita, KS | 504 | ||||||||||||||||||||||||||||||||
19 | Wichita Falls, TX | 504 | ||||||||||||||||||||||||||||||||
20 | Murfreesboro, TN | 504 | ||||||||||||||||||||||||||||||||
21 | San Marcos, TX | 504 | ||||||||||||||||||||||||||||||||
Sub Total | 10,528 | |||||||||||||||||||||||||||||||||
Joint Venture Properties | ||||||||||||||||||||||||||||||||||
22 | Lawrence, KS | 500 | ||||||||||||||||||||||||||||||||
23 | Moscow, ID | 504 | ||||||||||||||||||||||||||||||||
24 | San Angelo, TX | 504 | ||||||||||||||||||||||||||||||||
Sub Total | 1,508 | |||||||||||||||||||||||||||||||||
Total | 12,036 |
(a) | Economic occupancy for the historical 12 months ended June 30, 2010 reflects the average occupancy during that period, which generally includes one month of occupancy results from the 2008-2009 academic year (i.e., July 2009) and 11 months of occupancy results from the 2009-2010 academic year (i.e., August 2009 through June 2010). |
(b) | Executed lease status for the 2010-2011 academic year is based on the number of executed leases in hand for the 2010-2011 academic year as of , 2010. |
(c) | Economic occupancy for the 12 months ending June 30, 2011 is based on one month (i.e., July 2010) of current economic occupancy (as of , 2010) and 11 months (i.e., August 2010 through June 2011) of economic occupancy based on executed leases in hand for the 2010-2011 academic year as of , 2010. |
(d) | Impact on net income before depreciation for the 12 months ending June 30, 2011 based on increase in occupancy assuming average monthly revenue per occupied bed for the 12 months ending June 30, 2011 is equal to average monthly revenue per occupied bed for the 12 months ended June 30, 2010. |
(5) | The following table reflects the economic impact on the 12 months ending June 30, 2011 resulting from anticipated changes in our average revenue per leased bed based on our |
64
Table of Contents
executed lease status for our operating properties as of , 2010, as compared to the 12 months ended June 30, 2010 as follows: |
Average | Average | Average | Impact on Net | |||||||||||||||||||||||
Monthly Revenue | Monthly Revenue | Total Beds | Average | Monthly Revenue | Income before | |||||||||||||||||||||
per Occupied Bed | per Occupied Bed | Leased for | Monthly Revenue | per Leased Bed | Depreciation | |||||||||||||||||||||
for the 12 mos. | For the Month | the 2010-2011 AY | per Leased Bed | for the 12 mos. | for the 12 mos. | |||||||||||||||||||||
Ended 6/30/10(a) | Ended | as of (b) | for the 2010-2011 AY(b) | Ending 6/30/11(c) | Ending 6/30/11(d) | |||||||||||||||||||||
Wholly-Owned Properties | ||||||||||||||||||||||||||
1 | Asheville, NC | |||||||||||||||||||||||||
2 | Carrollton, GA | |||||||||||||||||||||||||
3 | Las Cruces, NM | |||||||||||||||||||||||||
4 | Milledgeville, GA | |||||||||||||||||||||||||
5 | Abilene, TX | |||||||||||||||||||||||||
6 | Ellensburg, WA | |||||||||||||||||||||||||
7 | Greeley, CO | |||||||||||||||||||||||||
8 | Jacksonville, AL | |||||||||||||||||||||||||
9 | Mobile, AL Phase I | |||||||||||||||||||||||||
10 | Mobile, AL Phase II | |||||||||||||||||||||||||
11 | Nacogdoches, TX | |||||||||||||||||||||||||
12 | Cheney, WA | |||||||||||||||||||||||||
13 | Jonesboro, AR | |||||||||||||||||||||||||
14 | Lubbock, TX | |||||||||||||||||||||||||
15 | Stephenville, TX | |||||||||||||||||||||||||
16 | Troy, AL | |||||||||||||||||||||||||
17 | Waco, TX | |||||||||||||||||||||||||
18 | Wichita, KS | |||||||||||||||||||||||||
19 | Wichita Falls, TX | |||||||||||||||||||||||||
20 | Murfreesboro, TN | |||||||||||||||||||||||||
21 | San Marcos, TX | |||||||||||||||||||||||||
Sub Total | ||||||||||||||||||||||||||
Joint Venture Properties | ||||||||||||||||||||||||||
22 | Lawrence, KS | |||||||||||||||||||||||||
23 | Moscow, ID | |||||||||||||||||||||||||
24 | San Angelo, TX | |||||||||||||||||||||||||
Sub Total | ||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||
(a) | Average monthly revenue per occupied bed for the historical 12 months ended June 30, 2010 generally includes one month of results from the 2008-2009 academic year (i.e., July 2009) and 11 months of results from the 2009-2010 academic year (i.e., August 2009 through June 2010). |
(b) | Total beds leased and average monthly revenue per leased bed for the 2010-2011 academic year is based on executed leases in hand for the 2010-2011 academic year as of , 2010. |
(c) | Estimated average monthly revenue per leased bed for the 12 months ending June 30, 2011 is based on one month (i.e., July 2010) of current average monthly revenue per occupied bed (as of the month ended , 2010) and 11 months (i.e., August 2010 through June 2011) of estimated average monthly revenue per leased bed based on executed leases in hand as of , 2010. |
(d) | Impact on net income before depreciation is based on the difference between the estimated average monthly revenue per leased bed for the 12 months ending June 30, 2011 and the historical average monthly revenue per occupied bed for the 12 months ended June 30, 2010, multiplied by the number of executed leases in hand as of , 2010, multiplied by 12 months. |
(6) | The following table reflects the economic impact on the 12 months ending June 30, 2011 resulting from a full year’s operation of two combined properties that opened in 2009 (The Grove at Murfreesboro and The Grove at San Marcos). |
65
Table of Contents
Annualized | Annualized | Impact on Net | ||||||||||||||||||||||||||||||||||||
Annualized | Operating | Operating | Interest | Interest | Income before | |||||||||||||||||||||||||||||||||
Revenue | Revenue | Expenses | Expenses | Expense | Expense | Depreciation | ||||||||||||||||||||||||||||||||
for the 11 mos. | for the 12 mos. | for the 11 mos. | for the 12 mos. | for the 11 mos. | for the 12 mos. | for the 12 mos. | ||||||||||||||||||||||||||||||||
Ended 6/30/10 | Ending 6/30/11(a) | Ended 6/30/10 | Ending 6/30/11(a) | Ended 6/30/10 | Ending 6/30/11(a) | Ending 6/30/11(b) | ||||||||||||||||||||||||||||||||
Wholly-Owned Properties | ||||||||||||||||||||||||||||||||||||||
1 | Murfreesboro, TN | |||||||||||||||||||||||||||||||||||||
2 | San Marcos, TX | |||||||||||||||||||||||||||||||||||||
Total |
(a) | Based on average monthly revenue, operating expenses or interest expense for the 11 months ended June 30, 2010 multiplied by 12. |
(b) | Represents the amount by which net income before depreciation (i.e., revenue less operating expenses less interest expense) for the 12 months ending June 30, 2011 exceeds net income before depreciation for the 11 months ended June 30, 2010. |
(7) | The following table reflects the economic impact on the 12 months ending June 30, 2011 resulting from a full year’s operation of three joint venture properties that opened in 2009 (The Grove at Lawrence, The Grove at Moscow and The Grove at San Angelo). |
Annualized | Annualized | Impact on Net | ||||||||||||||||||||||||||||||||||||
Annualized | Operating | Operating | Interest | Interest | Income before | |||||||||||||||||||||||||||||||||
Revenue | Revenue | Expenses | Expenses | Expense | Expense | Depreciation | ||||||||||||||||||||||||||||||||
for the 11 mos. | for the 12 mos. | for the 11 mos. | for the 12 mos. | for the 11 mos. | for the 12 mos. | for the 12 mos. | ||||||||||||||||||||||||||||||||
Ended 6/30/10 | Ending 6/30/11(a) | Ended 6/30/10 | Ending 6/30/11(a) | Ended 6/30/11 | Ending 6/30/11(a) | Ending 6/30/11(b) | ||||||||||||||||||||||||||||||||
Joint Venture Properties | ||||||||||||||||||||||||||||||||||||||
1 | Lawrence, KS(c) | |||||||||||||||||||||||||||||||||||||
2 | Moscow, ID | |||||||||||||||||||||||||||||||||||||
3 | San Angelo, TX | |||||||||||||||||||||||||||||||||||||
Total |
(a) | Based on average monthly revenue, operating expenses or interest expense for the 11 months ended June 30, 2010 multiplied by 12. |
(b) | Represents the amount by which net income before depreciation (i.e., revenue less operating expenses less interest expense) for the 12 months ending June 30, 2011 exceeds net income before depreciation for the 11 months ended June 30, 2010, as adjusted to reflect equity method of accounting assuming 49.9% ownership of each property. |
(c) | The Grove at Lawrence opened in 2009 with 300 available beds (out of 500 total planned beds); annualized operating expenses for the 12 months ending June 30, 2011 for this property based on average monthly operating expenses per available bed for the eight months ending June 30, 2010 (assuming 300 available beds) multiplied by 12 months and multiplied by 500 available beds for the 12 months ending June 30, 2011. |
(8) | Represents expected net income before depreciation from leasing activities related to the three uncombined properties scheduled to open in August 2010 for the 11 month period from expected opening in August 2010 through June 2011, as follows: |
Total Beds | Impact on Net | |||||||||||||||||||||||||||||||||
Leased | Average Monthly | Contribution to | Average Monthly | Estimated | Estimated Interest | Income before | ||||||||||||||||||||||||||||
for the | Revenue per | Revenue for the | Historical Portfolio | Expenses for the | Expense for the | Depreciation | ||||||||||||||||||||||||||||
Total Beds | 2010-2011 AY | Leased Bed | 11 mos. Ending | Operating Expense | 11 mos. Ending | 11 mos. Ending | for the 12 mos. | |||||||||||||||||||||||||||
at Property | as of (a) | for the 2010-2011 AY(b) | 6/30/11(c) | Per Bed(d) | 6/30/11(c) | 6/30/11(e) | Ending 6/30/11(f) | |||||||||||||||||||||||||||
Properties Scheduled to Open in August 2010 | ||||||||||||||||||||||||||||||||||
1 | Conway, AR | 504 | ||||||||||||||||||||||||||||||||
2 | Huntsville, TX | 504 | ||||||||||||||||||||||||||||||||
3 | Statesboro, GA | 536 | ||||||||||||||||||||||||||||||||
Total | 1,544 |
(a) | Reflects beds leased as evidenced by executed leases as of , 2010. | |
(b) | Average monthly rent for leased beds for the 2010-2011 academic year commencing in August 2010. |
66
Table of Contents
(c) | Calculated as Average Monthly Revenue Per Leased Bed or Average Monthly Historical Portfolio Operating Expense Per Bed multiplied by 11 months (August 2010 through June 2011) multiplied by the number of signed leases. |
(d) | Represents the average monthly operating cost per bed at our operating properties for the 12 months ended June 30, 2010. |
(e) | Represents estimated interest expense on unconsolidated joint venture debt for the 12 months ending June 30, 2011. |
(f) | Impact on net income before depreciation for the 12 months ending June 30, 2011 based on equity method of accounting assuming 49.9% ownership of each property. |
(9) | Write-off of pre-development costs represents a non-cash impairment charge incurred during the 12 months ended June 30, 2010 related to the write-off of capitalized expenditures for projects that were commenced but not completed due to unforeseen events, including significant limitations in the availability of debt financing to fund construction costs. We expect, subject to completion of this offering, to commence building five properties with completion targeted for the 2011-12 academic year, and we anticipate obtaining adequate financing to fund our developments over the next 12 months through our revolving credit facility and construction debt. Therefore, we do not anticipate having to write-off significant pre-development expenditures for the 12 months ending June 30, 2011 as a result of the unavailability of financing. |
(10) | Represents estimated recurring capital expenditures for our combined properties for the 12 months ending June 30, 2011 based on estimated recurring capital expenditures of $35.31 per bed multiplied by 10,528 total beds at our combined properties as of , 2010. Recurring capital expenditures were estimated based on a weighted average of capital expenditures per bed for the three fiscal years ending December 31, 2009. For more information regarding our recurring capital expenditures, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Recurring Capital Expenditures.” |
(11) | Represents our pro rata share of estimated recurring capital expenditures for our joint venture properties for the 12 months ending June 30, 2011 based on estimated recurring capital expenditures of $35.31 per bed multiplied by 1,508 total beds at our joint venture properties as of , 2010 (excluding beds at our three joint venture properties that are scheduled to open in August 2010, which we anticipate will not require material recurring capital expenditures for the 12 months ending June 30, 2011). Recurring capital expenditures were estimated based on a weighted average of capital expenditures per bed for the three fiscal years ending December 31, 2009. For more information regarding our recurring capital expenditures, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Recurring Capital Expenditures.” |
(12) | Represents required mortgage loan payments for combined properties after the repayment of certain indebtedness with the net proceeds from this offering. |
(13) | Represents our pro rata share of required mortgage loan payments for our uncombined joint venture properties. |
(14) | Reflects estimated operating cash flows less cash flows used in financing and investing activities. |
(15) | Estimated initial annual distribution calculated by multiplying the assumed issued shares of and OP units of by the assumed initial distribution amount per share of $ . |
(16) | Payout ratio calculated by dividing the estimated initial annual distribution to stockholders and holders of OP units by the estimated annual cash available for distribution. |
67
Table of Contents
Predecessor | Pro Forma | |||||||
as of | as of | |||||||
June 30, | June 30, | |||||||
2010 | 2010 (1)(2) | |||||||
(unaudited) | (unaudited) | |||||||
(in thousands) | ||||||||
Mortgage and construction loans | $ | 329,374 | $ | 132,304 | ||||
Lines of credit and other debt | 10,018 | — | ||||||
Related party loan (3) | 7,671 | — | ||||||
Equity (deficit): | ||||||||
Noncontrolling interest | 799 | (54,175 | ) | |||||
Common Stock, $.01 par value, 90,000,000 shares authorized, shares issued and outstanding on a pro forma basis | — | 223 | ||||||
Additional paid in capital | — | 266,797 | ||||||
Owners’ equity (deficit) | (54,245 | ) | — | |||||
Total owners’ equity (deficit) | (53,446 | ) | 212,845 | |||||
Total capitalization | $ | 293,617 | $ | 345,149 | ||||
(1) | Each $1.00 increase (decrease) in the assumed public offering price of $ per share, the mid-point of the price range set forth on the cover page of this prospectus, would increase (decrease) each of additional paid in capital, owners’ equity (deficit), total owners’ equity (deficit) and total capitalization by approximately $ , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the estimated underwriting discount and other estimated offering expenses payable by us. The as adjusted information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering determined at pricing. Does not include (i) any shares of common stock that may be issued pursuant to the underwriters’ overallotment option to purchase up to an additional shares of common stock or (ii) OP units issued as part of our formation transactions. Includes 249,335 shares of restricted common stock granted to our independent directors, certain of our executive officers and certain members of our management team under our 2010 Incentive Award Plan. | |
(2) | Assumes shares are sold in this offering at $ per share (the mid-point of the price range set forth on the cover of this prospectus). | |
(3) | Represents the proceeds from sale of The Grove at Milledgeville to HSRE, sale of 99% of our interest in HSRE I and prepaid management fees. These transactions are accounted for as financing arrangements. |
68
Table of Contents
Assumed initial public offering price per share based on the mid-point of the price range set forth on the cover page of this prospectus | $ | |||||||||||
Net tangible book value per share before our formation transactions and this offering (2) | ||||||||||||
Decrease in pro forma net tangible book value per share attributable to our formation transactions but before this offering (3) | ||||||||||||
Increase in pro forma net tangible book value per share attributable to this offering (4) | ||||||||||||
Net increase in pro forma net tangible book value per share attributable to our formation transactions and this offering | ||||||||||||
Pro forma net tangible book value per share after our formation transactions and this offering | ||||||||||||
Dilution in pro forma net tangible book value per share to purchasers of common stock in this offering |
(1) | The calculations above assume that the initial public offering price of our common stock is at the mid-point of the price range set forth on the cover page of this prospectus. | |
(2) | Net tangible book value per share before our formation transactions and this offering is determined by dividing the net book value of our tangible assets by the number of shares of common stock held by continuing investors. | |
(3) | Decrease in net tangible book value per share attributable to our formation transactions, but before this offering, is determined by dividing the difference between the pro forma net tangible book value, excluding net offering proceeds, and our net tangible book value before our formation transactions and this offering by the number of shares of common stock to be issued in this offering. | |
(4) | Represents increase in net tangible book value per share attributable to this offering, adjusted to spread the negative net tangible book value existing before this offering among purchasers of common stock in this offering. This amount is calculated after deducting the underwriting discount and estimated expenses of this offering payable by us. |
69
Table of Contents
70
Table of Contents
71
Table of Contents
Pro Forma | ||||||||||||||||||||||||||||||||||||
Campus Crest | ||||||||||||||||||||||||||||||||||||
Communities, Inc. | Historical Campus Crest Communities Predecessor | |||||||||||||||||||||||||||||||||||
Six Months | Year Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
Ended | December 31, | June 30, | Year Ended December 31, | |||||||||||||||||||||||||||||||||
June 30, 2010 | 2009 | 2010 | 2009 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||
Student housing leasing | $ | 25,986 | $ | 45,021 | $ | 24,443 | $ | 21,219 | $ | 43,708 | $ | 30,813 | $ | 15,598 | $ | 5,335 | $ | 1,034 | ||||||||||||||||||
Student housing services | 1,486 | 2,289 | 1,426 | 1,011 | 2,265 | 798 | 110 | 115 | 156 | |||||||||||||||||||||||||||
Development, construction and management services | 17,311 | 24,540 | 30,738 | 37,258 | 60,711 | 2,505 | — | — | — | |||||||||||||||||||||||||||
Total revenues | 44,783 | 71,850 | 56,607 | 59,488 | 106,684 | 34,116 | 15,708 | 5,450 | 1,190 | |||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||||||
Student housing operations | 14,229 | 23,707 | 13,455 | 11,416 | 23,155 | 14,890 | 7,470 | 2,149 | 528 | |||||||||||||||||||||||||||
Development, construction and management services | 16,140 | 24,847 | 28,644 | 35,693 | 60,200 | 2,147 | — | — | — | |||||||||||||||||||||||||||
General and administrative | 3,445 | 6,450 | 2,618 | 2,454 | 5,617 | 5,422 | 3,467 | 1,747 | 459 | |||||||||||||||||||||||||||
Ground leases | 94 | 264 | 94 | 96 | 264 | 224 | 40 | — | — | |||||||||||||||||||||||||||
Write-off of pre-development costs | — | 1,211 | — | — | 1,211 | 203 | — | — | — | |||||||||||||||||||||||||||
Depreciation and amortization | 9,792 | 18,598 | 9,429 | 9,115 | 18,371 | 13,573 | 5,765 | 1,708 | 529 | |||||||||||||||||||||||||||
Total operating expenses | 43,700 | 75,077 | 54,240 | 58,774 | 108,818 | 36,459 | 16,742 | 5,604 | 1,516 | |||||||||||||||||||||||||||
Equity in loss of uncombined entities | (1,112 | ) | (565 | ) | (194 | ) | — | (59 | ) | — | — | — | — | |||||||||||||||||||||||
Operating income (loss) | (29 | ) | (3,792 | ) | 2,173 | 714 | (2,193 | ) | (2,343 | ) | (1,034 | ) | (154 | ) | (326 | ) | ||||||||||||||||||||
Nonoperating income (expense): | ||||||||||||||||||||||||||||||||||||
Interest expense | (4,287 | ) | (8,646 | ) | (10,686 | ) | (7,369 | ) | (15,871 | ) | (14,946 | ) | (6,583 | ) | (1,954 | ) | (223 | ) | ||||||||||||||||||
Change in fair value of interest rate derivatives | 279 | 90 | 178 | 2,680 | 797 | (8,758 | ) | (2,115 | ) | — | — | |||||||||||||||||||||||||
Income taxes | (128 | ) | (73 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Other income (expense) | 45 | 44 | 45 | (19 | ) | 44 | (50 | ) | 100 | 110 | — | |||||||||||||||||||||||||
Total nonoperating expenses | (4,091 | ) | (8,585 | ) | (10,463 | ) | (4,708 | ) | (15,030 | ) | (23,754 | ) | (8,598 | ) | (1,844 | ) | (223 | ) | ||||||||||||||||||
Net loss | (4,120 | ) | (12,377 | ) | (8,290 | ) | (3,994 | ) | (17,223 | ) | (26,097 | ) | (9,632 | ) | (1,998 | ) | (549 | ) | ||||||||||||||||||
Net loss attributable to noncontrolling interest | (288 | ) | (864 | ) | (5,025 | ) | (2,060 | ) | (10,486 | ) | (870 | ) | (2,083 | ) | 1,078 | (192 | ) | |||||||||||||||||||
Net loss attributable to Predecessor | $ | (3,832 | ) | $ | (11,513 | ) | $ | (3,265 | ) | $ | (1,934 | ) | $ | (6,737 | ) | $ | (25,227 | ) | $ | (7,549 | ) | $ | (3,076 | ) | $ | (357 | ) | |||||||||
72
Table of Contents
Pro Forma Campus | ||||||||||||||||||||||||||||
Crest Communities, | ||||||||||||||||||||||||||||
Inc. | Historical Campus Crest Communities Predecessor | |||||||||||||||||||||||||||
As of | As of June 30, | As of December 31, | ||||||||||||||||||||||||||
June 30, 2010 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Student housing properties | $ | 370,400 | $ | 348,466 | $ | 347,157 | $ | 326,217 | $ | 182,788 | $ | 48,775 | $ | 12,691 | ||||||||||||||
Accumulated depreciation | (48,403 | ) | (48,403 | ) | (38,999 | ) | (20,794 | ) | (7,752 | ) | (2,066 | ) | (506 | ) | ||||||||||||||
Development in process | 7,868 | 3,641 | 3,300 | 15,742 | 18,929 | 25,667 | 15,827 | |||||||||||||||||||||
Investment in real estate, net | 329,865 | 303,704 | 311,458 | 321,165 | 193,965 | 72,376 | 28,012 | |||||||||||||||||||||
Investment in uncombined entity | 16,186 | 3,257 | 2,980 | 776 | — | — | — | |||||||||||||||||||||
Other assets | 29,048 | 21,412 | 17,358 | 20,214 | 19,939 | 5,269 | 1,721 | |||||||||||||||||||||
Total assets | $ | 375,099 | $ | 328,373 | $ | 331,796 | $ | 342,155 | $ | 213,904 | $ | 77,645 | $ | 29,733 | ||||||||||||||
Mortgage and construction loans | $ | 132,304 | $ | 329,374 | $ | 329,102 | $ | 322,426 | $ | 166,905 | $ | 65,560 | $ | 21,784 | ||||||||||||||
Lines of credit and other debt | — | 17,689 | 14,070 | 9,237 | 6,579 | 771 | 419 | |||||||||||||||||||||
Other liabilities | 29,950 | 34,756 | 31,340 | 32,606 | 25,533 | 6,370 | 4,455 | |||||||||||||||||||||
Total liabilities | 162,254 | 381,819 | 374,512 | 364,269 | 199,017 | 72,701 | 26,658 | |||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||
Owners’ equity (deficit) | 267,020 | (54,245 | ) | (50,090 | ) | (42,502 | ) | (14,589 | ) | (4,974 | ) | (383 | ) | |||||||||||||||
Noncontrolling interest | (54,175 | ) | 799 | 7,374 | 20,388 | 29,476 | 9,918 | 3,458 | ||||||||||||||||||||
Total equity | 212,845 | (53,446 | ) | (42,716 | ) | (22,114 | ) | 14,887 | 4,944 | 3,075 | ||||||||||||||||||
Total liabilities and equity | $ | 375,099 | $ | 328,373 | $ | 331,796 | $ | 342,155 | $ | 213,904 | $ | 77,645 | $ | 29,733 | ||||||||||||||
73
Table of Contents
Pro Forma | ||||||||||||||||||||||||||||||||||||
Campus Crest | Historical | |||||||||||||||||||||||||||||||||||
Communities, Inc. | Campus Crest Communities Predecessor | |||||||||||||||||||||||||||||||||||
Six Months Ended | Year Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
June 30, | December 31, | June 30, | Year Ended December 31, | |||||||||||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||||||||
(unaudited and in thousands) | ||||||||||||||||||||||||||||||||||||
Funds from operations (“FFO”) (1): | ||||||||||||||||||||||||||||||||||||
Net loss | $ | (4,120 | ) | $ | (12,377 | ) | $ | (8,290 | ) | $ | (3,994 | ) | $ | (17,223 | ) | $ | (26,097 | ) | $ | (9,632 | ) | $ | (1,998 | ) | $ | (549 | ) | |||||||||
Real estate related depreciation and amortization | 9,643 | 18,432 | 9,280 | 8,918 | 18,205 | 13,042 | 5,721 | 1,696 | 521 | |||||||||||||||||||||||||||
Equity portion of real estate related depreciation and amortization on equity investees | 691 | 355 | 157 | — | 52 | — | — | — | — | |||||||||||||||||||||||||||
FFO | $ | 6,214 | $ | 6,410 | $ | 1,147 | $ | 4,924 | $ | 1,034 | $ | (13,055 | ) | $ | (3,911 | ) | $ | (302 | ) | $ | (28 | ) | ||||||||||||||
FFO | $ | 6,214 | $ | 6,410 | $ | 1,147 | $ | 4,924 | $ | 1,034 | $ | (13,055 | ) | $ | (3,911 | ) | $ | (302 | ) | $ | (28 | ) | ||||||||||||||
Elimination of change in fair value of interest rate derivatives | (279 | ) | (90 | ) | (2,893 | ) | (2,990 | ) | (3,480 | ) | 7,414 | 2,115 | — | — | ||||||||||||||||||||||
Elimination of development cost write-off | — | 1,211 | — | — | 1,211 | 203 | — | — | — | |||||||||||||||||||||||||||
Funds from operations adjusted (“FFOA”) (2) | $ | 5,935 | $ | 7,531 | $ | (1,746 | ) | $ | 1,934 | $ | (1,235 | ) | $ | (5,438 | ) | $ | (1,796 | ) | $ | (302 | ) | $ | (28 | ) | ||||||||||||
Historical Campus Crest Communities Predecessor | ||||||||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||||||
June 30, | Year Ended December 31, | |||||||||||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Cash flow information: | ||||||||||||||||||||||||||||
Net cash provided by (used in) operations | $ | 2,739 | $ | 2,068 | $ | 4,353 | $ | 1,264 | $ | (1,209 | ) | $ | 395 | $ | 4,394 | |||||||||||||
Net cash used in investing | (2,662 | ) | (12,830 | ) | (23,552 | ) | (148,385 | ) | (113,043 | ) | (48,328 | ) | (28,036 | ) | ||||||||||||||
Net cash provided by financing | 75 | 5,523 | 11,060 | 144,781 | 126,061 | 48,607 | 24,381 |
As of | ||||||||||||||||||||||||
June 30, | As of December 31, | |||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||||||
Units | 4,476 | 4,476 | 3,542 | 1,814 | 658 | 154 | ||||||||||||||||||
Beds | 12,036 | 12,036 | 9,520 | 4,966 | 1,924 | 448 | ||||||||||||||||||
Occupancy | 89 | % | 84 | % | 78 | % | 91 | % | 92 | % | 73 | % |
74
Table of Contents
(1) | FFO is used by industry analysts and investors as a supplemental operating performance measure for REITs. We calculate FFO in accordance with the definition that was adopted by the Board of Governors of NAREIT. FFO, as defined by NAREIT, represents net income (loss) determined in accordance with accounting principles generally accepted in the United States of America, or GAAP, excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We use FFO as a supplemental performance measure because, in excluding real estate-related depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating expenses. We also believe that, as a widely recognized measure of the performance of equity REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially and adversely impact our results from operations, the utility of FFO as a measure of our performance is limited. While FFO is a relevant and widely used measure of operating performance of equity REITs, other equity REITs may use different methodologies for calculating FFO and, accordingly, FFO as disclosed by such other REITs may not be comparable to FFO published herein. Therefore, we believe that in order to facilitate a clear understanding of our historical operating results, FFO should be examined in conjunction with net income (loss) as presented in the combined financial statements and the other financial statements included elsewhere in this prospectus. FFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of the properties’ financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. |
(2) | When considering our FFO, we believe it is also a meaningful measure of our performance to adjust FFO to exclude the change in fair value of interest rate derivatives and the write-off of development costs. Excluding the change in fair value of interest rate derivatives and development cost write-offs adjusts FFO to be more reflective of operating results prior to capital replacement or expansion, debt amortization of principal or other commitments and contingencies. This measure is referred to herein as “FFOA.” |
75
Table of Contents
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
76
Table of Contents
77
Table of Contents
• | the sale of a 9.9% interest in HSRE I to HSRE; and |
78
Table of Contents
• | the pre-payment by HSRE to us of management fees relating to the following properties: The Grove at Carrollton, The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Milledgeville, The Grove at Moscow, The Grove at San Angelo, The Grove at San Marcos and The Grove at Statesboro. |
• | Purchase a 49.8% interest in HSRE I from HSRE; | |
• | Purchase a 50.1% interest in The Grove at San Marcos from HSRE I, with the result that we will own 100% of The Grove at San Marcos; | |
• | Purchase HSRE’s entire interest in HSRE II, with the result that we will own 100% of The Grove at Milledgeville; | |
• | Purchase a 99.9% interest in HSRE III from HSRE, with the result that we will own 100% of The Grove at Carrollton; and | |
• | Repay to HSRE the pre-paid management fees relating to the following properties: The Grove at Carrollton, The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Milledgeville, The Grove at Moscow, The Grove at San Angelo, The Grove at San Marcos and The Grove at Statesboro. |
• | a 49.9% interest in HSRE I, which will own 100% interests in the following six properties: The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Moscow, The Grove at San Angelo and The Grove at Statesboro; and | |
• | 100% interests in The Grove at Carrollton, The Grove at Milledgeville and The Grove at San Marcos. |
79
Table of Contents
80
Table of Contents
Distance | ||||||||||||||||||||||||||
% Leased | Total | to | ||||||||||||||||||||||||
Leased | as of June 30, | Student | Campus | |||||||||||||||||||||||
Property | University | Beds | Beds | 2010 | Enrollment | (miles) | ||||||||||||||||||||
Conway, AR | University of Central Arkansas | 504 | 399 | 79.2 | % | 11,781 | 0.4 | |||||||||||||||||||
Huntsville, TX | Sam Houston State University | 504 | 504 | 100.0 | % | 16,772 | 0.2 | |||||||||||||||||||
Statesboro, GA | Georgia Southern University | 536 | 460 | 85.8 | % | 19,086 | 0.7 | |||||||||||||||||||
Total | 1,544 | 1,363 | 88.3 | % (1) | 15,880 | (2) | 0.4 | (2) | ||||||||||||||||||
(1) | Weighted average. | |
(2) | Average. |
81
Table of Contents
82
Table of Contents
Six Months | Six Months | |||||||||||||||
Ended | Ended | |||||||||||||||
June 30, | June 30, | Change | Change | |||||||||||||
2010 | 2009 | ($) | (%) | |||||||||||||
(unaudited and in thousands) | ||||||||||||||||
Revenues: | ||||||||||||||||
Student housing leasing | $ | 24,443 | $ | 21,219 | $ | 3,224 | 15.2 | % | ||||||||
Student housing services | 1,426 | 1,011 | 415 | 41.0 | % | |||||||||||
Development, construction and management services | 30,738 | 37,258 | (6,520 | ) | (17.5 | )% | ||||||||||
Total revenues | 56,607 | 59,488 | (2,881 | ) | (4.8 | )% | ||||||||||
Operating expenses: | ||||||||||||||||
Student housing operations | 13,455 | 11,416 | 2,039 | 17.9 | % | |||||||||||
Development, construction and management services | 28,644 | 35,693 | (7,049 | ) | (19.7 | )% | ||||||||||
General and administrative | 2,618 | 2,454 | 164 | 6.7 | % | |||||||||||
Ground leases | 94 | 96 | (2 | ) | (2.1 | )% | ||||||||||
Depreciation and amortization | 9,429 | 9,115 | 314 | 3.4 | % | |||||||||||
Total operating expenses | 54,240 | 58,774 | (4,534 | ) | (7.7 | )% | ||||||||||
Equity in loss of uncombined entities | (194 | ) | — | (194 | ) | N/A | ||||||||||
Operating income | 2,173 | 714 | 1,459 | 204.3 | % | |||||||||||
Nonoperating income (expenses): | ||||||||||||||||
Interest expense | (10,686 | ) | (7,369 | ) | (3,317 | ) | 45.0 | % | ||||||||
Change in fair value of interest rate derivatives | 178 | 2,680 | (2,502 | ) | (93.4 | )% | ||||||||||
Other income (expense) | 45 | (19 | ) | 64 | (336.8 | )% | ||||||||||
Total nonoperating expenses | (10,463 | ) | (4,708 | ) | (5,755 | ) | 122.2 | % | ||||||||
Net loss | (8,290 | ) | (3,994 | ) | (4,296 | ) | 107.6 | % | ||||||||
Net loss attributable to noncontrolling interest | (5,025 | ) | (2,060 | ) | (2,965 | ) | 143.9 | % | ||||||||
Net loss attributable to Predecessor | $ | (3,265 | ) | $ | (1,934 | ) | $ | (1,331 | ) | 68.8 | % | |||||
83
Table of Contents
84
Table of Contents
85
Table of Contents
Year Ended | Year Ended | |||||||||||||||
December 31, | December 31, | Change | Change | |||||||||||||
2009 | 2008 | ($) | (%) | |||||||||||||
(in thousands) | ||||||||||||||||
Revenues: | ||||||||||||||||
Student housing leasing | $ | 43,708 | $ | 30,813 | $ | 12,895 | 41.8 | % | ||||||||
Student housing services | 2,265 | 798 | 1,467 | 183.8 | % | |||||||||||
Development, construction and management services | 60,711 | 2,505 | 58,206 | 2,323.6 | % | |||||||||||
Total revenues | 106,684 | 34,116 | 72,568 | 212.7 | % | |||||||||||
Operating expenses: | ||||||||||||||||
Student housing operations | 23,115 | 14,890 | 8,225 | 55.2 | % | |||||||||||
Development, construction and management services | 60,200 | 2,147 | 58,053 | 2,703.9 | % | |||||||||||
General and administrative | 5,617 | 5,422 | 195 | 3.6 | % | |||||||||||
Ground leases | 264 | 224 | 40 | 17.9 | % | |||||||||||
Write-off of pre-development costs | 1,211 | 203 | 1,008 | 496.6 | % | |||||||||||
Depreciation and amortization | 18,371 | 13,573 | 4,798 | 35.3 | % | |||||||||||
Total operating expenses | 108,818 | 36,459 | 72,359 | 198.5 | % | |||||||||||
Equity in loss of uncombined entities | (59 | ) | — | (59 | ) | N/A | ||||||||||
Operating loss | (2,193 | ) | (2,343 | ) | 150 | (6.4 | )% | |||||||||
Nonoperating income (expenses): | ||||||||||||||||
Interest expense | (15,871 | ) | (14,946 | ) | (925 | ) | 6.2 | % | ||||||||
Change in fair value of interest rate derivatives | 797 | (8,758 | ) | 9,555 | (109.1 | )% | ||||||||||
Other income (expense) | 44 | (50 | ) | 94 | (188.0 | )% | ||||||||||
Total nonoperating expenses | (15,030 | ) | (23,754 | ) | 8,724 | (36.7 | )% | |||||||||
Net loss | (17,223 | ) | (26,097 | ) | 8,874 | (34.0 | )% | |||||||||
Net loss attributable to noncontrolling interest | (10,486 | ) | (870 | ) | (9,616 | ) | 1,105.3 | % | ||||||||
Net loss attributable to Predecessor | $ | (6,737 | ) | $ | (25,227 | ) | $ | 18,490 | (73.3 | )% | ||||||
86
Table of Contents
87
Table of Contents
88
Table of Contents
Year Ended | Year Ended | |||||||||||||||
December 31, | December 31, | Change | Change | |||||||||||||
2008 | 2007 | ($) | (%) | |||||||||||||
(in thousands) | ||||||||||||||||
Revenues: | ||||||||||||||||
Student housing leasing | $ | 30,813 | $ | 15,598 | $ | 15,215 | 97.5 | % | ||||||||
Student housing services | 798 | 110 | 688 | 625.5 | % | |||||||||||
Development, construction and management services | 2,505 | — | 2,505 | N/A | ||||||||||||
Total revenues | 34,116 | 15,708 | 18,408 | 117.2 | % | |||||||||||
Operating expenses: | ||||||||||||||||
Student housing operations | 14,890 | 7,470 | 7,420 | 99.3 | % | |||||||||||
Development, construction and management services | 2,147 | — | 2,147 | N/A | ||||||||||||
General and administrative | 5,422 | 3,467 | 1,955 | 56.4 | % | |||||||||||
Ground leases | 224 | 40 | 184 | 460.0 | % | |||||||||||
Write-off of pre-development costs | 203 | — | 203 | N/A | ||||||||||||
Depreciation and amortization | 13,573 | 5,765 | 7,808 | 135.4 | % | |||||||||||
Total operating expenses | 36,459 | 16,742 | 19,717 | 117.8 | % | |||||||||||
Operating loss | (2,343 | ) | (1,034 | ) | (1,309 | ) | 126.6 | % | ||||||||
Nonoperating income (expenses): | ||||||||||||||||
Interest expense | (14,946 | ) | (6,583 | ) | (8,363 | ) | 127.0 | % | ||||||||
Change in fair value of interest rate derivative | (8,758 | ) | (2,115 | ) | (6,643 | ) | 314.1 | % | ||||||||
Other income (expense) | (50 | ) | 100 | (150 | ) | (150.0 | )% | |||||||||
Total nonoperating expenses | (23,754 | ) | (8,598 | ) | (15,156 | ) | 176.3 | % | ||||||||
Net loss | (26,097 | ) | (9,632 | ) | (16,465 | ) | 170.9 | % | ||||||||
Net loss attributable to noncontrolling interest | (870 | ) | (2,083 | ) | 1,213 | (58.2 | )% | |||||||||
Net loss attributable to Predecessor | $ | (25,227 | ) | $ | (7,549 | ) | $ | (17,678 | ) | 234.2 | % | |||||
89
Table of Contents
90
Table of Contents
91
Table of Contents
92
Table of Contents
• | our income may not be matched by our related expenses at the time the income is considered received for purposes of determining taxable income; and | |
• | non-deductible capital expenditures, creation of reserves or debt service requirements may reduce available cash but not taxable income. |
93
Table of Contents
94
Table of Contents
2009 | 2008 | 2007 | ||||||||||
Total Beds as of January 1(1) | 9,520 | 4,966 | 1,924 | |||||||||
Total Recurring Capital Expenditures | $ | 183,513 | $ | 261,048 | $ | 134,877 | ||||||
Average Per Bed | $ | 19 | $ | 53 | $ | 70 |
(1) | Total number of beds is as of January 1 of the year indicated, excluding beds at combined properties that commenced operations during the year indicated, as they did not require material recurring capital expenditures. |
95
Table of Contents
96
Table of Contents
Less than | 1-3 | More than 5 | ||||||||||||||||||
Contractual Obligations | Total | 1 Year | Years | 3-5 Years | Years | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Long-Term Debt Obligations(1) | $ | 343,172 | $ | 172,315 | $ | 6,744 | $ | 105,547 | $ | 58,566 | ||||||||||
Operating Lease Obligations | 11,279 | 457 | 1,006 | 1,128 | 8,688 | |||||||||||||||
Purchase Obligations (2) | 21,520 | 21,520 | — | — | — | |||||||||||||||
Other Long-Term Liabilities | 6,049 | 4,424 | 1,625 | — | — | |||||||||||||||
Total | $ | 382,020 | $ | 198,716 | $ | 9,375 | $ | 106,675 | $ | 67,254 | ||||||||||
(1) | We have executed an agreement with a lender to extend the maturity date of approximately $148.4 million of these obligations to January 31, 2011. |
(2) | Obligations relate to subcontracts executed by Campus Crest Construction, LLC, to complete projects under construction at December 31, 2009. |
Total | ||||
(in thousands) | ||||
2010 | $ | — | ||
2011 | 85 | |||
2012 | 643 | |||
2013 | 72,213 | |||
2014 | 797 | |||
Thereafter | 58,566 | |||
Total | $ | 132,304 | ||
97
Table of Contents
Principal | Interest Rate | |||||||||||||
Outstanding as of | Maturity | as of | ||||||||||||
Property | June 30, 2010 | Date | June 30, 2010 | Amortization | ||||||||||
(in thousands) | �� | |||||||||||||
The Grove at Asheville(1)(2) | $ | 14,800 | 4/11/2017 | 5.77 | % | Interest only until April 11, 2012, then 30 year amortizing | ||||||||
The Grove at Carrollton(1)(2) | 14,650 | 10/11/2016 | 6.13 | % | Interest only until October 11, 2011, then 30 year amortizing | |||||||||
The Grove at Las Cruces(1)(2) | 15,140 | 10/11/2016 | 6.13 | % | Interest only until October 11, 2011, then 30 year amortizing | |||||||||
The Grove at Milledgeville(2)(3) | 16,250 | 10/1/2016 | 6.12 | % | Interest only until October 11, 2011, then 30 year amortizing | |||||||||
The Grove at Ellensburg(4)(5) | 18,757 | 2/28/2013 | 6.40 | % | Interest only for entire term | |||||||||
The Grove at Greeley(4)(5) | 19,129 | 2/28/2013 | 6.40 | % | Interest only for entire term | |||||||||
The Grove at Mobile-Phase I(4)(5) | 15,972 | 2/28/2013 | 6.40 | % | Interest only for entire term | |||||||||
The Grove at Nacogdoches(4)(5) | 17,606 | 2/28/2013 | 6.40 | % | Interest only for entire term | |||||||||
Total | $ | 132,304 | ||||||||||||
(1) | Wachovia Bank as lender. | |
(2) | No financial covenants. | |
(3) | GE Capital as lender. | |
(4) | Silverton Bank Mortgage Loan. | |
(5) | Debt service coverage ratio of not less than 1.2 to 1.0; debt yield percentage of not less than 9.0%; loan-to-value ratio of not more than 80%. |
98
Table of Contents
99
Table of Contents
Pro Forma | ||||||||||||||||||||||||||||
Campus Crest | ||||||||||||||||||||||||||||
Communities, Inc. | ||||||||||||||||||||||||||||
Six Months | Year | Historical Campus Crest Communities Predecessor | ||||||||||||||||||||||||||
Ended | Ended | Six Months | ||||||||||||||||||||||||||
June 30, | December 31, | Ended June 30, | Year Ended December 31, | |||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
(unaudited and in thousands) | ||||||||||||||||||||||||||||
Net loss | $ | (4,120 | ) | $ | (12,377 | ) | $ | (8,290 | ) | $ | (3,994 | ) | $ | (17,223 | ) | $ | (26,097 | ) | $ | (9,632 | ) | |||||||
Real estate related depreciation and amortization | 9,643 | 18,432 | 9,280 | 8,918 | 18,205 | 13,042 | 5,721 | |||||||||||||||||||||
Equity portion of real estate related depreciation and amortization on equity investee | 691 | 355 | 157 | — | 52 | — | — | |||||||||||||||||||||
Funds from operations (“FFO”) | $ | 6,214 | $ | 6,410 | $ | 1,147 | $ | 4,924 | $ | 1,034 | $ | (13,055 | ) | $ | (3,911 | ) | ||||||||||||
100
Table of Contents
Pro Forma | ||||||||||||||||||||||||||||
Campus Crest | ||||||||||||||||||||||||||||
Communities, Inc. | ||||||||||||||||||||||||||||
Six Months | Year | Historical Campus Crest Communities Predecessor | ||||||||||||||||||||||||||
Ended | Ended | Six Months | ||||||||||||||||||||||||||
June 30, | December 31, | Ended June 30, | Year Ended December 31, | |||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
(unaudited and in thousands) | ||||||||||||||||||||||||||||
FFO | $ | 6,214 | $ | 6,410 | $ | 1,147 | $ | 4,924 | $ | 1,034 | $ | (13,055 | ) | $ | (3,911 | ) | ||||||||||||
Elimination of change in fair value of interest rate derivatives | (279 | ) | (90 | ) | (2,893 | ) | (2,990 | ) | (3,480 | ) | 7,414 | 2,115 | ||||||||||||||||
Elimination of development cost write-off | — | 1,211 | — | — | 1,211 | 203 | — | |||||||||||||||||||||
Funds from operations adjusted (“FFOA”) | $ | 5,935 | $ | 7,531 | $ | (1,746 | ) | $ | 1,934 | $ | (1,235 | ) | $ | (5,438 | ) | $ | (1,796 | ) | ||||||||||
101
Table of Contents
102
Table of Contents
103
Table of Contents
Level 1 — | Observable inputs, such as quoted prices in active markets at the measurement date for identical, unrestricted assets or liabilities. | |
Level 2 — | Other inputs that are observable directly or indirectly, such as quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. | |
Level 3 — | Unobservable inputs for which there is little or no market data and which the Predecessor makes its own assumptions about how market participants would price the asset or liability. |
104
Table of Contents
105
Table of Contents
106
Table of Contents
• | “By the bed” lease terms and rental rates (as opposed to “by the unit” apartment leases), | |
• | Bed/bath parity with private en suite baths, | |
• | Fully furnished units, | |
• | Bundled pricing, which typically includes utilities, cable and Internet, | |
• | Enhanced security features, including keyed bedroom locks and gated entrances, | |
• | Resort-style amenities (e.g., oversized pools, volleyball / basketball courts, clubhouses, etc.); and | |
• | Active residence life and student support programs |
107
Table of Contents
![(CHART)](https://capedge.com/proxy/S-11A/0000950123-10-078464/g23199a3g2319902.gif)
108
Table of Contents
![(CHART)](https://capedge.com/proxy/S-11A/0000950123-10-078464/g23199a3g2319903.gif)
![(CHART)](https://capedge.com/proxy/S-11A/0000950123-10-078464/g23199a3g2319904.gif)
109
Table of Contents
![(CHART)](https://capedge.com/proxy/S-11A/0000950123-10-078464/g23199a3g2319905.gif)
110
Table of Contents
![(CHART)](https://capedge.com/proxy/S-11A/0000950123-10-078464/g23199a3g2319906.gif)
111
Table of Contents
![(CHART)](https://capedge.com/proxy/S-11A/0000950123-10-078464/g23199a3g2319907.gif)
112
Table of Contents
![(CHART)](https://capedge.com/proxy/S-11A/0000950123-10-078464/g23199a3g2319908.gif)
113
Table of Contents
Undergraduate | Dorm | Capacity as % | Capacity | |||||||||||||
State | Enrollment | Capacity | Enrollment | Shortfall | ||||||||||||
California | 480.5 | 92.7 | 19 | % | 387.8 | |||||||||||
Texas | 391.7 | 77.9 | 20 | % | 313.8 | |||||||||||
Florida | 310.7 | 36.8 | 12 | % | 273.8 | |||||||||||
New York | 287 | 77.9 | 27 | % | 209.1 | |||||||||||
Michigan | 221.5 | 70.2 | 32 | % | 151.3 | |||||||||||
Ohio | 217.2 | 54.2 | 25 | % | 163 | |||||||||||
Pennsylvania | 211.3 | 70.5 | 33 | % | 140.8 | |||||||||||
Indiana | 163.3 | 38.7 | 24 | % | 124.6 | |||||||||||
Georgia | 160.6 | 36.2 | 23 | % | 124.5 | (1) | ||||||||||
North Carolina | 150 | 50.5 | 34 | % | 99.6 | (1) | ||||||||||
Illinois | 149.4 | 45.3 | 30 | % | 104 | (1) | ||||||||||
Virginia | 140.4 | 54.2 | 39 | % | 86.2 | |||||||||||
Louisiana | 131.8 | 26.5 | 20 | % | 105.4 | (1) | ||||||||||
Wisconsin | 128.1 | 35.9 | 28 | % | 92.3 | (1) | ||||||||||
Colorado | 124.2 | 25.3 | 20 | % | 98.9 | |||||||||||
Total | 3,267.7 | 792.8 | 24 | % | 2,475.1 | (1) | ||||||||||
(1) | Capacity shortfall may not equal the difference between undergraduate enrollment and dorm capacity due to rounding. |
114
Table of Contents
![(CHART)](https://capedge.com/proxy/S-11A/0000950123-10-078464/g23199a3g2319909.gif)
115
Table of Contents
116
Table of Contents
117
Table of Contents
118
Table of Contents
119
Table of Contents
120
Table of Contents
Average | ||||||||||||||||||||||||||||||||
Occupancy | Monthly | |||||||||||||||||||||||||||||||
Primary | Fall 2009 | Distance to | as of | Rental Revenue | ||||||||||||||||||||||||||||
Year | University | Overall | Campus | Number | Number | June 30, | Per | |||||||||||||||||||||||||
City | State | Opened | Served | Enrollment | (miles) | of Units | of Beds | 2010 | Occupied Bed | |||||||||||||||||||||||
Wholly-Owned Properties | ||||||||||||||||||||||||||||||||
1 | Asheville | NC | 2005 | University of NC Asheville | 3,695 | 0.1 | 154 | 448 | 97 | % | $ | 484 | ||||||||||||||||||||
2 | Carrollton | GA | 2006 | University of West Georgia | 11,500 | 0.1 | 168 | 492 | 99 | % | $ | 426 | ||||||||||||||||||||
3 | Las Cruces | NM | 2006 | New Mexico State University | 18,497 | 0.4 | 168 | 492 | 87 | % | $ | 441 | ||||||||||||||||||||
4 | Milledgeville | GA | 2006 | Georgia College & State University | 6,633 | 0.1 | 168 | 492 | 97 | % | $ | 500 | ||||||||||||||||||||
5 | Abilene | TX | 2007 | Abilene Christian University | 4,838 | 0.5 | 192 | 504 | 81 | % | $ | 442 | ||||||||||||||||||||
6 | Ellensburg | WA | 2007 | Central Washington University | 10,187 | 0.5 | 192 | 504 | 99 | % | $ | 462 | ||||||||||||||||||||
7 | Greeley | CO | 2007 | University of Northern Colorado | 12,711 | 1.0 | 192 | 504 | 79 | % | $ | 439 | ||||||||||||||||||||
8 | Jacksonville | AL | 2007 | Jacksonville State University | 9,351 | 0.2 | 192 | 504 | 85 | % | $ | 424 | ||||||||||||||||||||
9 | Mobile—Phase I (1) | AL | 2007 | University of South Alabama | 14,522 | On- Campus | 192 | 504 | 96 | % | $ | 453 | ||||||||||||||||||||
10 | Mobile—Phase II (1) | AL | 2008 | University of South Alabama | 14,522 | On- Campus | 192 | 504 | 98 | % | $ | 453 | ||||||||||||||||||||
11 | Nacogdoches | TX | 2007 | Stephen F. Austin University | 12,845 | 0.4 | 196 | 522 | 96 | % | $ | 484 | ||||||||||||||||||||
12 | Cheney | WA | 2008 | Eastern Washington University | 11,302 | 0.5 | 192 | 512 | 98 | % | $ | 450 | ||||||||||||||||||||
13 | Jonesboro | AR | 2008 | Arkansas State University | 12,156 | 0.2 | 192 | 504 | 82 | % | $ | 426 | ||||||||||||||||||||
14 | Lubbock | TX | 2008 | Texas Tech University | 30,049 | 2.1 | 192 | 504 | 86 | % | $ | 473 | ||||||||||||||||||||
15 | Stephenville | TX | 2008 | Tarleton State University | 8,598 | 0.8 | 192 | 504 | 99 | % | $ | 451 | ||||||||||||||||||||
16 | Troy | AL | 2008 | Troy University | 6,679 | 0.4 | 192 | 514 | 94 | % | $ | 455 | ||||||||||||||||||||
17 | Waco | TX | 2008 | Baylor University | 14,614 | 0.8 | 192 | 504 | 89 | % | $ | 516 | ||||||||||||||||||||
18 | Wichita | KS | 2008 | Wichita State University | 14,823 | 1.1 | 192 | 504 | 92 | % | $ | 440 | ||||||||||||||||||||
19 | Wichita Falls | TX | 2008 | Midwestern State University | 6,341 | 1.2 | 192 | 504 | 71 | % | $ | 451 | ||||||||||||||||||||
20 | Murfreesboro | TN | 2009 | Middle Tennessee State University | 25,188 | 0.8 | 186 | 504 | 90 | % | $ | 452 | ||||||||||||||||||||
21 | San Marcos | TX | 2009 | Texas State University | 30,816 | 1.7 | 192 | 504 | 97 | % | $ | 528 | ||||||||||||||||||||
Sub Total of Wholly-Owned Properties | 13,327 | (2) | 0.6 | (2) | 3,920 | 10,528 | 91 | % (3) | $ | 460 | (3) | |||||||||||||||||||||
Joint Venture Properties—49.9% Ownership Interest | ||||||||||||||||||||||||||||||||
22 | Lawrence (4) | KS | 2009 | University of Kansas | 29,242 | 1.6 | 172 | 500 | 70 | % | $ | 444 | ||||||||||||||||||||
23 | Moscow (1) | ID | 2009 | University of Idaho | 11,957 | 0.5 | 192 | 504 | 50 | % | $ | 453 | ||||||||||||||||||||
24 | San Angelo | TX | 2009 | Angelo State University | 6,387 | 0.3 | 192 | 504 | 88 | % | $ | 470 | ||||||||||||||||||||
25 | Conway (5) | AR | 2010 | University of Central Arkansas | 11,781 | 0.4 | 180 | 504 | NA | NA | ||||||||||||||||||||||
26 | Huntsville (5) | TX | 2010 | Sam Houston State University | 16,772 | 0.2 | 192 | 504 | NA | NA | ||||||||||||||||||||||
27 | Statesboro (5) | GA | 2010 | Georgia Southern University | 19,086 | 0.7 | 200 | 536 | NA | NA | ||||||||||||||||||||||
Sub Total of Joint Venture Properties | 15,871 | (2) | 0.6 | (2) | 1,128 | 3,052 | 70 | % (3) | $ | 459 | (3) | |||||||||||||||||||||
Total Properties | 13,892 | (2) | 0.6 | (2) | 5,048 | 13,580 | 89 | % (3) | $ | 460 | (3) | |||||||||||||||||||||
(1) | Property subject to a ground lease. | |
(2) | Average. | |
(3) | Weighted average for the month ended June 30, 2010. | |
(4) | Occupancy based on 300 beds available for the 2009-2010 academic year; the property has been expanded and now has a total of 500 beds available for the 2010-2011 academic year. |
(5) | Property scheduled to open in August 2010. As of June 30, 2010, the percentage of beds leased at Conway, AR, Huntsville, TX and Statesboro, GA was 79%, 100% and 86%, respectively. |
121
Table of Contents
The Grove at Asheville | ||||||||||
Address: | 600 Bulldog Drive Asheville, NC 28801 | Year Opened: 2005 | ||||||||
Market Information | ||||||||||
Institution Served: | University of North Carolina, Asheville | |||||||||
Fall 2009 Overall Enrollment: | 3,695 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 16.60 | Units | Beds | |||||||
Square Feet: | 182,488 | 2bed/2bath | 14 | 28 | ||||||
Parking Spaces: | 447 | 3bed/3bath | 140 | 420 | ||||||
Distance to Campus: | 0.1 miles | Total: | 154 | 448 | ||||||
Occupancy (1): | 97% | |||||||||
Average rental revenue per occupied bed (1): | $484 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $14,800,000 | Post Offering Debt: $14,800,000 | ||||||||
Rate: | 5.77% fixed | |||||||||
Amortization: | Interest only until April 11, 2012, then 30 year amortizing | |||||||||
Maturity: | April 11, 2017; loan may be defeased | |||||||||
122
Table of Contents
The Grove at Carrollton | ||||||||||
Address: | 912 Lovorn Road Carrollton, GA 30117 | Year Opened: 2006 | ||||||||
Market Information | ||||||||||
Institution Served: | University of West Georgia | |||||||||
Fall 2009 Overall Enrollment: | 11,500 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 14.93 | Units | Beds | |||||||
Square Feet: | 198,797 | 2bed/2bath | 12 | 24 | ||||||
Parking Spaces: | 470 | 3bed/3bath | 156 | 468 | ||||||
Distance to Campus: | 0.1 miles | Total: | 168 | 492 | ||||||
Occupancy (1): | 99% | |||||||||
Average rental revenue per occupied bed (1): | $426 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $14,650,000 | Post Offering Debt: $14,650,000 | ||||||||
Rate: | 6.13% fixed | |||||||||
Amortization: | Interest only until October 11, 2011, then 30 year amortizing | |||||||||
Maturity: | October 11, 2016; loan may be defeased | |||||||||
123
Table of Contents
The Grove at Las Cruces | ||||||||||
Address: | 320 East Union Avenue Las Cruces, NM 88001 | Year Opened: 2006 | ||||||||
Market Information | ||||||||||
Institution Served: | New Mexico State University | |||||||||
Fall 2009 Overall Enrollment: | 18,497 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 9.96 | Units | Beds | |||||||
Square Feet: | 198,797 | 2bed/2bath | 12 | 24 | ||||||
Parking Spaces: | 504 | 3bed/3bath | 156 | 468 | ||||||
Distance to Campus: | 0.4 miles | Total: | 168 | 492 | ||||||
Occupancy (1): | 87% | |||||||||
Average rental revenue per occupied bed (1): | $441 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $15,140,000 | Post Offering Debt: $15,140,000 | ||||||||
Rate: | 6.13% fixed | |||||||||
Amortization: | Interest only until October 11, 2011, then 30 year amortizing | |||||||||
Maturity: | October 11, 2016; loan may be defeased | |||||||||
124
Table of Contents
The Grove at Milledgeville | ||||||||||
Address: | 500 West Franklin Street Milledgeville, GA 31061 | Year Opened: 2006 | ||||||||
Market Information | ||||||||||
Institution Served: | Georgia College & State University | |||||||||
Fall 2009 Overall Enrollment: | 6,633 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 19.83 | Units | Beds | |||||||
Square Feet: | 198,797 | 2bed/2bath | 12 | 24 | ||||||
Parking Spaces: | 459 | 3bed/3bath | 156 | 468 | ||||||
Distance to Campus: | 0.1 miles | Total: | 168 | 492 | ||||||
Occupancy (1): | 97% | |||||||||
Average rental revenue per occupied bed (1): | $500 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $16,250,000 | Post Offering Debt: $16,250,000 | ||||||||
Rate: | 6.12% fixed | |||||||||
Amortization: | Interest only until October 11, 2011, then 30 year amortizing | |||||||||
Maturity: | October 1, 2016; loan may be defeased | |||||||||
125
Table of Contents
The Grove at Abilene | ||||||||||
Address: | 2702 North Judge Ely Boulevard Abilene, TX 79601 | Year Opened: 2007 | ||||||||
Market Information | ||||||||||
Institution Served: | Abilene Christian University | |||||||||
Fall 2009 Overall Enrollment: | 4,838 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 9.22 | Units | Beds | |||||||
Square Feet: | 209,999 | 2bed/2bath | 72 | 144 | ||||||
Parking Spaces: | 521 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | 0.5 miles | Total: | 192 | 504 | ||||||
Occupancy (1): | 81% | |||||||||
Average rental revenue per occupied bed (1): | $442 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $16,120,000 | Post Offering Debt: $0 | ||||||||
Rate: | 6.40% fixed | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | February 28, 2013; may be pre-paid at any time without penalty | |||||||||
126
Table of Contents
The Grove at Ellensburg | ||||||||||
Address: | 2420 Airport Road Ellensburg, WA 98926 | Year Opened: 2007 | ||||||||
Market Information | ||||||||||
Institution Served: | Central Washington University | |||||||||
Fall 2009 Overall Enrollment: | 10,187 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 13.53 | Units | Beds | |||||||
Square Feet: | 209,999 | 2bed/2bath | 72 | 144 | ||||||
Parking Spaces: | 566 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | 0.5 miles | Total: | 192 | 504 | ||||||
Occupancy (1): | 99% | |||||||||
Average rental revenue per occupied bed (1): | $462 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $18,757,143 | Post Offering Debt: $18,757,143 | ||||||||
Rate: | 6.40% fixed | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | February 28, 2013; may be pre-paid at any time without penalty | |||||||||
127
Table of Contents
The Grove at Greeley | ||||||||||
Address: | 3202 11th Avenue Evans, CO 80620 | Year Opened: 2007 | ||||||||
Market Information | ||||||||||
Institution Served: | University of Northern Colorado | |||||||||
Fall 2009 Overall Enrollment: | 12,711 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 11.47 | Units | Beds | |||||||
Square Feet: | 209,999 | 2bed/2bath | 72 | 144 | ||||||
Parking Spaces: | 549 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | 1.0 miles | Total: | 192 | 504 | ||||||
Occupancy (1): | 79% | |||||||||
Average rental revenue per occupied bed (1): | $439 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $19,128,571 | Post Offering Debt: $19,128,571 | ||||||||
Rate: | 6.40% fixed | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | February 28, 2013; may be pre-paid at any time without penalty | |||||||||
128
Table of Contents
The Grove at Jacksonville | ||||||||||
Address: | 351 Nisbet Street NW Jacksonville, AL 36265 | Year Opened: 2007 | ||||||||
Market Information | ||||||||||
Institution Served: | Jacksonville State University | |||||||||
Fall 2009 Overall Enrollment: | 9,351 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 15.82 | Units | Beds | |||||||
Square Feet: | 209,999 | 2bed/2bath | 72 | 144 | ||||||
Parking Spaces: | 710 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | 0.2 miles | Total: | 192 | 504 | ||||||
Occupancy (1): | 85% | |||||||||
Average rental revenue per occupied bed (1): | $424 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $16,417,143 | Post Offering Debt: $0 | ||||||||
Rate: | 6.40% fixed | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | February 28, 2013; may be pre-paid at any time without penalty | |||||||||
129
Table of Contents
The Grove at Mobile—Phase I | ||||||||||
Address: | 375 Cleverdon Parkway Mobile, AL 36688 | Year Opened: 2007 | ||||||||
Market Information | ||||||||||
Institution Served: | University of South Alabama | |||||||||
Fall 2009 Overall Enrollment: | 14,522 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 12.40 | Units | Beds | |||||||
Square Feet: | 209,999 | 2bed/2bath | 72 | 144 | ||||||
Parking Spaces: | 551 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | On-Campus | Total: | 192 | 504 | ||||||
Occupancy (1): | 96% | |||||||||
Average rental revenue per occupied bed (1): | $453 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $15,971,429 | Post Offering Debt: $15,971,429 | ||||||||
Rate: | 6.40% fixed | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | February 28, 2013; may be pre-paid at any time without penalty | |||||||||
The Grove at Mobile—Phase II | ||||||||||
Address: | 375 Cleverdon Parkway Mobile, AL 36688 | Year Opened: 2008 | ||||||||
Property Statistics | ||||||||||
Land Acreage: | 10.45 | Units | Beds | |||||||
Square Feet: | 203,856 | 2bed/2bath | 72 | 144 | ||||||
Parking Spaces: | 527 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | On-Campus | Total: | 192 | 504 | ||||||
Occupancy (1): | 98% | |||||||||
Average rental revenue per occupied bed (1): | $453 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $15,874,109 | Post Offering Debt: $0 | ||||||||
Rate: | LIBOR + 300bps; rate floor of 5.50% | |||||||||
Amortization: | 25 year, with $1 million curtailment (2) | |||||||||
Maturity: | October 31, 2010; may be pre-paid at any time without penalty | |||||||||
(2) On the earliest to occur of the completion of this offering, the completion of a private placement of the equity interests in MXT Capital or Campus Crest Group, or October 31, 2010. | ||||||||||
130
Table of Contents
• | Term: The initial term ends October 31, 2046, with a 20-year first renewal term and a 15-year second renewal term. |
• | Rent: The annual base rent for the first five years of the initial term shall be equal to 8.5% of the appraised fair market value of the land. Beginning with the sixth year of the initial term and every five years thereafter until the termination of the lease, the annual base rent is subject to a Consumer Price Index, or “CPI,” increase that is not less than 5% or more than 7.5%. Annual base rent for the first five years of the first renewal term shall be equal to 8.5% of the then-appraised fair market value of the land. Annual base rent during the remainder of the renewal terms shall be adjusted every five years as provided above using the CPI for the last month of the initial term. |
• | Property Manager: The manager of this property is The Grove Student Properties. The management agreement has an initial 10-year term, and thereafter is automatically renewed on a month-to-month basis with mutual termination rights upon 90 days’ notice. Our duties as manager are similar to those as a manager of our owned properties. The management agreement terminates upon termination of our ground lease. | |
• | Transferability: USART’s consent is not required for us to assign or sublease the premises. Prior to any assignment or subleasing to a third party other than one of our affiliates or a current USA student then leasing a portion of the premises, USART has the right of first opportunity to lease the premises under the same terms as those offered to the third party. |
131
Table of Contents
• | Right of First Refusal: USART has a right of first refusal to purchase our leasehold interest in the event we decide to accept a bona fide offer to sell it to any third party. |
• | Term: The initial term ends October 31, 2046, with a 20-year first renewal term and a 15-year second renewal term. | |
• | Rent: The annual base rent for the first five years of the initial term is $125,000. Beginning with the sixth year of the initial term and every five years thereafter until the termination of the lease, the annual base rent is subject to a CPI increase that is not less than 7.5% or more than 11%. Annual base rent for the first five years of the first renewal term shall be equal to 8.5% of the then-appraised fair market value of the land. Annual base rent during the remainder of the renewal terms shall be adjusted every five years as provided above using the CPI for the last month of the initial term. | |
• | Property Manager: The manager of this property is The Grove Student Properties. The management agreement has an initial 10-year term, and thereafter is automatically renewed on a month-to-month basis with mutual termination rights upon 90 days’ notice. Our duties as manager are similar to those as a manager of our owned properties. The management agreement terminates upon termination of our ground lease. | |
• | Transferability: USART’s consent, which shall not be unreasonably withheld, is required prior to our assignment of the ground lease or our subleasing of the entirety of our interest in the premises. Prior to any assignment or subleasing to a third party other than one of our affiliates or a current USA student then leasing a portion of the premises, USART has the right of first opportunity to lease the premises under the same terms as those offered to the third party. | |
• | Right of First Refusal: USART has a right of first refusal to purchase our leasehold interest in the event we decide to accept a bona fide offer to sell it to any third party. |
132
Table of Contents
The Grove at Nacogdoches | ||||||||||
Address: | 1602 Cardinal Street Nacogdoches, TX 75961 | Year Opened: 2007 | ||||||||
Market Information | ||||||||||
Institution Served: | Stephen F. Austin State University | |||||||||
Fall 2009 Overall Enrollment: | 12,845 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 13.85 | Units | Beds | |||||||
Square Feet: | 217,493 | 2bed/2bath | 66 | 132 | ||||||
Parking Spaces: | 600 | 3bed/3bath | 130 | 390 | ||||||
Distance to Campus: | 0.4 miles | Total: | 196 | 522 | ||||||
Occupancy (1): | 96% | |||||||||
Average rental revenue per occupied bed (1): | $484 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $17,605,714 | Post Offering Debt: $17,605,714 | ||||||||
Rate: | 6.40% fixed | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | February 28, 2013; may be pre-paid at any time without penalty | |||||||||
133
Table of Contents
The Grove at Cheney | ||||||||||
Address: | 240 S. Cheney-Spangle Road Cheney, WA 99004 | Year Opened: 2008 | ||||||||
Market Information | ||||||||||
Institution Served: | Eastern Washington University | |||||||||
Fall 2009 Overall Enrollment: | 11,302 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 13.10 | Units | Beds | |||||||
Square Feet: | 214,935 | 2bed/2bath | 64 | 128 | ||||||
Parking Spaces: | 554 | 3bed/3bath | 128 | 384 | ||||||
Distance to Campus: | 0.5 miles | Total: | 192 | 512 | ||||||
Occupancy (1): | 98% | |||||||||
Average rental revenue per occupied bed (1): | $450 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $16,080,000 | Post Offering Debt: $0 | ||||||||
Rate: | LIBOR + 180bps; rate floor of 6.00% (1) | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | January 31, 2011; may be pre-paid at any time without penalty | |||||||||
(1) $14,780,000 has a rate floor of 6.00% through October 31, 2010 | ||||||||||
134
Table of Contents
The Grove at Jonesboro | ||||||||||
Address: | 500 N. Caraway Road Jonesboro, AR 72401 | Year Opened: 2008 | ||||||||
Market Information | ||||||||||
Institution Served: | Arkansas State University | |||||||||
Fall 2009 Overall Enrollment: | 12,156 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 14.00 | Units | Beds | |||||||
Square Feet: | 211,943 | 2bed/2bath | 72 | 144 | ||||||
Parking Spaces: | 575 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | 0.2 miles | Total: | 192 | 504 | ||||||
Occupancy (1): | 82% | |||||||||
Average rental revenue per occupied bed (1): | $426 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $17,075,098 | Post Offering Debt: $0 | ||||||||
Rate: | LIBOR + 180bps; rate floor of 6.00%(1) | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | January 31, 2011; may be pre-paid at any time without penalty | |||||||||
(1) $14,893,598 has a rate floor of 6.00% through October 31, 2010 | ||||||||||
135
Table of Contents
The Grove at Lubbock | ||||||||||
Address: | 315 N. Utica Drive Lubbock, TX 79416 | Year Opened: 2008 | ||||||||
Market Information | ||||||||||
Institution Served: | Texas Tech University | |||||||||
Fall 2009 Overall Enrollment: | 30,049 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 14.54 | Units | Beds | |||||||
Square Feet: | 211,943 | 2bed/2bath | 72 | 144 | ||||||
Parking Spaces: | 654 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | 2.1 miles | Total: | 192 | 504 | ||||||
Occupancy (1): | 86% | |||||||||
Average rental revenue per occupied bed (1): | $473 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $16,440,000 | Post Offering Debt: $0 | ||||||||
Rate: | LIBOR + 180bps; rate floor of 6.00% through October 31, 2010 | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | January 31, 2011; may be pre-paid at any time without penalty | |||||||||
136
Table of Contents
The Grove at Stephenville | ||||||||||
Address: | 2825 W. Frey Street Stephenville, TX 76401 | Year Opened: 2008 | ||||||||
Market Information | ||||||||||
Institution Served: | Tarleton State University | |||||||||
Fall 2009 Overall Enrollment: | 8,598 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 12.00 | Units | Beds | |||||||
Square Feet: | 211,943 | 2bed/2bath | 72 | 144 | ||||||
Parking Spaces: | 533 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | 0.8 miles | Total: | 192 | 504 | ||||||
Occupancy (1): | 99% | |||||||||
Average rental revenue per occupied bed (1): | $451 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $16,080,000 | Post Offering Debt: $0 | ||||||||
Rate: | LIBOR + 180bps; rate floor of 6.00% (1) | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | January 31, 2011; may be pre-paid at any time without penalty | |||||||||
(1) $14,830,000 has a rate floor of 6.00% through October 31, 2010 | ||||||||||
137
Table of Contents
The Grove at Troy | ||||||||||
Address: | 920 E. Academy Street Troy, AL 36081 | Year Opened: 2008 | ||||||||
Market Information | ||||||||||
Institution Served: | Troy University | |||||||||
Fall 2009 Overall Enrollment: | 6,679 (Troy campus only) | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 21.00 | Units | Beds | |||||||
Square Feet: | 215,683 | 2bed/2bath | 62 | 124 | ||||||
Parking Spaces: | 560 | 3bed/3bath | 130 | 390 | ||||||
Distance to Campus: | 0.4 miles | Total: | 192 | 514 | ||||||
Occupancy (1): | 94% | |||||||||
Average rental revenue per occupied bed (1): | $455 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $17,440,000 | Post Offering Debt: $0 | ||||||||
Rate: | LIBOR + 180bps; rate floor of 6.00%(1) | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | January 31, 2011; may be pre-paid at any time without penalty | |||||||||
(1) $16,115,000 has a rate floor of 6.00% through October 31, 2010 | ||||||||||
138
Table of Contents
The Grove at Waco | ||||||||||
Address: | 2826 S. University Parks Drive Waco, TX 76706 | Year Opened: 2008 | ||||||||
Market Information | ||||||||||
Institution Served: | Baylor University | |||||||||
Fall 2009 Overall Enrollment: | 14,614 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 11.30 | Units | Beds | |||||||
Square Feet: | 213,958 | 2bed/2bath | 72 | 144 | ||||||
Parking Spaces: | 519 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | 0.8 miles | Total: | 192 | 504 | ||||||
Occupancy (1): | 89% | |||||||||
Average rental revenue per occupied bed (1): | $516 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $16,741,718 | Post Offering Debt: $0 | ||||||||
Rate: | LIBOR + 180bps; rate floor of 6.00%(1) | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | January 31, 2011; may be pre-paid at any time without penalty | |||||||||
(1) $15,741,718 has a rate floor of 6.00% through October 31, 2010 | ||||||||||
139
Table of Contents
The Grove at Wichita | ||||||||||
Address: | 2909 N. Oliver Street Wichita, KS 67220 | Year Opened: 2008 | ||||||||
Market Information | ||||||||||
Institution Served: | Wichita State University | |||||||||
Fall 2009 Overall Enrollment: | 14,823 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 18.65 | Units | Beds | |||||||
Square Feet: | 211,943 | 2bed/2bath | 72 | 144 | ||||||
Parking Spaces: | 592 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | 1.1 miles | Total: | 192 | 504 | ||||||
Occupancy (1): | 92% | |||||||||
Average rental revenue per occupied bed(1): | $440 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $16,062,180 | Post Offering Debt: $0 | ||||||||
Rate: | LIBOR + 180bps; rate floor of 6.00%(1) | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | January 31, 2011; may be pre-paid at any time without penalty | |||||||||
(1) $15,184,180 has a rate floor of 6.00% through October 31, 2010 | ||||||||||
140
Table of Contents
The Grove at Wichita Falls | ||||||||||
Address: | 5005 Lake Park Drive Wichita Falls, TX 76302 | Year Opened: 2008 | ||||||||
Market Information | ||||||||||
Institution Served: | Midwestern State University | |||||||||
Fall 2009 Overall Enrollment: | 6,341 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 14.48 | Units | Beds | |||||||
Square Feet: | 211,943 | 2bed/2bath | 72 | 144 | ||||||
Parking Spaces: | 604 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | 1.2 miles | Total: | 192 | 504 | ||||||
Occupancy (1): | 71% | |||||||||
Average rental revenue per occupied bed (1): | $451 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $16,280,000 | Post Offering Debt: $0 | ||||||||
Rate: | LIBOR + 180bps; rate floor of 6.00% (1) | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | January 31, 2011; may be pre-paid at any time without penalty | |||||||||
(1) $14,205,000 has a rate floor of 6.00% through October 31, 2010 | ||||||||||
141
Table of Contents
The Grove at Murfreesboro | ||||||||||
Address: | 1320 Journey Drive Murfreesboro, TN 37130 | Year Opened: 2009 | ||||||||
Market Information | ||||||||||
Institution Served: | Middle Tennessee State University | |||||||||
Fall 2009 Overall Enrollment: | 25,188 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 13.63 | Units | Beds | |||||||
Square Feet: | 212,213 | 2bed/2bath | 60 | 120 | ||||||
Parking Spaces: | 583 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | 0.8 miles | 4bed/4bath | 6 | 24 | ||||||
Occupancy (1): | 90% | Total: | 186 | 504 | ||||||
Average rental revenue per occupied bed (1): | $452 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $16,720,000 | Post Offering Debt: $0 | ||||||||
Rate: | LIBOR + 180bps; rate floor of 6.00% (1) | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | January 31, 2011; may be pre-paid at any time without penalty | |||||||||
(1) $14,220,000 has a rate floor of 6.00% through October 31, 2010 | ||||||||||
142
Table of Contents
The Grove at San Marcos | ||||||||||
Address: | 1200 East River Ridge Parkway San Marcos, TX 78666 | Year Opened: 2009 | ||||||||
Market Information | ||||||||||
Institution Served: | Texas State University | |||||||||
Fall 2009 Overall Enrollment: | 30,816 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 19.39 | Units | Beds | |||||||
Square Feet: | 211,943 | 2bed/2bath | 72 | 144 | ||||||
Parking Spaces: | 601 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | 1.7 miles | Total: | 192 | 504 | ||||||
Occupancy (1): | 97% | |||||||||
Average rental revenue per occupied bed (1): | $528 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Debt: | $15,131,700 | Post Offering Debt: $0 | ||||||||
Rate: | LIBOR + 250bps; rate floor of 5.94% | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | May 15, 2011 (with a one-year extension option); may be pre-paid at any time without penalty | |||||||||
143
Table of Contents
The Grove at Lawrence | ||||||||||
Address: | 4301 West 24th Place Lawrence, KS 66047 | Year Opened: 2009 Ownership %: 49.9% | ||||||||
Market Information | ||||||||||
Institution Served: | University of Kansas | |||||||||
Fall 2009 Overall Enrollment: | 29,242 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 12.55 | Units | Beds | |||||||
Square Feet: | 214,751 | 2bed/2bath | 16 | 32 | ||||||
Parking Spaces: | 523 | 3bed/3bath | 156 | 468 | ||||||
Distance to Campus: | 1.6 miles | Total: | 172 | 500 | ||||||
Occupancy (1): | 70% | |||||||||
Average rental revenue per occupied bed (1): | $444 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Current Debt: | $16,000,000 | Post Offering Debt: $16,000,000 | ||||||||
Rate: | Prime + 150bps; rate floor of 6.25% | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | February 4, 2012; may be pre-paid at any time without penalty | |||||||||
144
Table of Contents
The Grove at Moscow | ||||||||||
Address: | 209 East Southview Avenue Moscow, ID 83843 | Year Opened: 2009 Ownership %: 49.9% | ||||||||
Market Information | ||||||||||
Institution Served: | University of Idaho | |||||||||
Fall 2009 Overall Enrollment: | 11,957 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 13.80 | Units | Beds | |||||||
Square Feet: | 211,256 | 2bed/2bath | 72 | 144 | ||||||
Parking Spaces: | 502 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | 0.5 miles | Total: | 192 | 504 | ||||||
Occupancy (1): | 50% | |||||||||
Average rental revenue per occupied bed (1): | $453 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Current Debt: | $17,268,300 | Post Offering Debt: $17,268,300 | ||||||||
Rate: | LIBOR + 250bps; rate floor of 5.94% | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | May 15, 2011 (with a one-year extension option); may be pre-paid at any time without penalty | |||||||||
145
Table of Contents
The Grove at San Angelo | ||||||||||
Address: | 4225 S. Jackson Street San Angelo, TX 76903 | Year Opened: 2009 Ownership %: 49.9% | ||||||||
Market Information | ||||||||||
Institution Served: | Angelo State University | |||||||||
Fall 2009 Overall Enrollment: | 6,387 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 32.06 | Units | Beds | |||||||
Square Feet: | 211,943 | 2bed/2bath | 72 | 144 | ||||||
Parking Spaces: | 544 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | 0.3 miles | Total: | 192 | 504 | ||||||
Occupancy (1): | 88% | |||||||||
Average rental revenue per occupied bed (1): | $470 | |||||||||
(1) As of June 30, 2010. | ||||||||||
Financing | ||||||||||
Current Debt: | $14,668,000 | Post Offering Debt: $14,668,000 | ||||||||
Rate: | LIBOR + 250bps; rate floor of 5.94% | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | May 15, 2011 (with a one-year extension option); may be pre-paid at any time without penalty | |||||||||
146
Table of Contents
The Grove at Conway | ||||||||||
Address: | 2730 Dave Ward Drive Conway, AR 72032 | Year to Open: 2010-2011 academic year Ownership %: 49.9% | ||||||||
Market Information | ||||||||||
Institution Served: | University of Central Arkansas | |||||||||
Fall 2009 Overall Enrollment: | 11,781 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 12.84 | Units | Beds | |||||||
Square Feet: | 212,483 | 2bed/2bath | 48 | 96 | ||||||
Parking Spaces: | 539 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | 0.4 miles | 4bed/4bath | 12 | 48 | ||||||
Total: | 180 | 504 | ||||||||
Financing | ||||||||||
Current Debt: | $16,000,000 | Post Offering Debt: $16,000,000 | ||||||||
Rate: | 7.50% fixed | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | July 2, 2012; may be pre-paid at any time without penalty | |||||||||
147
Table of Contents
The Grove at Huntsville | ||||||||||
Address: | 2015 Sycamore Avenue Huntsville, TX 77340 | Year to Open: 2010-2011 academic year Ownership %: 49.9% | ||||||||
Market Information | ||||||||||
Institution Served: | Sam Houston State University | |||||||||
Fall 2009 Overall Enrollment: | 16,772 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 19.40 | Units | Beds | |||||||
Square Feet: | 211,943 | 2bed/2bath | 72 | 144 | ||||||
Parking Spaces: | 594 | 3bed/3bath | 120 | 360 | ||||||
Distance to Campus: | 0.2 miles | Total: | 192 | 504 | ||||||
Financing | ||||||||||
Current Debt: | $13,355,000 | Post Offering Debt: $13,355,000 | ||||||||
Rate: | LIBOR + 400bps with floor of 6.00% | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | January 1, 2012; may be pre-paid at any time without penalty | |||||||||
148
Table of Contents
The Grove at Statesboro | ||||||||||
Address: | 1150 Brampton Avenue Statesboro, GA 30458 | Year to Open: 2010-2011 academic year Ownership %: 49.9% | ||||||||
Market Information | ||||||||||
Institution Served: | Georgia Southern University | |||||||||
Fall 2009 Overall Enrollment: | 19,086 | |||||||||
Property Statistics | ||||||||||
Land Acreage: | 31.83 (includes pond) | Units | Beds | |||||||
Square Feet: | 226,035 | 2bed/2bath | 64 | 128 | ||||||
Parking Spaces: | 558 | 3bed/3bath | 136 | 408 | ||||||
Distance to Campus: | 0.7 miles | Total: | 200 | 536 | ||||||
Financing | ||||||||||
Current Debt: | $15,057,000, with possible increase to $16,130,000 | Post Offering Debt: $15,057,000, with possible increase to $16,130,000 | ||||||||
Rate: | LIBOR + 350bps, with floor of 5.00% | |||||||||
Amortization: | Interest only for entire term | |||||||||
Maturity: | February 12, 2012; may be pre-paid at any time without penalty | |||||||||
Primary | Fall 2009 | Distance to | Estimated | |||||||||||||||||||||||||||||
Targeted | University | Overall | Campus | Number | Number | Cost | ||||||||||||||||||||||||||
City | State | Completion | Served | Enrollment | (miles) | of Units | of Beds | ($ in thousands) | ||||||||||||||||||||||||
Fort Wayne | IN | August 2011 | Indiana University/ Purdue University | 13,675 | 1.1 | 204 | 540 | $ | 19,926 | |||||||||||||||||||||||
Valdosta | GA | August 2011 | Valdosta State University | 12,391 | 1.9 | 216 | 584 | 20,768 | ||||||||||||||||||||||||
Clarksville | TN | August 2011 | Austin Peay State University | 10,188 | 1.3 | 208 | 560 | 21,202 | ||||||||||||||||||||||||
Orono | ME | August 2011 | University of Maine | 11,867 | 0.5 | 188 | 620 | 23,993 | ||||||||||||||||||||||||
Fort Collins | CO | August 2011 | Colorado State University | 25,413 | On-Campus | 224 | 624 | 25,380 | ||||||||||||||||||||||||
Total Expected Future Developments | 14,707 | (1) | 0.96 | (1) | 1,040 | 2,928 | $ | 111,269 | ||||||||||||||||||||||||
(1) | Average. |
149
Table of Contents
150
Table of Contents
151
Table of Contents
• | the quality of our facilities, including their proximity to campus, as well as our properties’ physical location, the size and layout of units and the types of amenities offered; | |
• | rental terms, including price, which varies based on the market in which the property is located, and per-bed rental (individual lease liability), which allows individual student-tenants to avoid responsibility for the rental of an entire apartment unit; | |
• | community environment, including community facilities, amenities and programming, which is overseen by our staff of CAs/RockStars; and | |
• | our relationships with colleges and universities, which may result in our properties being recommended or listed in recruiting and admissions literature provided to incoming and prospective students. |
• | Social: parties, group events, movie nights, bonfires, concerts, tavern/game nights, tailgating and homecoming events; | |
• | Cultural: attending plays, concerts, readings, art galleries and open microphone nights; | |
• | Outreach: blood drives, big brother/big sister programs, mentoring, food drives/themed activities; | |
• | Recreational: intramural sports teams and volleyball and basketball tournaments; | |
• | Educational: CPR training, resume writing workshops, nutrition classes, self-defense training and job interview rehearsals; and | |
• | Spiritual: bible studies, sing-alongs, campus church, guest speakers and reading groups. |
152
Table of Contents
153
Table of Contents
154
Table of Contents
155
Table of Contents
• | approximately 442 on-site employees, including 290 Community Assistants/RockStars (who we employ on a part-time basis); |
• | approximately 17 persons in The Grove Student Properties; | |
• | two persons in Campus Crest Development; | |
• | approximately 20 persons in Campus Crest Construction and its facilities division; and | |
• | approximately 23 executive, corporate administration and financial personnel. |
156
Table of Contents
Name | Age | Titles | ||||
Ted W. Rollins | 47 | Co-Founder, Co-Chairman of the Board and Chief Executive Officer | ||||
Michael S. Hartnett | 51 | Co-Founder, Co-Chairman of the Board and Chief Investment Officer | ||||
Earl C. Howell | 60 | President, Chief Operating Officer and Director | ||||
N. Anthony Coles | 50 | Independent Director Nominee | ||||
Richard S. Kahlbaugh | 50 | Independent Director Nominee | ||||
Denis L. McGlynn | 64 | Independent Director Nominee | ||||
William G. Popeo | 52 | Independent Director Nominee | ||||
Daniel L. Simmons | 57 | Independent Director Nominee | ||||
Donald L. Bobbitt, Jr. | 41 | Executive Vice President and Chief Financial Officer | ||||
Shannon N. King | 38 | Executive Vice President and Chief Marketing Officer | ||||
Brian L. Sharpe | 51 | Executive Vice President and Division President—Development, Construction and Facilities | ||||
Howard J. Weissman | 41 | Senior Vice President—Corporate Controller |
157
Table of Contents
158
Table of Contents
159
Table of Contents
160
Table of Contents
• | our system of internal controls; | |
• | our accounting and financial reporting processes; | |
• | the integrity and audits of our combined financial statements; | |
• | our compliance with legal and regulatory requirements; | |
• | the qualifications and independence of our independent auditors; and | |
• | the performance of our independent auditors and any internal auditors. |
• | evaluating the performance of our officers; | |
• | establishing overall employee compensation policies and recommending, as appropriate or necessary, to our board of directors major compensation programs; | |
• | reviewing and approving the compensation payable to our officers, including salary and bonus awards and awards under our 2010 Incentive Award Plan; | |
• | administering our 2010 Incentive Award Plan and any other compensation plans, policies and programs of ours; | |
• | assisting management in complying with our proxy statement and annual report disclosure requirements; and | |
• | discharging the board’s responsibilities relating to compensation to our directors. |
161
Table of Contents
• | seeking, considering and recommending to our board of directors qualified candidates for election as directors, recommending a slate of nominees for election as directors at the annual meeting of stockholders and verifying the independence of directors; | |
• | recommending to our board of directors the appointment of each of our executive officers; | |
• | periodically preparing and submitting to our board of directors for adoption the committee’s selection criteria for director nominees; | |
• | reviewing and making recommendations on matters involving the general operation of our board of directors and our corporate governance; | |
• | annually recommending to our board the nominees for each committee of the board; and | |
• | annually facilitating the assessment of our board of directors’ performance as a whole and of the individual directors and report thereon to our board. |
162
Table of Contents
163
Table of Contents
164
Table of Contents
Change in | ||||||||||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||||||||||
and | ||||||||||||||||||||||||||||||||
NonQualified | ||||||||||||||||||||||||||||||||
Non-Equity | Deferred | All | ||||||||||||||||||||||||||||||
Stock | Incentive Plan | Compensation | Other | |||||||||||||||||||||||||||||
Name and | Salary | Bonus | Awards | Compensation | Earnings | Compensation | Total | |||||||||||||||||||||||||
Principal Position | Year | ($) | ($) (1) | ($) | ($) | ($) | ($) (2) | ($) | ||||||||||||||||||||||||
Ted W. Rollins | 2010 | 360,000 | — | — | — | 12,000 | 372,000 | |||||||||||||||||||||||||
Co-Chairman of the Board | 2009 | — | — | 308,892 | (3) | 308,892 | ||||||||||||||||||||||||||
and Chief Executive Officer | ||||||||||||||||||||||||||||||||
Michael S. Hartnett | 2010 | 360,000 | — | — | — | 12,000 | 372,000 | |||||||||||||||||||||||||
Co-Chairman of the Board | 2009 | — | — | 308,500 | (3) | 308,500 | ||||||||||||||||||||||||||
and Chief Investment Officer | ||||||||||||||||||||||||||||||||
Earl C. Howell | 2010 | 360,000 | (4) | — | — | 12,000 | ||||||||||||||||||||||||||
President and | 2009 | — | — | 25,000 | (8) | 25,000 | ||||||||||||||||||||||||||
Chief Operating Officer | ||||||||||||||||||||||||||||||||
Donald L. Bobbitt, Jr. | 2010 | 275,000 | 200,000 | (5) | (6) | — | — | 12,000 | ||||||||||||||||||||||||
Executive Vice President | 2009 | 225,000 | — | 3,317 | 228,317 | |||||||||||||||||||||||||||
and Chief Financial Officer | ||||||||||||||||||||||||||||||||
Shannon N. King | 2010 | 200,000 | (7) | — | — | 12,000 | ||||||||||||||||||||||||||
Executive Vice President | 2009 | 200,000 | — | 10,149 | 210,149 | |||||||||||||||||||||||||||
and Chief Marketing Officer |
(1) | Each of our named executive officers is also entitled to an annual cash bonus ranging from 50% to 100% of his or her base salary in the event certain performance-based criteria are met. | |
(2) | We will lease an automobile for each of Messrs. Rollins, Hartnett, Howell and Bobbitt and Ms. King, with a cost not to exceed $12,000 per year per officer. | |
(3) | Reflects distributions of $300,000 from Campus Crest Group to each of Messrs. Rollins and Hartnett, transportation allowances of $8,892 and $8,000, respectively to Messrs. Rollins and Hartnett and a $500 match for Mr. Hartnett to our 401(k) profit sharing plan. | |
(4) | Reflects 66,667 shares of restricted common stock granted to Mr. Howell upon completion of this offering that will vest ratably on each of the first three anniversaries of the date of the grant. For purposes of this table, each share was valued at $ , the mid-point of the price range set forth on the cover page of this prospectus. | |
(5) | Reflects a cash bonus payable upon completion of this offering. | |
(6) | Reflects 53,334 shares of restricted common stock granted to Mr. Bobbitt upon completion of this offering. Of this amount (i) 8,056 shares reflect shares issued under our 2010 Incentive Award Plan in exchange for awards that were fully vested under the DCP, which vest immediately, (ii) 18,611 shares reflect shares issued under our 2010 Incentive Award Plan in exchange for awards that were not fully vested under the DCP, which will vest ratably in equal installments on the first two anniversaries of the date of the grant and (iii) 26,667 shares reflect shares issued under our 2010 Incentive Award Plan unrelated to the DCP, which will vest ratably on each of the first three anniversaries of the date of the grant. For purposes of this table, each share was valued at $ , the mid-point of the price range set forth on the cover page of this prospectus. | |
(7) | Reflects 29,999 shares of restricted common stock granted to Ms. King upon completion of this offering. Of this amount (i) 15,000 shares reflect shares issued under our 2010 Incentive Award Plan in exchange for awards that were fully vested under the DCP, which vest immediately, (ii) 11,666 shares reflect shares issued under our 2010 Incentive Award Plan in exchange for awards that were not fully vested under the DCP, which will vest in equal installments on the first two anniversaries of the date of the grant and (iii) 3,333 shares reflect shares issued under our 2010 Incentive Award Plan unrelated to the DCP, which will vest ratably on each of the first three anniversaries of the date of |
165
Table of Contents
the grant. For purposes of this table, each share was valued at $ , the mid-point of the price range set forth on the cover page of this prospectus. | ||
(8) | Reflects payment for management services performed pursuant to a consulting agreement. |
Share or Unit | ||||||||||
Awards Related to | All Other Share or Unit | |||||||||
Grant | the DCP; Number of | Awards; Number of | Grant Date | |||||||
Name | Date (1) | Shares or Units (#) | Shares or Units (#) (2) | Fair Value (3) | ||||||
Ted W. Rollins | — | — | — | — | ||||||
Co-Chairman of the | ||||||||||
Board and Chief | ||||||||||
Executive Officer | ||||||||||
Michael S. Hartnett | — | — | — | — | ||||||
Co-Chairman of the | ||||||||||
Board and Chief Investment | ||||||||||
Officer | ||||||||||
Earl C. Howell | — | 66,667 | ||||||||
President and | ||||||||||
Chief Operating | ||||||||||
Officer | ||||||||||
Donald L. Bobbitt, Jr. | 26,667 (4) | 26,667 | ||||||||
Executive Vice | ||||||||||
President and Chief | ||||||||||
Financial Officer | ||||||||||
Shannon N. King | 26,666 (5) | 3,333 | ||||||||
Executive Vice | ||||||||||
President and Chief | ||||||||||
Marketing Officer | ||||||||||
All other employees as a group | 46,667 (6) | 19,333 |
(1) | Grants will be effective on the date of completion of this offering. | |
(2) | These grants of restricted common stock are unrelated to the DCP and will vest ratably on each of the first three anniversaries of the date of the grant. | |
(3) | The fair value of the grants of restricted common stock are based on per share value of $ , the mid-point of the price range set forth on the cover page of this prospectus. | |
(4) | Of this amount (i) 8,056 shares reflect shares issued under our 2010 Incentive Award Plan in exchange for awards that were fully vested under the DCP, which vest immediately and (ii) 18,611 shares reflect shares issued under our 2010 Incentive Award Plan in exchange for awards that were not fully vested under the DCP, which will vest in equal installments on the first two anniversaries of the date of the grant. | |
(5) | Of this amount (i) 15,000 shares reflect shares issued under our 2010 Incentive Award Plan in exchange for awards that were fully vested under the DCP, which vest immediately and (ii) 11,666 shares reflect shares issued under our 2010 Incentive Award Plan in exchange for awards that were not fully vested under the DCP, which will vest in equal installments on the first two anniversaries of the date of the grant. | |
(6) | Of this amount (i) 31,667 shares reflect shares issued under our 2010 Incentive Award Plan in exchange for awards that were fully vested under the DCP, which vest immediately and (ii) 15,000 shares reflect shares issued under our 2010 Incentive Award Plan in exchange for awards that were not fully vested under the DCP, which will vest in equal installments on the first two anniversaries of the date of the grant. |
166
Table of Contents
• | an annual base salary of $360,000 for each of Messrs. Rollins, Hartnett and Howell, and $275,000 and $200,000 for Mr. Bobbitt and Ms. King, respectively, subject in the case of Messrs. Rollins, Hartnett, Howell and Bobbitt, to increase in accordance with our normal executive compensation practices and in the case of Ms. King, modifications to her compensation and benefits commensurate with her assigned duties in the discretion of our chief executive officer, president and chief operating officer and our board of directors; | |
• | eligibility for annual cash performance bonuses determined by our board of directors, in accordance with the terms of our incentive compensation plan to be adopted by our board of directors, with potential bonuses ranging from 50% to 100% of base salary if performance targets are achieved; | |
• | eligibility to participate in our 2010 Incentive Award plan; | |
• | Messrs. Howell and Bobbitt and Ms. King, respectively, to receive 66,667, 26,667, and 3,333 shares of restricted common stock unrelated to awards under the DCP (worth approximately $ , $ and $ , respectively, based on the mid-point of the price range set forth on the cover page of this prospectus) upon completion of this offering; these shares will vest annually in three equal installments beginning on the one-year anniversary of the grant; | |
• | participation in any other employee benefit plans, insurance policies or contracts maintained by us relating to retirement, health, disability, vacation, auto and other related benefits. |
167
Table of Contents
168
Table of Contents
Acceleration of | ||||||||||||
Cash | Vesting of Restricted | |||||||||||
Name and Termination Scenario | Payment(1) | Common Stock(2) | Total | |||||||||
Ted W. Rollins | ||||||||||||
Co-Chairman and Chief Executive Officer | ||||||||||||
By company without cause or by employee for good reason (after a change in control) | $ | 1,620,000 | $ | — | $ | 1,620,000 | ||||||
By company without cause or by employee for good reason (and without a change in control) | $ | 1,080,000 | $ | — | $ | 1,080,000 | ||||||
Michael S. Hartnett | ||||||||||||
Co-Chairman and Chief Investment Officer | ||||||||||||
By company without cause or by employee for good reason (after a change in control) | $ | 1,620,000 | $ | — | $ | 1,620,000 | ||||||
By company without cause or by employee for good reason (and without a change in control) | $ | 1,080,000 | $ | — | $ | 1,080,000 | ||||||
Earl C. Howell | ||||||||||||
President, Chief Operating Officer and Director | ||||||||||||
By company without cause or by employee for good reason (after a change in control) | $ | 1,080,000 | $ | $ | ||||||||
By company without cause or by employee for good reason (and without a change in control) | $ | 1,080,000 | $ | $ | ||||||||
Donald L. Bobbitt, Jr. | ||||||||||||
Executive Vice President and Chief Financial Officer | ||||||||||||
By company without cause or by employee for good reason (after a change in control) | $ | 825,000 | $ | $ | ||||||||
By company without cause or by employee for good reason (and without a change in control) | $ | 825,000 | $ | $ | ||||||||
Shannon N. King | ||||||||||||
Executive Vice President and Chief Marketing Officer | ||||||||||||
By company without cause or by employee for good reason (after a change in control) | $ | 150,000 | $ | $ | ||||||||
By company without cause or by employee for good reason (and without a change in control) | $ | 150,000 | $ | $ |
(1) | Assumes a targeted annual bonus for each of our named executive officers equal to 50% of his or her base salary. As no bonus was paid in the prior year, the named executive officer will be entitled to receive 50% of this targeted bonus under the scenarios set forth below. |
(2) | Amounts in this column reflect accelerated vesting of shares of restricted common stock granted pursuant to our 2010 Incentive Award Plan. For purposes of this table, each share of common stock was valued at $ , the mid-point of the price range set forth on the cover page of this prospectus. |
169
Table of Contents
• | the act or omission of the director or executive officer was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty; |
170
Table of Contents
• | the director or executive officer actually received an improper personal benefit in money, property or services; or | |
• | with respect to any criminal proceeding, the director or executive officer had reasonable cause to believe that his or her conduct was unlawful. |
• | the act or omission of the director or executive officer was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty; or | |
• | the director or executive officer actually received an improper personal benefit in money, property or services. |
171
Table of Contents
• | options to purchase shares of common stock (non-qualified and incentive stock options); |
• | SARs; |
• | restricted stock and restricted stock units; | |
• | performance shares; | |
• | performance units; | |
• | dividend equivalents; and | |
• | other stock-based awards. |
172
Table of Contents
173
Table of Contents
• | earnings per share or other corporate measure; | |
• | profit (net profit, gross profit, operating profit, economic profit or other profit measures); | |
• | net income; | |
• | revenue; | |
• | stock price or performance; | |
• | total stockholder return; | |
• | return measures (return on assets, capital, equity or revenue); | |
• | FFO; | |
• | EBITDA (earnings before interest, taxes, depreciation and amortization); | |
• | market share; | |
• | expenses; | |
• | business expansions or consolidation; | |
• | internal rate of return; and | |
• | planning accuracy. |
174
Table of Contents
175
Table of Contents
176
Table of Contents
177
Table of Contents
Number of Shares and OP | Percent of All | |||||||
Name of Beneficial Owner | Units Beneficially Owned | Shares and OP Units (1) | ||||||
Ted W. Rollins (2) | ||||||||
Michael S. Hartnett (2) | ||||||||
Earl C. Howell (3) | 66,667 | * | ||||||
N. Anthony Coles (4) | 6,667 | * | ||||||
Richard S. Kahlbaugh (4) | 6,667 | * | ||||||
Denis L. McGlynn (4) | 6,667 | * | ||||||
William G. Popeo (4) | 6,667 | * | ||||||
Daniel L. Simmons (4) | 6,667 | * | ||||||
Donald L. Bobbitt, Jr. (3) | 53,334 | * | ||||||
Shannon N. King (3) | 29,999 | * | ||||||
All directors, director nominees and named executive officers as a group (10 persons) |
* | Represents less than one percent of the number of shares of common stock outstanding on a fully diluted basis upon completion of this offering. | |
(1) | Assumes a total of shares of common stock and OP units are outstanding immediately following this offering. | |
(2) | Includes shares of common stock that may be issued in exchange for OP units held by MXT Capital. MXT Capital is wholly-owned and controlled by Ted W. Rollins, our co-chairman and chief executive officer, and Michael S. Hartnett, our co-chairman and chief investment officer, and certain members of their families. | |
(3) | Represents shares of restricted common stock granted to certain of our executive officers. See “Management—2010 Incentive Award Plan—Restricted Stock Awards.” | |
(4) | We will grant 6,667 shares of restricted common stock to each independent director upon completion of this offering which will rest ratably over five years on each anniversary of the date of the grant. |
178
Table of Contents
179
Table of Contents
180
Table of Contents
181
Table of Contents
182
Table of Contents
183
Table of Contents
• | consolidate the ownership of our properties and the student housing business of Campus Crest Group into our operating partnership and its wholly-owned subsidiaries; | |
• | facilitate this offering; and | |
• | enable us to qualify as a REIT for federal income tax purposes commencing with our taxable year ending December 31, 2010. |
• | Pursuant to the terms of a contribution agreement, MXT Capital will contribute to our operating partnership its entire student housing business, which is principally comprised of The Grove Student Properties, Campus Crest Development and Campus Crest Construction, and all of its ownership interests in each of our 21 wholly-owned properties and each of our six joint venture properties. In exchange, MXT Capital will receive approximately $4.5 million (which will immediately be used to make capital contributions to certain entities, which will in turn, immediately use such capital contributions solely to repay indebtedness) and OP units, representing a % limited partnership interest in our operating partnership. |
184
Table of Contents
• | Campus Crest Group will distribute to MXT Capital its interests in two parcels of land consisting of 20.2 acres, with associated indebtedness of approximately $1.9 million, on which we have decided not to build student housing properties; MXT Capital has agreed not to build student housing properties on these parcels in the future. Campus Crest Group will not receive any consideration from this transaction other than the release of the indebtedness associated with the two parcels and MXT Capital’s agreement regarding the use of the parcels in the future. | |
• | Campus Crest Group will distribute to MXT Capital its interest in an entity that will own a minority interest in a 1999 Pilatus PC-12 single-engine turboprop airplane. Upon completion of this offering, we will lease this aircraft on payment terms structured to equal our pro rata carrying and operating costs of the aircraft based on our actual usage. | |
• | Pursuant to the terms of a contribution agreement, the Ricker Group will contribute to our operating partnership all of its ownership interests in each of our 21 wholly-owned properties, as well as all of its ownership interests in The Grove at Moscow and The Grove at San Angelo. In addition, it will contribute its entire ownership interest in the entities that own fee interests in The Grove at Murfreesboro, The Grove at Stephenville, The Grove at Cheney, The Grove at Troy, The Grove at Waco, The Grove at Jonesboro, The Grove at Wichita and The Grove at Wichita Falls, all of which were subject to ground leases with the Ricker Group prior to the completion of our formation transactions. In exchange, the Ricker Group will receive approximately $26.7 million and 266,667 OP units, representing a % limited partnership interest in our operating partnership. |
In its contribution agreement, the Ricker Group provides us with certain ownership and limited real estate and operational representations, warranties and covenants. These representations and warranties relate to, among other things, ownership of the interests to be contributed to us, the Ricker Group’s authority to enter into the contribution agreement, the absence of litigation relating to the interests to be contributed, the existence of required permits and consents, tax matters and real estate matters. The Ricker Group has also covenanted not to sell any of the interests to be contributed pursuant to the contribution agreement, or permit entities through which it holds the interests to be contributed to engage in material transactions not in the ordinary course of business (in each case, other than pursuant to the contribution agreement) or to permit any such entity to make any distributions or pay any dividends. The Ricker Group will indemnify us with respect to losses resulting from breaches of its representations, warranties and covenants; these indemnification obligations generally are subject to a $250,000 deductible and capped at an amount equal to the aggregate consideration received by the Ricker Group pursuant to the contribution agreement with respect to certain ownership matters and $7.5 million with respect to all other matters and are generally limited to claims brought within 18 months from the completion of this offering (with certain claims surviving indefinitely). |
• | Pursuant to the terms of contribution agreements and purchase and sale agreements, certain third-party investors will contribute to our operating partnership all of their ownership interests in The Grove at Abilene, The Grove at Asheville, The Grove at Carrollton, The Grove at Cheney, The Grove at Ellensburg, The Grove at Greeley, The Grove at Jacksonville, The Grove at Jonesboro, The Grove at Lubbock, The Grove at Las Cruces, The Grove at Mobile-Phase I, The Grove at Mobile-Phase II, The Grove at Nacogdoches and The Grove at Wichita. In exchange, these third-party investors will receive approximately $10.7 million and 53,000 OP units, representing a % limited partnership interest in our operating partnership. Under the terms of these agreements, |
185
Table of Contents
• | In exchange for approximately $28.6 million, HSRE will sell to our operating partnership (i) all of its interests in each of The Grove at Milledgeville and The Grove at San Marcos, with the result that we will own a 100% interest in each of these properties and (ii) a 49.8% interest in a joint venture that will own 100% of each of The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Moscow, The Grove at San Angelo and The Grove at Statesboro, with the result that we will own a 49.9% interest in these properties and HSRE will own a 50.1% interest in these properties. |
• | We will purchase the preferred membership interest in our CC-Encore joint venture for approximately $3.9 million and terminate CC-Encore. |
• | we will own approximately % of the outstanding OP units, MXT Capital will own approximately % of the outstanding OP units, the Ricker Group will own approximately % of the outstanding OP units and certain third-party investors will own, in the aggregate, approximately % of the outstanding OP units; | |
• | our operating partnership will own 100% interests in 21 of our properties; | |
• | our operating partnership will own an indirect 49.9% interest in The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Moscow, The Grove at San Angelo and The Grove at Statesboro; and | |
• | we will own each of the entities through which Campus Crest Group conducted its student housing business. |
186
Table of Contents
![(PERFORMANCE GRAPH)](https://capedge.com/proxy/S-11A/0000950123-10-078464/g23199a3g2319911.gif)
(1) | Includes an aggregate of 249,335 shares of restricted common stock to be granted to our independent directors, certain of our executive officers and certain members of our management team. | |
(2) | Represents a limited partnership interest in our operating partnership. |
187
Table of Contents
• | Our operating partnership will issue to MXT Capital OP units in exchange for MXT Capital’s contribution to our operating partnership of the interests owned by MXT Capital in the predecessor entities and its student housing business. |
• | MXT Capital will enter into a tax protection agreement with us. Pursuant to the tax protection agreement, we will agree not to sell, exchange or otherwise dispose of any of our properties for a period of years, or the tax protection period, in a transaction that would cause MXT Capital to realize built-in gain, to such properties at the time of their contribution to our operating partnership. All of our properties will have such built-in gain. If we sell one or more of our properties during the tax protection period, we will be required to pay to MXT Capital an amount equal to the federal, state and local taxes imposed on the built-in gain allocated to it, with the amount of such taxes being computed based on the highest applicable federal, state and local marginal tax rates, as well as any “grossed up” taxes imposed on such payments. Consequently, our ability to sell or dispose of our properties will be substantially restricted by this obligation to make payments to MXT Capital during the tax protection period if we sell a property. This requirement will also restrict our ability to arrange financing for our operations as well as our ability to manage our capital structure. |
The tax protection agreement will also require us to maintain a minimum level of indebtedness of $ throughout the tax protection period in order to allow a sufficient amount of debt to be allocable to MXT Capital to avoid certain adverse tax consequences. If we fail to maintain such minimum indebtedness throughout the tax protection period, and as a consequence MXT Capital incurs federal, state or local tax liabilities, we will be required to make indemnifying payments to them, computed in the manner described in the preceding paragraph. |
• | We will enter into a registration rights agreement with MXT Capital pursuant to which we will agree, among other things, to register the resale of any common stock that may be exchanged for the OP units issued in our formation transactions. This agreement requires us to seek to register all common stock that may be exchanged for OP units effective as of that date which is 12 months following completion of this offering on a shelf registration statement under the Securities Act. | |
• | MXT Capital will receive Campus Crest Group’s interests in two parcels of land consisting of 20.2 acres, with associated indebtedness of approximately $1.9 million, on which we have decided not to build student housing properties. | |
• | We will pay the Ricker Group approximately $26.7 million of the net proceeds from this offering and our operating partnership will issue to the Ricker Group 266,667 OP units in |
188
Table of Contents
exchange for the Ricker Group’s contribution to our operating partnership of the interests owned by the Ricker Group in the predecessor entities and in the entities that have entered into ground leases with us relating to eight properties. |
• | Approximately $6.0 million of the net proceeds from this offering will be used to repay indebtedness owed by us to RHR, LLC, an entity owned by MXT Capital and the Ricker Group; RHR, LLC will, in turn, immediately repay an equal amount of indebtedness owed by it to an unaffiliated third party on substantially the same terms and conditions as the loan from RHR, LLC to us. | |
• | Approximately $4.0 million of the net proceeds from this offering will be used to repay our indebtedness to Capital Bank, an entity in which the Ricker Group has an ownership interest and of which Carl H. Ricker, Jr. is a director. |
• | Each of Ted W. Rollins, Michael S. Hartnett and Carl H. Ricker, Jr. will be released from certain personal guarantees with respect to mortgage and construction indebtedness with aggregate principal amounts of $ million, $ million and $ million, respectively, and from personal guarantees with respect to the RHR, LLC and Capital Bank indebtedness described above. Each of Messrs. Rollins and Hartnett will be released from certain personal guarantees with respect to the preferred membership interest in CC-Encore. |
• | Indebtedness incurred by two entities through which MXT Capital conducts aspects of its business will be repaid by MXT Capital. MXT Capital will receive $4.5 million of the net proceeds from this offering, which it will immediately use to make capital contributions to these entities. These entities will, in turn, immediately use the capital contributions received from MXT Capital solely to repay indebtedness. | |
• | Our executive officers, directors and certain members of our management team will receive material benefits, including: |
• | a grant of 249,335 shares of restricted common stock pursuant to the 2010 Incentive Award Plan (including 100,000 shares of restricted common stock granted in exchange for awards outstanding under Campus Crest Group’s deferred compensation plan, 116,000 shares of restricted common stock granted to certain of our executive officers and certain members of our management team and an aggregate grant of 33,335 shares of restricted common stock to our independent directors); |
• | employment agreements providing for salary, bonus and other benefits, including severance upon a termination of employment under certain circumstances, as described under “Management—Employment Agreements;” | |
• | indemnification by us for certain liabilities and expenses incurred as a result of actions brought, or threatened to be brought, against them as officers; and | |
• | upon the completion of this offering we have agreed to pay to Donald L. Bobbitt, Jr., an executive vice president and our chief financial officer, and Howard J. Weissman, a senior vice president and our corporate controller, cash bonuses of $200,000 and $125,000, respectively. |
• | Each of our non-employee directors will receive material benefits, including: |
• | annual and per-meeting fees described under “Management—Director Compensation;” and | |
• | indemnification by us for certain liabilities and expenses incurred as a result of actions brought, or threatened to be brought, against him as a director. |
189
Table of Contents
190
Table of Contents
191
Table of Contents
192
Table of Contents
• | the material facts relating to the common directorship or interest and as to the transaction are disclosed to, or known by, our board of directors or a committee of our board, and our board of directors or committee authorizes, approves or ratifies the transaction or contract by the affirmative vote of a majority of disinterested directors, even if the disinterested directors constitute less than a quorum; | |
• | the material facts relating to the common directorship or interest and as to the transaction are disclosed to, or known by, our stockholders entitled to vote thereon, and the transaction is authorized, approved or ratified by a majority of the votes cast by the stockholders entitled to vote other than the votes of stock owned of record or beneficially by the interested director, corporation or other entity; or | |
• | the transaction or contract is fair and reasonable to us at the time it is authorized, approved or ratified. |
193
Table of Contents
194
Table of Contents
195
Table of Contents
196
Table of Contents
• | our board of directors obtains such representations and undertakings from such stockholder as are reasonably necessary to ascertain that no individual’s beneficial or constructive ownership of our stock will result in our being “closely held” under Section 856(h) of the Internal Revenue Code (without regard to whether the stockholder’s interest is held during the last half of a taxable year) or otherwise failing to qualify as a REIT; | |
• | such stockholder does not, and represents that it will not, own, actually or constructively, an interest in a tenant of ours (or a tenant of any entity whose operations are attributed in whole or in part to us) that would cause us to own, actually or constructively, more than a 9.8% interest (as set forth in Section 856(d)(2)(B) of the Internal Revenue Code) in such tenant (or our board of directors determines that revenue derived from such tenant will not affect our ability to qualify as a REIT) and our board of directors obtains such representations and undertakings from such stockholder as are reasonably necessary to ascertain this fact; and |
197
Table of Contents
• | such stockholder agrees that any violation or attempted violation of such representations and undertakings, or any other action that is contrary to the provisions of our charter relating to the restrictions or ownership and transfer of our stock, will result in shares of stock owned by such stockholder in excess of the ownership limit being automatically transferred to a charitable trust as described below. |
• | any person from beneficially or constructively owning shares of our stock that would result in our being “closely held” under Section 856(h) of the Internal Revenue Code (without regard to whether the stockholder’s interest is held during the last half of a taxable year) or otherwise cause us to fail to qualify as a REIT; and | |
• | any person from transferring shares of our stock if such transfer would result in shares of our stock being beneficially owned by fewer than 100 persons (determined without reference to any rules of attribution). |
198
Table of Contents
• | to rescind as void any vote cast by a purported record transferee prior to our discovery that the shares have been transferred to the trust; and | |
• | to recast the vote in accordance with the desires of the trustee acting for the benefit of the beneficiary of the trust. |
199
Table of Contents
200
Table of Contents
201
Table of Contents
• | pursuant to our notice of the meeting; | |
• | by or at the direction of our board of directors; or | |
• | by a stockholder who is entitled to vote at the meeting and has complied with the advance notice procedures set forth in our bylaws. |
202
Table of Contents
• | pursuant to our notice of the meeting; | |
• | by or at the direction of our board of directors; or | |
• | provided that our board of directors has determined that directors shall be elected at such meeting, by a stockholder who is entitled to vote at the meeting and has complied with the advance notice provisions set forth in our bylaws. |
203
Table of Contents
204
Table of Contents
• | provide that a special meeting of the stockholders will be called at the request of stockholders only if requested by stockholders entitled to cast at least a majority of the votes entitled to be cast at the meeting; | |
• | reserve for itself the right to fix the number of directors; | |
• | provide that a director may be removed only by the vote of the holders of two-thirds of the stock entitled to vote; and | |
• | provide that any vacancies on the board of directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, for the remainder of the full term of the class of directors in which the vacancy occurred and until a successor is elected and qualified. |
205
Table of Contents
• | any present or former director or officer who is made a party to the proceeding by reason of his or her service in that capacity; or | |
• | any individual who, while a director of our company and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise as a director, officer, partner or trustee of such corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made a party to the proceeding by reason of his or her service in that capacity. |
206
Table of Contents
• | the act or omission of the director or officer was material to the matter giving rise to the proceeding and: |
• | was committed in bad faith; or | |
• | was the result of active and deliberate dishonesty; |
• | the director or officer actually received an improper personal benefit in money, property or services; or | |
• | in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. |
207
Table of Contents
208
Table of Contents
209
Table of Contents
210
Table of Contents
• | add to our obligations as general partner or surrender any right or power granted to us as general partner for the benefit of the limited partners; | |
• | reflect the issuance of additional OP units or the admission, substitution, termination or withdrawal of partners in accordance with the terms of the partnership agreement; | |
• | reflect a change of an inconsequential nature that does not adversely affect the limited partners in any material respect, or cure any ambiguity, correct or supplement any provisions of the partnership agreement not inconsistent with law or with other provisions of the partnership agreement, or make other changes concerning matters under the partnership agreement that will not otherwise be inconsistent with the partnership agreement or law; | |
• | satisfy any requirements, conditions or guidelines contained in any order, directive, opinion, ruling or regulation of a federal or state agency or contained in federal or state law; | |
• | reflect changes that are reasonably necessary for us to maintain our status as a REIT; or | |
• | modify the manner in which capital accounts are computed. |
• | take any action in contravention of an express prohibition or limitation contained in the partnership agreement; | |
• | enter into or conduct any business other than in connection with our role as general partner of the operating partnership and our operation as a REIT; | |
• | withdraw from the operating partnership or transfer any portion of our general partnership interest; or | |
• | be relieved of our obligations under the partnership agreement following any permitted transfer of our general partnership interest. |
211
Table of Contents
212
Table of Contents
213
Table of Contents
• | the act or omission of the indemnitee was material to the matter giving rise to the proceeding and either was committed in bad faith or fraud or was the result of active and deliberate dishonesty; | |
• | the indemnitee actually received an improper personal benefit in money, property or services; or | |
• | in the case of any criminal proceeding, the indemnitee had reasonable cause to believe that the act or omission was unlawful. |
214
Table of Contents
• | dealers in securities or currencies; | |
• | traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; | |
• | banks and other financial institutions; | |
• | regulated investment companies or real estate investment trusts; | |
• | tax-exempt organizations (except to the limited extent discussed in “—Taxation of Tax-Exempt Stockholders”); | |
• | certain insurance companies; | |
• | persons liable for the alternative minimum tax; | |
• | holders who received stock through the exercise of employee stock options or otherwise as compensation; | |
• | persons that hold common stock as a hedge against interest rate or currency risks or as part of a straddle or conversion transaction; | |
• | persons that hold stock as nominees on behalf of other persons; | |
• | persons that hold stock indirectly through other vehicles, such as partnerships, trusts or other entities; | |
• | non-U.S. individuals and foreign corporations (except to the limited extent discussed in “—Taxation of Non-U.S. Stockholders”); and | |
• | stockholders whose functional currency is not the U.S. dollar. |
215
Table of Contents
• | First, we will have to pay tax at regular corporate rates on any undistributed real estate investment trust taxable income, including undistributed net capital gains. | |
• | Second, under certain circumstances, we may have to pay the alternative minimum tax on items of tax preference. |
216
Table of Contents
• | Third, if we have (a) net income from the sale or other disposition of “foreclosure property,” as defined in the Internal Revenue Code, which is held primarily for sale to customers in the ordinary course of business or (b) other non-qualifying income from foreclosure property, we will have to pay tax at the highest corporate rate on that income. | |
• | Fourth, if we have net income from “prohibited transactions,” as defined in the Internal Revenue Code, we will have to pay a 100% tax on that income. Prohibited transactions are, in general, certain sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. We do not currently intend to dispose of any of our properties and do not intend to engage in prohibited transactions. We cannot assure you, however, that we will only make sales that satisfy the requirements of the safe harbors or that the IRS will not successfully assert that one or more of such sales are prohibited transactions. | |
• | Fifth, if we should fail to satisfy the 75% gross income test or the 95% gross income test, as discussed below under “—Requirements for Qualification,” but we have nonetheless maintained our qualification as a REIT because we have satisfied other requirements necessary to maintain REIT qualification, we will have to pay a 100% tax on an amount equal to the greater of the amount of gross income by which we fail either the 75% gross income test or the 95% gross income test, multiplied by a fraction which is our taxable income over our gross income determined with certain modifications. | |
• | Sixth, if we should fail to satisfy any of the asset tests other than a de minimis failure of the 5% and 10% asset tests, as discussed below under “—Requirements for Qualification,” but we have nonetheless maintained our qualification as a REIT because we have satisfied other requirements necessary to maintain REIT qualification and our failure to satisfy a test or tests is due to reasonable cause and not due to willful neglect, we will be subject to an excise tax equal to the greater of (i) $50,000 for each taxable year in which we fail to satisfy any of the asset tests or (ii) the amount of net income generated by the assets that caused the failure (for the period from the start of such failure until the failure is resolved or the assets that caused the failure are disposed of), multiplied by the highest corporate tax rate. | |
• | Seventh, if we should fail to distribute during each calendar year at least the sum of (1) 85% of our real estate investment trust ordinary income for that year, (2) 95% of our real estate investment trust capital gain net income for that year and (3) any undistributed taxable income from prior periods, we would have to pay a 4% excise tax on the excess of that required dividend over the amounts actually distributed. | |
• | Eighth, if we fail to satisfy one or more requirements for REIT qualification, other than the gross income tests and asset tests, we will be required to pay a penalty of $50,000 for each such failure. | |
• | Ninth, if we acquire any appreciated asset from a C corporation in certain transactions in which we must adopt the basis of the asset or any other property in the hands of the C corporation as our basis of the asset in our hands, and we recognize gain on the disposition of that asset during the 10-year period beginning on the date on which we acquired that asset, then we will have to pay tax on the built-in gain at the highest regular corporate rate. In general, a C corporation means a corporation that has to pay full corporate-level tax. |
217
Table of Contents
• | Tenth, if we receive non-arm’s length income from one of our TRSs (as defined under “—Requirements for Qualification”), we will be subject to a 100% tax on the amount of our non-arm’s length income. |
• | that is managed by one or more trustees or directors; | |
• | the beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest; | |
• | that would be taxable as a domestic corporation, but for the special Internal Revenue Code provisions applicable to REITs; | |
• | that is neither a financial institution nor an insurance company to which certain provisions of the Internal Revenue Code apply; | |
• | the beneficial ownership of which is held by 100 or more persons; | |
• | during the last half of each taxable year, not more than 50% in value of the outstanding stock of which is owned, directly or constructively, by five or fewer “individuals” (as defined in the Internal Revenue Code to also include certain entities); and | |
• | that meets certain other tests, described below, regarding the nature of its income and assets. |
218
Table of Contents
219
Table of Contents
• | rents from real property; | |
• | interest on debt secured by mortgages on real property, or on interests in real property; | |
• | dividends or other distributions on, and gain from the sale of, shares in other REITs; | |
• | gain from the sale of real estate assets; and | |
• | income derived from the temporary investment of new capital that is attributable to the issuance of our shares of beneficial interest or a public offering of our debt with a maturity date of at least five years and that we receive during the one year period beginning on the date on which we received such new capital. |
• | First, the rent must not be based in whole or in part on the income or profits of any person. Participating rent, however, will qualify as “rents from real property” if it is based on percentages of receipts or sales and the percentages: (a) are fixed at the time the leases are entered into, (b) are not renegotiated during the term of the leases in a manner that has the effect of basing rent on income or profits, and (c) conform with normal business practice. |
• | Second, we must not own, actually or constructively, 10% or more of the stock or the assets or net profits of any lessee, referred to as a related party tenant, other than a TRS. The constructive ownership rules generally provide that, if 10% or more in value of our |
220
Table of Contents
shares is owned, directly or indirectly, by or for any person, we are considered as owning the stock owned, directly or indirectly, by or for such person. |
• | Third, rent attributable to personal property leased in connection with a lease of real property must not be greater than 15% of the total rent received under the lease. |
• | Fourth, we cannot furnish or render noncustomary services to the tenants of our properties, or manage or operate our properties, other than through an independent contractor who is adequately compensated and from whom we do not derive or receive any income. However, we need not provide services through an “independent contractor,” but instead may provide services directly to our tenants, if the services are “usually or customarily rendered” in connection with the rental of space for occupancy only and are not considered to be provided for the tenants’ convenience. In addition, we may provide a minimal amount of “noncustomary” services to the tenants of a property, other than through an independent contractor, as long as our income from the services does not exceed 1% of our income from the related property. Finally, we may own up to 100% of the stock of one or more TRSs, which may provide noncustomary services to our tenants without tainting our rents from the related properties. |
221
Table of Contents
222
Table of Contents
• | our failure to meet the income tests was due to reasonable cause and not due to willful neglect; | |
• | we attach a schedule of the sources of our income to our tax return; and | |
• | any incorrect information on the schedule is not due to fraud with intent to evade tax. |
• | First, at least 75% of the value of our total assets must consist of: (a) cash or cash items, including certain receivables, (b) government securities, (c) interests in real property, including leaseholds and options to acquire real property and leaseholds, (d) interests in mortgages on real property, (e) stock in other REITs, and (f) investments in stock or debt instruments during the one year period following our receipt of new capital; | |
• | Second, of our investments not included in the 75% asset class other than TRSs, the value of our interest in any one issuer’s securities may not exceed 5% of the value of our total assets; | |
• | Third, of our investments not included in the 75% asset class other than TRSs, we may not own more than 10% of the voting power of any one issuer’s outstanding securities; | |
• | Fourth, of our investments not included in the 75% asset class other than TRSs, we may not own more than 10% of the value of any one issuer’s outstanding securities; | |
• | Fifth, no more than 25% of the value of our total assets may consist of the securities of one or more TRSs; and | |
• | Sixth, no more than 25% of the value of our total assets may consist of the securities of TRSs and other non-TRS taxable subsidiaries and other assets that are not qualifying assets for purposes of the 75% asset test. |
223
Table of Contents
• | we satisfied the asset tests at the end of the preceding calendar quarter; and | |
• | the discrepancy between the value of our assets and the asset test requirements arose from changes in the market values of our assets and was not wholly or partly caused by the acquisition of one or more non-qualifying assets. |
224
Table of Contents
225
Table of Contents
226
Table of Contents
• | a citizen or resident of the U.S.; | |
• | a domestic corporation; | |
• | an estate whose income is subject to U.S. federal income taxation regardless of its source; or | |
• | a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons have authority to control all substantial decisions of the trust. |
227
Table of Contents
228
Table of Contents
• | is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact; or | |
• | provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules. |
229
Table of Contents
• | is described in Section 401(a) of the Internal Revenue Code; | |
• | is tax-exempt under Section 501(a) of the Internal Revenue Code; and | |
• | holds more than 10% (by value) of the equity interests in the REIT. |
• | it would not have qualified as a REIT but for the fact that Section 856(h)(3) of the Internal Revenue Code provides that stock owned by qualified trusts will be treated, for purposes of the “not closely held” requirement, as owned by the beneficiaries of the trust (rather than by the trust itself); and | |
• | either (a) at least one qualified trust holds more than 25% by value of the interests in the REIT or (b) one or more qualified trusts, each of which owns more than 10% by value of the interests in the REIT, hold in the aggregate more than 50% by value of the interests in the REIT. |
230
Table of Contents
231
Table of Contents
• | a U.S. person; | |
• | a controlled foreign corporation for U.S. tax purposes; | |
• | a foreign person 50% or more of whose gross income is effectively connected with the conduct of a U.S. trade or business for a specified three-year period; or |
232
Table of Contents
• | a foreign partnership, if at any time during its tax year: (a) one or more of its partners are “U.S. persons,” as defined in U.S. Treasury Regulations, who in the aggregate hold more than 50% of the income or capital interest in the partnership, or (b) such foreign partnership is engaged in the conduct of a U.S. trade or business, |
• | is treated as a partnership under the Treasury Regulations relating to entity classification (the “check-the-box regulations”); and | |
• | is not a “publicly traded” partnership. |
233
Table of Contents
234
Table of Contents
235
Table of Contents
236
Table of Contents
237
Table of Contents
Number | ||||
Underwriter | of Shares | |||
Raymond James & Associates, Inc. | ||||
Citigroup Global Markets Inc. | ||||
Goldman, Sachs & Co. | ||||
KeyBanc Capital Markets Inc. | ||||
RBC Capital Markets Corporation | ||||
Robert W. Baird & Co. Incorporated | ||||
Total | ||||
238
Table of Contents
Per Share | Without Option | With Option | ||||||||||
Public offering price | $ | $ | $ | |||||||||
Underwriting discount(1) | $ | $ | $ | |||||||||
Proceeds, before expenses, to us | $ | $ | $ |
(1) | Excludes a structuring fee payable to Raymond James & Associates, Inc. of 0.35% of the total public offering price of our common stock sold in this offering. Contingent upon completion of this offering, we will also pay Raymond James & Associates, Inc. a fee of $1,465,000 for services rendered in connection with various financing and purchase and sale arrangements. |
239
Table of Contents
• | offer, pledge, sell or contract to sell any common stock, | |
• | sell any option or contract to purchase any common stock, | |
• | purchase any option or contract to sell any common stock, | |
• | grant any option, right or warrant for the sale of any common stock, | |
• | lend or otherwise dispose of or transfer any common stock, | |
• | request or demand that we file a registration statement related to the common stock, or | |
• | enter into any swap or other agreement that transfers, in whole or in part, the economic consequence of ownership of any common stock whether any such swap or transaction is to be settled by delivery of shares of our common stock or other securities, in cash or otherwise. |
• | the valuation multiples of publicly traded companies that the representatives believe to be comparable to us, | |
• | our financial information, |
240
Table of Contents
• | the history of, and the prospects for, our company and the industry in which we compete, | |
• | an assessment of our management, its past and present operations, and the prospects for, and timing of, our future revenues, | |
• | the present state of our development, and | |
• | the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours. |
241
Table of Contents
242
Table of Contents
243
Table of Contents
244
Table of Contents
245
Table of Contents
Page | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
Historical Financial Statements: | ||||
F-12 | ||||
F-13 | ||||
F-14 | ||||
Campus Crest Communities Predecessor Combined Financial Statements: | ||||
F-15 | ||||
F-16 | ||||
F-17 | ||||
F-18 | ||||
F-19 | ||||
F-20 | ||||
F-50 | ||||
F-51 | ||||
HSRE Properties Combined Statement of Revenue and Certain Expenses: | ||||
F-52 | ||||
F-53 | ||||
F-54 |
F-1
Table of Contents
• | the historical financial results of Campus Crest Communities Predecessor (as defined below), including Campus Crest Communities, Inc. for the six months ended June 30, 2010 (unaudited) and for the year ended December 31, 2009; |
• | our formation transactions; | |
• | the repayment of indebtedness and other use of proceeds from this offering; | |
• | the acquisition of certain noncontrolling interests of the Predecessor; | |
• | the incremental general and administrative expenses to be incurred to operate as a public company; | |
• | the probable 2010 acquisition by the Company of certain entities owned by one or more real estate ventures in which the Predecessor is a member; | |
• | the probable 2010 acquisition by the Company of certain land under contract; and | |
• | the election by certain of the Company’s subsidiaries to be treated as taxable real estate investment trust (“REIT”) subsidiaries. |
F-2
Table of Contents
As of June 30, 2010
(in thousands)
Acquisition | ||||||||||||||||||||||||||||||||||||||||
Campus | Repayment | of Third- | Acquisition | Impact of | ||||||||||||||||||||||||||||||||||||
Campus Crest | Crest | of debt | Acquisition | Party | Acquisition | of land | TRS for | |||||||||||||||||||||||||||||||||
Communities, | Communities | and associated | of Ricker | Investor | of HSRE | under | third-party | This | Pro | |||||||||||||||||||||||||||||||
Inc. | Predecessor | costs | interest | interest | Properties | contract | contracts | offering | forma | |||||||||||||||||||||||||||||||
(A) | (B) | (C) | (D) | (E) | (F) | (G) | ||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||
Investment in real estate, net: | ||||||||||||||||||||||||||||||||||||||||
Student housing properties | $ | — | $ | 348,466 | $ | — | $ | — | $ | — | $ | 21,934 | $ | — | $ | — | $ | — | $ | 370,400 | ||||||||||||||||||||
Accumulated depreciation | — | (48,403 | ) | — | — | — | — | — | — | — | (48,403 | ) | ||||||||||||||||||||||||||||
Development in process | — | 3,641 | — | — | — | — | 4,227 | — | — | 7,868 | ||||||||||||||||||||||||||||||
Investment in real estate, net | — | 303,704 | — | — | — | 21,934 | 4,227 | — | — | 329,865 | ||||||||||||||||||||||||||||||
Investment in uncombined entities | — | 3,257 | — | — | — | 12,929 | — | — | — | 16,186 | ||||||||||||||||||||||||||||||
Cash and cash equivalents | — | 3,054 | (224,377 | ) | (26,731 | ) | (10,711 | ) | (26,730 | ) | (4,227 | ) | — | 302,305 | 12,583 | |||||||||||||||||||||||||
Restricted cash and investments | — | 3,770 | — | — | — | — | — | — | — | 3,770 | ||||||||||||||||||||||||||||||
Student receivables, net | — | 333 | — | — | — | 7 | — | — | — | 340 | ||||||||||||||||||||||||||||||
Cost in excess of construction billings | — | 2,781 | — | — | — | — | — | — | — | 2,781 | ||||||||||||||||||||||||||||||
Other assets | — | 11,474 | (341 | ) | (1,629 | ) | — | 70 | — | — | — | 9,574 | ||||||||||||||||||||||||||||
Total assets | $ | — | $ | 328,373 | $ | (224,718 | ) | $ | (28,360 | ) | $ | (10,711 | ) | $ | 8,210 | $ | — | $ | — | $ | 302,305 | $ | 375,099 | |||||||||||||||||
Liabilities and equity (deficit) | ||||||||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||
Mortgage and construction loans | $ | — | $ | 329,374 | $ | (212,008 | ) | $ | — | $ | — | $ | 14,938 | $ | — | $ | — | $ | — | $ | 132,304 | |||||||||||||||||||
Lines of credit and other debt | — | 10,018 | (10,018 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Related party loan | — | 7,671 | — | — | — | (7,671 | ) | — | — | — | — | |||||||||||||||||||||||||||||
Accounts payable and accrued expenses | — | 25,954 | — | (217 | ) | — | 501 | — | — | (3,244 | ) | 22,994 | ||||||||||||||||||||||||||||
Construction billings in excess of cost | — | 267 | — | — | — | — | — | — | — | 267 | ||||||||||||||||||||||||||||||
Other liabilities | — | 8,535 | (2,351 | ) | — | — | 377 | — | 128 | — | 6,689 | |||||||||||||||||||||||||||||
Total liabilities | — | 381,819 | (224,377 | ) | (217 | ) | — | 8,145 | — | 128 | (3,244 | ) | 162,254 | |||||||||||||||||||||||||||
Equity (deficit): | ||||||||||||||||||||||||||||||||||||||||
Common stock | — | — | — | — | — | — | — | — | 223 | 223 | ||||||||||||||||||||||||||||||
Additional paid-in capital | — | — | — | (28,123 | ) | (14,727 | ) | — | — | — | 310,051 | 267,201 | ||||||||||||||||||||||||||||
Accumulated earnings (losses) | — | (54,245 | ) | (341 | ) | — | — | 65 | — | (128 | ) | 54,245 | (404 | ) | ||||||||||||||||||||||||||
Noncontrolling interest | — | 799 | — | (20 | ) | 4,016 | — | — | — | (58,970 | ) | (54,175 | ) | |||||||||||||||||||||||||||
Total equity (deficit) | — | (53,446 | ) | (341 | ) | (28,143 | ) | (10,711 | ) | 65 | — | (128 | ) | 305,549 | 212,845 | |||||||||||||||||||||||||
Total liabilities and equity (deficit) | $ | — | $ | 328,373 | $ | (224,718 | ) | $ | (28,360 | ) | $ | (10,711 | ) | $ | 8,210 | $ | — | $ | — | $ | 302,305 | $ | 375,099 | |||||||||||||||||
F-3
Table of Contents
For the Six Months Ended June 30, 2010
(in thousands, except per share data)
Acquisition | ||||||||||||||||||||||||||||||||||||
Campus | Repayment | of Third- | Impact of | |||||||||||||||||||||||||||||||||
Campus Crest | Crest | of debt and | Acquisition | Party | Acquisition | TRS for | ||||||||||||||||||||||||||||||
Communities, | Communities | associated | of Ricker | Investor | of HSRE | third-party | This | Pro | ||||||||||||||||||||||||||||
Inc. | Predecessor | costs | interest | interest | Properties | contracts | offering | forma | ||||||||||||||||||||||||||||
(AA) | (BB) | (CC) | (DD) | (FF) | (GG) | |||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||
Student housing leasing | $ | — | $ | 24,443 | $ | — | $ | — | $ | — | $ | 1,543 | $ | — | $ | — | $ | 25,986 | ||||||||||||||||||
Student housing services | — | 1,426 | — | — | — | 60 | — | — | 1,486 | |||||||||||||||||||||||||||
Development, construction and management services | — | 30,738 | — | — | — | (13,427 | ) | — | — | 17,311 | ||||||||||||||||||||||||||
Total revenues | — | 56,607 | — | — | — | (11,824 | ) | — | — | 44,783 | ||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||||||
Student housing operations | — | 13,455 | — | — | — | 774 | — | — | 14,229 | |||||||||||||||||||||||||||
Development, construction and management services | — | 28,644 | — | — | — | (12,504 | ) | — | — | 16,140 | ||||||||||||||||||||||||||
General and administrative | — | 2,618 | — | — | — | — | — | 827 | 3,445 | |||||||||||||||||||||||||||
Ground leases | — | 94 | — | — | — | — | — | — | 94 | |||||||||||||||||||||||||||
Depreciation and amortization | — | 9,429 | — | — | — | 363 | — | — | 9,792 | |||||||||||||||||||||||||||
Total operating expenses | — | 54,240 | — | — | — | (11,367 | ) | — | 827 | 43,700 | ||||||||||||||||||||||||||
Equity in loss of uncombined entities | — | (194 | ) | — | — | — | (918 | ) | — | — | (1,112 | ) | ||||||||||||||||||||||||
Operating loss | — | 2,173 | — | — | — | (1,375 | ) | — | (827 | ) | (29 | ) | ||||||||||||||||||||||||
Nonoperating income (expense): | ||||||||||||||||||||||||||||||||||||
Interest expense | — | (10,686 | ) | 3,866 | — | — | 1,252 | — | 1,281 | (4,287 | ) | |||||||||||||||||||||||||
Change in fair value of interest rate derivatives | — | 178 | 101 | — | — | — | — | — | 279 | |||||||||||||||||||||||||||
Other income (expense) | — | 45 | — | — | — | — | — | — | 45 | |||||||||||||||||||||||||||
Income taxes | — | — | — | — | — | — | (128 | ) | — | (128 | ) | |||||||||||||||||||||||||
Total nonoperating income (expense) | — | (10,463 | ) | 3,967 | — | — | 1,252 | (128 | ) | 1,281 | (4,091 | ) | ||||||||||||||||||||||||
Net income (loss) | — | (8,290 | ) | 3,967 | — | — | (123 | ) | (128 | ) | 454 | (4,120 | ) | |||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interest | — | (5,025 | ) | — | 4,231 | 794 | — | — | (288 | ) | (288 | ) | ||||||||||||||||||||||||
Net income (loss) attributable to Campus Crest Communities, Inc. | $ | — | $ | (3,265 | ) | $ | 3,967 | $ | (4,231 | ) | $ | (794 | ) | $ | (123 | ) | $ | (128 | ) | $ | 742 | $ | (3,832 | ) | ||||||||||||
Pro forma earnings per share—basic and diluted | $ | |||||||||||||||||||||||||||||||||||
Pro forma weighted average shares outstanding—basic and diluted | ||||||||||||||||||||||||||||||||||||
F-4
Table of Contents
For the Year Ended December 31, 2009
(in thousands, except per share data)
Acquisition | ||||||||||||||||||||||||||||||||||||
Campus | Repayment | of Third- | Impact of | |||||||||||||||||||||||||||||||||
Campus Crest | Crest | of debt and | Acquisition | Party | Acquisition | TRS for | ||||||||||||||||||||||||||||||
Communities, | Communities | associated | of Ricker | Investor | of HSRE | third-party | This | Pro | ||||||||||||||||||||||||||||
Inc. | Predecessor | costs | interest | interest | Properties | contracts | offering | forma | ||||||||||||||||||||||||||||
(AA) | (BB) | (CC) | (DD) | (FF) | (GG) | |||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||
Student housing leasing | $ | — | $ | 43,708 | $ | — | $ | — | $ | — | $ | 1,313 | $ | — | $ | — | $ | 45,021 | ||||||||||||||||||
Student housing services | — | 2,265 | — | — | — | 24 | — | — | 2,289 | |||||||||||||||||||||||||||
Development, construction and management services | — | 60,711 | — | — | — | (36,171 | ) | — | — | 24,540 | ||||||||||||||||||||||||||
Total revenues | — | 106,684 | — | — | — | (34,834 | ) | — | — | 71,850 | ||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||||||
Student housing operations | — | 23,155 | — | — | — | 552 | — | — | 23,707 | |||||||||||||||||||||||||||
Development, construction and management services | — | 60,200 | — | — | — | (35,353 | ) | — | — | 24,847 | ||||||||||||||||||||||||||
General and administrative | — | 5,617 | — | — | — | — | — | 833 | 6,450 | |||||||||||||||||||||||||||
Ground leases | — | 264 | — | — | — | — | — | — | 264 | |||||||||||||||||||||||||||
Write-off of pre-development costs | — | 1,211 | — | — | — | — | — | — | 1,211 | |||||||||||||||||||||||||||
Depreciation and amortization | — | 18,371 | — | — | — | 227 | — | — | 18,598 | |||||||||||||||||||||||||||
Total operating expenses | — | 108,818 | — | — | — | (34,574 | ) | — | 833 | 75,077 | ||||||||||||||||||||||||||
Equity in loss of uncombined entities | — | (59 | ) | — | — | — | (506 | ) | — | — | (565 | ) | ||||||||||||||||||||||||
Operating loss | — | (2,193 | ) | — | — | — | (766 | ) | — | (833 | ) | (3,792 | ) | |||||||||||||||||||||||
Nonoperating income (expense): | ||||||||||||||||||||||||||||||||||||
Interest expense | — | (15,871 | ) | 7,180 | — | — | 45 | — | — | (8,646 | ) | |||||||||||||||||||||||||
Change in fair value of interest rate derivatives | — | 797 | (707 | ) | — | — | — | — | — | 90 | ||||||||||||||||||||||||||
Other income (expense) | — | 44 | — | — | — | — | — | — | 44 | |||||||||||||||||||||||||||
Income taxes | — | — | — | — | — | — | (73 | ) | — | (73 | ) | |||||||||||||||||||||||||
Total nonoperating income (expense) | — | (15,030 | ) | 6,473 | — | — | 45 | (73 | ) | — | (8,585 | ) | ||||||||||||||||||||||||
Net income (loss) | — | (17,223 | ) | 6,473 | — | — | (721 | ) | (73 | ) | (833 | ) | (12,377 | ) | ||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interest | — | (10,486 | ) | — | 8,502 | 1,984 | — | — | (864 | ) | (864 | ) | ||||||||||||||||||||||||
Net income (loss) attributable to Campus Crest Communities, Inc. | $ | — | $ | (6,737 | ) | $ | 6,473 | $ | (8,502 | ) | $ | (1,984 | ) | $ | (721 | ) | $ | (73 | ) | $ | 31 | $ | (11,513 | ) | ||||||||||||
Pro forma earnings per share—basic and diluted | $ | |||||||||||||||||||||||||||||||||||
Pro forma weighted average shares outstanding—basic and diluted | ||||||||||||||||||||||||||||||||||||
F-5
Table of Contents
1. | Adjustments to the Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2010 |
Net ownership | Net ownership | |||||||
interest | interest | |||||||
Property | pre-acquisition | post-acquisition | ||||||
The Grove at Milledgeville(1) | 5 | % | 100.0 | % | ||||
The Grove at San Marcos(2) | 0.1 | % | 100.0 | % | ||||
The Grove at San Angelo(2) | 0.1 | % | 49.9 | % | ||||
The Grove at Moscow(2) | 0.1 | % | 49.9 | % | ||||
The Grove at Lawrence(2) | 0.1 | % | 49.9 | % | ||||
The Grove at Huntsville(2) | 0.1 | % | 49.9 | % | ||||
The Grove at Conway(2) | 0.1 | % | 49.9 | % | ||||
The Grove at Statesboro(2) | 0.1 | % | 49.9 | % |
(1) | The Grove at Milledgeville is combined in the Predecessor’s June 30, 2010 (unaudited) historical combined balance sheet and historical combined statement of operations. In November 2009, the Predecessor sold 90% of its interest in Campus Crest at Milledgeville, LLC. The transaction did not qualify as a sale under U.S. GAAP and Campus Crest at Milledgeville, LLC remained a combined entity as of June 30, 2010 and December 31, 2009. |
F-6
Table of Contents
(2) | Properties are accounted for using the equity method of accounting in the Predecessor’s June 30, 2010 (unaudited) historical combined balance sheet. In March 2010, the Predecessor sold 99% of its ownership interest in the uncombined real estate venture that owns these properties. The transaction did not qualify as a sale of an interest under U.S. GAAP, and these properties are accounted for at their pre-sale ownership interests as of June 30, 2010. |
Investment in unconsolidated entities | $ | 12,929 | ||
Investment in real estate, net | 21,934 | |||
Other assets acquired | 77 | |||
Indebtedness assumed | (14,938 | ) | ||
Other liabilities assumed | (878 | ) | ||
Acquisition of ownership interests | 19,124 | |||
Repayment of related party debt at contracted amount | 9,492 | |||
28,616 | ||||
Cash acquired — San Marcos | (1,886 | ) | ||
Cash paid to acquire ownership interest and retire debt, net of cash acquired | $ | 26,730 | ||
Proceeds from this offering | $ | 335,000 | ||
Less offering related costs | (26,950 | ) | ||
Net cash proceeds from this offering | $ | 308,050 | ||
F-7
Table of Contents
2. | Adjustments to the Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Six Months Ended June 30, 2010 |
Amount to be | ||||||||||||||||||||||||
Repaid | ||||||||||||||||||||||||
Principal | from | Stated | Interest | |||||||||||||||||||||
Face | Outstanding | Offering | Interest | Rate at | Maturity | |||||||||||||||||||
Amount | at 6/30/10 | Proceeds | Rate | 6/30/10 | Date | Amortization | ||||||||||||||||||
Construction loans | ||||||||||||||||||||||||
The Grove at Mobile-Phase II | $ | 15,875 | $ | 15,648 | $ | 15,648 | Greater of LIBOR + 3.00% or 5.50% | 5.50 | % | 10/31/2010 | Amortizing- $1.0 million due (1) | |||||||||||||
Construction Loan (nine properties) (2) | 157,550 | 148,886 | 148,886 | LIBOR + 1.80% | 2.15 | % | 1/31/2011 | Interest only | ||||||||||||||||
The Grove at San Marcos (3) | 15,131 | 14,938 | 14,938 | LIBOR + 2.50% | 5.94 | % | 5/15/2011 | Interest only | ||||||||||||||||
Mortgage loans | ||||||||||||||||||||||||
Mortgage (six properties) | 104,000 | 104,000 | 32,536 | 6.40% | 6.40 | % | 2/28/2013 | 30 years | ||||||||||||||||
Total | $ | 283,472 | $ | 212,008 | ||||||||||||||||||||
(1) | On the earliest to occur of the completion of this offering, the completion of a private placement of the equity interests in MXT Capital or Campus Crest Group, or October 31, 2010. |
(2) | At June 30, 2010, approximately $136.4 million of the loan balance is hedged with a floating to fixed interest rate swap which, when taken together with the loan interest, fixes this portion of the loan’s interest rate at 6.0%. We intend to terminate and settle this interest rate swap at the completion of the offering. |
(3) | Construction loan secured by The Grove at San Marcos will become a consolidated obligation of the Company upon our acquisition of the 95% ownership interest discussed in notes D and DD. This loan is expected to be repaid from offering proceeds. |
F-8
Table of Contents
Six Months Ended | ||||||||||||
June 30, 2010 | Adjustments (1)(3) | Pro forma | ||||||||||
Revenues-student housing revenues | $ | 4,111 | $ | (2,508 | ) | $ | 1,603 | |||||
Operating expenses: | ||||||||||||
Student housing operations | 2,672 | (1,898 | ) | 774 | ||||||||
Depreciation and amortization | — | 363 | 363 | |||||||||
Total operating expenses | 2,672 | (1,535 | ) | 1,137 | ||||||||
Interest expense (2) | (1,446 | ) | 2,698 | 1,252 | ||||||||
Equity in loss of unconsolidated entities (3) | — | (918 | ) | (918 | ) | |||||||
Net loss | $ | (7 | ) | $ | 807 | $ | 800 | |||||
(1) | Does not include impact to third-party development, construction and management services income and expenses, which is a reduction of operating income of approximately $0.9 million. |
(2) | Pro forma amount does not include interest expense related to funds provided by HSRE in conjunction with the sale of The Grove at Milledgeville. Such amount is included in the historical combined financial statements of the Predecessor. | |
(3) | Reflects accounting for investments in The Grove at San Angelo, The Grove at Moscow and The Grove at Lawrence using the equity method of accounting. |
3. | Adjustments to the Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2009 |
F-9
Table of Contents
Amount to be | ||||||||||||||||||||||||
Repaid | ||||||||||||||||||||||||
Principal | from | Stated | Interest | |||||||||||||||||||||
Face | Outstanding | Offering | Interest | Rate at | Maturity | |||||||||||||||||||
Amount | at 12/31/09 | Proceeds | Rate | 12/31/09 | Date | Amortization | ||||||||||||||||||
Construction loans | ||||||||||||||||||||||||
The Grove at Mobile-Phase II | $ | 15,875 | $ | 15,874 | $ | 15,874 | Greater of LIBOR + 3.00% or 5.50% | 5.50 | % | 10/31/2010 | Amortizing- $1.0 million due (1) | |||||||||||||
Construction Loan (nine properties) (2) | 157,550 | 148,388 | 148,388 | LIBOR + 1.80% | 2.03 | % | 1/31/2011 | Interest only | ||||||||||||||||
The Grove at San Marcos (3) | 15,131 | 14,123 | 14,004 | LIBOR + 2.50% | 5.94 | % | 5/15/2011 | Interest only | ||||||||||||||||
Mortgage loans | ||||||||||||||||||||||||
Mortgage (six properties) | 104,000 | 104,000 | 32,536 | 6.40% | 6.40 | % | 2/28/2013 | 30 years | ||||||||||||||||
Total | $ | 282,385 | $ | 210,802 | ||||||||||||||||||||
(1) | On the earliest to occur of the completion of this offering, the completion of a private placement of the equity interests in MXT Capital or Campus Crest Group, LLC, or October 31, 2010. |
(2) | At December 31, 2009, approximately $136.4 million of the loan balance is hedged with a floating to fixed interest rate swap which, when taken together with the loan interest, fixes this portion of the loan’s interest rate at 6.0%. We intend to terminate and settle this interest rate swap at the completion of the offering. |
(3) | Construction loan secured by The Grove at San Marcos will become a consolidated obligation of the Company upon our acquisition of the 95% ownership interest discussed in notes D and DD. This loan is expected to be repaid from offering proceeds. |
F-10
Table of Contents
Year Ended | ||||||||||||
December 31, 2009 | Adjustments (1)(3) | Pro forma | ||||||||||
Revenues-student housing revenues | $ | 3,131 | $ | (1,794 | ) | $ | 1,337 | |||||
Operating expenses: | ||||||||||||
Student housing operations | 1,698 | (1,146 | ) | 552 | ||||||||
Depreciation and amortization | — | 227 | 227 | |||||||||
Total operating expenses | 1,698 | (919 | ) | 779 | ||||||||
Interest expense (2) | (1,009 | ) | 1,054 | 45 | ||||||||
Equity in loss of unconsolidated entities (3) | — | (506 | ) | (506 | ) | |||||||
Net loss | $ | 424 | $ | (327 | ) | $ | 97 | |||||
(1) | Does not include impact to third-party development, construction and management services income and expenses, which is a reduction of operating income of approximately $0.8 million. | |
(2) | Pro forma amount does not include interest expense related to funds provided by HSRE in conjunction with the sale of The Grove at Milledgeville. Such amount is included in the historical combined financial statements of the Predecessor. | |
(3) | Reflects accounting for investments in The Grove at San Angelo, The Grove at Moscow and The Grove at Lawrence using the equity method of accounting. |
F-11
Table of Contents
F-12
Table of Contents
(in thousands, except shares and par value)
As of | As of | |||||||
June 30, | March 1, | |||||||
2010 | 2010 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Cash and total assets | $ | — | $ | — | ||||
Liabilities and Stockholder’s Equity | ||||||||
Liabilities | $ | — | $ | — | ||||
Stockholder’s equity: | ||||||||
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized; 0 shares issued and outstanding | — | — | ||||||
Common stock, $0.01 par value per share; 90,000,000 shares authorized; 1 share issued and outstanding | — | — | ||||||
Retained earnings | — | — | ||||||
Total stockholder’s equity | — | — | ||||||
Total liabilities and stockholder’s equity | $ | — | $ | — | ||||
F-13
Table of Contents
1. | Organization |
• | consolidate the ownership of our properties and the student housing business of the Predecessor into the Operating Partnership and its wholly-owned subsidiaries; and | |
• | facilitate this offering. |
2. | Federal Income Tax |
F-14
Table of Contents
F-15
Table of Contents
June 30, | December 31, | |||||||||||
2010 | 2009 | 2008 | ||||||||||
(unaudited) | ||||||||||||
(in thousands) | ||||||||||||
Assets | ||||||||||||
Investment in real estate, net: | ||||||||||||
Student housing properties | $ | 348,466 | $ | 347,157 | $ | 326,217 | ||||||
Accumulated depreciation | (48,403 | ) | (38,999 | ) | (20,794 | ) | ||||||
Development in process | 3,641 | 3,300 | 15,742 | |||||||||
Investment in real estate, net | 303,704 | 311,458 | 321,165 | |||||||||
Investment in uncombined entity | 3,257 | 2,980 | 776 | |||||||||
Cash and cash equivalents | 3,054 | 2,902 | 11,041 | |||||||||
Restricted cash and investments | 3,770 | 3,377 | 4,134 | |||||||||
Student receivables, net of allowance for doubtful accounts of $133, $653 and $401, respectively | 333 | 577 | 498 | |||||||||
Cost in excess of construction billings | 2,781 | 3,938 | — | |||||||||
Other assets | 11,474 | 6,564 | 4,541 | |||||||||
Total assets | $ | 328,373 | $ | 331,796 | $ | 342,155 | ||||||
Liabilities and equity (deficit) | ||||||||||||
Liabilities: | ||||||||||||
Mortgage and construction loans | $ | 329,374 | $ | 329,102 | $ | 322,426 | ||||||
Lines of credit and other debt | 10,018 | 9,978 | 9,237 | |||||||||
Related party loan | 7,671 | 4,092 | — | |||||||||
Accounts payable and accrued expenses | 25,954 | 20,029 | 17,311 | |||||||||
Construction billings in excess of cost | 267 | — | 2,049 | |||||||||
Other liabilities | 8,535 | 11,311 | 13,246 | |||||||||
Total liabilities | 381,819 | 374,512 | 364,269 | |||||||||
Equity (deficit): | ||||||||||||
Owner’s deficit | (54,245 | ) | (50,090 | ) | (42,502 | ) | ||||||
Noncontrolling interest | 799 | 7,374 | 20,388 | |||||||||
Total deficit | (53,446 | ) | (42,716 | ) | (22,114 | ) | ||||||
Commitments and contingencies | ||||||||||||
Total liabilities and equity (deficit) | $ | 328,373 | $ | 331,796 | $ | 342,155 | ||||||
F-16
Table of Contents
Six Months Ended | ||||||||||||||||||||
June 30, | Year Ended December 31, | |||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | ||||||||||||||||
(unaudited) | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Student housing leasing | $ | 24,443 | $ | 21,219 | $ | 43,708 | $ | 30,813 | $ | 15,598 | ||||||||||
Student housing services | 1,426 | 1,011 | 2,265 | 798 | 110 | |||||||||||||||
Development, construction and management services | 30,738 | 37,258 | 60,711 | 2,505 | — | |||||||||||||||
Total revenues | 56,607 | 59,488 | 106,684 | 34,116 | 15,708 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Student housing operations | 13,455 | 11,416 | 23,155 | 14,890 | 7,470 | |||||||||||||||
Development, construction and management services | 28,644 | 35,693 | 60,200 | 2,147 | — | |||||||||||||||
General and administrative | 2,618 | 2,454 | 5,617 | 5,422 | 3,467 | |||||||||||||||
Ground leases | 94 | 96 | 264 | 224 | 40 | |||||||||||||||
Write-off of pre-development costs | — | — | 1,211 | 203 | — | |||||||||||||||
Depreciation and amortization | 9,429 | 9,115 | 18,371 | 13,573 | 5,765 | |||||||||||||||
Total operating expenses | 54,240 | 58,774 | 108,818 | 36,459 | 16,742 | |||||||||||||||
Equity in loss of uncombined entities | (194 | ) | — | (59 | ) | — | — | |||||||||||||
Operating income (loss) | 2,173 | 714 | (2,193 | ) | (2,343 | ) | (1,034 | ) | ||||||||||||
Nonoperating income (expense): | ||||||||||||||||||||
Interest expense | (10,686 | ) | (7,369 | ) | (15,871 | ) | (14,946 | ) | (6,583 | ) | ||||||||||
Change in fair value of interest rate derivatives | 178 | 2,680 | 797 | (8,758 | ) | (2,115 | ) | |||||||||||||
Other income (expense) | 45 | (19 | ) | 44 | (50 | ) | 100 | |||||||||||||
Total nonoperating expenses | (10,463 | ) | (4,708 | ) | (15,030 | ) | (23,754 | ) | (8,598 | ) | ||||||||||
Net loss | (8,290 | ) | (3,994 | ) | (17,223 | ) | (26,097 | ) | (9,632 | ) | ||||||||||
Net loss attributable to noncontrolling interest | (5,025 | ) | (2,060 | ) | (10,486 | ) | (870 | ) | (2,083 | ) | ||||||||||
Net loss attributable to Predecessor | $ | (3,265 | ) | $ | (1,934 | ) | $ | (6,737 | ) | $ | (25,227 | ) | $ | (7,549 | ) | |||||
F-17
Table of Contents
Noncontrolling | ||||||||||||
Owner’s deficit | interest | Total | ||||||||||
(in thousands) | ||||||||||||
Equity (deficit), December 31, 2006 | $ | (4,974 | ) | $ | 9,918 | $ | 4,944 | |||||
Contributions | — | 22,823 | 22,823 | |||||||||
Distributions | (2,066 | ) | (1,182 | ) | (3,248 | ) | ||||||
Net loss | (7,549 | ) | (2,083 | ) | (9,632 | ) | ||||||
Equity (deficit), December 31, 2007 | (14,589 | ) | 29,476 | 14,887 | ||||||||
Contributions | 1,402 | 6,567 | 7,969 | |||||||||
Distributions | (4,088 | ) | (14,785 | ) | (18,873 | ) | ||||||
Net loss | (25,227 | ) | (870 | ) | (26,097 | ) | ||||||
Equity (deficit), December 31, 2008 | (42,502 | ) | 20,388 | (22,114 | ) | |||||||
Contributions | — | 924 | 924 | |||||||||
Distributions | (851 | ) | (3,452 | ) | (4,303 | ) | ||||||
Net loss | (6,737 | ) | (10,486 | ) | (17,223 | ) | ||||||
Equity (deficit), December 31, 2009 | (50,090 | ) | 7,374 | (42,716 | ) | |||||||
Contributions | 241 | 405 | 646 | |||||||||
Distributions | (1,131 | ) | (1,955 | ) | (3,086 | ) | ||||||
Net loss | (3,265 | ) | (5,025 | ) | (8,290 | ) | ||||||
Equity (deficit), June 30, 2010 (unaudited) | $ | (54,245 | ) | $ | 799 | $ | (53,446 | ) | ||||
F-18
Table of Contents
Six Months Ended | ||||||||||||||||||||
June 30, | Year Ended December 31, | |||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | ||||||||||||||||
(unaudited) | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Operating activities: | ||||||||||||||||||||
Net loss | $ | (8,290 | ) | $ | (3,994 | ) | $ | (17,223 | ) | $ | (26,097 | ) | $ | (9,632 | ) | |||||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||||||||||||||
Depreciation and amortization | 9,429 | 9,115 | 18,371 | 13,573 | 5,765 | |||||||||||||||
Amortization of deferred financing costs | 318 | 317 | 828 | 798 | 305 | |||||||||||||||
Loss on disposal of property | — | — | — | — | 674 | |||||||||||||||
Accretion of interest expense | 1,376 | — | 220 | — | — | |||||||||||||||
Bad debt expense | 304 | 560 | 1,639 | 1,047 | 292 | |||||||||||||||
Write-off of pre-development costs | — | — | 1,211 | 203 | — | |||||||||||||||
Unrealized (gain) loss on interest rate derivatives | (2,893 | ) | (2,990 | ) | (3,480 | ) | 7,414 | 2,115 | ||||||||||||
Equity in loss of uncombined entities | 194 | — | 59 | — | — | |||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||
Restricted cash and investments | (393 | ) | 1,131 | 757 | (1,346 | ) | (2,309 | ) | ||||||||||||
Student receivables, net | (60 | ) | (400 | ) | (1,718 | ) | (1,314 | ) | (409 | ) | ||||||||||
Change in construction billings | 527 | 210 | (5,987 | ) | 2,049 | — | ||||||||||||||
Accounts payable and accrued expenses | 6,586 | 6,953 | 11,026 | 1,537 | 783 | |||||||||||||||
Other | (4,359 | ) | (8,834 | ) | (1,350 | ) | 3,400 | 1,207 | ||||||||||||
Net cash provided by (used in) operating activities | 2,739 | 2,068 | 4,353 | 1,264 | (1,209 | ) | ||||||||||||||
Investing activities: | ||||||||||||||||||||
Investments in development in process | (694 | ) | (11,373 | ) | (19,655 | ) | (145,344 | ) | (111,235 | ) | ||||||||||
Investments in student housing properties | (1,766 | ) | (82 | ) | (1,387 | ) | (1,676 | ) | (1,382 | ) | ||||||||||
Investments in uncombined entities | (202 | ) | (1,297 | ) | (2,388 | ) | (776 | ) | — | |||||||||||
Purchase of corporate fixed assets | — | (78 | ) | (122 | ) | (589 | ) | (426 | ) | |||||||||||
Net cash used in investing activities | (2,662 | ) | (12,830 | ) | (23,552 | ) | (148,385 | ) | (113,043 | ) | ||||||||||
Financing activities: | ||||||||||||||||||||
Proceeds from construction loans | 497 | 9,330 | 9,826 | 140,921 | 86,317 | |||||||||||||||
Proceeds from mortgage loans | — | — | — | 104,600 | 27,310 | |||||||||||||||
Proceeds from lines of credit and related party loans | 2,290 | 4,395 | 13,703 | 8,967 | 12,027 | |||||||||||||||
Principal payments on construction loans | (225 | ) | — | — | (90,000 | ) | (12,282 | ) | ||||||||||||
Payments on lines of credit and related party loans | (47 | ) | (5,816 | ) | (9,090 | ) | (6,308 | ) | (6,220 | ) | ||||||||||
Debt issuance costs | — | — | — | (2,495 | ) | (666 | ) | |||||||||||||
Contributions from owner | 241 | 795 | — | 1,402 | — | |||||||||||||||
Contributions from noncontrolling interest | 405 | — | 924 | 6,567 | 22,823 | |||||||||||||||
Distributions to owner | (1,131 | ) | (1,241 | ) | (851 | ) | (4,088 | ) | (2,066 | ) | ||||||||||
Distributions to noncontrolling interest | (1,955 | ) | (1,940 | ) | (3,452 | ) | (14,785 | ) | (1,182 | ) | ||||||||||
Net cash provided by financing activities | 75 | 5,523 | 11,060 | 144,781 | 126,061 | |||||||||||||||
Net change in cash and cash equivalents | 152 | (5,239 | ) | (8,139 | ) | (2,340 | ) | 11,809 | ||||||||||||
Cash and cash equivalents at beginning of period | 2,902 | 11,041 | 11,041 | 13,381 | 1,572 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 3,054 | $ | 5,802 | $ | 2,902 | $ | 11,041 | $ | 13,381 | ||||||||||
Supplemental disclosure of cash flow information: | ||||||||||||||||||||
Interest paid | $ | 7,604 | $ | 6,948 | $ | 16,491 | $ | 16,330 | $ | 7,804 | ||||||||||
Non-cash investing and financing activity: | ||||||||||||||||||||
Conversion of note payable to equity interest | $ | — | $ | 600 | $ | 600 | $ | — | $ | — | ||||||||||
Change in payables related to capital expenditures | $ | (661 | ) | $ | (4,011 | ) | $ | (8,308 | ) | $ | (6,575 | ) | $ | 15,367 | ||||||
Accrued costs related to investments in uncombined entities | $ | (225 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||
Contribution to real estate venture: | ||||||||||||||||||||
Land | $ | — | $ | 3,025 | $ | 3,025 | $ | — | $ | — | ||||||||||
Construction loan | $ | — | $ | 2,550 | $ | 2,550 | $ | — | $ | — |
F-19
Table of Contents
1. | Organization and Description of Business |
• | Campus Crest Development, LLC; | |
• | Campus Crest Construction, LLC; | |
• | The Grove Student Properties, LLC (d/b/a Campus Crest Real Estate Management); and | |
• | Campus Crest Properties, LLC and its subsidiaries, including certain limited liability companies and limited partnerships that have varying ownership interests in 27 student housing properties located on or near 26 colleges and universities in 11 states. |
June 30, 2010 (unaudited) | ||||||||||||
Properties | Properties | Effective ownership | ||||||||||
in operation | under construction | percentage | ||||||||||
Combined entities (1) | 20 | — | 5-52 | % | ||||||||
Uncombined entities(2) | 4 | 3 | 0.1-10 | % | ||||||||
Total | 24 | 3 | ||||||||||
December 31, 2009 | ||||||||||||
Properties | Properties | Effective ownership | ||||||||||
in operation | under construction | percentage | ||||||||||
Combined entities (1) | 20 | — | 5-52 | % | ||||||||
Uncombined entities | 4 | 3 | 5-10 | % | ||||||||
Total | 24 | 3 | ||||||||||
December 31, 2008 | ||||||||||||
Properties | Properties | Effective ownership | ||||||||||
in operation | under construction | percentage | ||||||||||
Combined entities | 19 | 1 | 30-52 | % | ||||||||
Uncombined entities | — | 3 | 10 | % | ||||||||
Total | 19 | 4 | ||||||||||
F-20
Table of Contents
December 31, 2007 | ||||||||||||
Properties | Properties | Effective ownership | ||||||||||
in operation | under construction | percentage | ||||||||||
Combined entities | 10 | 10 | 30-52 | % | ||||||||
(1) | In November 2009, we sold 90% of our ownership interest in Campus Crest at Milledgeville, LLC. The transaction did not qualify as a sale under U.S. GAAP and Campus Crest at Milledgeville, LLC remained a combined entity as of June 30, 2010 (unaudited) and December 31, 2009. See note 7. |
(2) | In March 2010, we sold 99% of our ownership interest in the uncombined real estate venture that owns these entities. The transaction did not qualify as a sale of an interest under U.S. GAAP and the affected entities are accounted for at their pre-sale net ownership interests as of June 30, 2010. See notes 14 and 15. |
• | consolidate the ownership of our properties and the student housing business of the Predecessor into the Operating Partnership and its wholly-owned subsidiaries; and | |
• | facilitate this offering. |
2. | Summary of Significant Accounting Policies |
F-21
Table of Contents
Buildings | 40 years | |||
Improvements | 20 years | |||
Furniture, fixtures and equipment | 3-10 years |
F-22
Table of Contents
F-23
Table of Contents
F-24
Table of Contents
Effective Ownership | ||||||||||||
Percentage at | Effective Ownership | |||||||||||
June 30, 2010 | Percentage at | |||||||||||
Entities | Year Opened | (unaudited) | December 31, 2009 | |||||||||
Combined Entities | ||||||||||||
Campus Crest at Asheville, LLC | 2005 | 40 | % | 40 | % | |||||||
Campus Crest at Carrollton, LLC | 2006 | 38 | % | 38 | % | |||||||
Campus Crest at Las Cruces, LLC | 2006 | 30 | % | 30 | % | |||||||
Campus Crest at Milledgeville, LLC (1)(2) | 2006 | 5 | % | 5 | % | |||||||
Campus Crest at Abilene, LP | 2007 | 38 | % | 38 | % | |||||||
Campus Crest at Ellensburg, LLC | 2007 | 36 | % | 36 | % | |||||||
Campus Crest at Greeley, LLC | 2007 | 30 | % | 30 | % | |||||||
Campus Crest at Jacksonville AL, LLC | 2007 | 37 | % | 37 | % | |||||||
Campus Crest at Mobile, LLC | 2007 | 37 | % | 37 | % | |||||||
Campus Crest at Nacogdoches, LP | 2007 | 38 | % | 38 | % | |||||||
Campus Crest at Cheney, LLC | 2008 | 52 | % | 52 | % | |||||||
Campus Crest at Jonesboro, LLC | 2008 | 42 | % | 42 | % | |||||||
Campus Crest at Lubbock, LP | 2008 | 40 | % | 40 | % | |||||||
Campus Crest at Mobile—Phase II, LLC | 2008 | 37 | % | 37 | % | |||||||
Campus Crest at Stephenville, LP | 2008 | 52 | % | 52 | % | |||||||
Campus Crest at Troy, LLC | 2008 | 52 | % | 52 | % | |||||||
Campus Crest at Waco, LP | 2008 | 52 | % | 52 | % | |||||||
Campus Crest at Wichita, LLC | 2008 | 42 | % | 42 | % | |||||||
Campus Crest at Wichita Falls, LP | 2008 | 52 | % | 52 | % | |||||||
Campus Crest at Murfreesboro, LLC (3) | 2009 | 52 | % | 52 | % | |||||||
Uncombined Entities | ||||||||||||
Campus Crest at Lawrence, LLC (2)(5) | 2009 | 0.1 | % | 10 | % | |||||||
Campus Crest at Moscow, LLC (2)(3)(5) | 2009 | 0.1 | % | 5 | % | |||||||
Campus Crest at San Angelo, LP (2)(3)(5) | 2009 | 0.1 | % | 5 | % | |||||||
Campus Crest at San Marcos, LP (2)(3)(5) | 2009 | 0.1 | % | 5 | % | |||||||
Campus Crest at Huntsville, LP (2)(4)(5) | 2010 | 0.1 | % | 10 | % | |||||||
Campus Crest at Conway, LLC (2)(4)(5) | 2010 | 0.1 | % | 10 | % | |||||||
Campus Crest at Statesboro, LLC (2)(4)(5) | 2010 | 0.1 | % | 10 | % |
(1) | In November 2009, we sold 90% of our ownership interest in Campus Crest at Milledgeville, LLC. The transaction did not qualify as a sale under U.S. GAAP and Campus Crest at Milledgeville, LLC remained a combined entity as of June 30, 2010 (unaudited) and December 31, 2009. See note 7. |
(2) | Entity is wholly-owned by a real estate venture in which the Predecessor is a member. | |
(3) | Asset under construction at December 31, 2008. |
(4) | Asset under construction at June 30, 2010 (unaudited) and December 31, 2009. Completion and occupancy are expected for the 2010-2011 academic year. |
(5) | In March 2010, we sold 99% of our ownership interest in the uncombined real estate venture that owns these entities. The transaction did not qualify as a sale of an interest under U.S. GAAP and the affected entities are accounted for at their pre-sale net ownership interests as of June 30, 2010. See notes 14 and 15. |
F-25
Table of Contents
F-26
Table of Contents
Balance at | ||||||||||||||||
Beginning | Charged to | Balance at | ||||||||||||||
Year Ended December 31: | of Period | Expense | Write-Offs | End of Period | ||||||||||||
2007 | $ | (77 | ) | $ | (292 | ) | $ | 81 | $ | (288 | ) | |||||
2008 | $ | (288 | ) | $ | (1,047 | ) | $ | 934 | $ | (401 | ) | |||||
2009 | $ | (401 | ) | $ | (1,639 | ) | $ | 1,387 | $ | (653 | ) | |||||
Six Months Ended June 30: | ||||||||||||||||
2010 (unaudited) | $ | (653 | ) | $ | (304 | ) | $ | 824 | $ | (133 | ) |
F-27
Table of Contents
Quoted Prices in | ||||||||||||||||
Active Markets for | Significant Other | Significant | Balance at | |||||||||||||
Identical Assets and | Observable Inputs | Unobservable | June 30, 2010 | |||||||||||||
Liabilities (Level 1) | (Level 2) | Inputs (Level 3) | (unaudited) | |||||||||||||
Other liabilities: | ||||||||||||||||
Interest rate swaps | $ | — | $ | (3,156 | ) | $ | — | $ | (3,156 | ) |
F-28
Table of Contents
Quoted Prices in | ||||||||||||||||
Active Markets for | Significant Other | Significant | ||||||||||||||
Identical Assets and | Observable Inputs | Unobservable | Balance at | |||||||||||||
Liabilities (Level 1) | (Level 2) | Inputs (Level 3) | December 31, | |||||||||||||
Other liabilities: | ||||||||||||||||
2009-Interest rate swaps | $ | — | $ | (6,049 | ) | $ | — | $ | (6,049 | ) | ||||||
2008-Interest rate swaps | $ | — | $ | (9,529 | ) | $ | — | $ | (9,529 | ) |
F-29
Table of Contents
F-30
Table of Contents
3. | Student Housing Properties |
June 30, | December 31, | |||||||||||
2010 | 2009 | 2008 | ||||||||||
(unaudited) | ||||||||||||
Land | $ | 24,578 | $ | 24,578 | $ | 26,186 | ||||||
Buildings and improvements | 287,063 | 286,120 | 262,643 | |||||||||
Furniture, fixtures and equipment | 36,825 | 36,459 | 37,388 | |||||||||
348,466 | 347,157 | 326,217 | ||||||||||
Accumulated depreciation | (48,403 | ) | (38,999 | ) | (20,794 | ) | ||||||
$ | 300,063 | $ | 308,158 | $ | 305,423 | |||||||
4. | Variable Interest Entities |
Original/ | ||||||||||||||
Remaining | Current | |||||||||||||
Rent Start | Term | Annual Lease | ||||||||||||
Tenant/Ground Lessee(1) | Landlord/Ground Lessor | Date | (in years) | Payment | ||||||||||
Campus Crest at Jonesboro, LLC | Jonesboro - CHR Campus Crest LLC | 10/1/07 | 25/23 | $ | 187 | |||||||||
Campus Crest at Cheney, LLC | Cheney - CHR Campus Crest LLC | 10/1/07 | 25/23 | $ | 115 | |||||||||
Campus Crest at Wichita, LLC | Wichita - CHR Campus Crest LLC | 11/1/07 | 25/23 | $ | 76 | |||||||||
Campus Crest at Wichita Falls, LP | Wichita Falls - CHR Campus Crest LLC | 8/1/07 | 25/23 | $ | 178 | |||||||||
Campus Crest at Waco, LP | Waco - CHR Campus Crest LLC | 7/1/07 | 25/23 | $ | 92 | |||||||||
Campus Crest at Troy, LLC | Troy - CHR Campus Crest LLC | 7/1/07 | 25/23 | $ | 123 | |||||||||
Campus Crest at Stephenville, LP | Stephenville - CHR Campus Crest LLC | 7/1/07 | 25/23 | $ | 107 | |||||||||
Campus Crest at Murfreesboro, LLC | Murfreesboro - CHR Campus Crest LLC | 8/1/07 | 25/23 | $ | 215 |
(1) | Each entity is included in the combined financial statements of the Predecessor. |
5. | Ground Leases |
F-31
Table of Contents
Original / | ||||||||||||||
Rent | Remaining | |||||||||||||
Start | Term | Current Annual | ||||||||||||
Property | Landlord | Date | (in years) | Lease Payment | ||||||||||
Mobile Phase I | USA Research and Technology Corporation | 10/31/06 | 40/36 | $ | 84 | |||||||||
Mobile Phase II | USA Research and Technology Corporation | 3/1/08 | 38/36 | $ | 125 |
(1) | Lease contains options to renew for one additional 20-year term, followed by an additional term of 15 years if the first renewal is exercised. |
6. | Noncontrolling Interest |
Effective Ownership | ||||
Entities | Percentage | |||
Campus Crest at Asheville, LLC | 40 | % | ||
Campus Crest at Carrollton, LLC | 38 | % | ||
Campus Crest at Las Cruces, LLC | 30 | % | ||
Campus Crest at Milledgeville, LLC | 5 | % | ||
Campus Crest at Abilene, LP | 38 | % | ||
Campus Crest at Ellensburg, LLC | 36 | % | ||
Campus Crest at Greeley, LLC | 30 | % | ||
Campus Crest at Jacksonville, AL, LLC | 37 | % | ||
Campus Crest at Mobile, LLC | 37 | % | ||
Campus Crest at Nacogdoches, LP | 38 | % | ||
Campus Crest at Cheney, LLC | 52 | % | ||
Campus Crest at Jonesboro, LLC | 42 | % | ||
Campus Crest at Lubbock, LP | 40 | % | ||
Campus Crest at Mobile—Phase II, LLC | 37 | % | ||
Campus Crest at Stephenville, LP | 52 | % | ||
Campus Crest at Troy, LLC | 52 | % | ||
Campus Crest at Waco, LP | 52 | % | ||
Campus Crest at Wichita, LLC | 42 | % | ||
Campus Crest at Wichita Falls, LP | 52 | % | ||
Campus Crest at Murfreesboro, LLC | 52 | % |
F-32
Table of Contents
As Reported | Pro forma | |||||||
Net loss attributable to Predecessor | $ | (6,737 | ) | (13,362 | ) | |||
Net loss attributable to noncontrolling interest | $ | (10,486 | ) | (3,861 | ) | |||
Net loss | $ | (17,223 | ) | $ | (17,223 | ) | ||
7. | Sale of Student Housing Property |
8. | Investment in Uncombined Entity |
F-33
Table of Contents
June 30, | December 31, | |||||||||||
2010 | 2009 | 2008 | ||||||||||
(unaudited) | ||||||||||||
Assets: | ||||||||||||
Student housing properties, net | $ | 70,899 | $ | 72,488 | $ | — | ||||||
Development in process | 53,837 | 15,528 | 10,042 | |||||||||
Other assets | 5,090 | 4,377 | 53 | |||||||||
Total assets | $ | 129,826 | $ | 92,393 | $ | 10,095 | ||||||
Liabilities and owners’ equity | ||||||||||||
Construction debt | $ | 92,427 | $ | 59,562 | $ | — | ||||||
Other liabilities | 6,610 | 3,210 | 1,916 | |||||||||
Owners’ equity | 30,789 | 29,621 | 8,179 | |||||||||
Total liabilities and owners’ equity | $ | 129,826 | $ | 92,393 | $ | 10,095 | ||||||
Predecessor’s share of historical owners’ equity | $ | 3,079 | $ | 2,962 | $ | 818 | ||||||
Net difference in investment basis over net book value of underlying net assets(1) | 178 | 18 | (42 | ) | ||||||||
Predecessor’s carrying value of investment in uncombined entity | $ | 3,257 | $ | 2,980 | $ | 776 |
(1) | This amount represents the aggregate difference between our historical cost basis and the basis reflected at the entity level, which is typically amortized over the life of the related asset. The basis differential occurs primarily due to the capitalization of additional investment in the uncombined entity offset by the elimination of service related revenue to the extent of our percentage ownership. |
F-34
Table of Contents
Six Months Ended | Year Ended | |||||||
June 30, 2010 | December 31, 2009 | |||||||
(unaudited) | ||||||||
Revenues | $ | 4,111 | $ | 3,131 | ||||
Expenses: | ||||||||
Operating expenses | 2,672 | 1,698 | ||||||
Interest expense | 1,893 | 1,341 | ||||||
Depreciation and amortization | 1,589 | 792 | ||||||
Total expenses | 6,154 | 3,831 | ||||||
Net loss | $ | (2,043 | ) | $ | (700 | ) | ||
Predecessor’s share of net loss | $ | (194 | ) | $ | (59 | ) | ||
9. | Debt |
June 30, | December 31, | |||||||||||
2010 | 2009 | 2008 | ||||||||||
(unaudited) | ||||||||||||
Fixed-rate mortgage loans | $ | 164,840 | $ | 164,840 | $ | 164,840 | ||||||
Construction loans | 164,534 | 164,262 | 157,586 | |||||||||
Lines of credit and other debt | 10,018 | 9,978 | 9,237 | |||||||||
Related party loan | 7,671 | 4,092 | — | |||||||||
$ | 347,063 | $ | 343,172 | $ | 331,663 | |||||||
F-35
Table of Contents
June 30, | December 31, | |||||||||||
2010 | 2009 | 2008 | ||||||||||
(unaudited) | ||||||||||||
Balance at beginning of period | $ | 343,172 | $ | 331,663 | $ | 173,483 | ||||||
Additions: | ||||||||||||
Draws on lines of credit | 40 | 9,831 | 8,967 | |||||||||
Draws under construction loans | 497 | 9,826 | 140,921 | |||||||||
Proceeds from mortgage loans | — | — | 104,600 | |||||||||
Proceeds from related party loan (1) | 2,250 | 3,872 | — | |||||||||
Accretion of interest expense (1) | 1,376 | 220 | — | |||||||||
Deductions: | ||||||||||||
Conversion of note to equity interest | — | (600 | ) | — | ||||||||
Payments on lines of credit | — | (9,090 | ) | (6,308 | ) | |||||||
Payments on construction loans | (225 | ) | — | (90,000 | ) | |||||||
Payments on related party loan | (47 | ) | — | — | ||||||||
Contribution of construction loan to real estate venture | (2,550 | ) | — | |||||||||
Balance at end of period | $ | 347,063 | $ | 343,172 | $ | 331,663 | ||||||
(1) | Relates to sale of 90% of our interest in Campus Crest at Milledgeville, LLC, sale of 99% of our interest in HSRE I and prepaid management fees. See notes 7 and 15. |
F-36
Table of Contents
Principal | Principal | Principal | Stated | Interest | Interest | |||||||||||||||||||||||||||||
Face | Outstanding at | Outstanding at | Outstanding at | Interest | Rate at | Rate at | Maturity | |||||||||||||||||||||||||||
Amount | 6/30/10 | 12/31/09 | 12/31/08 | Rate | 6/30/10 | 12/31/09 | Date | Amortization | ||||||||||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||||||||||||||
Construction loans | ||||||||||||||||||||||||||||||||||
The Grove at Mobile-Phase II | $ | 15,875 | $ | 15,648 | $ | 15,874 | $ | 15,643 | Greater of LIBOR + 3.00 | % or 5.50% | 5.50 | % | 5.50 | % | 10/31/2010 | Amortizing- $1.0 million due 6/30/10 (note 15) | ||||||||||||||||||
Construction Loan (nine properties) (1) | 157,550 | 148,886 | 148,388 | 139,393 | LIBOR + 1.80 | % | 2.15 | % | 2.03 | % | 10/31/2010 (4 | ) | Interest only | |||||||||||||||||||||
The Grove at Huntsville (2) | 2,550 | — | — | 2,550 | 8.00 | % | — | — | 7/6/2009 | Interest only | ||||||||||||||||||||||||
Mortgage loans | ||||||||||||||||||||||||||||||||||
The Grove at Asheville | 14,800 | 14,800 | 14,800 | 14,800 | 5.77 | % | 5.77 | % | 5.77 | % | 4/11/2017 | 30 years | ||||||||||||||||||||||
The Grove at Carrollton | 14,650 | 14,650 | 14,650 | 14,650 | 6.13 | % | 6.13 | % | 6.13 | % | 10/11/2016 | 30 years | ||||||||||||||||||||||
The Grove at Las Cruces | 15,140 | 15,140 | 15,140 | 15,140 | 6.13 | % | 6.13 | % | 6.13 | % | 10/11/2016 | 30 years | ||||||||||||||||||||||
Mortgage (six properties) (3) | 104,000 | 104,000 | 104,000 | 104,000 | 6.40 | % | 6.40 | % | 6.40 | % | 2/28/2013 | 30 years | ||||||||||||||||||||||
The Grove at Milledgeville | 16,250 | 16,250 | 16,250 | 16,250 | 6.12 | % | 6.12 | % | 6.12 | % | 10/1/2016 | 30 years | ||||||||||||||||||||||
Total | $ | 329,374 | $ | 329,102 | $ | 322,426 | ||||||||||||||||||||||||||||
(1) | Secured by The Grove at Cheney, The Grove at Jonesboro, The Grove at Lubbock, The Grove at Murfreesboro, The Grove at Stephenville, The Grove at Troy, The Grove at Waco, The Grove at Wichita and The Grove at Wichita Falls. At June 30, 2010 (unaudited) and December 31, 2009, approximately $136.4 million of the loan balance is hedged with a floating to fixed interest rate swap which, when taken together with the loan interest, fixes this portion of the loan’s interest rate at 6.0%. |
(2) | Debt was repaid in full when construction loan closed. | |
(3) | Secured by The Grove at Abilene, The Grove at Ellensburg, The Grove at Greeley, The Grove at Jacksonville, The Grove at Mobile—Phase I and The Grove at Nacogdoches. |
(4) | We have a commitment from the lender to extend the maturity date of the loan to January 31, 2011 (note 15). |
F-37
Table of Contents
F-38
Table of Contents
2010 | $ | 172,315 | (1) | |
2011 | 6,103 | |||
2012 | 641 | |||
2013 | 104,750 | |||
2014 | 797 | |||
Thereafter | 58,566 | |||
$ | 343,172 | |||
(1) | We have a commitment from a lender to extend the maturity date of approximately $148.4 million of these obligations in January 31, 2011 (note 15). |
F-39
Table of Contents
F-40
Table of Contents
10. | Derivative Instruments and Hedging Activities |
Weighted | Estimated Fair | |||||||||||||||||||||
Average Fixed | Estimated Fair | Value at | ||||||||||||||||||||
Notional | Interest | Value at | December 31, | |||||||||||||||||||
Instrument | Hedged Item | Amount | Rate | Maturity Date | June 30, 2010 | 2009 | ||||||||||||||||
(unaudited) | ||||||||||||||||||||||
Interest rate swap | 30-day LIBOR variable interest rate | $ | 136,409 | 6.00 | % | October 2010 | $ | (1,949 | ) | $ | (4,424 | ) | ||||||||||
Interest rate swap | 30-day LIBOR variable interest rate | $ | 45,000 | 3.44 | % | May 2011 | (1,207 | ) | (1,625 | ) | ||||||||||||
$ | (3,156 | ) | $ | (6,049 | ) | |||||||||||||||||
F-41
Table of Contents
Weighted | ||||||||||||||||||
Average | Estimated Fair | |||||||||||||||||
Fixed | Value at | |||||||||||||||||
Notional | Interest | December 31, | ||||||||||||||||
Instrument | Hedged Item | Amount | Rate | Maturity Date | 2008 | |||||||||||||
Interest rate swap | 30-day LIBOR variable interest rate | $ | 14,464 | 4.59 | % | September 2009 | $ | (1,764 | ) | |||||||||
Interest rate swap | 90-day LIBOR variable interest rate | $ | 50,000 | 5.48 | % | November 2019 | (6,280 | ) | ||||||||||
Interest rate swap | 90-day LIBOR variable interest rate | $ | 15,000 | 4.96 | % | November 2019 | (1,485 | ) | ||||||||||
$ | (9,529 | ) | ||||||||||||||||
Six Months | Six Months | |||||||||||||||||||||
Location of Gain (Loss) | Ended | Ended | Year Ended | |||||||||||||||||||
Derivatives not Designated | Recognized on the Combined | June 30, | June 30, | December 31, | ||||||||||||||||||
as Hedging Instruments | Statements of Operations | 2010 | 2009 | 2009 | 2008 | 2007 | ||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||
Interest rate swaps (receive float/pay fixed): | ||||||||||||||||||||||
Monthly net settlements-cash settled | Change in fair value of interest rate derivatives | $ | (2,715 | ) | $ | (310 | ) | $ | (2,373 | ) | $ | (244 | ) | $ | — | |||||||
Mark to market adjustments-cash settled | Change in fair value of interest rate derivatives | — | — | (310 | ) | (1,100 | ) | — | ||||||||||||||
Mark to market adjustments-non-cash | Change in fair value of interest rate derivatives | 2,893 | 2,990 | 3,480 | (7,414 | ) | (2,115 | ) | ||||||||||||||
Total effect of derivative instruments on the combined statements of operations | $ | 178 | $ | 2,680 | $ | 797 | $ | (8,758 | ) | $ | (2,115 | ) | ||||||||||
F-42
Table of Contents
11. | Related Party Transactions |
Six Months | Six Months | |||||||||||||||||||
Ended | Ended | |||||||||||||||||||
June 30, | June 30, | Year Ended December 31, | ||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | ||||||||||||||||
(unaudited) | ||||||||||||||||||||
Total Construction revenue | $ | 32,136 | $ | 48,497 | $ | 71,798 | $ | 120,338 | $ | 88,296 | ||||||||||
Eliminated Construction revenue | (3,231 | ) | (13,383 | ) | (14,901 | ) | (118,104 | ) | (88,296 | ) | ||||||||||
Construction revenue recognized from transactions with uncombined entities | $ | 28,905 | $ | 35,114 | $ | 56,897 | $ | 2,234 | $ | — | ||||||||||
Total Development revenue | $ | 1,471 | $ | 2,318 | $ | 3,934 | $ | 3,854 | $ | 3,226 | ||||||||||
Eliminated Development revenue | (147 | ) | (752 | ) | (1,390 | ) | (3,751 | ) | (3,226 | ) | ||||||||||
Development revenue recognized from transactions with uncombined entities | $ | 1,324 | $ | 1,566 | $ | 2,544 | $ | 103 | $ | — | ||||||||||
Total Management revenue | $ | 1,778 | $ | 1,671 | $ | 3,516 | $ | 1,577 | $ | 873 | ||||||||||
Eliminated Management revenue | (1,269 | ) | (1,093 | ) | (2,246 | ) | (1,409 | ) | (873 | ) | ||||||||||
Management revenue recognized from transactions with uncombined entities | $ | 509 | $ | 578 | $ | 1,270 | $ | 168 | $ | — | ||||||||||
F-43
Table of Contents
12. | Segments |
Six Months Ended | ||||||||||||||||||||
June 30, | Year Ended December 31, | |||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | ||||||||||||||||
(unaudited) | ||||||||||||||||||||
Student Housing Operations: | ||||||||||||||||||||
Revenues from external customers | $ | 25,869 | $ | 22,230 | $ | 45,973 | $ | 31,611 | $ | 15,708 | ||||||||||
Operating expenses | 23,892 | 21,247 | 42,997 | 29,481 | 13,788 | |||||||||||||||
Operating income | 1,977 | 983 | 2,976 | 2,130 | 1,920 | |||||||||||||||
Nonoperating expenses | (7,718 | ) | (4,795 | ) | (14,747 | ) | (23,492 | ) | (8,005 | ) | ||||||||||
Net loss | (5,741 | ) | (3,812 | ) | (11,771 | ) | (21,362 | ) | (6,085 | ) | ||||||||||
Net loss attributable to noncontrolling interest | (4,385 | ) | (2,060 | ) | (10,486 | ) | (870 | ) | (2,083 | ) | ||||||||||
Net loss attributable to Predecessor | $ | (1,356 | ) | $ | (1,752 | ) | $ | (1,285 | ) | $ | (20,492 | ) | $ | (4,002 | ) | |||||
Total segment assets at end of period | $ | 304,352 | $ | 310,075 | $ | 319,052 | $ | 205,151 | ||||||||||||
Development, Construction and Management Services: | ||||||||||||||||||||
Revenues from external customers | $ | 30,738 | $ | 37,258 | $ | 60,711 | $ | 2,505 | $ | — | ||||||||||
Intersegment revenues | 4,647 | 15,228 | 18,537 | 123,264 | 92,395 | |||||||||||||||
Total revenues | 35,385 | 52,486 | 79,248 | 125,769 | 92,395 | |||||||||||||||
Operating expenses | 32,090 | 47,553 | 76,305 | 122,535 | 96,835 | |||||||||||||||
Operating income (loss) | 3,295 | 4,933 | 2,943 | 3,234 | (4,440 | ) | ||||||||||||||
Nonoperating expenses | (31 | ) | (330 | ) | (108 | ) | (520 | ) | (18 | ) | ||||||||||
Net income (loss) | 3,264 | 4,603 | 2,835 | 2,714 | (4,458 | ) | ||||||||||||||
Net income (loss) attributable to Predecessor | $ | 3,264 | $ | 4,603 | $ | 2,835 | $ | 2,714 | $ | (4,458 | ) | |||||||||
Total segment assets at end of period | $ | 25,785 | $ | 28,926 | $ | 30,048 | $ | 28,152 | ||||||||||||
Reconciliations: | ||||||||||||||||||||
Total segment revenues | $ | 61,254 | $ | 74,716 | $ | 125,221 | $ | 157,380 | $ | 108,103 | ||||||||||
Elimination of intersegment revenues | (4,647 | ) | (15,228 | ) | (18,537 | ) | (123,264 | ) | (92,395 | ) | ||||||||||
Total combined revenues | $ | 56,607 | $ | 59,488 | $ | 106,684 | $ | 34,116 | $ | 15,708 | ||||||||||
F-44
Table of Contents
Six Months Ended | ||||||||||||||||||||
June 30, | Year Ended December 31, | |||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | ||||||||||||||||
(unaudited) | ||||||||||||||||||||
Segment operating income | $ | 5,272 | $ | 5,916 | $ | 5,919 | $ | 5,364 | $ | (2,520 | ) | |||||||||
Interest expense | (10,686 | ) | (7,369 | ) | (15,871 | ) | (14,946 | ) | (6,583 | ) | ||||||||||
Change in fair value of interest rate derivatives | 178 | 2,680 | 797 | (8,758 | ) | (2,115 | ) | |||||||||||||
Net unallocated income (expenses) and eliminations | (2,905 | ) | (5,202 | ) | (8,053 | ) | (7,707 | ) | 1,486 | |||||||||||
Equity in loss of uncombined entities | (194 | ) | — | (59 | ) | — | — | |||||||||||||
Other income (expense) | 45 | (19 | ) | 44 | (50 | ) | 100 | |||||||||||||
Loss from continuing operations | $ | (8,290 | ) | $ | (3,994 | ) | $ | (17,223 | ) | $ | (26,097 | ) | $ | (9,632 | ) | |||||
Total segment assets | $ | 330,137 | $ | 339,001 | $ | 349,100 | $ | 233,303 | ||||||||||||
Unallocated corporate assets and eliminations | (1,764 | ) | (7,205 | ) | (6,945 | ) | (19,399 | ) | ||||||||||||
Total assets | $ | 328,373 | $ | 331,796 | $ | 342,155 | $ | 213,904 | ||||||||||||
13. | Commitments and Contingencies |
F-45
Table of Contents
2010 | $ | 457 | ||
2011 | 464 | |||
2012 | 542 | |||
2013 | 551 | |||
2014 | 577 | |||
Thereafter | 8,688 | |||
Total future minimum lease payments | $ | 11,279 | ||
14. | Subsequent Events |
F-46
Table of Contents
• | the sale of a 9.9% interest in HSRE I to HSRE; and | |
• | the pre-payment by HSRE to us of management fees relating to the following properties: The Grove at Carrollton, The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Milledgeville, The Grove at Moscow, The Grove at San Angelo, The Grove at San Marcos and The Grove at Statesboro. |
F-47
Table of Contents
• | Purchase a 49.8% interest in HSRE I from HSRE; | |
• | Purchase a 50.1% interest in The Grove at San Marcos from HSRE I, with the result that we will own 100% of The Grove at San Marcos; | |
• | Purchase HSRE’s entire interest in HSRE II, with the result that we will own 100% of The Grove at Milledgeville; | |
• | Purchase a 99.9% interest in HSRE III from HSRE, with the result that we will own 100% of The Grove at Carrollton; and | |
• | Repay to HSRE the pre-paid management fees relating to the following properties: The Grove at Carrollton, The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Milledgeville, The Grove at Moscow, The Grove at San Angelo, The Grove at San Marcos and The Grove at Statesboro. |
15. | Unaudited Interim Transactions |
F-48
Table of Contents
F-49
Table of Contents
Costs | Total Costs | |||||||||||||||||||||||||||||||||||
Capitalized | Student | |||||||||||||||||||||||||||||||||||
Initial | Subsequent to | Housing | Year | Depreciable | ||||||||||||||||||||||||||||||||
Student Housing Properties | Cost | Development | Land | Properties | Total | Accum. Depr. | Encumbrances | Built | Lives (1) | |||||||||||||||||||||||||||
(dollar amounts in thousands) | ||||||||||||||||||||||||||||||||||||
The Grove at Asheville | $ | 12,631 | $ | 276 | $ | 51 | $ | 12,856 | $ | 12,907 | $ | (3,091 | ) | $ | (14,800 | ) | 2005 | 40 | ||||||||||||||||||
The Grove at Carrollton | 13,339 | 230 | 1,104 | 12,465 | 13,569 | (2,615 | ) | (14,650 | ) | 2006 | 40 | |||||||||||||||||||||||||
The Grove at Las Cruces | 16,038 | 47 | 1,098 | 14,987 | 16,085 | (2,897 | ) | (15,140 | ) | 2006 | 40 | |||||||||||||||||||||||||
The Grove at Milledgeville | 14,672 | 98 | 942 | 13,828 | 14,770 | (2,681 | ) | (16,250 | ) | 2006 | 40 | |||||||||||||||||||||||||
The Grove at Abilene | 17,077 | 74 | 1,361 | 15,790 | 17,151 | (2,253 | ) | (16,120 | ) | 2007 | 40 | |||||||||||||||||||||||||
The Grove at Ellensburg | 20,985 | 53 | 1,483 | 19,555 | 21,038 | (2,535 | ) | (18,757 | ) | 2007 | 40 | |||||||||||||||||||||||||
The Grove at Greeley | 20,144 | 124 | 1,454 | 18,814 | 20,268 | (2,387 | ) | (19,128 | ) | 2007 | 40 | |||||||||||||||||||||||||
The Grove at Jacksonville | 17,741 | 134 | 892 | 16,983 | 17,875 | (2,451 | ) | (16,417 | ) | 2007 | 40 | |||||||||||||||||||||||||
The Grove at Mobile—Phase I | 15,986 | 67 | 98 | 15,955 | 16,053 | (2,318 | ) | (15,972 | ) | 2007 | 40 | |||||||||||||||||||||||||
The Grove at Nacogdoches | 19,144 | 68 | 1,589 | 17,623 | 19,212 | (2,340 | ) | (17,606 | ) | 2007 | 40 | |||||||||||||||||||||||||
The Grove at Cheney | 18,679 | 169 | 1,347 | 17,501 | 18,848 | (1,467 | ) | (16,080 | ) | 2008 | 40 | |||||||||||||||||||||||||
The Grove at Jonesboro | 17,646 | 21 | 2,156 | 15,511 | 17,667 | (1,423 | ) | (17,076 | ) | 2008 | 40 | |||||||||||||||||||||||||
The Grove at Lubbock | 18,121 | 26 | 1,520 | 16,627 | 18,147 | (1,447 | ) | (16,440 | ) | 2008 | 40 | |||||||||||||||||||||||||
The Grove at Mobile—Phase II | 16,654 | 68 | 52 | 16,670 | 16,722 | (1,366 | ) | (15,874 | ) | 2008 | 40 | |||||||||||||||||||||||||
The Grove at Stephenville | 16,989 | 16 | 1,250 | 15,755 | 17,005 | (1,481 | ) | (16,080 | ) | 2008 | 40 | |||||||||||||||||||||||||
The Grove at Troy | 18,178 | 17 | 1,433 | 16,762 | 18,195 | (1,501 | ) | (17,440 | ) | 2008 | 40 | |||||||||||||||||||||||||
The Grove at Waco | 17,479 | 16 | 1,094 | 16,401 | 17,495 | (1,508 | ) | (16,742 | ) | 2008 | 40 | |||||||||||||||||||||||||
The Grove at Wichita | 16,842 | 15 | 911 | 15,946 | 16,857 | (1,467 | ) | (16,062 | ) | 2008 | 40 | |||||||||||||||||||||||||
The Grove at Wichita Falls | 17,682 | 15 | 2,065 | 15,632 | 17,697 | (1,431 | ) | (16,280 | ) | 2008 | 40 | |||||||||||||||||||||||||
The Grove at Murfreesboro | 19,577 | 19 | 2,678 | 16,918 | 19,596 | (340 | ) | (16,188 | ) | 2009 | 40 | |||||||||||||||||||||||||
Total-student housing properties | $ | 345,604 | $ | 1,553 | $ | 24,578 | $ | 322,579 | $ | 347,157 | $ | (38,999 | ) | $ | (329,102 | ) | ||||||||||||||||||||
(1) | The life to compute depreciation on buildings is 40 years. Furniture, fixtures, equipment and building improvements are depreciated over periods of up to 20 years. |
F-50
Table of Contents
For the Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Investment in real estate: | ||||||||||||
Balance, beginning of year | $ | 326,217 | $ | 182,788 | $ | 48,775 | ||||||
Improvements and development expenditures | 23,965 | 143,429 | 134,722 | |||||||||
Disposition of properties | (3,025 | ) | — | (709 | ) | |||||||
Balance, end of year | $ | 347,157 | $ | 326,217 | $ | 182,788 | ||||||
Accumulated depreciation: | ||||||||||||
Balance, beginning of year | $ | 20,794 | $ | 7,752 | $ | 2,066 | ||||||
Depreciation for the year | 18,205 | 13,042 | 5,721 | |||||||||
Disposition of properties | — | — | (35 | ) | ||||||||
Balance, end of year | $ | 38,999 | $ | 20,794 | $ | 7,752 | ||||||
Development in process | 3,300 | 15,742 | 18,929 | |||||||||
Investment in real estate, net | $ | 311,458 | $ | 321,165 | $ | 193,965 | ||||||
F-51
Table of Contents
F-52
Table of Contents
Six Months Ended | Year Ended | |||||||
June 30, 2010 | December 31, 2009 | |||||||
(unaudited) | ||||||||
Revenue: | ||||||||
Student housing leasing | $ | 3,906 | $ | 3,021 | ||||
Student housing services | 205 | 110 | ||||||
Total revenue | 4,111 | 3,131 | ||||||
Certain expenses: | ||||||||
Student housing operations | 2,504 | 1,561 | ||||||
Management fees | 168 | 137 | ||||||
Interest expense | 1,446 | 1,009 | ||||||
Total certain expenses | 4,118 | 2,707 | ||||||
Revenue in excess of certain expenses (certain expenses in excess of revenue) | $ | (7 | ) | $ | 424 | |||
F-53
Table of Contents
1. | Organization and Description of Business |
Property | University | Year Opened | ||
The Grove at San Angelo | Angelo State University | 2009 (1) | ||
The Grove at San Marcos | Texas State University | 2009 (1) | ||
The Grove at Moscow | University of Idaho | 2009 (1) | ||
The Grove at Lawrence | University of Kansas | 2009 (1) | ||
The Grove at Huntsville | Sam Houston State University | 2010 (2) | ||
The Grove at Statesboro | Georgia Southern University | 2010 (2) | ||
The Grove at Conway | University of Central Arkansas | 2010 (2) |
(1) | Property opened and began operations in Fall 2009. The statement of revenue and certain expenses for the year ended December 31, 2009 includes approximately five months of rental income and related expenses. |
(2) | Property under construction at June 30, 2010 and December 31, 2009. Property had no operating results for 2009. Completion and occupancy are expected for the 2010-2011 academic year. |
• | a 49.9% interest in the Venture, which will own 100% interests in the following six properties: The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Moscow, The Grove at San Angelo and The Grove at Statesboro; we will continue to recognize our interest in the Venture under the equity method of accounting; and | |
• | 100% interest in The Grove at San Marcos, which will be consolidated. |
2. | Summary of Significant Accounting Policies |
F-54
Table of Contents
F-55
Table of Contents
3. | Ground Lease |
4. | Debt |
Principal | Principal | |||||||||||||||||||||||||||
Face | Outstanding at | Outstanding at | Stated | Interest Rate at | Interest Rate at | Maturity | ||||||||||||||||||||||
Amount | 6/30/10 | 12/31/09 | Interest Rate | 6/30/10 | 12/31/09 | Date | Amortization | |||||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||||||||
Variable rate construction loans | ||||||||||||||||||||||||||||
The Grove at San Angelo (1) | $ | 14,668 | $ | 14,458 | $ | 14,356 | LIBOR + 2.50% | 5.94 | % | 5.94 | % | May 2011 | Interest only | |||||||||||||||
The Grove at Moscow (1) | 17,268 | 16,083 | 15,026 | LIBOR + 2.50% | 5.94 | % | 5.94 | % | May 2011 | Interest only | ||||||||||||||||||
The Grove at Lawrence | 16,000 | 15,640 | 14,679 | Prime + 1.50% (6.25% Floor) | 6.25 | % | 6.25 | % | February 2012 | Interest only | ||||||||||||||||||
The Grove at Huntsville | 13,355 | 9,760 | — | LIBOR + 4.00% (6.00% Floor) | 6.00 | % | 6.00 | % | January 2012 | Interest only | ||||||||||||||||||
The Grove at Statesboro | 16,130 | 9,624 | — | LIBOR + 3.50% (5.00% Floor) | 5.00 | % | 5.00 | % | February 2012 | Interest only | ||||||||||||||||||
Fixed rate construction loans | ||||||||||||||||||||||||||||
The Grove at Conway | 16,000 | 11,927 | 1,377 | 7.50% | 7.50 | % | 7.50 | % | July 2012 | Interest only | ||||||||||||||||||
Total | $ | 77,492 | $ | 45,438 | ||||||||||||||||||||||||
(1) | At June 30, 2010 (unaudited) and December 31, 2009, The Grove at San Angelo, The Grove at San Marcos and The Grove at Moscow are aggregated under one construction loan facility and are cross-collateralized. |
5. | Related Party Transactions |
F-56
Table of Contents
![](https://capedge.com/proxy/S-11A/0000950123-10-078464/g23199a3g2319913alo.gif)
Table of Contents
![(CAMPUS CREST LOGO)](https://capedge.com/proxy/S-11A/0000950123-10-078464/g23199a3g2319900.gif)
Citi
Goldman, Sachs & Co.
KeyBanc Capital Markets
RBC Capital Markets
Baird
Table of Contents
Item 31. | Other Expenses of Issuance and Distribution. |
SEC registration fee | $ | 27,468 | ||
Financial Industry Regulatory Authority filing fee | $ | 39,025 | ||
NYSE listing fee | $ | * | ||
Printing and engraving expenses | $ | * | ||
Legal fees and expenses | $ | * | ||
Accounting fees and expenses | $ | * | ||
Transfer agent and registrar fees | $ | * | ||
Blue sky fees and expenses (including fees of counsel) | $ | * | ||
Miscellaneous | $ | * | ||
Total | $ | * | ||
* | To be filed by amendment. |
Item 32. | Sales to Special Parties. |
Item 33. | Recent Sales of Unregistered Securities. |
II-1
Table of Contents
Item 34. | Indemnification of Directors and Officers |
II-2
Table of Contents
Item 35. | Treatment of Proceeds from Stock Being Registered. |
Item 36. | Financial Statements and Exhibits. |
Exhibit | ||||
Number | Description of Document | |||
1 | .1* | Form of Underwriting Agreement among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP and the underwriters named therein. | ||
3 | .1* | Articles of Incorporation of Campus Crest Communities, Inc. | ||
3 | .2* | Bylaws of Campus Crest Communities, Inc. | ||
5 | .1* | Opinion of Saul Ewing LLP with respect to Maryland law. | ||
8 | .1* | Opinion of Bradley Arant Boult Cummings LLP with respect to tax matters. | ||
10 | .1* | Amended and Restated Partnership Agreement of Campus Crest Communities Operating Partnership, LP. | ||
10 | .2*** | Campus Crest Communities, Inc. 2010 Incentive Award Plan. | ||
10 | .3*** | Form of Indemnification Agreement. | ||
10 | .4* | Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Ted W. Rollins, dated 2010. | ||
10 | .5* | Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Michael S. Hartnett, dated 2010. | ||
10 | .6* | Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Earl C. Howell, dated 2010. | ||
10 | .7* | Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Donald L. Bobbitt, Jr., dated 2010. | ||
10 | .8* | Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Shannon N. King, dated 2010. |
II-3
Table of Contents
Exhibit | ||||
Number | Description of Document | |||
10 | .9* | Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Ted W. Rollins, dated 2010. | ||
10 | .10* | Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Michael S. Hartnett, dated 2010. | ||
10 | .11* | Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Earl C. Howell, dated 2010. | ||
10 | .12* | Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Donald L. Bobbitt, Jr., dated 2010. | ||
10 | .13* | Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Shannon N. King dated 2010. | ||
10 | .14* | Operating Agreement of HSRE-Campus Crest I, LLC, dated as of November 7, 2008. | ||
10 | .15* | Credit Agreement for Senior Secured Revolving Credit Facility by and among Campus Crest Communities Operating Partnership, LP, and certain other parties thereto, dated 2010. | ||
10 | .16* | Tax Protection Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC, dated 2010. | ||
10 | .17* | Registration Rights Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC, dated 2010. | ||
10 | .18* | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC, dated May 13, 2010. | ||
10 | .19*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Carl H. Ricker, Jr., dated May 13, 2010. | ||
10 | .20*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Flynn Development, LLC, dated April 22, 2010. | ||
10 | .21*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Mansion Ridge Investment Company, LLC, dated May 6, 2010. | ||
10 | .22*** | Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Highland Park, LLC, dated May 13, 2010. | ||
10 | .23*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Marc Rollins, dated May 1, 2010. | ||
10 | .24*** | Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and P. Andrew Walker, dated May 13, 2010. | ||
10 | .25*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Joe C. Brumit, II, dated April 19, 2010. | ||
10 | .26*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and BGY, LLC, dated April 15, 2010. |
II-4
Table of Contents
Exhibit | ||||
Number | Description of Document | |||
10 | .27*** | Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Jerry V. Sternberg, dated May 13, 2010. | ||
10 | .28*** | Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Marlene Breger Joyce, dated May 13, 2010. | ||
10 | .29*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Steve Emtman, dated May 10, 2010. | ||
10 | .30*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and O.A. Keller, III, dated April 29, 2010. | ||
10 | .31*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and NLR-Cotton Valley Investment, LLC, dated April 19, 2010. | ||
10 | .32*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Horatio Alger Association Endowment Fund, dated May 4, 2010. | ||
10 | .33*** | Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Keith M. Maxwell, dated May 9, 2010. | ||
10 | .34*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Harrison-Zahn Investments, LLC, dated April 19, 2010. | ||
10 | .35*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Matthew S. O’Reilly, dated May 6, 2010. | ||
10 | .36*** | Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP and certain other parties thereto, dated March 26, 2010. | ||
10 | .37*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP and Thomas A. Odai dated May 13, 2010. | ||
10 | .38*** | Ground Lease by and between USA Research and Technology Corporation and Campus Crest at Mobile, LLC, dated August 8, 2006. | ||
10 | .39*** | Ground Lease by and between USA Research and Technology Corporation and Campus Crest at Mobile Phase II, LLC, dated March 14, 2008. | ||
10 | .40*** | Ground Lease Agreement by and between Indian Hills Trading Company, LLC and Campus Crest Development, LLC, dated March 20, 2008. | ||
10 | .41*** | First Amendment to Ground Lease Agreement by and between Indian Hills Trading Company, LLC and Campus Crest Development, LLC, dated July 28, 2008. | ||
10 | .42*** | Assignment of Ground Lease Agreement and Purchase Option Agreement by Campus Crest Development, LLC and Campus Crest at Moscow, LLC, dated July 28, 2008. | ||
10 | .43*** | Loan Agreement between General Electric Capital Corporation and Campus Crest at Milledgeville, LLC, dated September 7, 2006. | ||
10 | .44*** | Deed to Secure Debt, Security Agreement and Fixture Filing by Campus Crest at Carrollton, LLC to Wachovia Bank, National Association, dated September 18, 2006. |
II-5
Table of Contents
Exhibit | ||||
Number | Description of Document | |||
10 | .45*** | Deed of Trust, Security Agreement and Fixture Filing by Campus Crest at Las Cruces, LLC for the benefit of Wachovia Bank, National Association, dated September 22, 2006. | ||
10 | .46*** | Deed of Trust, Security Agreement and Fixture Filing by Campus Crest at Asheville, LLC for the benefit of Wachovia Bank, National Association, dated March 13, 2007. | ||
10 | .47*** | Loan Agreement by and among Campus Crest at Mobile, LLC, Campus Crest at Jacksonville, AL, LLC, Campus Crest at Nacogdoches, LP, Campus Crest at Abilene, LP, Campus Crest at Greeley, LLC, and Campus Crest at Ellensburg, LLC, and Silverton Bank, N.A., dated February 29, 2008. | ||
10 | .48*** | Transfer, Assignment and Assumption Agreement by and among the Federal Deposit Insurance Corporation as receiver and successor-in-interest to Silverton Bank, N.A. and Campus Crest Loan Servicing, LLC, dated March 31, 2010. | ||
10 | .49*** | Construction Loan Agreement by and among Wachovia Bank, National Association, Campus Crest Group, LLC, Campus Crest at Moscow, LLC, Campus Crest at San Angelo, LP and Campus Crest at San Marcos, LP, dated November 18, 2008. | ||
10 | .50*** | First Amendment to Construction Loan Agreement by and among Wachovia Bank, National Association, Campus Crest Group, LLC, Campus Crest at Moscow, LLC, Campus Crest at San Angelo, LP and Campus Crest at San Marcos, LP, dated June 2009. | ||
10 | .51*** | Construction Loan Agreement by and between Campus Crest at Lawrence, LLC and Mutual of Omaha Bank, dated February 13, 2009. | ||
10 | .52*** | First Amendment to Construction Loan Agreement by and between Campus Crest at Lawrence, LLC and Mutual of Omaha Bank, dated March 19, 2009. | ||
10 | .53*** | Construction Loan Agreement by and between Amegy Mortgage Company, L.L.C. d/b/a Q-10 Amegy Mortgage Capital and Campus Crest at Huntsville, LP, dated June 12, 2009. | ||
10 | .54*** | Secured Construction Loan Agreement by and between Centennial Bank, F/K/A First State Bank and Campus Crest at Conway, LLC, dated July 2, 2009. | ||
10 | .55*** | Construction Loan Agreement by and between Campus Crest at Statesboro, LLC and The PrivateBank and Trust Company, dated November 12, 2009. | ||
10 | .56* | Form of Aircraft Lease. | ||
10 | .57* | Amendment No. 1 to Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC, dated , 2010. | ||
21 | .1* | List of Subsidiaries of the Registrant. | ||
23 | .1* | Consent of Bradley Arant Boult Cummings LLP (included in Exhibit 8.1). | ||
23 | .2** | Consent of KPMG LLP. | ||
23 | .3* | Consent of Saul Ewing LLP (included in Exhibit 5.1). | ||
23 | .4** | Consent of Michael Gallis and Associates | ||
24 | .1*** | Power of Attorney (included on the Signature Page). | ||
99 | .1*** | Consent of N. Anthony Coles to be named as a proposed director. | ||
99 | .2*** | Consent of Richard S. Kahlbaugh to be named as a proposed director. | ||
99 | .3*** | Consent of Denis L. McGlynn to be named as a proposed director. | ||
99 | .4*** | Consent of William G. Popeo to be named as a proposed director. | ||
99 | .5*** | Consent of Daniel L. Simmons to be named as a proposed director. |
* | To be filed by amendment | |
** | Filed herewith | |
*** | Previously filed. |
II-6
Table of Contents
Item 37. | Undertakings. |
II-7
Table of Contents
By: | /s/ Ted W. Rollins |
Chief Executive Officer
Signature | Title | Date | ||||
/s/ Ted W. Rollins Ted W. Rollins | Co-Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer) | August 17, 2010 | ||||
/s/ Michael S. Hartnett Michael S. Hartnett | Co-Chairman of the Board, Chief Investment Officer and Director | August 17, 2010 | ||||
/s/ Earl C. Howell Earl C. Howell | President, Chief Operating Officer and Director | August 17, 2010 | ||||
/s/ Donald L. Bobbitt, Jr. Donald L. Bobbitt, Jr. | Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | August 17, 2010 |
II-8
Table of Contents
Exhibit | ||||
Number | Description of Document | |||
1 | .1* | Form of Underwriting Agreement among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP and the underwriters named therein. | ||
3 | .1* | Articles of Incorporation of Campus Crest Communities, Inc. | ||
3 | .2* | Bylaws of Campus Crest Communities, Inc. | ||
5 | .1* | Opinion of Saul Ewing LLP with respect to Maryland law. | ||
8 | .1* | Opinion of Bradley Arant Boult Cummings LLP with respect to tax matters. | ||
10 | .1* | Amended and Restated Partnership Agreement of Campus Crest Communities Operating Partnership, LP. | ||
10 | .2*** | Campus Crest Communities, Inc. 2010 Incentive Award Plan. | ||
10 | .3*** | Form of Indemnification Agreement. | ||
10 | .4* | Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Ted W. Rollins, dated 2010. | ||
10 | .5* | Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Michael S. Hartnett, dated 2010. | ||
10 | .6* | Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Earl C. Howell, dated 2010. | ||
10 | .7* | Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Donald L. Bobbitt, Jr., dated 2010. | ||
10 | .8* | Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Shannon N. King, dated 2010. | ||
10 | .9* | Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Ted W. Rollins, dated 2010. | ||
10 | .10* | Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Michael S. Hartnett, dated 2010. | ||
10 | .11* | Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Earl C. Howell, dated 2010. | ||
10 | .12* | Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Donald L. Bobbitt, Jr. dated 2010. | ||
10 | .13* | Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Shannon N. King, dated 2010. | ||
10 | .14* | Operating Agreement of HSRE-Campus Crest I, LLC, dated as of November 7, 2008. | ||
10 | .15* | Credit Agreement for Senior Secured Revolving Credit Facility by and among Campus Crest Communities Operating Partnership, LP, and certain other parties thereto, dated 2010. | ||
10 | .16* | Tax Protection Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC, dated 2010. | ||
10 | .17* | Registration Rights Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC, dated 2010. | ||
10 | .18* | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC, dated May 13, 2010. |
Table of Contents
Exhibit | ||||
Number | Description of Document | |||
10 | .19*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Carl H. Ricker, Jr., dated May 13, 2010. | ||
10 | .20*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Flynn Development, LLC, dated April 22, 2010. | ||
10 | .21*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Mansion Ridge Investment Company, LLC, dated May 6, 2010. | ||
10 | .22*** | Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Highland Park, LLC, dated May 13, 2010. | ||
10 | .23*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Marc Rollins, dated May 1, 2010. | ||
10 | .24*** | Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and P. Andrew Walker, dated May 13, 2010. | ||
10 | .25*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Joe C. Brumit, II, dated April 19, 2010. | ||
10 | .26*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and BGY, LLC, dated April 15, 2010. | ||
10 | .27*** | Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Jerry V. Sternberg, dated May 13, 2010. | ||
10 | .28*** | Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Marlene Breger Joyce, dated May 13, 2010. | ||
10 | .29*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Steve Emtman, dated May 10, 2010. | ||
10 | .30*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and O.A. Keller, III, dated April 29, 2010. | ||
10 | .31*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and NLR-Cotton Valley Investment, LLC, dated April 19, 2010. | ||
10 | .32*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Horatio Alger Association Endowment Fund, dated May 4, 2010. | ||
10 | .33*** | Purchase and Sale by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Keith M. Maxwell, dated May 9, 2010. | ||
10 | .34*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Harrison-Zahn Investments, LLC, dated April 19, 2010. | ||
10 | .35*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Matthew S. O’Reilly, dated May 6, 2010. |
Table of Contents
Exhibit | ||||
Number | Description of Document | |||
10 | .36*** | Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP and certain other parties thereto, dated March 26, 2010. | ||
10 | .37*** | Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP and Thomas A. Odai dated May 13, 2010. | ||
10 | .38*** | Ground Lease by and between USA Research and Technology Corporation and Campus Crest at Mobile, LLC, dated August 8, 2006. | ||
10 | .39*** | Ground Lease by and between USA Research and Technology Corporation and Campus Crest at Mobile Phase II, LLC, dated March 14, 2008. | ||
10 | .40*** | Ground Lease Agreement by and between Indian Hills Trading Company, LLC and Campus Crest Development, LLC, dated March 20, 2008. | ||
10 | .41*** | First Amendment to Ground Lease Agreement by and between Indian Hills Trading Company, LLC and Campus Crest Development, LLC, dated July 28, 2008. | ||
10 | .42*** | Assignment of Ground Lease Agreement and Purchase Option Agreement by Campus Crest Development, LLC and Campus Crest at Moscow, LLC, dated July 28, 2008. | ||
10 | .43*** | Loan Agreement between General Electric Capital Corporation and Campus Crest at Milledgeville, LLC, dated September 7, 2006. | ||
10 | .44*** | Deed to Secure Debt, Security Agreement and Fixture Filing by Campus Crest at Carrollton, LLC to Wachovia Bank, National Association, dated September 18, 2006. | ||
10 | .45*** | Deed of Trust, Security Agreement and Fixture Filing by Campus Crest at Las Cruces, LLC for the benefit of Wachovia Bank, National Association, dated September 22, 2006. | ||
10 | .46*** | Deed of Trust, Security Agreement and Fixture Filing by Campus Crest at Asheville, LLC for the benefit of Wachovia Bank, National Association, dated March 13, 2007. | ||
10 | .47*** | Loan Agreement by and among Campus Crest at Mobile, LLC, Campus Crest at Jacksonville, AL, LLC, Campus Crest at Nacogdoches, LP, Campus Crest at Abilene, LP, Campus Crest at Greeley, LLC, and Campus Crest at Ellensburg, LLC, and Silverton Bank, N.A., dated February 29, 2008. | ||
10 | .48*** | Transfer, Assignment and Assumption Agreement by and among the Federal Deposit Insurance Corporation as receiver and successor-in-interest to Silverton Bank, N.A. and Campus Crest Loan Servicing, LLC, dated March 31, 2010. | ||
10 | .49*** | Construction Loan Agreement by and among Wachovia Bank, National Association, Campus Crest Group, LLC, Campus Crest at Moscow, LLC, Campus Crest at San Angelo, LP and Campus Crest at San Marcos, LP, dated November 18, 2008. | ||
10 | .50*** | First Amendment to Construction Loan Agreement by and among Wachovia Bank, National Association, Campus Crest Group, LLC, Campus Crest at Moscow, LLC, Campus Crest at San Angelo, LP and Campus Crest at San Marcos, LP, dated June 2009. | ||
10 | .51*** | Construction Loan Agreement by and between Campus Crest at Lawrence, LLC and Mutual of Omaha Bank, dated February 13, 2009. | ||
10 | .52*** | First Amendment to Construction Loan Agreement by and between Campus Crest at Lawrence, LLC and Mutual of Omaha Bank, dated March 19, 2009. | ||
10 | .53*** | Construction Loan Agreement by and between Amegy Mortgage Company, L.L.C. d/b/a Q-10 Amegy Mortgage Capital and Campus Crest at Huntsville, LP, dated June 12, 2009. |
Table of Contents
Exhibit | ||||
Number | Description of Document | |||
10 | .54*** | Secured Construction Loan Agreement by and between Centennial Bank, F/K/A First State Bank and Campus Crest at Conway, LLC, dated July 2, 2009. | ||
10 | .55*** | Construction Loan Agreement by and between Campus Crest at Statesboro, LLC and The PrivateBank and Trust Company, dated November 12, 2009. | ||
10 | .56* | Form of Aircraft Lease. | ||
10 | .57* | Amendment No. 1 to Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC, dated , 2010. | ||
21 | .1* | List of Subsidiaries of the Registrant. | ||
23 | .1* | Consent of Bradley Arant Boult Cummings LLP (included in Exhibit 8.1). | ||
23 | .2** | Consent of KPMG LLP. | ||
23 | .3* | Consent of Saul Ewing LLP (included in Exhibit 5.1). | ||
23 | .4** | Consent of Michael Gallis and Associates | ||
24 | .1*** | Power of Attorney (included on the Signature Page). | ||
99 | .1*** | Consent of N. Anthony Coles to be named as a proposed director. | ||
99 | .2*** | Consent of Richard S. Kahlbaugh to be named as a proposed director. | ||
99 | .3*** | Consent of Denis L. McGlynn to be named as a proposed director. | ||
99 | .4*** | Consent of William G. Popeo to be named as a proposed director. | ||
99 | .5*** | Consent of Daniel L. Simmons to be named as a proposed director. |
* | To be filed by amendment | |
** | Filed herewith | |
*** | Previously filed |