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CCG Announces Staged Acquisition Of Copper Beech Townhome Communities; Initial Investment Of $262 Million In Entity With A Total Enterprise Value Of $970 Million

Stocks in this article: CCG

Campus Crest Communities, Inc. (“CCG”) (NYSE: CCG), today announced that it has signed a purchase and sale agreement to acquire Copper Beech Townhome Communities, LLC and affiliates (“Copper Beech”). The initial stage of the investment represents a 48% equity interest in a portfolio of 35 student housing properties. Pursuant to the purchase and sale agreement, CCG has the right, but not the obligation, to acquire the remaining 52% interest in the Copper Beech portfolio in stages over a period of up to three years at fixed prices. Total consideration for the initial stage of the investment includes $230.2 million to acquire equity interests and repay debt in Copper Beech and a $31.7 million loan to the existing investors. The loan carries an interest rate of 8.5% per annum, has a term of three years and is secured by the investors’ remaining equity stakes in Copper Beech. CCG’s investment is contingent upon successful completion of a follow-on equity offering and does not include a break-up penalty. Upon completion of the initial stage of the investment, Copper Beech will have $469.1 million of mortgage debt with a weighted average interest rate of 5.7% per annum and an average term of 4.2 years to maturity (3).

Copper Beech, which was founded in 1994, is the fifth largest student housing operator in the United States, with a portfolio of approximately 16,645 beds (1). For 20 years, it has been a vertically integrated developer, owner and operator of a unique, market-tested, branded townhome student housing product. The Copper Beech portfolio consists of 35 student housing properties, including two phase II development properties scheduled to open in fall 2013, plus one undeveloped land parcel in Charlotte, NC and Copper Beech’s corporate office building in State College, PA. Copper Beech has utilized its vertically integrated platform to develop 30 of its 35 properties. As of February 13, 2013, the operating portfolio had an average occupancy of 98.5%, marking three consecutive years with occupancy levels in excess of 98%.

CCG’s investment will give it additional scale and diversification, with interests in a combined portfolio of nearly 42,000 beds (includes 2013 deliveries for CCG and Copper Beech and CCG’s Philadelphia, PA development), creating the second largest public student housing platform in the United States by beds. The high-quality, well-located townhome portfolio complements CCG’s existing portfolio and prototypical Grove product. A summary of the pro forma CCG portfolio is set forth in the table below:

          CCG           Copper Beech           Pro Forma    
Enterprise Value (in billions)         $0.9   (1)       $0.5   (2)       $1.4   (1)
Operating Properties 39 (3) 33 (4) 72
Developments 7 (5) 2 9
Total Beds (6) 25,298 16,645 41,943
Occupancy 90.4% (7) 98.5% (7) 93.9%
Age (years) (8) 3.4 7.1 4.9
Markets 45 18 57
Enrollment (all students - AY 12/13) (9) 17,470 28,700 21,927
Tuition         $9,951           $10,378           $10,120    

(1) Based on closing share price of $12.53 as of 02/26/2013

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