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
(2) Enterprise Value attributable to CCG’s investment in Copper
Beech plus pro rata share of debt
(3) Includes 32 wholly-owned and seven joint venture
properties
(4) All operating properties excluding Copper Beech head office
and Charlotte land parcel
(5) Includes three wholly-owned and three joint venture projects
for 2013 and Philadelphia joint venture for 2014
(6) Includes 2013 deliveries for CCG and Copper Beech and CCG’s
Philadelphia, PA development
(7) CCG occupancy as of 12/31/2012 and Copper Beech occupancy as
of 02/13/2013
(8) CCG average age based on current operating properties
(9) Fall 2012 overall enrollment from university websites. Fall
2011 enrollment if fall 2012 enrollment not available
"The proposed acquisition of Copper Beech is an excellent
opportunity for Campus Crest. Not only are we able to add another
successful operation, but we are adding a scalable second brand and
product line that has great market acceptance and complements our
already existing brand, The Grove. We believe this is an accretive
and diversifying transaction for Campus Crest,” said Ted W.
Rollins, CCG’s Co-Founder, Co-Chairman and Chief Executive Officer.
“It has been a pleasure working with Dr. McWhirter to structure a
deal that provides us the opportunity to acquire the nearly $1
billion Copper Beech portfolio over the next three years.”
Transaction Highlights
- Increased Size & Portfolio
Diversification
- Creates 2nd largest public student
housing platform in U. S. by beds, with ownership interests in 81
properties with nearly 42,000 beds (includes 2013 deliveries for
CCG and Copper Beech and CCG’s Philadelphia, PA development) in 57
unique markets
- Complementary and scalable townhouse
product, price point and brand will provide CCG ability to roll out
both product types in each market
- Copper Beech properties located in 18
university markets, with an average enrollment of nearly 28,000, in
13 states
- Provides CCG entry into 12 new
markets
- High-Quality, Well-Located Student
Housing Communities
- 98.5% occupancy for 2012 / 2013
academic year and over 98% occupancy for prior two academic
years
- Developed 30 of 35 student housing
properties in-house with an average property age of approximately
seven years
- Longstanding track record in leading
university markets, including six Tier I universities(1) such as
Penn State, Indiana University, and Purdue
- Attractive scale and operating
margins
- Experienced Management Team
- Dr. Jack McWhirter, Founder & Chief
Executive Officer of Copper Beech, has 20 years of experience in
the student housing industry
- Existing management team will continue
to manage the operations
- Copper Beech has been an innovator in
townhome student housing product since its founding in 1994
- Internal & External Growth
Opportunities
- Potential for synergies as platforms
are centralized, ancillary services expanded and economies of scale
achieved in overlapping markets
- Portfolio includes land for future
development opportunities
- Favorable Structure & Accretive
Transaction
- Transaction expected to be accretive in
first full year of ownership
- Attractive investment cap rate and
purchase price relative to cost of capital
- 48% ownership in initial stage of the
investment
- Transaction contingent upon successful
completion of equity offering by CCG
- CCG has the right, but not the
obligation, to acquire the remaining equity in the Copper Beech
portfolio over three years at fixed prices
- CCG’s pro forma leverage, including its
pro rata share of Copper Beech debt, is expected to increase
slightly to approximately 40% of total market capitalization
Transaction Terms
The transaction has been approved by CCG’s Board of Directors.
Pursuant to the purchase agreement, CCG has the right, but not the
obligation, to acquire additional interests in the Copper Beech
portfolio over a period of up to three years at fixed prices. The
initial investment of $261.9 million for the initial stage includes
$230.2 million to acquire equity interests and to repay
approximately $106.7 million existing debt in Copper Beech and an
additional $31.7 million loan to the existing investors secured by
the investors’ remaining equity stakes in Copper Beech. CCG will
earn a preferred return of $13 million in the first year of the
investment plus 48% of distributable cash flows plus interest on
the loan to existing investors. Within 14 months of the initial
close, CCG has the option to acquire an additional 27.0% interest
in the Copper Beech portfolio; within 26 months of the initial
close, CCG has the option to acquire an additional 13.9% interest;
and, within 38 months of the initial close, CCG has the option to
acquire the remaining 11.1% interest. If CCG exercises each of the
purchase options, it expects that by the end of the second quarter
of 2016 it will hold 100% of the interests in the Copper Beech
portfolio. The aggregate purchase price upon exercise of the three
purchase options is approximately $404.2 million plus total debt
repayment of approximately $146.7 million.
CCG will name one member of the two member Copper Beech
portfolio board of directors. Major decisions will require
unanimous consent of the board. In addition, Copper Beech will
continue to manage the day-to-day operations of the portfolio until
CCG owns at least 88.9% of the Copper Beech portfolio.
Completion of the transaction is subject to the successful
completion of a follow-on equity offering and customary closing
conditions. CCG expects the initial stage of the acquisition to
close during the first or second quarter of 2013, although there
can be no assurance that the transaction will close or, if it does,
when the closing will occur.
Barclays and Raymond James served as exclusive financial
advisors to CCG, and Hogan Lovells US LLP and Bradley Arant Boult
Cummings LLP acted as CCG’s legal advisors.
About Campus Crest Communities, Inc.
Campus Crest Communities, Inc. is a leading developer, builder,
owner and manager of high-quality, residence life focused student
housing properties located close to college campuses in targeted
U.S. markets. CCG is a self-managed, self-administered and
vertically-integrated real estate investment trust which operates
all of its properties under The Grove® brand. CCG owns interests in
39 operating student housing properties containing approximately
20,884 beds. CCG plans to deliver six projects containing
approximately 3,564 beds in the third quarter of 2013.
Additionally, CCG is developing a 33-story student housing tower in
Philadelphia, PA containing approximately 850 beds for delivery in
the third quarter of 2014. Since its inception, CCG has focused on
customer service, privacy, on-site amenities and its proprietary
residence life programs to provide college students across the
United States with a higher quality of living.
Forward-Looking Statements
This press release, together with other statements and
information publicly disseminated by CCG, contains certain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. CCG intends such
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 and includes this
statement for purposes of complying with these safe harbor
provisions. Forward-looking statements relate to expectations,
beliefs, projections, future plans and strategies, anticipated
events or trends and similar expressions concerning matters that
are not historical facts. In some cases, you can identify
forward-looking statements by the use of forward-looking
terminology such as “may,” “will,” “should,” “expects,” “intends,”
“plans,” “anticipates,” “believes,” “estimates,” “predicts” or
“potential” or the negative of these words and phrases or similar
words or phrases which are predictions of or indicate future events
or trends and which do not relate solely to historical matters. You
should not rely on forward-looking statements since they involve
known and unknown risks, uncertainties, assumptions and
contingencies, many of which are beyond CCG’s control that may
cause actual results to differ significantly from those expressed
in any forward-looking statement, including risks and uncertainties
related to the proposed transaction (including but not limited to
(i) the occurrence of any effect, event, development, or change
that could give rise to the termination of the purchase and sale
agreement, (ii) the failure to complete the proposed transaction,
and (iii) the failure of any party to satisfy the conditions to the
closing of the transaction. All forward-looking statements reflect
CCG’s good faith beliefs, assumptions and expectations, but they
are not guarantees of future performance. Furthermore, except as
otherwise required by federal securities laws, CCG disclaims any
obligation to publicly update or revise any forward-looking
statement to reflect changes in underlying assumptions or factors,
new information, data or methods, future events or other changes.
For a further discussion of these and other factors that could
cause CCG’s future results to differ materially from any
forward-looking statements, see the risk factors discussed in CCG’s
most recent Annual Report on Form 10-K.
The issuer has filed a registration statement (including a
prospectus) with the Securities and Exchange Commission (the “SEC”)
for the offering to which this communication relates. Before
you invest, you should read the preliminary prospectus supplement
and the related prospectus in that registration statement and other
documents the issuer has filed with the SEC for more complete
information about the issuer and this offering. You may get
these documents for free by visiting EDGAR on the SEC Web site
at www.sec.gov. Alternatively, the issuer or
any underwriter participating in the offering will arrange to send
you the prospectus if you request it by calling Raymond James &
Associates, Inc. at (800) 248-8863 or Barclays Capital Inc. at
(888) 603-5847.
(1) Student Housing Business as of 10/31/2012
(2) Public company filings
(3) Excludes $19.7 million of construction loans expected to
close in the first quarter of 2013
(1) U.S. News & World Report 2013 College Rankings List
Lehman Abs Mbna Capa (NYSE:CCG)
Historical Stock Chart
From May 2024 to Jun 2024
Lehman Abs Mbna Capa (NYSE:CCG)
Historical Stock Chart
From Jun 2023 to Jun 2024