CCG Campus Crest Communities, Inc.

Campus Crest Communities, Inc. (NYSE: CCG) (the “Company”), a leading developer, builder, owner and manager of high-quality student housing properties, today announced results for the three months ended March, 31 2013.

Highlights

• $0.18 Funds From Operations Adjusted (“FFOA”) per diluted share for the first quarter
• 28.3% increase in year-over-year quarterly student housing rental and services revenue
• Solid gains in wholly-owned same store results through continued operational focus:
  • 1.7% increase in quarterly Net Operating Income (“NOI”)
  • 170 basis point increase in average quarterly occupancy to 91.8%
• 3.1% annual common stock dividend increase in January 2013 from $0.64 to $0.66 per share
• Announced a staged transaction to acquire Copper Beech Townhome Communities, LLC and affiliates (“Copper Beech”) with an initial 48% investment for $230.2 million plus a $31.7 million loan to existing investors
  • Successfully raised $312.7 million with a two-day marketed follow-on common stock offering to fund the transaction
    • Invested $153.1 million of the new proceeds prior to quarter end
• 65.5% pre-leased at all properties for the 2013/2014 academic year as of April 28, 2013
  • 59.2% pre-leased across our Grove portfolio
  • 35-property Copper Beech portfolio was 76.5% pre-leased
• Six new Grove properties and a 192-bed phase II of The Grove at Flagstaff on-schedule for opening in 2013/2014 academic year for a total cost of $184.7 million ($101.5 million for wholly-owned and $83.3 million for joint ventures)
• Commencement of two new Grove joint venture properties – The Grove at Greensboro and The Grove at Louisville – for 2014/2015 academic year delivery with a total cost of $65.6 million
• New urban market concept added in January 2013 with construction commencement of a 33-story, 850-bed student housing tower, called The Grove at Cira Centre South, for 2014/2015 academic year delivery
• Acquired for $13.8 million a 629-bed student housing redevelopment property adjacent to the campus of the University of Toledo from bank foreclosure
• Increased size of unsecured credit facility from $200 million to $300 million while lowering borrowing costs and setting the stage for further growth

Financial Results for the Three Months Ended March 31, 2013

For the three months ended March 31, 2013, Funds From Operations (“FFO”) and FFOA are shown in the table below.

                  FFO/FFOA Three Months Ended March 31,

 

Per share -

Per share -

($mm, except per share)     2013    

diluted

      2012    

diluted

FFO $8.1 $0.17 $4.6 $0.15 Write-Off of Unamortized Deferred Financing Fees - - 1.0 0.03 Elimination of transactions costs 0.4 0.00 - - Elimination of FV adjustment of CB debt (0.1)     (0.00) -     - FFOA $8.4     $0.18 $5.6     $0.18  

A reconciliation of net income attributable to common shareholders to FFO and FFOA can be found at the end of this release.

For the quarter ended March 31, 2013, the Company reported total revenues of $35.3 million and net income attributable to common stockholders of $1.0 million, compared to $32.9 million and $(1.6) million, respectively, in the same period in 2012.

“This quarter has been transformational for our business given the staged acquisition of Copper Beech, but just as exciting is our team’s continued growth of our core business and the results we are seeing across our portfolio from the investments we are making in our people and systems,” commented Ted W. Rollins, Co-Chairman and Chief Executive Officer of Campus Crest. “We can now deploy a multi-brand and product approach to each of our markets that we serve. In addition to this, we are excited about the opportunities to share best practices with Copper Beech as we integrate our businesses. Our pipeline of new properties remains strong, and we look forward to developing both The Grove and Copper Beech brands across the U.S. while strengthening operations and continuing to proactively manage our balance sheet.”

Operating Results

For the three months ended March 31, 2013, results for wholly-owned same store properties were as follows:

Same Store Results   Three Months Ended March 31, ($mm)   2013 2012 Change   Number of Assets 27 27 Number of Beds 13,884 13,884 Occupancy 91.8% 90.1% 170 bps Total Revenues $19.0 $18.6 2.2% NOI $10.2 $10.0 1.7% NOI Margin 53.6% 53.9% -30 bps

The improvement in same-store NOI for three months was driven by higher occupancy and rental rate.

NOI margin is calculated by dividing NOI for the period by total student housing rental and services revenues for the period. A reconciliation of net income attributable to common stockholders to NOI can be found at the end of this release. In addition, details regarding same store NOI and calculations thereof may be found in the Supplemental Analyst Package.

Portfolio & Leasing Update

As of March 31, 2013, the Company owned interests in 84 properties totaling 44,002 beds across the U.S. Approximately 61% of the beds are branded The Grove, while 38% are branded Copper Beech. The remaining 1% of beds is a 629-bed redevelopment at the University of Toledo that will remain operational for the 2012/2013 academic year, and the Company expects to begin renovations during the 2013/2014 academic year.

The portfolio overview and 2012/2013 academic year occupancy status as of March 31, 2013 is outlined in the table below. In addition, the table includes 2013/2014 academic year pre-leasing.

Portfolio Overview                      

# of

Pre-leasing Occupancy

Property

     

Properties

  Units   Beds     04/29/13   04/29/12     03/31/13   03/31/12   Wholly-Owned - Operating 27 5,156 13,884 59.6% 61.3% 91.3% 89.5% Wholly-Owned - Operating Acquisitions in 2012 2 408 1,088 59.7% 64.0% 91.1% 98.2% Wholly-Owned - 2012 Deliveries1 3   684   1,964     85.5%   78.4%     97.7%   n/a Sub Total Operating Wholly-Owned 32 6,248 16,936 62.6% 63.4% 92.0% 90.2%   Joint Venture - Operating 4 760 2,092 50.4% 44.8% 82.1% 80.5% Joint Venture - 2012 Deliveries 3   662   1,856     46.8%   51.9%     77.2%   n/a Sub Total Operating Joint Venture 7 1,422 3,948 48.7% 48.2% 79.8% 80.5%   Wholly-Owned - 2013 Deliveries2 3 704 1,972 58.5% n/a n/a n/a Joint Venture - 2013 Deliveries 3   664   1,784     50.7%   n/a     n/a   n/a Sub Total 2013 Deliveries 6 1,368 3,756 54.8% n/a n/a n/a                                       Total Grove Leasing Portfolio       45   9,038   24,640     59.2%   60.5%     89.7%   89.0%   Toledo, OH Redevelopment 1 382 629 21.2% n/a 74.2% n/a   Copper Beech Operating Portfolio 33 6,041 16,127 78.2% n/a 98.0% n/a Copper Beech Development Portfolio 2   201   518     23.7%   n/a     n/a   n/a Sub Total Copper Beech 35 6,242 16,645 76.5% n/a 98.0% n/a                                       Total Leasing Portfolio       81   15,662   41,914     65.5%   60.5%     93.0%   89.0%   The Grove at Cira Centre South 1 344 850 n/a n/a n/a n/a The Grove at Greensboro 1 216 584 n/a n/a n/a n/a The Grove at Louisville 1 252 654 n/a n/a n/a n/a                                       Total Portfolio       84   16,474   44,002     65.5%   60.5%     93.0%   89.0%   1 Includes The Grove at Nacogdoches - Phase II. 2 Includes The Grove at Flagstaff - Phase II.

• All 48 Grove properties were built, renovated or are being built by the Company or its predecessor. The median distance to campus of the portfolio is 0.5 miles with an average age of 3.0 years as of March 31, 2013.
• The redevelopment property is located adjacent to the University of Toledo campus and was acquired by the Company in March 2013.
• 30 of 35 Copper Beech properties were built, renovated or are being built by Copper Beech. The median distance to campus of the portfolio is 1.2 miles with an average age of 7.3 years as of March 31, 2013.

Development and Acquisition Activity

Wholly-Owned and Joint Venture Development

The Company continues to maintain an active pipeline of development opportunities. It currently is conducting due diligence in approximately 80 markets, with land identified and under letter of intent or contract in 30 of these markets for either a Grove or Copper Beech project. At an approximate cost of $25 million per project, this represents a total pipeline under control of approximately $750 million.

2013/2014 Academic Year Deliveries – The Grove

The Company is scheduled to deliver six 2013/2014 academic year Grove-branded projects and an expansion at The Grove at Flagstaff in the third quarter of 2013. Total estimated costs for these developments are approximately $184.7 million. All of the projects have been bought-out and are on schedule to be completed for a fall 2013 opening. This investment is split between wholly-owned and joint ventures with Harrison Street Real Estate Capital (“HSRE”) as follows:

• 3 wholly-owned projects and a Flagstaff phase II expansion with total estimated project costs of approximately $101.5 million
• 3 joint venture projects with total estimated project costs of $83.3 million. The Company will own 20.0% of the joint venture projects being developed, with HSRE owning the balance

2014/2015 Academic Year Deliveries – The Grove

The Company’s joint venture partnership with Brandywine Realty Trust and HSRE continues to make progress on the development of the 33-story, 850-bed student housing tower, The Grove at Cira Centre South, on a site leased from the University of Pennsylvania. Campus Crest and Brandywine each own 30.0% of the joint venture, while HSRE owns 40.0%. Construction commenced in January with a targeted completion date for fall 2014; leasing is expected to begin in fall 2013.

During the quarter ended March 31, 2013, the Company also commenced construction of two joint venture projects with HSRE at University of North Carolina at Greensboro and University of Louisville. The two projects are for delivery for the 2014/2015 academic year and have total estimated project costs of $65.6 million. The Company will own 30.0% of the two assets. Select highlights for these projects include:

• The Grove at Greensboro: Located a short walk from the University of North Carolina at Greensboro campus and adjacent to the Greensboro Greenway trail system, this site provides convenient access to the University and the surrounding city amenities. The proposed Grove community will consist of 584 beds using the Company’s 9th generation apartment building prototype.
• The Grove at Louisville: Situated adjacent to a visible gateway entrance to campus, on a 7-acre infill parcel, this site creates convenient, pedestrian friendly access to the University of Louisville. The proposed project will be a modified Grove prototype with a contiguous 4-story building and parking garage, featuring 654 beds.

Details of the Company’s Grove-branded developments are as follows:

2013/2014 Academic Year Deliveries               Project     Primary University Served    

TotalEnrollment1

 

Miles toCampus

  Units  

TotalBeds

 

Est. Cost($mm)

Wholly-Owned

    On Campus The Grove at Ft. Collins Colorado State University 26,769 218 612 $32.9   The Grove at Muncie Ball State University 17,851 0.1 216 584 25.3   The Grove at Pullman Washington State University 19,989 0.0 216 584 30.4   The Grove at Flagstaff - Phase II Northern Arizona University 18,292 0.2 54 192 12.8                               Average/Median/Sub Total2 20,725 0.0 704 1,972 $101.5  

Joint Venture3

The Grove at Indiana Indiana University of Pennsylvania 15,379 0.6 224 600 $27.6   The Grove at Norman University of Oklahoma 24,144 0.6 224 600 27.0   The Grove at State College Penn State University 44,679 0.8 216 584 28.6                               Average/Median/Sub Total2           28,067   0.6   664   1,784   $83.3     Average/Median/Total3          

23,872

  0.2   1,368   3,756   $184.7   1 All data is from each school's website as of fall 2012. 2 Total Enrollment is an average, Miles to Campus is the median, while others are totals.

3 The Company owns a 20.0% interest in the joint venture projects, with Harrison Street Real Estate owning the balance. Total gross fees to the Company forthe joint venture projects are approximately $8.1 million, of which $4.9 million has been earned through March 31, 2013.

    2014/2015 Academic Year Deliveries

Project

    Primary University Served     Total Enrollment1   Miles to Campus   Units   Total Beds   Est. Cost ($mm)

Joint Venture3

The Grove at Cira South University of Pennsylvania 24,725 On Campus 344 850 $158.5 Drexel University 25,500 0.2   The Grove at Greensboro University of North Carolina Greensboro 18,172 0.5 216 584 27.3   The Grove at Louisville University of Louisville 22,293 0.1 252 654 38.3                               Average/Median/Total2           22,673   0.2   812   2,088   $224.1   1 All data is from each school's website as of fall 2012. 2 Total Enrollment is an average, Miles to Campus is the median, while others are totals. 3 The Company owns a 30.0% interest in the joint venture projects, with Harrison Street Real Estate owning the balance. Total gross fees to the Company for the joint venture projects are approximately $10.5 million, of which $1.1 million has been earned through March 31, 2013.  

2013/2014 Academic Year Deliveries – Copper Beech

Copper Beech is scheduled to deliver two 2013/2014 academic year phase II projects in the third quarter of 2013. Development on these projects has commenced and is progressing according to plan. The total investment in these projects is approximately $23.3 million. Details of the developments are as follows:

2014/2015 Academic Year Deliveries           Project     Primary University Served  

TotalEnrollment1

 

Miles toCampus

  Units  

TotalBeds

 

Est. Cost($mm)

Copper Beech Joint Venture

      Copper Beech at Mount Pleasant - Phase II Central Michigan University 20,504 0.7 119 256 $12.2   Copper Beech at Statesboro - Phase II     Georgia Southern University   20,574   0.3   82   262   11.1 Average/Median/Total2         20,539   0.5   201   518   $23.3   1 All data is from each school's website as of fall 2012. 2 Total Enrollment is an average, Miles to Campus is the median, while others are totals.  

2014/2015 Academic Year Deliveries – Redevelopments

Given its successful trial of renovating and converting an existing property into a Grove in Stillwater, OK, the Company purchased a bank owned 629-bed student housing property in Toledo, OH in March 2013. The Company will operate the property as-is for the remaining 2012/2013 academic year and plans to renovate the property during the 2013/2014 academic year. The 20-acre property, adjacent to the University of Toledo, is situated in the heart of the university’s social life and is surrounded by retail businesses. The Company expects to provide further details on the renovation later in the 2013/2014 academic year.

Copper Beech Acquisition

On February 27, 2013, the Company announced that it signed a purchase and sale agreement to acquire Copper Beech. The initial stage of the investment represents a 48.0% equity interest in a portfolio of 35 student housing properties. Pursuant to the purchase and sale agreement, the Company has the right, but not the obligation, to acquire the remaining 52.0% 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.

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. 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 student housing properties.

Following its successful $312.7 million equity offering that closed in early March, the Company invested on March 18, 2013, approximately $121.4 million, consisting of approximately $47.1 million for the acquisition of equity interests and approximately $74.3 million for the repayment of debt, in certain assets and provided the $31.7 million loan to the existing investors. Following these acquisitions, the Company holds an effective 25.3% interest in the Copper Beech portfolio.

The Company expects to complete the acquisition of additional properties at such time as it obtains the requisite lender consent relating thereto. The Company expects to obtain all such consents and to complete the acquisition of the CB Portfolio on or before the end of the third quarter of 2013.

Balance Sheet and Capital Markets

The Company proactively manages its balance sheet and looks to opportunistically access capital to fund growth and maintain a conservative capital structure. Details of the capital structure and the outstanding debt as of March 31, 2013 follow:

Capital Structure and Debt Summary             (in $000s, except per share data)                     Closing common stock price at March 28, 2013 $13.90   Common stock 63,747 Operating partnership units 436 Restricted stock 682 Total shares and units outstanding 64,865   Total equity market value $901,621 Total preferred equity outstanding 57,500 Total consolidated debt outstanding 328,713 Total market capitalization $1,287,834   Debt to total market capitalization 25.5% Debt to gross assets1 28.9%   Total Number of Unencumbered Operating Properties 20   Weighted Average Principal % of Total Average Years to Wholly-Owned Debt2,3 Outstanding   Principal Outstanding     Interest Rate     Maturity   Fixed rate mortgage loans $166,406 50.6% 4.95% 6.2 Construction loans 46,732 14.2% 2.94% 1.4 Variable rate credit facility 112,500 34.2% 2.09% 3.8 Other debt, fixed rate 3,075   0.9%     3.67%     14.0 Total/Weighted Average $328,713   100.0%     3.67%     4.8   1 Gross assets is defined as total assets plus accumulated depreciation, as reported in the Company's March 31, 2013 consolidated balance sheet. 2 Excludes joint venture debt of $33.5 million, of which the Company is a 49.9% owner, $17.0 million, of which the Company is 20.0% owner, $45.7 million, of which the Company is a 10.0% owner, and $0.7 million, of which the Company is a 20.0% owner. The Company is the guarantor of these loans. 3 Excludes Copper Beech joint venture debt of $498.2 million, of which the Company will be a 48.0% owner upon completion of the Copper Beech transaction announced on February 27, 2013. The total pro forma debt upon completion is expected to be $469.1 million, excluding the two construction loans for the phase II development projects for delivery in fall 2013.  

On March 6, 2013, the Company announced it closed its underwritten public offering of 25,530,000 shares of its common stock, including 3,330,000 shares issued and sold pursuant to the full exercise of the underwriters’ option to purchase additional shares. The shares were issued at a public offering price of $12.25 per share, resulting in gross proceeds of $312.7 million, and after deducting the underwriting discount and other net estimated offering costs, net proceeds of approximately $299.7 million. Net proceeds from this offering have been used to fund an initial investment in certain assets of Copper Beech for approximately $153.1 million, consisting of a $121.4 million initial investment and providing the $31.7 million loan to the existing investors. Additionally, the Company paid $9.7 million of transaction costs during the quarter, of which $0.3 million were expensed. The Company intends to use the remaining proceeds to further fund its investment in the Copper Beech portfolio and pay related transactional costs, with any remaining net proceeds to be used for general corporate purposes, including the repayment of CCG debt.

On January 8, 2013, the Company amended and restated its unsecured credit facility, which now comprises a $250 million revolving facility and a $50 million term loan. Highlights of the new facility are as follows:

• Increase in facility size by 50% from $200 million to $300 million, with an accordion feature of up to $600 million, upon satisfaction of certain conditions
• Extension of the initial three-year term to four years with a one-year extension option, upon satisfaction of certain conditions
• Ability to fully fund development properties while receiving borrowing base credit, which will make the development financing process more cost and time efficient
• Reduced pricing on the leverage-based grid
• Increase in the number of assets in the unencumbered pool of the credit facility to 19 with the addition of The Grove at Huntsville, The Grove at Moscow and The Grove at Valdosta
• Demonstrate support of existing bank group and adds four new participants

Dividends

Q1 2013

On January 29, 2013, the Company announced that the Company’s Board of Directors approved an increase in the Company's annual common stock dividend from the current annual rate of $0.64 per share to $0.66 per share, representing an annualized dividend yield of 4.9% based on the Company's closing pricing of $13.50 on April 29, 2013.

The $0.165 quarterly common stock dividend commenced with the payment of the first quarter of 2013 dividend, paid on April 10, 2013 to stockholders of record on March 27, 2013.

The Board of Directors also declared a cash dividend of $0.50 per share of Series A Preferred stock for the first quarter of 2013. The preferred share dividend was paid on April 15, 2013 to stockholders of record on March 27, 2013.

Q2 2013

On April 24, 2013, the Company announced that its Board of Directors declared its second quarter of 2013 common stock dividend of $0.165 per share. The dividend is payable on July 10, 2013 to stockholders of record as of June 26, 2013.

The Board of Directors also declared a cash dividend of $0.50 per Series A Cumulative Redeemable Preferred Share for the second quarter of 2013. The preferred share dividend is payable on July 15, 2013 to stockholders of record as of June 26, 2013.

2013 Outlook Update

Based upon management’s current estimates, including the timing related to obtaining lender consents for the Copper Beech transaction, the Company is updating its guidance for full year 2013 FFOA per fully diluted share of $0.82 to $0.88 based on the following assumptions, which reflect a blend of 2012/2013 and 2013/2014 academic years:

Guidance Update                         Original   Updated   Wholly-owned NOI for operating properties1 $51.2 - $53.4 million $51.8 - $54.0 million Occupancy 91.0% - 93.0% No Change RevPOB $508 - $513 No Change   Expected weighted average development yields on 2013/2014 AY 7.5% - 8.0% No Change deliveries (wholly-owned and JVs)   FFOA contribution from JV properties (including 2013 deliveries) $2.4 - $2.7 million No Change   FFOA contribution from investment in Copper Beech2 n/a $16.4 - $17.4 million   Net development, construction and management services fees $4.8 - $5.3 million No Change   General and administrative expense $9.3 - $10.3 million No Change   Interest expense $12.7 - $13.7 million $13.1 - $14.1 million   Preferred dividends $4.6 million No Change   Weighted average fully diluted shares/units outstanding 39.1 million 60.4 million   FFOA/Share $0.82 - $0.88 No Change                     1 Includes 32 wholly-owned Grove properties for "Original" and 32 plus the Toledo, OH redevelopment for "Updated". 2 Includes preferred payment, property cash flows and interest income; excludes non-cash items related to transaction.  

The guidance above excludes non-recurring and non-cash items, such as the write-off of deferred financing costs as a result of early payoff of financings, transaction costs associated with the Copper Beech investment or other acquisitions and the mark-to-market adjustment of the Copper Beech debt.

Conference Call Details

The Company will host a conference call on Wednesday, May 1, 2013, at 9:00 a.m. (Eastern Time) to discuss the financial results.

The call can be accessed live over the phone by dialing 877-407-0789, or for international callers, 201-689-8562. A replay will be available shortly after the call and can be accessed by dialing 877-870-5176, or for international callers, 858-384-5517. The pin number for the replay is 412521. The replay will be available until May 8, 2013.

Interested parties may also listen to a simultaneous webcast of the conference call by logging onto the Company's website at http://investors.campuscrest.com/.

Supplemental Schedules

The Company has published a Supplemental Analyst Package in order to provide additional disclosure and financial information for the benefit of the Company’s stakeholders. These can be found under the “Earnings Center” tab in the Investor Relations section of the Company’s web site at http://investors.campuscrest.com/.

About Campus Crest Communities, Inc.

Campus Crest Communities, Inc. is a leading developer, builder, owner and manager of high-quality student housing properties located close to college campuses in targeted U.S. markets. It has ownership interests in 84 student housing properties and over 44,000 beds across the United States, of which 72 are operating and 12 are development or redevelopment properties. The Company is an equity REIT that differentiates itself through its vertical integration and consistent branding across the portfolio through two unique brands targeting different segments of the college student population. The Grove® brand offers more traditional apartment floor plans and focuses on customer service, privacy, on-site amenities and a proprietary residence life program. The Copper Beech brand and townhome product offers more residential-type living to students looking for a larger floor plan with a front door and back porch. Additional information can be found on the Company's website at http://www.campuscrest.com.

Forward-Looking Statements

This press release, together with other statements and information publicly disseminated by the Company, 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. The Company 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. Forward-looking statements in this press release include, among others, the performance of properties in occupancy and yield targets, outlook and guidance for full year 2013 FFO and the related underlying assumptions, growth and development opportunities, leasing activities, financing strategies, and development and construction projects. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond the Company’s control that may cause actual results to differ significantly from those expressed in any forward-looking statement. All forward-looking statements reflect the Company’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Furthermore, except as otherwise required by federal securities laws, the Company 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 the Company’s future results to differ materially from any forward-looking statements, see the risk factors discussed in the Company’s most recent Annual Report on Form 10-K, as updated in the Company’s Quarterly Reports on Form 10-Q.

CAMPUS CREST COMMUNITIES                 CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in $000s)       March 31, December 31,             2013         2012   Assets Investment in real estate, net: Student housing properties $684,929 $669,387 Accumulated depreciation (104,019 ) (97,820 ) Development in process 74,499   50,781   Investment in real estate, net 655,409 622,348 Investment in unconsolidated entities1 165,688 22,555 Cash and cash equivalents 11,723 5,970 Restricted cash 2 112,559 3,902 Student receivables, net 1,895 2,193 Notes receivable3 36,245 - Cost and earnings in excess of construction billings 27,206 23,077 Other assets, net 21,800   16,275   Total assets $1,032,525   $696,320     Liabilities and equity Liabilities: Mortgage and construction loans $213,138 $218,337 Line of credit and other debt 115,575 75,375 Accounts payable and accrued expenses 53,886 45,634 Construction billings in excess of cost and earnings 1,249 49 Other liabilities 13,116   12,023   Total liabilities 396,964   351,418   Equity: Preferred stock $23 $23 Common stock 644 386 Additional common and preferred paid-in capital 677,049 377,180 Accumulated deficit and distributions (46,669 ) (37,047 ) Accumulated other comprehensive loss -   (58 ) Total stockholders' equity 631,047 340,484 Noncontrolling interests 4,514   4,418   Total equity 635,561   344,902   Total liabilities and equity $1,032,525   $696,320                             1 As of March 31, 2013, the Company’s investment in Copper Beech equates to an effective 25.3% ownership interest. 2 As of March 31, 2013, includes approximately $108.7 million of cash held in escrow for the Copper Beech transaction. 3 As of March 31, 2013, includes the Company’s $31.7 million loan made to existing investors in Copper Beech.   CAMPUS CREST COMMUNITIES                       CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in $000s, except per share data)       Three Months Ended March 31,          

2013(1)

      2012       $ Change   Revenues: Student housing rental $22,982 $17,858 $5,124 Student housing services 910 763 147 Development, construction and management services 11,427   14,256   (2,829 ) Total revenues 35,319 32,877 2,442 Operating expenses: Student housing operations 10,931 8,578 2,353 Development, construction and management services 10,658 13,458 (2,800 ) General and administrative 2,699 2,326 373 Transaction costs2 385 - 385 Ground leases 54 52 2 Depreciation and amortization 6,439   5,856   583   Total operating expenses 31,166 30,270 896 Equity in earnings of unconsolidated entities3 410   96   314   Operating income 4,563   2,703   1,860   Nonoperating income (expense): Interest expense4 (2,884 ) (3,573 ) 689 Change in fair value of interest rate derivatives (54 ) (49 ) (5 ) Other income5 90   2   88   Total nonoperating expense, net (2,848 ) (3,620 ) 772   Net income before income tax benefit (expense), net 1,715 (917 ) 2,632 Income tax benefit (expense) 452   (63 ) 515   Net income (loss) 2,167 (980 ) 3,147 Net income (loss) attributable to noncontrolling interests 11 (9 ) 20 Dividends on preferred stock 1,150   664   486   Net income (loss) attributable to common stockholders $1,006   ($1,635 ) $2,641     Net income (loss) per share attributable to common stockholders - Basic and Diluted: $0.02 ($0.05 )   Weighted average common shares outstanding: Basic 46,156 30,923 Diluted 46,591 30,923  

1 Includes consolidated results from the operations at The Grove at Moscow and The Grove at Valdosta, which were included in equity in earnings (loss) of unconsolidated entities prior to theCompany's acquisition of its joint venture partner's interest in the properties. The Company's acquisition of The Grove at Moscow and The Grove at Valdosta was completed on July 6, 2012.

2 For three months ended March 31, 2013, includes $334 of Copper Beech-related transaction costs and $51 of Toledo, OH-related transaction costs.

3 For three months ended March 31, 2013, includes 14 days of results from the Company’s initial investment in Copper Beech on March 18, 2013 and a $112 fair value adjustment of Copper Beech’sdebt. The initial investment equates to an effective 25.3% ownership interest.

4 For three months ended March 31, 2012, includes an approximate $960 non-cash charge primarily related to the write-off of unamortized deferred financing fees associated with construction debtpaid-off using proceeds from the February 2012 preferred equity offering.

5 For three months ended March 31, 2013, includes 14 days of interest income from the 8.5%, $31.7 million loan made to existing investors in Copper Beech.   CAMPUS CREST COMMUNITIES                 RECONCILIATION OF NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS TO FUNDS FROM OPERATIONS ("FFO") & NET OPERATING INCOME ("NOI") (unaudited) (in $000s, except per share data)       Three Months Ended March 31,            

2013(1)

    2012     $ Change   Net income (loss) attributable to common stockholders $1,006 ($1,635 ) $2,641 Net income (loss) attributable to noncontrolling interests 11 (9 ) 20 Real estate related depreciation and amortization 6,296 5,789 507 Real estate related depreciation and amortization - unconsolidated entities 807   493   314   FFO available to common shares and OP units2, 3, 4 $8,120 $4,638 $3,482   Elimination of transactions costs 385 - 385 Elimination of FV adjustment of CB debt (112 ) - (112 ) Elimination of non-cash charge from the write-off of unamortized deferred financing fees -   960   (960 ) Funds from operations adjusted (FFOA) available to common shares and OP units $8,393   $5,598   $2,795     FFO per share - diluted2 $0.17 $0.15 $0.02 FFOA per share - diluted $0.18 $0.18 $0.00 Weighted average common shares and OP units outstanding - diluted 46,591 31,359                                   Three Months Ended March 31,             2012(1 )     2012     Net income attributable to common stockholders $1,006 ($1,635 ) Net income attributable to noncontrolling interests 11 (9 ) Preferred stock dividends 1,150 664 Income tax (benefit) expense (452 ) 63 Other (income) expense (90 ) (2 ) Change in fair value of interest rate derivatives 54 49 Interest expense 2,884 3,573 Equity in earnings of unconsolidated entities (410 ) (96 ) Depreciation and amortization 6,439 5,856 Ground lease expense 54 52 General and administrative expense 2,699 2,326 Transaction costs 385 - Development, construction and management services expenses 10,658 13,458 Development, construction and management services revenues (11,427 ) (14,256 ) Total NOI $12,961   $10,043   Same store properties NOI5 $10,209 $10,043 New properties NOI5 $2,752                

1 Includes consolidated results from the operations at The Grove at Moscow and The Grove at Valdosta, which were included in equity in earnings (loss) of unconsolidated entities prior to the Company's acquisition of its jointventure partner's interest in the properties. The Company's acquisition of The Grove at Moscow and The Grove at Valdosta was completed on July 6, 2012.

2 For three months ended March 31, 2013, includes 14 days of results from the Company’s initial investment in Copper Beech on March 18, 2013, which equates to an effective 25.3% ownership interest. 3 For three months ended March 31, 2013, includes $334 of Copper Beech-related transaction costs, $51 of Toledo, OH-related transaction costs and a $112 fair value adjustment of Copper Beech’s debt.

4 For three months ended March 31, 2012, includes an approximate $960 non-cash charge primarily related to the write-off of unamortized deferred financing fees associated with construction debt paid-off using proceedsfrom the February 2012 preferred equity offering.

5 "Same store" properties are our wholly-owned operating properties acquired or placed in-service prior to the beginning of the earliest period presented and owned by us and remaining in service through the end of the latestperiod presented or period being analyzed. "New properties" are our wholly-owned operating properties that we acquired or placed in service after the beginning of the earliest period presented or period being analyzed.

Non-GAAP Financial Measures

FFO and FFOA

FFO is a non-GAAP financial measure. 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 U.S. 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. In addition, in October 2011, NAREIT communicated to its members that the exclusion of impairment write-downs of depreciable real estate is consistent with the definition of FFO.

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 of 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) (computed in accordance with U.S. GAAP) as presented in the consolidated financial statements included elsewhere in this document. FFO should not be considered as an alternative to net income (loss) (computed in accordance with U.S. GAAP) as an indicator of our properties’ financial performance or to cash flow from operating activities (computed in accordance with U.S. 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.

FFOA is a non-GAAP financial measure. In addition to FFO, we believe it is also a meaningful measure of our performance to adjust FFO to exclude the write-off of unamortized deferred financing fees, transaction costs and fair value debt adjustments on equity method investments. Excluding the write-off of unamortized deferred financing fees, transaction costs and fair value debt adjustments on equity method investments adjusts FFO to be more reflective of operating results prior to capital replacement or expansion, debt service obligations or other commitments and contingencies.

NOI

NOI is a non-GAAP financial measure. We calculate NOI by adding back (or subtracting from) to net income (loss) attributable to common stockholders the following expenses or charges: income tax expense, interest expense, equity in earnings (loss) of unconsolidated entities, preferred stock dividends, depreciation and amortization, transaction costs, ground lease expense, general and administrative expense and development, construction and management services expense. The following income or gains are then deducted from net income (loss) attributable to common stockholders, adjusted for add backs of expenses or charges: other income, change in fair value of interest rate derivatives and development, construction and management services revenue. We believe these adjustments help provide a performance measure, when compared year over year, that illustrates the operating results of our wholly-owned properties and captures trends in student housing rental and services income and student housing operating expenses.

NOI excludes multiple components of net income (loss) (computed in accordance with U.S. GAAP) 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 of operations. Therefore, the utility of NOI as a measure of our performance is limited. Additionally, other companies, including other equity REITs, may use different methodologies for calculating NOI and, accordingly, NOI as disclosed by such other companies may not be comparable to NOI published herein. Therefore, we believe that in order to facilitate a clear understanding of our historical operating results, NOI should be examined in conjunction with net income (loss) (computed in accordance with U.S. GAAP) as presented in the consolidated financial statements included elsewhere in this document. NOI should not be considered as an alternative to net income (loss) (computed in accordance with U.S. GAAP) as an indicator of our properties’ financial performance or to cash flow from operating activities (computed in accordance with U.S. 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.