- 3,756 Beds Added in Six1 New Grove Properties
and a Phase II Expansion Using Unique Vertical Platform –
- Provides Pipeline Update Showing Solid Growth
Prospects –
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
and nine months ended September 30, 2013.
Highlights
Operations
- 15.8% increase in Funds From Operations
Adjusted (“FFOA”) per diluted share, from $0.19 for the three
months ended September 30, 2012 to $0.22 for the three months ended
September 30, 2013
- 7.3% increase for the nine months ended
September 30, 2013
- Same store net operating income (“NOI”)
for the quarter was $9.4 million driven primarily by lower revenues
as a result of the timing of a slower lease-up in August and
September
- 92.1% leased at all 45 Grove and 28
Copper Beech student housing properties2 for the 2013/2014 academic
year as of September 30, 2013
Growth
- Six new Grove properties and phase II
of The Grove at Flagstaff were delivered on-schedule for opening in
the 2013/2014 academic year1
- Based on in-place rate and occupancy,
this group of developments is expected to achieve between a 7.5%
and 8.0% weighted average yield
- Continued progress on six previously
announced developments/redevelopments for 2014/2015 academic year
delivery
- Announced two new developments for the
2014/2015 academic year:
- One wholly-owned project – The Grove at
Mt. Pleasant, MI
- One Copper Beech joint venture project
at Ames, IA
- Entered into an amendment to the
purchase and sale agreement to acquire Copper Beech
1 On July 14, 2013, the Company experienced a fire at its
development at The Grove at Pullman, WA. The Company has reached a
resolution with its insurance provider and while no assurances can
be given, after taking into account its existing insurance
coverage, it believes that the damages sustained as a result of
this fire will not have a material adverse effect on its financial
position or results of operations.
2 The Company entered into an amendment to the purchase and sale
agreement on September 30, 2013 that, subject to receipt of
required third-party lender consents, will enable the Company to
acquire a 67% ownership interest in 30 properties, while deferring
ownership in 7 properties until the Company exercises future
purchase options. In conjunction with the amendment and subsequent
to quarter-end, the $31.7 million loan was repaid by Copper Beech
and Campus Crest subsequently reinvested $16.2 million into the 30
properties.
Capital
- Subsequent to September 30, 2013, the
Company raised approximately $95 million through the re-opening of
its 8.0% Series A cumulative redeemable preferred stock and
approximately $100 million through an offering by its operating
partnership of 4.75% senior exchangeable notes due 2018
Financial Results for the Three and Nine Months Ended
September 30, 2013
For the three and nine months ended September 30, 2013, Funds
From Operations (“FFO”) and FFOA are shown in the table below.
FFO/FFOA Three Months Ended September
30,
Per share -
diluted
Per share - diluted ($mm, except per share)
2013
2012 FFO $14.1 $0.22 $7.4 $0.19 FFOA1 $14.0 $0.22
$7.4 $0.19
Nine Months Ended September 30,
Per share -
diluted
Per share - diluted
($mm, except per share)
2013 2012 FFO
$35.0 $0.59 $17.7 $0.52 FFOA1 $34.6 $0.59 $18.6 $0.55
1 Includes eliminations for the write-off
of unamortized deferred financing fees, transaction costs, and the
fair value adjustments of Copper Beech debt as reflected in the Q3
2013 supplemental analyst package.
A reconciliation of net income attributable to common
stockholders to FFO and to FFOA can be found at the end of this
release.
For the three months ended September 30, 2013, the Company
reported total revenues of $40.2 million and net income
attributable to common stockholders of $3.7 million, compared to
$34.5 million and $7.8 million, respectively, in the same period in
2012. For the nine months ended September 30, 2013, the Company
reported total revenues of $114.5 million and net income
attributable to common stockholders of $7.5 million, compared to
$102.8 million and $5.5 million, respectively, in the same period
in 2012.
“As we begin our fourth year as a public REIT, we remain excited
about the opportunities ahead of us. We believe we have created
significant value in our vertically integrated platform and
multi-brand strategy,” commented Ted W. Rollins, Chairman and Chief
Executive Officer of Campus Crest. “We believe we can drive
internal growth through our operational excellence initiative,
while development will continue to be our primary external growth
driver as our platform should continue to provide attractive
returns. Once again, based on our current occupancies, we expect to
achieve our yield targets on our newest deliveries.”
Operating Results
For the three and nine months ended September 30, 2013, results
for wholly-owned same store properties were as follows:
Same Store Results Three Months Ended
September 30, Nine Months Ended September 30, ($mm)
2013 2012 Change 2013
2012 Change Number of Assets 27 27 27 27
Number of Beds 13,884 13,884 13,884 13,884 Occupancy 90.1% 91.5%
-140 bps 90.9% 90.6% 30 bps Total Revenues $18.8 $19.1 -1.6% $56.9
$56.2 1.3% NOI $9.4 $9.8 -4.2% $29.9 $29.5 1.3% NOI Margin 50.3%
51.6% -130 bps 52.5% 52.5% 0 bps
The decrease in same-store NOI for the three months ended
September 30, 2013 was a result of the timing of slower lease-up in
August and September.
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 located at
http://investors.campuscrest.com/.
Portfolio Information
As of September 30, 2013, the Company owned interests in 89
properties totaling ~47,000 beds across North America. However, on
September 30, 2013, the Company entered into an amendment to
restructure the acquisition of Copper Beech, which is described in
detail later in this release. The table below presents data for the
Company's operating portfolio giving effect to the amendment to the
acquisition of the Copper Beech Portfolio. In addition, the table
below excludes nine developments and redevelopments.
Final Occupancy Summary
2013-2014 2012-2013
Rental Rate Property Properties Unit
Beds Signed1 %
Signed1 % Change
Change(2)
Operating Wholly-Owned 30 5,832 15,768 14,840 94.1 %
14,632 92.8 % 1.3 % 2.4 % Columbia, MO / Statesboro, GA 2 416
1,168 837 71.7 % 1,168 100.0 % -28.3 %
-10.3 %
Total Wholly-Owned Operating 32 6,248
16,936 15,677 92.6 % 15,800
93.3 % -0.7 % 1.7 %
Total Joint Venture Operating 7 1,422
3,948 3,272 82.9 % 3,107
78.7 % 4.2 % 1.1 %
Total Operating 39
7,670 20,884 18,949 90.7
% 18,907 90.5 % 0.2
% 1.6 % 2013 Deliveries
Wholly-Owned 3 704 1,972 1,786 90.6 % n/a n/a n/a n/a Joint Venture
3 664 1,784 1,436 80.5 % n/a n/a n/a
n/a
Total 2013 Deliveries 6
1,368 3,756 3,222 85.8 %
n/a n/a n/a n/a Total Copper
Beech Portfolio3 28 5,047 13,177
12,666 96.1 % n/a n/a n/a
n/a
Total Portfolio
73 14,085 37,817 34,837
92.1 % 18,907 90.5 %
1.6 % n/a 1 As of
September 30, 2013 and September 30, 2012, respectively. 2 Rental
Rate change for the 2013-2014 academic year over the 2012-2013
academic year achieved rental RevPOB. 3 The Company entered into an
amendment to the purchase and sale agreement on September 30, 2013
that, subject to receipt of required third-party lender consents,
will enable the Company to acquire a 67% ownership interest in 30
properties, while deferring ownership in 7 properties until the
Company exercises future purchase options. In conjunction with the
amendment and subsequent to quarter-end, the $31.7 million loan was
repaid by Copper Beech and Campus Crest subsequently reinvested
$16.2 million into the 30 properties.
- All 45 Grove properties were built,
renovated or are being built by the Company or its predecessor. The
median distance to campus of the Grove portfolio is 0.5 miles with
an average age of 3.6 years as of September 30, 2013.
- The 28 Copper Beech student housing
properties were built or renovated by Copper Beech. The median
distance to campus of the Copper Beech portfolio is 1.2 miles with
an average age of 8.6 years as of September 30, 2013.
On July 14, 2013, the Company experienced a fire at its
development at The Grove at Pullman, WA. The Company has reached a
resolution with its insurance provider and while no assurances can
be given, after taking into account its existing insurance
coverage, it believes that the damages sustained as a result of
this fire will not have a material adverse effect on its financial
position or results of operations.
Development and Acquisition Activity
The Company continues to pursue development opportunities. It
currently is conducting due diligence in approximately 80 markets,
with land identified and under letter of intent or contract in
approximately 30 of these markets for either a Grove, Copper Beech,
or evo project. In addition, the Company believes that additional
redevelopment opportunities in Montreal exist.
2013/2014 Academic Year
Deliveries
The Company delivered 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 were
approximately $184.7 million. These investments are 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 $83.2 million. The Company owns 20.0% of
the joint venture projects, with HSRE owning the balance
2014/2015 Academic Year
Deliveries
The Company will deliver eight new projects for the 2014/2015
academic year, which now includes two additional projects that
commenced construction during the quarter ended September 30, 2013.
Highlights for these two projects include:
- The Grove at Mt. Pleasant:
Approximately 0.9 miles from Central Michigan University, with a
total enrollment of over 20,000 students, this four-story
prototypical Grove community will consist of 584 beds. Situated
along Broomfield Street, residents will have easy access to campus
and enjoy the amenities and lifestyle programming offered at this
property, which will be the first resort style student housing
community in Mount Pleasant.
- Copper Beech at Ames: Located
0.3 miles from campus and in close proximity to the Grove at Ames,
the property will be the first development in which the Company
will complement the Company's existing Grove-branded property in
the market.
Details of the Company’s 2014/2015 academic year deliveries are
as follows:
2014/2015 Academic Year
Deliveries
Project Ownership Primary University
Served Total Enrollment1 Miles to Campus
Units Total Beds Est. Cost ($mm) CCG Share
of Total Cost Wholly-Owned The Grove at
Slippery Rock 100% Slippery Rock University 8,559 0.3 201 603 $29.9
$29.9 The Grove at Grand Forks 100% University of North
Dakota 15,250 0.1 224 600 28.2 $28.2 The Grove at Mt.
Pleasant, MI 100% Central Michigan University 20,504 0.9 216 584
24.1 $24.1
Average/Median/Sub Total2 14,771
0.3 641 1,787 $82.2 $82.2
Joint Venture The Grove at Greensboro3 30%
University of North Carolina Greensboro 18,172 0.5 216 584 27.3
$8.2 The Grove at Louisville3 30% University of Louisville
22,293 0.1 252 654 38.3 $11.5 Copper Beech at Ames4 67% Iowa
State University 30,748 0.3 214 636 $30.2 $20.3 evo at Cira
Centre South5 30% University of Pennsylvania 24,725 OC 344 850
158.5 $47.6 Drexel University 25,500 0.2
evo à Square Victoria6, 7
20% McGill University 38,779 0.6 711 1,200 90.0 $18.0 Concordia
University 37,835 0.8 L’École de Technologie Supérieure (ÉTS) 6,160
0.3
Average/Median/Sub Total2 25,527
0.3 1,737 3,924 $344.3 $105.6
Average/Median/Total2 22,593
0.3 2,378 5,711 $426.5 $187.8
Note: OC denotes on campus
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's joint venture partner on the
subject project is Harrison Street Real Estate Capital. 4 The
Company's joint venture partner on the subject project is Copper
Beech. 5 The Company's joint venture partner on the subject project
is Harrison Street Real Estate Capital and Brandywine Realty Trust.
6 The Company's joint venture partner on the subject project is
Beaumont Partners SA.
7 Additional details of the redevelopment
of the Delta Centre-Ville Hotel are expected to be announced in
2014. Current figures are estimates.
Redevelopment
The Company expects to provide further details on the
redevelopment of the Toledo, OH and evo à Square Victoria property
later in the 2013/2014 academic year.
Copper Beech Acquisition
On September 30, 2013, the Company entered into an amendment to
the purchase and sale agreement to acquire Copper Beech. Highlights
of the amendment follow:
- Provides Campus Crest the ability to
defer the first purchase option until August 2014
- Original planned investment of 48% in
37 properties is restructured to enable the Company to acquire 67%
in 30 properties and eliminate ownership in seven lower leased
properties
- The Company has the option, but not the
obligation, to purchase interests in the seven properties in the
future
- 30 properties include 28 operating
student housing properties, a land parcel and the Copper Beech
corporate headquarters
- Repayment by Copper Beech to the
Company of $31.7 million loan originally made in March 2013
- $16.2 million reinvested into Copper
Beech; balance of $15.5 million increases the Company’s
liquidity
- Accelerates day-to-day management of
Copper Beech operations to the Company in 2014 from 2015 if the
Company exercises the first purchase option
- No change in transaction economics,
outside of the $4 million for consideration for the amendment
Summary of Copper Beech
Amendment
Investment Dollars ($mm) Timing
Investment
Dollars
Debt
Paydown
Total
Investment
Cumulative Direct
Equity Interest
Cash Flow Stage 1 30 Properties n/a $143.7 1
$106.7 $250.4 67% $13 preferred & 67% 2 7 Properties n/a $0.0
$0.0 $0.0 0% 0% Total $143.7 $106.7 $250.4 n/a n/a
Purchase Option 1 30 Properties March 18 - August 18,
2014 $93.5 $21.0 $114.5 85% 100% 7 Properties $16.9
$0.0 $16.9 18% 33% Total $110.4 $21.0 $131.4 n/a n/a
Purchase Option 2 37 Properties Through March 2015 $100.7 3
$19.0 $119.7 88.9% 100%
Purchase Option 3 37
Properties Through March 2016 $53.4 4 $0.0 $53.4 100% 100%
Total $408.2 $146.7
$554.9 100% 100% 1 Includes
$16.2 million of loan repayment proceeds and $4 million as
consideration for entering into the amendment. 2 Per original
agreement, CCG entitled to first $13 million of cash flow in year
1; per subject amendment, CCG is entitled to 67% of residual cash
flow after preferred. 3 Includes $10.7 million originally part of
the loan that will be repaid by Copper Beech. 4 Includes $4.8
million originally part of the loan that will be repaid by Copper
Beech.
Completion of the amendment is subject to receipt of required
lender consents. The Company expects to obtain such consents during
the fourth quarter of 2013 or early 2014, although there can be no
assurance as to the timing. As of September 30, 2013, the Company
held an effective 47.2% interest in the entire Copper Beech
portfolio.
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 September 30, 2013 follow:
Capital Structure and Debt
Summary
($000s)
Closing common
stock price at September 30, 2013
$10.80 Common stock
63,792 Operating partnership units 435 Restricted stock 719 Total
shares and units outstanding
64,946 Total equity
market value $701,412 Total preferred equity outstanding 57,500
Total consolidated debt outstanding 487,759 Total market
capitalization
$1,246,671 Debt to total market
capitalization
39.1% Debt to gross assets1
37.5%
Total number of unencumbered operating properties2
20
Weighted Average Principal % of
Total Average Years to Wholly Owned
Debt3, 4 Outstanding Principal Outstanding
Interest Rate Maturity Fixed rate
mortgage loans $165,846 34.0% 4.95% 5.7 Construction loans 74,725
15.3% 2.67% 1.3 Variable rate credit facility 210,500 43.2% 2.38%
3.3 Other debt5 36,688 7.5% 3.03% 1.4
Total/Weighted Average $487,759 100.0%
3.35% 3.6 1 Gross assets is defined as
total assets plus accumulated depreciation, as reported in the
Company's September 30, 2013 consolidated balance sheet. 2 Pro
forma for the October 2013 capital raise and subsequent paydown of
the 2012 wholly-owned deliveries, the number of unencumbered
properties will be 23.
3 Excludes $128.5 million of debt
associated with HSRE joint ventures. The Company is the
guarantor of these loans.
4 On September 30, 2013, the Company entered into an amendment to
the purchase and sale agreement with Copper Beech that, subject to
receipt of required third-party lender consents, will enable the
Company to acquire a 67% ownership interest in 30 properties, while
deferring ownership in 7 properties until the Company exercises
future purchase options. In conjunction with the amendment and
subsequent to quarter-end, the $31,700 loan was repaid by Copper
Beech and Campus Crest subsequently reinvested $16,200 into the 30
properties. Debt applicable to Copper Beech is excluded from above.
5 Includes a $33,995 unsecured loan that helped facilitate the
Company's recent acquisition in Montreal, Canada. The Company and
its joint venture partner intend to obtain a secured acquisition
and development loan in 2013 to repay this note and fund the
redevelopment of the Montreal project.
As of September 30, 2013, the Company had not sold any shares
under its $100 million At-the-Market common equity offering
program.
Subsequent to quarter-end, the Company raised approximately $100
million through an issuance by its operating partnership of 4.75%
exchangeable senior notes due 2018 and approximately $95 million
through the re-opening of the Company's 8.0% Series A cumulative
redeemable preferred stock. Both transactions closed on October 9,
2013.
Dividends
Q3 2013
On July 22, 2013, the Company announced that its Board of
Directors declared its third quarter 2013 common stock dividend of
$0.165 per share. The dividend was paid on October 9, 2013 to
stockholders of record as of September 25, 2013.
The Board of Directors also declared a cash dividend of $0.50
per Series A Cumulative Redeemable Preferred Share for the third
quarter of 2013. The preferred share dividend was paid on October
15, 2013 to stockholders of record as of September 25, 2013.
Q4 2013
On October 22, 2013, the Company announced that its Board of
Directors declared its fourth quarter 2013 common stock dividend of
$0.165 per share. The dividend is payable on January 8, 2014 to
stockholders of record as of December 23, 2013.
The Board of Directors also declared a cash dividend of $0.50
per Series A Cumulative Redeemable Preferred Share for the fourth
quarter of 2013. The preferred share dividend is payable on January
15, 2014 to stockholders of record as of December 23, 2013.
2013 Earnings Guidance and Outlook
The Company is tightening its guidance range for full year 2013
FFOA from $0.82 to $0.88 per fully diluted share to $0.80 to $0.82
per fully diluted share based on management’s current estimates for
the fourth quarter, including the impact of the preferred stock and
exchangeable note offering in October 2013 and subsequent debt
repayment. The midpoint of FFOA guidance represents an approximate
8% increase over 2012.
The Company's guidance 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 and other acquisitions and the
mark-to-market adjustment of the Copper Beech debt. Additionally,
it excludes the potential impact of any asset dispositions.
Conference Call Details
The Company will host a conference call on Thursday, October 31,
2013, at 9:00 a.m. (EST) 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 10000651. The replay will be
available until November 7, 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/. A recording of the call will
also be available on the Company's website following the call.
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 Investors section of the
Company’s web site at http://www.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 markets. Pro forma
for the Copper Beech restructure, the Company has ownership
interests in 82 student housing properties and over ~44,000 beds
across North America, of which 74 are operating and 8 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 three 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. The evo brand provides urban students with a
luxury student housing option with all the conveniences of city
living. 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 FFOA 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) September 30,2013
December 31,2012
Assets
Investment in real estate, net: Student housing properties $
771,467 $ 669,387 Accumulated depreciation (115,817 ) (97,820 )
Development in process 69,023 50,781
Investment in real estate, net 724,673 622,348 Investment in
unconsolidated entities1 323,268 22,555 Cash and cash equivalents
22,835 5,970 Restricted cash 2 8,169 3,902 Student receivables, net
3,625 2,193 Notes receivable3 31,700 - Cost and earnings in excess
of construction billings 32,749 23,077 Other assets, net
37,733 16,275
Total assets $ 1,184,752
$ 696,320
Liabilities and equity
Liabilities: Mortgage and construction loans $ 240,571 $ 218,337
Line of credit and other debt 247,188 75,375 Accounts payable and
accrued expenses 57,297 45,634 Construction billings in excess of
cost and earnings 1,799 49 Other liabilities 15,423
12,023 Total liabilities 562,278
351,418 Equity: Preferred stock $ 23 $ 23 Common stock 645
386 Additional common and preferred paid-in capital 678,505 377,180
Accumulated deficit and distributions (61,510 ) (37,047 )
Accumulated other comprehensive loss 88 (58 )
Total stockholders' equity 617,751 340,484 Noncontrolling interests
4,723 4,418 Total equity 622,474
344,902
Total liabilities and equity $
1,184,752 $ 696,320
1 As of September 30, 2013,
includes the Company’s investment in Copper Beech equating to an
effective 47.2% ownership interest. 2 As of September 30, 2013,
includes approximately $3,544 of cash held in escrow for the Copper
Beech transaction. 3 As of September 30, 2013, includes the
Company’s $31,700 loan made to existing investors in Copper Beech.
In conjunction with the amendment to the purchase and sale
agreement, the $31,700 loan was repaid subsequent to quarter-end.
CAMPUS CREST COMMUNITIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in $000s, except per share data)
Three Months Ended September 30, Nine
Months Ended September 30,
2013(1)
2012(1)
$ Change
2013(1)
2012(1)
$ Change
Revenues: Student housing rental $ 24,496 $ 21,449 $
3,047 $ 70,960 $ 57,160 $ 13,800 Student housing services 972 934
38 2,934 2,430 504 Development, construction and management
services 14,778 12,103 2,675
40,573 43,162 (2,589 )
Total revenues 40,246 34,486 5,760 114,467 102,752 11,715
Operating expenses: Student housing operations 11,381 10,123
1,258 33,438 27,631 5,807 Development, construction and management
services 14,028 11,374 2,654 38,343 40,260 (1,917 ) General and
administrative 2,424 1,972 452 8,076 6,517 1,559 Transaction costs2
247 - 247 835 - 835 Ground leases 54 54 - 162 163 (1 ) Depreciation
and amortization 6,126 5,799 327
19,224 17,528 1,696
Total operating expenses 34,260 29,322 4,938 100,078
92,099 7,979 Equity in earnings of unconsolidated entities3, 4
1,302 86 1,216
3,608 283 3,325
Operating
income 7,288 5,250 2,038
17,997 10,936 7,061
Nonoperating income (expense): Interest expense, net5
(3,091 ) (2,623 ) (468 ) (8,764 ) (8,395 ) (369 ) Change in fair
value of interest rate derivatives - (57 ) 57 (73 ) (160 ) 87 Other
income6 696 6,554 (5,858 )
1,494 6,479 (4,985 )
Total
nonoperating expense, net (2,395 ) 3,874
(6,269 ) (7,343 ) (2,076 ) (5,267 )
Net income before income tax benefit (expense) 4,893 9,124
(4,231 ) 10,654 8,860 1,794 Income tax benefit (expense) (40
) (74 ) 34 306 (330 )
636
Net income (loss) 4,853 9,050 (4,197 )
10,960 8,530 2,430 Net income (loss) attributable to noncontrolling
interests 26 61 (35 ) 51 38 13 Dividends on preferred stock
1,150 1,150 - 3,450
2,964 486
Net income (loss)
attributable to common stockholders $ 3,677 $ 7,839
($4,162 ) $ 7,459 $ 5,528 $ 1,931
Net income (loss) per share attributable to common
stockholders - Basic and Diluted: $ 0.06 $ 0.20 $ 0.13 $ 0.16
Weighted average common shares outstanding:
Basic 64,518 38,479 58,461 33,514
Diluted 64,953
38,915 58,896 33,950
1 Includes consolidated results from the operations at The
Grove at Moscow and The Grove at Valdosta, which were included in
equity in earnings of unconsolidated entities prior to the
Company'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 the
three months ended September 30, 2013, includes $247 of Copper
Beech-related transaction costs. For nine months ended September
30, 2013, includes $784 of Copper Beech-related transaction costs
and $51 of Toledo, OH-related transaction costs. 3 For the three
and nine months ended September 30, 2013, includes results from the
Company’s investment in Copper Beech. The Company made its initial
investment on March 18, 2013 and has subsequently made additional
investments, bringing its effective ownership interest as of
September 30, 2013 to ~47.2%. The Company, however, entered into an
amendment to the purchase and sale agreement on September 30, 2013
that, subject to receipt of required third-party lender consents,
will enable the Company to acquire a 67% ownership interest in 30
properties, while deferring ownership in 7 properties until the
Company exercises future purchase options. In conjunction with the
amendment and subsequent to quarter-end, the $31,700 loan was
repaid by Copper Beech and Campus Crest subsequently reinvested
$16,200 into the 30 properties.
4 For the three months and nine months
ended September 30, 2013, includes $906 in transaction costs
related to evo à Square Victoria.
5 For the nine months ended September 30, 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 proceeds from the February 2012 preferred
equity offering. 6 For the three and nine months ended September
30, 2013, includes interest income from the 8.5%, $31,700 loan made
to existing investors in Copper Beech on March 18, 2013. In
conjunction with the amendment to the purchase and sale agreement
and subsequent to quarter-end, the $31,700 loan was repaid by
Copper Beech.
CAMPUS CREST COMMUNITIES
RECONCILIATION OF NET INCOME (LOSS)
ATTRIBUTABLE TO COMMON STOCKHOLDERS TO FUNDS FROM OPERATIONS
("FFO") & NET OPERATING INCOME ("NOI") (unaudited) (in
$000s, except per share data) Three
Months Ended September 30, Nine Months Ended September
30,
2013(1)
2012(1)
$ Change
2013(1)
2012(1)
$ Change
Net income (loss) attributable to common stockholders $
3,677 $ 7,839 ($4,162 ) $ 7,459 $ 5,528 $ 1,931 Net income (loss)
attributable to noncontrolling interests 26 61 (35 ) 51 38 13 Gain
on purchase of joint venture properties2 - (6,554 ) 6,554 - (6,554
) 6,554 Real estate related depreciation and amortization 5,886
5,726 160 18,593 17,319 1,274 Real estate related depreciation and
amortization - unconsolidated entities 4,487
366 4,121 8,917 1,353
7,564
FFO available to common shares and OP
units3, 4, 5
14,076 7,438 6,638
35,020 17,684 17,336 Elimination of
transactions costs 1,153 - 1,153 1,741 - 1,741 Elimination of FV
adjustment of CB debt (1,220 ) - (1,220 ) (2,165 ) - (2,165 )
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 $ 14,009 $
7,438 $ 6,571 $
34,596 $ 18,644 $
15,952 FFO per share - diluted3, 4, 5 $ 0.22 $
0.19 $ 0.03 $ 0.59 $ 0.52 $ 0.07 FFOA per share - diluted $ 0.22 $
0.19 $ 0.03 $ 0.59 $ 0.55 $ 0.04 Weighted average common shares and
OP units outstanding - diluted 64,953 38,915 58,896 33,950
Three Months Ended September
30,
Nine Months Ended September 30, 2013(1)
2012(1) 2013(1) 2012(1)
Net income (Loss) attributable to common stockholders
$ 3,677 $ 7,839 $ 7,459 $ 5,528 Net income (Loss) attributable to
noncontrolling interests 26 61 51 38 Preferred stock dividends
1,150 1,150 3,450 2,964 Income tax benefit (expense) 40 74 (306 )
330 Other income (expense)2 (696 ) (6,554 ) (1,494 ) (6,479 )
Change in fair value of interest rate derivatives - 57 73 160
Interest expense 3,091 2,623 8,764 8,395 Equity in earnings of
unconsolidated entities (1,302 ) (86 ) (3,608 ) (283 ) Depreciation
and amortization 6,126 5,799 19,224 17,528 Ground lease expense 54
54 162 163 General and administrative expense 2,424 1,972 8,076
6,517 Transaction costs 247 - 835 - Development, construction and
management services expenses 14,028 11,374 38,343 40,260
Development, construction and management services revenues
(14,778 ) (12,103 ) (40,573 ) (43,162 )
Total NOI $ 14,087 $
12,260 $ 40,456 $
31,959 Same store properties NOI6 $ 9,439 $ 9,849 $
29,868 $ 29,472 New properties NOI6 $ 4,142 $ 2,411 $ 9,783 $ 2,487
The Grove at Pullman & Toledo NOI7 $ 506 $ 0 $ 805 $ 0
1 Includes consolidated results
from the operations at The Grove at Moscow and The Grove at
Valdosta, which were included in equity in earnings of
unconsolidated entities prior to the Company'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 the three and nine months ended
September 30, 2012, includes a $6,554 gain from the purchase of our
joint venture partner's interest in The Grove at Valdosta and The
Grove at Moscow. 3 For the three and nine months ended September
30, 2013, includes results from the Company’s investment in Copper
Beech, including interest income from the 8.5%, $31,700 loan made
to existing investors in Copper Beech. The Company made its initial
investment on March 18, 2013 and has subsequently made additional
investments, bringing its effective ownership interest as of
September 30, 2013 to ~47.2%. The Company, however, entered into an
amendment to the purchase and sale agreement on September 30, 2013
that, subject to receipt of required third-party lender consents,
will enable the Company to acquire a 67% ownership interest in 30
properties, while deferring ownership in 7 properties until the
Company exercises future purchase options. In conjunction with the
amendment and subsequent to quarter-end, the $31,700 loan was
repaid by Copper Beech and Campus Crest subsequently reinvested
$16,200 into the 30 properties. 4 For the three months ended
September 30, 2013, includes an $1,220 fair value adjustment of
Copper Beech’s debt. For nine months ended September 30, 2013,
includes $784 of Copper Beech-related transaction costs, $51 of
Toledo, OH-related transaction costs and a $2,165 fair value
adjustment of Copper Beech’s debt. 5 For the nine months ended
September 30, 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
proceeds from the February 2012 preferred equity offering. 6 "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 latest period 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.
7 For the three and nine months ended
September 30, 2013, includes NOI contribution from the operations
of The Grove at Pullman and the Toledo, OH-redevelopment, as well
as business interruption insurance proceeds from The Grove at
Pullman.
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 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: equity
in earnings of unconsolidated entities, income tax benefit, 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.
Campus Crest Communities, Inc.Thomas Nielsen, Investor
Relations704-496-2571Investor.Relations@CampusCrest.com
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