CCG Campus Crest Communities, Inc.

Campus Crest Communities, Inc. (NYSE:CCG) (the “Company”), an owner and manager of high-quality student housing properties, today announced additional changes in senior management, as well as its intent to acquire Copper Beech assets, discontinue its construction and development business, reduce joint venture exposure and sell non-core assets as part of the Company’s release of financial results for the three months ended September 30, 2014.

Highlights

Change in Management

• Effective immediately, Ted W. Rollins, Chairman and Chief Executive Officer, has resigned and will no longer be actively involved with the Company. The Independent Directors of the Board of Directors of the Company have elected Richard Kahlbaugh, lead independent director, as Executive Chairman and Interim CEO. It is intended that Mr. Kahlbaugh will guide the Company through the completion of its strategic repositioning.
• Effective immediately, Donnie Bobbitt has resigned and will no longer serve as the Company’s Chief Financial Officer. Mr. Bobbitt will remain as a transition advisor to the Company reporting to Mr. Kahlbaugh. Scott Rochon has been named acting Chief Financial Officer in addition to his duties as the Company’s Chief Accounting Officer.
• Aaron Halfacre and Angel Herrera remain as the Company’s Chief Investment Officer and Chief Operating Officer, respectively.

Copper Beech Transaction

• Entered into an amendment to the Copper Beech purchase agreement to acquire remaining equity interests in 32 properties in the Copper Beech portfolio; transaction expected to generate approximately $20 million of incremental net operating income (“NOI”) at an incremental purchase cap rate of 7.3% based on current share price
• Total consideration of approximately $60.3 million cash, approximately $140.6 million of debt assumption and the issuance of approximately 12.4 million operating partnership units (“OP units”)
• OP units to be issued at premium to the current share price and above consensus net asset value
• Achieves full operational control while also providing scale, diversification and accretion
• Target closing of December 31, 2014

Strategic Repositioning

• Discontinuing all construction and development to simplify the business model and focus on organic growth
• Identifying cost savings at the property and corporate level to enhance profitability
• Reducing joint venture exposure through select asset dispositions to reduce indebtedness and increase liquidity
• Exploring strategic options for our projects in Montreal, to include capital solutions to reduce exposure, concurrent with ongoing efforts to drive occupancy
• Marketing development pipeline assets for sale to increase liquidity and simplify balance sheet

"Today’s announcement exemplifies our commitment to our investors. Not only are we completing the Copper Beech transaction on attractive terms, we have also taken the necessary actions to deliver change," declared the Independent Directors of the Board of Directors of the Company. "After a thorough and deliberate process, the Board of Directors of the Company have accepted the resignations of Mr. Rollins and Mr. Bobbitt. We thank them for their years of service and wish them the very best in their future endeavors.”

“The Board of Directors will be working closely with Aaron, Scott and Angel as we continue the strategic repositioning of Campus Crest,” noted Mr. Kahlbaugh. “As previously stated, our initiatives for change include a focus on operations to deliver organic growth, instilling a disciplined approach to capital allocation, manifesting meaningful cost savings across our organization and bringing about thoughtful balance sheet improvements. We look forward to providing more information in the weeks and months ahead.”

“We are proactively taking the steps necessary to restore investor confidence and are intently focused on improving shareholder value. We thank our investors for their continued support,” said Aaron Halfacre.

Financial Results for the Three and Nine Months Ended September 30, 2014

For the three and nine months ended September 30, 2014, Funds From Operations (“FFO”) and FFOA are shown in the table below.

FFO/FFOA                 Three Months Ended September 30, Nine Months Ended September 30, ($mm, except per share)   2014  

Per share -diluted

  2013  

Per share -diluted

  2014  

Per share -diluted

  2013  

Per share -diluted

  FFO ($118.9) ($1.84) $14.1 $0.22 ($96.2) ($1.49) $35.0 $0.60 FFOA1 $9.7 $0.15 $13.1 $0.20 $28.2 $0.44 $31.9 $0.55                                     1 Includes eliminations for the write-off of transaction costs, the fair value adjustments of Copper Beech debt, restructuring related charges, asset impairments, and other charges as reflected in the Q3 2014 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, 2014, the Company reported total revenues of $28.3 million and net income (loss) attributable to common stockholders of ($130.0) million as a result of the Company’s strategic repositioning, compared to $23.3 million and $3.7 million, respectively, in the same period in 2013. Please see Balance Sheet Impairments and Condensed Consolidated Statement of Operations for further details below.

Operating Results

For the three and nine months ended September 30, 2014, results for wholly owned same store properties were as follows:

Same Store Results   Three Months Ended September 30,   Nine Months Ended September 30, ($mm)   2014   2013   Change   2014   2013   Change Number of Assets 28   28   28   28   Number of Beds 14,920 14,920 14,920 14,920 Occupancy 90.0% 91.5% (150) bps 90.2% 92.5% (230) bps Total Revenues $20.9 $21.1 (1.1%) $62.7 $64.1 (2.2%) NOI $10.5 $11.4 (7.8%) $33.5 $35.4 (5.5%) NOI Margin   50.4%   54.1%   (370) bps   53.4%   55.2%   (180) bps  

The year-over-year results reflect the Company’s improved tenant underwriting processes implemented for the 2014/2015 academic leasing year. These improvements are designed to better reflect in-place economic occupancy and minimize quarter-over-quarter volatility on a go-forward basis.

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, 2014, the Company owned interests in 86 properties totaling approximately 46,682 beds across North America. A summary of the leasing for the 2014/2015 academic year follows:

2014/2015 Academic Year Leasing Summary             2013-2014 2014-2015 Rental Rate Category   Properties   Beds   Signed1   %   Actual2   %   Forecast3   %   Change4   Change5 Operating Properties By Ownership Wholly Owned 32 17,476 16,048   91.8%   15,861   90.8% 16,100   92.1% 1.3% 2.0% Joint Venture 9 5,148 4,197 81.5% 4,141 80.4% 4,110 79.8% (0.6%) 2.7% Copper Beech   35   16,647   15,082   90.6%   15,080   90.6%   15,592   93.7%   3.1%   0.2% Total Operating Properties   76   39,271   35,327   90.0%   35,082   89.3%   35,802   91.2%   1.9%   1.3%                                           Total 2014 Deliveries   10   7,411   n/a   n/a   n/a   n/a   3,814   51.5%   n/a   n/a  

Footnotes:

1) Total signed leases as of September 30, 2013, as reported in October 1, 2013, press release

  2) Actual physical occupancy during the 2013/2014 academic year  

3) Forecast 2014/2105 physical occupancy based on leases signed as of September 30, 2014, and projected tenant attrition

  4) Year over year change in occupancy based on actual 2013/2014 and forecast 2014/2015   5) Forecast rental rate change for the 2014-2015 academic year over the 2013-2014 academic achieved rental RevPOB  

Balance Sheet Impairments

The Company’s strategic repositioning resulted in impairments to the balance sheet as of September 30, 2014, and can be broadly associated with the following three categories:

Discontinued development – The Company’s exit from the construction and development business triggered the write-off of unrecoverable pre-development costs and adjustments to the carrying values of land parcels now being held for sale. Other related charges include severance and corporate infrastructure changes.

Reduced joint venture exposure – The Company has recognized impairments to its investments held in underperforming properties within our HSRE joint ventures. Additionally, an impairment of our Montreal joint venture has been taken in recognition that the full value of the investment may not be recoverable.

Effects of not exercising Copper Beech purchase option – A one-time non-cash accounting charge associated with the third quarter 2014 shift in the Company’s pro-rata economic ownership interest in the Copper Beech assets.

A summary of all balance sheet impairments follows:

Balance Sheet Impairments   ($mm)   Adjustment   Impairment of land & predevelopment costs $29,790 Write off of corporate other assets 7,765 Impairment of unconsolidated entities 50,866 Effect of not exercising Copper Beech purchase option 34,048   Total $122,469      

Capital Markets Activity and Liquidity

As of September 30, 2014, the Company had not sold any shares under its $100.0 million At-the-Market common equity offering program. The Company had $18.3 million of cash, $6.2 million of restricted cash and net availability under its revolving credit facility of $70.8 million as of September 30, 2014.

2014 Earnings Guidance and Dividends

Based on the Copper Beech transaction and the strategic repositioning announced today, the Company has withdrawn 2014 earnings guidance to allow sufficient time to complete forecast revisions.

The Company announced that its Board of Directors has declared its intent to lower the common stock dividend upon final review of forecast revisions; the fourth quarter dividend will be announced in December.

Conference Call Details

The Company will host a conference call on Tuesday, November 4, 2014, 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 13594808. The replay will be available until November 11, 2014.

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 owner and manager of high-quality student housing properties located close to college campuses in targeted markets. It has ownership interests in 86 student housing properties with over 46,000 beds across North America. 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 2014 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, December 31,     2014   2013   Assets Investment in real estate, net: Student housing properties $923,531 $716,285 Accumulated depreciation (120,121) (102,356) Development in process 19,802 91,184 Investment in real estate, net 823,212 705,113 Investment in unconsolidated entities1 275,040 324,838 Cash and cash equivalents 18,313 32,054 Restricted cash 2 6,207 32,636 Student receivables, net 2,802 2,825 Cost and earnings in excess of construction billings 24,449 42,803 Other assets, net 46,796 42,410 Total assets $1,196,819 $1,182,679   Liabilities and equity Liabilities: Mortgage and construction loans $279,152 $205,531 Line of credit and other debt 301,122 207,952 Accounts payable and accrued expenses 69,902 62,448 Construction billings in excess of cost and earnings 8 600 Other liabilities 18,768 11,167 Total liabilities 668,952 487,698 Equity: Preferred stock $61 $61 Common stock 648 645 Additional common and preferred paid-in capital 776,605 773,896 Accumulated deficit and distributions (256,377) (84,143) Accumulated other comprehensive loss (1,451) (71) Total stockholders' equity 519,486 690,388 Noncontrolling interests 8,381 4,593 Total equity 527,867 694,981 Total liabilities and equity $1,196,819 $1,182,679           1 As of December 31, 2013, includes the Company’s investment in Copper Beech equating to a 67% effective ownership interest in 30 properties, of which 28 are operating and two are non-operating properties. On August 18, 2014, the Company elected to not exercise the first purchase option and reverted to a 48% interest ownership interest in 35 operating properties. As of September 30, 2014, the Company held a 48% effective interest in 35 operating and two non-operating properties which are unconsolidated and a 48% interest in one consolidated operating property.  

2 As of September 30, 2014, and December 31, 2013, includes approximately $0 and $28,200, respectively, of cash held in escrow from the sale of four wholly-owned Grove-branded student housing properties on December 27, 2013.

              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,     2014   2013   $ Change   2014   2013   $ Change Revenues: Student housing rental $26,985 $22,165 $4,820 $74,256 $64,118 $10,138 Student housing services 1,043 867 176 3,043 2,645 398 Property management services 281 225 56 711 539 172 Total revenues 28,309 23,257 5,052 78,010 67,302 10,708 Operating expenses: Student housing operations 12,368 9,923 2,445 33,728 29,341 4,387 General and administrative1 4,043 2,424 1,619 11,198 8,076 3,122 Impairment of land & predevelopment costs 29,790 - 29,790 29,790 - 29,790 Write-off of corporate other assets 7,765 - 7,765 7,765 - 7,765 Transaction costs2 286 247 39 2,331 835 1,496 Ground leases 120 54 66 357 162 195 Depreciation and amortization 7,035 5,581 1,454 21,269 17,154 4,115 Total operating expenses 61,407 18,229 43,178 106,438 55,568 50,870 Equity in earnings (loss) of unconsolidated entities3,4 635 1,302 (667) 63 3,608 (3,545) Impairment of unconsolidated entities (50,866) - (50,866) (50,866) - (50,866) Effect of not exercising Copper Beech purchase option (34,048) - (34,048) (34,048) - (34,048) Operating income (117,377) 6,330 (123,707) (113,279) 15,342 (128,621) Nonoperating income (expense): Interest expense, net (3,639) (3,091) (548) (9,965) (8,764) (1,201) Other income (expense)5 (41) 696 (737) 129 1,421 (1,292) Total nonoperating expense, net (3,680) (2,395) (1,285) (9,836) (7,343) (2,493) Net income before income tax benefit (expense) (121,057) 3,935 (124,992) (123,115) 7,999 (131,114) Income tax benefit (expense) (1,131) (40) (1,091) (731) 306 (1,037) Income from continuing operations (122,188) 3,895 (126,083) (123,846) 8,305 (132,151) Income (loss) from discontinued operations (5,506) 958 (6,464) (3,191) 2,655 (5,846) Net income (loss) (127,694) 4,853 (132,547) (127,037) 10,960 (137,997) Dividends on preferred stock 3,050 1,150 1,900 9,150 3,450 5,700 Net income (loss) attributable to noncontrolling interests (770) 26 (796) (773) 51 (824) Net income (loss) attributable to common stockholders ($129,974) $3,677 ($133,651) ($135,414) $7,459 ($142,873)   Per share data - basic and diluted: Income (loss) from continuing operations attributable to common stockholders ($1.92) $0.05 ($2.04) $0.08 Income (loss) from discontinued operations attributable to common stockholders ($0.09) $0.01 ($0.05) $0.05 Net income (loss) per share attributable to common stockholders ($2.01) $0.06 ($2.09) $0.13   Weighted average common shares outstanding: Basic 64,770 64,518 64,650 58,461 Diluted 65,204 64,953 65,084 58,896                             1 For three and nine months ended September 30, 2014, includes $720 of severance costs.   2 For the three and nine months ended September 30, 2014, includes $286 and $2,331, respectively, of transaction costs related to Copper Beech, the Montreal investments and other transaction costs. Additionally, for the three and nine months ended September 30, 2013, includes $247 and $835, respectively, of transaction costs related to Copper Beech.  

3 For the three and nine months ended September 30, 2014, and the period from March 18, 2013, to September 30, 2013, includes results from the Company’s investment in Copper Beech. The Company made its initial investment on March 18, 2013, and subsequently made additional investments. On September 30, 2013, the Company entered into an amendment to the purchase and sale agreement that, subject to receipt of required third-party lender consents, enabled the Company to acquire a 67% ownership interest in 28 operating properties, while deferring ownership in seven properties until the Company exercises future purchase options. On August 18, 2014, the Company elected to not exercise the first purchase option and reverted to a 48% interest ownership interest in 35 operating properties. As of September 30, 2014, the Company held a 48% effective interest in 35 operating and two non-operating properties which are unconsolidated and a 48% interest in one consolidated operating property.

  4 For the three and nine months ended September 30, 2014, includes $1,539 and $5,058, respectively, of fair value adjustment related to Copper Beech's debt. For the three and nine months ended September 30, 2013, includes $1,220 and $2,165, respectively, of fair value adjustment related to Copper Beech's debt.   5 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 September 30, 2013 amendment to the purchase and sale agreement, 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"), FUNDS FROM OPERATIONS ADJUSTED ("FFOA") & NET OPERATING INCOME ("NOI") (unaudited)

(in $000s, except per share data)   Three Months Ended September 30, Nine Months Ended September 30,     2014   2013   $ Change   2014   2013   $ Change   Net income (loss) attributable to common stockholders ($129,974) $3,677 ($133,651) ($135,414) $7,459 ($142,873) Net income (loss) attributable to noncontrolling interests (770) 26 (796) (773) 51 (824) Real estate related depreciation and amortization 6,590 5,341 1,249 20,175 16,523 3,652 Real estate related depreciation and amortization - discontinued operations - 545 (545) - 2,070 (2,070) Real estate related depreciation and amortization - unconsolidated entities 5,259 4,487 772 19,856 8,917 10,939 FFO available to common shares and OP units1, 2, 3 (118,895) 14,076 (132,971) (96,156) 35,020 (131,176) Elimination of the following: Transaction costs 286 1,153 (867) 2,331 1,741 590 Impairment of land & predevelopment costs 29,790 - 29,790 29,790 - 29,790 Write off of corporate other assets 7,765 - 7,765 7,765 - 7,765 Severance 720 - 720 720 - 720 Change in valuation allowance for deferred tax asset 1,131 - 1,131 731 - 731 Discontinued operations 5,506 (958) 6,464 3,191 (2,655) 5,846 Impairment of unconsolidated entities 50,866 - 50,866 50,866 - 50,866 Effect of not exercising Copper Beech purchase option 34,048 - 34,048 34,048 - 34,048 FV adjustment of CB debt (1,539) (1,220) (319) (5,058) (2,165) (2,893)

Funds from operations adjusted (FFOA) available to common shares and OP units

$9,678 $13,051 ($3,373) $28,228 $31,941 ($3,713)   FFO per share - diluted1, 2, 3 ($1.84) $0.22 ($2.06) ($1.49) $0.60 ($2.09) FFOA per share - diluted $0.15 $0.20 ($0.05) $0.44 $0.55 ($0.11) Weighted average common shares and OP units outstanding - basic/dilutive4 64,770 64,518 64,650 58,461                             Three Months Ended Nine Months Ended September 30,   September 30,     20141   20131       20141   20131       Net income (Loss) attributable to common stockholders ($129,974) $3,677 ($135,414) $7,459 Net income (Loss) attributable to noncontrolling interests (770) 26 (773) 51 Preferred stock dividends 3,050 1,150 9,150 3,450 Income tax (benefit) expense 1,131 40 731 (306) Other (income) expense 41 (696) (129) (1,348) (Income) loss on discontinued operations 5,506 (958) 3,191 (2,655) Interest expense 3,639 3,091 9,965 8,764 Equity in earnings of unconsolidated entities (635) (1,302) (63) (3,608) Depreciation and amortization 7,035 5,581 21,269 17,154 Ground lease expense 120 54 357 162 General and administrative expense5 4,043 2,424 11,198 8,076 Impairment of unconsolidated entities 50,866 - 50,866 - Effect of not exercising Copper Beech purchase option 34,048 - 34,048 - Impairment of land & predevelopment costs 29,790 - 29,790 - Write-off of corporate other assets 7,765 - 7,765 - Transaction costs 286 247 2,331 835 Property management services (281) (225) (711) (539) Total NOI $15,660 $13,109 $43,571 $37,495 Same store properties NOI6 $10,525 $11,424 $33,461 $35,412 New properties NOI6,7 $4,259 $1,224 $7,743 $1,255 The Grove at Pullman & Toledo NOI8 $876 $461 $2,367 $755                            

1 For the three and nine months ended September 30, 2014, and the period March 18, 2013, to June 30, 2013, includes results from the Company’s investment in Copper Beech. The Company made its initial investment on March 18, 2013, and subsequently made additional investments. On September 30, 2013, the Company entered into an amendment to the purchase and sale agreement that, subject to receipt of required third-party lender consents, enabled the Company to acquire a 67% ownership interest in 28 operating properties, while deferring ownership in seven properties until the Company exercises future purchase options. On August 18, 2014, the Company elected to not exercise the first purchase option and reverted to a 48% interest ownership interest in 35 operating properties. As of September 30, 2014, the Company held a 48% effective interest in 35 operating and two non-operating properties which are unconsolidated and a 48% interest in one consolidated operating property.

  2 For the three and nine months ended September 30, 2014, includes $286 and $2,331, respectively, of transaction costs related to Copper Beech, the Montreal investments and other transaction costs. Additionally, for the three and nine months ended September 30, 2013, includes $247 and $835, respectively, of transaction costs related to Copper Beech.   3 For the three and nine months ended September 30, 2014, includes $1,539 and $5,058, respectively, of fair value adjustment related to Copper Beech's debt. For the three and nine months ended September 30, 2013, includes $1,220 and $2,165, respectively, of fair value adjustment related to Copper Beech's debt.   4 For the three and nine months ended September 30, 2014, the basic shares were used to calculate FFO and FFOA as the dilutive shares would have been anti-dilutive. For the three and nine months ended September 30, 2013, the dilutive shares were used to calculate FFO and FFOA.   5For three and nine months ended September 30, 2014, includes $720 of severance costs.   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 Includes NOI contribution from Copper Beech at Ames. This is a consolidated joint venture.   8 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, impairments, severance, discontinued operations, the effect of not exercising the Copper Beech purchase option, the write-off of development cost and fair value debt adjustments on equity method investments. Excluding the write-off of unamortized deferred financing fees, transaction costs, impairments, severance, discontinued operations, the effect of not exercising the Copper Beech purchase option, the write-off of development cost, 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, 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.Investor Relations:Aaron Halfacre, 704-496-2500Investor.Relations@CampusCrest.com