This summary highlights selected information appearing elsewhere in this prospectus. This prospectus includes information regarding our business and detailed financial data, as well as information about the common stock we are offering. You should read this prospectus in its entirety, including “Risk Factors” and the financial statements and related notes appearing elsewhere in this prospectus, before deciding to purchase our common stock.

 

Our Company

 

Campus Crest Communities, Inc. is a self-managed, self-administered and vertically-integrated developer, builder, owner and manager of high-quality, purpose-built student housing. Prior to this offering, our business was conducted through Campus Crest Group, which is wholly-owned and controlled by Ted W. Rollins, our co-chairman and chief executive officer, and Michael S. Hartnett, our co-chairman and chief investment officer, and certain members of their families. We intend to elect and qualify to be taxed as a real estate investment trust, or “REIT,” for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2010.

 

We believe that we are one of the largest vertically-integrated developers, builders, owners and managers of high-quality, purpose-built student housing properties in the United States based on beds owned and under management. Upon completion of this offering and our formation transactions, we will own interests in 27 student housing properties containing approximately 5,048 apartment units and 13,580 beds. All of our properties are recently built, with an average age of approximately 2.2 years as of August 31, 2010. Twenty-one of our properties will be wholly-owned and six will be owned through a joint venture with HSRE, in which we will own a 49.9% interest. We recently completed construction of three of our joint venture properties, each of which commenced operations in August 2010.

 

Our 21 wholly-owned properties contain approximately:

 

 

Our six joint venture properties contain approximately:

 

 

As of September 15, 2010, our 27 properties had:

 

 

 

We were formed to continue and expand the student housing business of Campus Crest Group, which has been engaged in this business since 2004. Our properties are located in 11 states, primarily in medium-sized college and university markets, which we define as markets located outside of major U.S. cities that have nearby schools generally with overall enrollment of approximately 8,000 to 20,000 students. We believe such markets are underserved and are generally experiencing enrollment growth. All of our properties have been developed, built and managed by Campus Crest Group, generally based upon a common prototypical building design. We believe that our use of this prototypical building design, which we have built approximately 410 times at our 27 student housing properties (approximately 15 of such residential buildings comprise one student housing property), allows us to efficiently deliver a uniform and proven student housing product in multiple markets. All of our properties operate under The Grove^®

brand, and we believe that our brand and the associated lifestyle are effective differentiators that create higher visibility and appeal for our properties within their markets.

 

In addition to our existing properties, we actively seek new development opportunities. We expect that, subject to completion of this offering, we will commence building seven new student housing properties, four of which are expected to be wholly-owned by us and three of which are expected to be owned by a new joint venture with HSRE in which we expect to own a 20% interest. We are currently targeting completion of these seven properties for the 2011-2012 academic year. For each of these projects, we have conducted significant pre-development activities and are in the process of obtaining the necessary zoning and site plan approvals. In total, we have identified over 200 markets and approximately 80 specific sites within these markets as potential future development opportunities, and our current business plan contemplates the development of approximately five to seven new student housing properties per year. No assurance can be given that we will not adjust our business plan as it relates to development, or that any particular development opportunity will be undertaken or completed in accordance with our current expectations.

 

We are led by our co-founders Ted W. Rollins and Michael S. Hartnett, each of whom has over 25 years of real estate investment and operating experience, including the development, construction and management of over 13,000 student housing beds. They are supported by over 500 full and part time employees who carry out our development, construction, property management and asset management activities.

 

Our principal executive offices are located at 2100 Rexford Road, Suite 414, Charlotte, NC 28211. Our telephone number is (704) 496-2500. Our website is located at www.gogrove.com. The information on our website is not part of this prospectus. We have included our website address only as an inactive textual reference and do not intend this to be an active link to our website.

 

Market Opportunity

 

We believe that attractive investment opportunities exist in the student housing market due to various factors impacting the supply, demand and profit potential of this market in the United States. These factors include:

 

Significant and Sustainable Growth in College Enrollments. Based on information from the National Center for Education Statistics and the U.S. Census Bureau, college enrollments are projected to grow at a faster rate than the overall population through 2017. This growth is expected to be driven primarily by: (i) the significant growth of the college-aged population in the U.S. fueled by the Echo Boom generation (i.e., the children of the Baby Boomers); (ii) an increase in the percentage of graduating high school students choosing to enroll in college; and (iii) a trend toward longer college enrollments.

 

Outsourcing Pressure Due to Institutional Budgetary Constraints. We believe that budget shortfalls and funding constraints at colleges and universities have reduced the availability of capital to build new student housing supply commensurate with enrollment increases. Thus, colleges and universities are increasingly relying on private developers to offer on-campus and off-campus student housing options to support enrollment growth.

 

Obsolescence of Existing Dormitory-Style Student Housing. Increasingly, on-campus, dormitory-style student housing facilities are becoming obsolete and are in need of significant renovation or replacement. Traditional dormitory-style housing typically consists of shared rooms, communal bathroom facilities and limited (if any) amenities and parking. We believe that such facilities do not meet the needs and preferences of modern-day college students,

who generally have a higher standard of living and an increased focus on privacy, amenities and other lifestyle considerations than previous generations of students.

 

Highly Fragmented Ownership with Diminishing Competition and Costs. The student housing industry is highly fragmented, which provides opportunities for consolidation. Moreover, the recent economic environment has reduced the availability of construction financing, which has restricted the number of new competitors entering the industry and created opportunities for well-capitalized firms specializing in student housing. Meanwhile, as competition has become constrained, excess capacity in the residential and commercial construction markets has lowered material and labor costs for firms able to access capital for new projects.

 

Availability of Attractive, Long-Term Financing through Freddie Mac and Fannie Mae. Despite tightening credit markets, stabilized student housing properties continue generally to have access to long-term debt financing through Federal Home Loan Mortgage Corporation, or “Freddie Mac,” and Federal National Mortgage Association, or “Fannie Mae.”

 

Our Competitive Strengths

 

We believe that we distinguish ourselves from other developers, builders, owners and managers of student housing properties through the following competitive strengths:

 

Experienced Management Team with Demonstrated Track Record. Our management team is led by Messrs. Rollins and Hartnett, each of whom has over 25 years of real estate investment, advisory and management experience. Our management team has overseen the financing, development, construction and management of all of our student housing properties with an aggregate cost of approximately $500 million.

 

Modern, Well-Located Portfolio. The average age of our student housing properties is approximately 2.2 years as of August 31, 2010, and all of our properties are located in close proximity to the campuses of the schools from which they draw student-tenants, with an average distance to campus of approximately 0.6 miles.

 

Attractive, Branded Properties. All of our properties operate under The Grove^® brand, and all of our properties feature private bedrooms with en suite bathrooms, full furnishings, state-of-the-art technology, ample parking, and a broad array of other on-site amenities, such as resort-style swimming pools, basketball and volleyball courts, and community clubhouses with regularly planned social activities. We strive to offer not just an apartment but an entire lifestyle and community experience designed to appeal to the modern-day college student.

 

Proven and Scalable Business Model. We believe that our vertically-integrated business model enables us to deliver properties economically while maintaining consistency in our building design, construction quality and amenity package. We continue to refine our processes and systems in an effort to reduce costs and improve quality, having overseen the construction of the same prototypical residential building approximately 410 times during the last six years.

 

Focus on Underserved College Markets. We generally focus on medium-sized college and university markets. While total enrollments in these markets are generally lower than enrollments in larger educational markets, we believe that the overall market dynamics are often more favorable (e.g., higher enrollment growth rates and fewer purpose-built student housing competitors).

 

Conservative Capitalization. Upon completion of this offering, application of the net proceeds therefrom and our formation transactions, our debt to total market capitalization ratio will be approximately 20.0%, which we believe will provide us with incremental financing capacity to fund identified future growth opportunities. In addition, we have entered into a credit agreement with Citibank, N.A. and certain other parties thereto relating to a three-year, $125 million senior secured revolving credit facility, or our “revolving credit facility,” which will become effective immediately upon completion of this offering and

satisfaction of customary loan closing conditions. This facility may be used for general corporate purposes, payment of distributions and to finance, among other things, identified future growth opportunities, including the seven properties that we expect to commence building upon completion of this offering, four of which are expected to be wholly-owned by us and three of which are expected to be owned by a new joint venture that we expect to establish with HSRE and in which we expect to own a 20% interest. Our ability to borrow under our revolving credit facility will be subject to the terms and conditions of our credit agreement, including those relating to the facility’s borrowing base. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Principal Capital Resources.”

 

Our Business and Growth Strategies

 

Our objective is to maximize total returns to our stockholders through the pursuit of the following business and growth strategies:

 

Utilize Our Vertically-Integrated Platform. Our vertically-integrated platform performs each key function in the student housing value chain: project development, project construction, property management and asset management. We believe that the ongoing feedback and accountability facilitated by our vertically-integrated platform allow us to improve efficiency, reduce costs, control project timing and enhance the overall quality of our properties.

 

Target Attractive Markets. We utilize a proprietary underwriting model with over 60 inputs to evaluate the relative attractiveness of each potential development market. We generally focus on markets that exceed certain student enrollment thresholds and exhibit favorable student housing supply-demand dynamics. Our due diligence process is designed to identify markets in which we can operate successfully.

 

Optimize Our Properties and Brand Value. We employ a consistent set of operating principles across our properties in order to optimize the student lifestyle experience and enhance the value and recognition of our brand. We believe that our focus on enhancing student lifestyle and promoting a sense of community at our properties drives improved occupancy and allows us to charge premium rents.

 

Development Growth. We believe that our vertically-integrated platform generally allows us to generate more favorable returns by developing new properties versus acquiring existing properties from third parties, and we therefore anticipate that in-house development will remain the primary driver of our growth. Our current business plan contemplates the development of approximately five to seven new student housing properties per year from our identified pipeline of opportunities, including the seven properties that we expect to commence building upon completion of this offering.

 

Acquisition Growth. We may also seek to grow by selectively acquiring student housing properties from third parties. Generally, we anticipate that any properties acquired from third parties would meet our investment criteria for development properties and fit into our overall strategy in terms of property quality, proximity to campus, bed-bath parity, availability of amenities and return on investment.

 

Summary Risk Factors

 

An investment in our common stock involves various risks. You should carefully consider the matters discussed in “Risk Factors” beginning on page 25 of this prospectus before making a decision to invest in our common stock. Some of the risks include the following:

 

 

 

 

 

 

Our Properties

 

The following table presents certain summary information about the 21 properties that we will own 100% interests in and the six joint venture properties that we will own 49.9% interests in upon completion of this offering and our formation transactions. All properties were developed and built by us.

 

 

 

 

 

 

Expected 2011 Development Properties

 

Subject to completion of this offering, we expect to commence building four properties for our own account, with completion targeted for the 2011-2012 academic year. Information with respect to these expected wholly-owned developments is included in the following table:

 

 

 

 

 

Subject to completion of this offering, we expect to commence building three properties, which are expected to be owned by a new joint venture that we expect to establish with HSRE and in which we expect to own a 20% interest. Although we have entered into a non-binding letter of intent with HSRE relating to this potential joint venture, we have not entered into definitive documentation, and we do not plan to commence construction of these three properties until such time as a definitive agreement is reached with HSRE. We are currently targeting

completion of these three properties for the 2011-2012 academic year. Information with respect to these expected joint venture developments is included in the following table:

 

 

 

 

 

Development activities involve significant risks and uncertainties, including risks of delays, cost overruns and the potential expenditure of funds on projects that are not ultimately completed. No assurance can be given that these developments will be undertaken as currently expected or, if undertaken, that they will be completed in accordance with our current expectations, including those with respect to targeted completion and estimated cost. Further, if these properties are developed, there can be no assurance that we will be successful in achieving attractive occupancy levels or rental rates. Additionally, our ability to commence construction of these properties will depend upon obtaining property-specific construction financing or financing these developments through other means. For additional information, see “Business and Properties—Expected 2011 Development Properties.”

 

Our Financing Strategy

 

Upon completion of this offering, application of the net proceeds therefrom and our formation transactions, we will have total consolidated indebtedness of approximately $100.4 million (including $39.6 million that we expect to borrow under our revolving credit facility upon completion of this offering). In addition, subject to satisfaction of customary loan closing conditions, we will have a three-year, $125 million senior secured revolving credit facility, which will become effective immediately upon completion of this offering. Amounts outstanding under our revolving credit facility will bear interest at a floating rate equal to, at our election, the Eurodollar Rate or the Base Rate (each as defined in our revolving credit facility) plus a spread. The spread will depend upon our leverage ratio and will range from 2.75% to 3.50% for Eurodollar Rate based borrowings and from 1.75% to 2.50% for Base Rate based borrowings. Immediately upon completion of this offering, we expect to use approximately $39.6 million borrowed under our revolving credit facility, together with a portion of the net proceeds from this offering, to repay in full our mortgage loan with Silverton Bank that is currently secured by six of our properties. In addition, we expect to use approximately $1.6 million of our revolving credit facility to issue letters of credit relating to indebtedness secured by The Grove at Carrollton, The Grove at Mobile—Phase II and The Grove at Las Cruces. We anticipate that a portion of our revolving credit facility will be used, in conjunction with project-specific construction debt, to finance the construction of the four wholly-owned and three joint venture properties that we expect to commence building upon completion of this offering. In addition, we may fund distributions to our stockholders with borrowings under our revolving credit facility. Our ability to borrow from time to time under this facility will be subject to certain conditions and the satisfaction of specified financial covenants. Our revolving credit facility will also contain covenants that will restrict our ability to pay dividends or other amounts to our stockholders unless certain financial tests are satisfied. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Principal Capital Resources.”

We generally intend to limit our ratio of debt to total market capitalization to not greater than 50%, although our charter places no limit on the amount of indebtedness that we may incur and we may exceed this level from time to time. We intend to finance our long-term growth with common and preferred equity issuances and debt financing having staggered maturities. Our debt may include mortgage debt secured by our properties, as well as unsecured debt, and such debt may require us to pay fixed or floating rates of interest. We will seek to utilize Freddie Mac and Fannie Mae long-term debt financing for stabilized properties to the extent possible. We may also seek to finance development projects through unconsolidated joint ventures with third parties, such as the three properties that we intend to develop in a new joint venture that we expect to establish with HSRE and in which we expect to own a 20% interest.

 

Structure and Formation

 

We were formed as a Maryland corporation on March 1, 2010. Our operating partnership was formed as a Delaware limited partnership on March 4, 2010. Through our wholly-owned subsidiary, Campus Crest Communities GP, LLC, we are the sole general partner of our operating partnership, and we will conduct substantially all of our business through our operating partnership. Upon completion of this offering and our formation transactions, we will own a 95.8% limited partnership interest in our operating partnership. MXT Capital, which is wholly-owned and controlled by Ted W. Rollins, our co-chairman and chief executive officer, and Michael S. Hartnett, our co-chairman and chief investment officer, and certain members of their families, will own a 3.3% limited partnership interest in our operating partnership. Mr. Hartnett, in addition to his indirect ownership interest in our operating partnership through his ownership interest in MXT Capital, will own a 0.5% interest in our operating partnership. The Ricker Group, which owned interests in our predecessor entities prior to the consummation of our formation transactions, will in the aggregate own a 0.2% limited partnership interest in our operating partnership. Certain third-party investors, who owned interests in our predecessor entities prior to the consummation of our formation transactions, will in the aggregate own a 0.2% limited partnership interest in our operating partnership.

 

Certain of our officers, certain members of our management team and our directors will own restricted common stock, representing approximately 0.4% of our common stock outstanding after completion of this offering.

 

Formation Transactions

 

Prior to our formation transactions, all of the interests in our properties were owned by Campus Crest Group and third-party investors, including the Ricker Group and HSRE. The value of these interests was determined by our executive officers based on a capitalization rate analysis, an internal rate of return analysis, an assessment of the fair market value of the properties and the consideration of other factors, such as per bed value and the liquidation preference with respect to certain interests. We did not obtain third-party appraisals or valuations in connection with the formation transactions.

 

Immediately upon completion of this offering, we will engage in the following formation transactions, which are designed to:

 

 

 

 

Set forth below is an overview of our formation transactions:

 

 

In its contribution agreement, MXT Capital provides us with certain real estate, ownership and operational representations, warranties and covenants with respect to its student housing business and interests in the predecessor entities being contributed to our operating partnership. For a more detailed description of the representations, warranties and covenants being provided by MXT Capital, see “Structure and Formation—Formation Transactions.” MXT Capital will indemnify us with respect to losses resulting from breaches of its representations, warranties and covenants and for any real estate transfer or mortgage recording tax liabilities that we may incur; these indemnification obligations generally are subject to a $250,000 deductible and capped at an amount equal to the aggregate equity consideration received by MXT Capital pursuant to the contribution agreement (other than the tax liability indemnity, which is not subject to either the deductible or the cap) and are generally limited to claims brought within 18 months from the completion of this offering (with certain claims surviving indefinitely).

 

 

 

In its contribution agreement, the Ricker Group provides us with certain ownership and limited real estate and operational representations, warranties and covenants. For a more detailed description of the representations, warranties and covenants being provided by the Ricker Group, see “Structure and Formation—Formation Transactions.” The Ricker Group will indemnify us with respect to losses resulting from breaches of its representations, warranties and covenants; these indemnification obligations generally are subject to a $250,000 deductible and capped at an amount equal to the aggregate consideration received by the Ricker Group pursuant to the contribution agreement with respect to certain ownership matters and

$7.5 million with respect to all other matters and are generally limited to claims brought within 18 months from the completion of this offering (with certain claims surviving indefinitely).

 

 

 

In connection with obtaining financing for our business prior to completion of this offering, we and the other current owners of The Grove at Carrollton have agreed, subject to receipt of required lender consents, to contribute 100% of the ownership interests in The Grove at Carrollton to a new special-purpose joint venture with HSRE formed exclusively to hold this asset. HSRE has agreed to contribute approximately $1.3 million to this joint venture. If this joint venture with HSRE is consummated: (i) all of HSRE’s cash contribution will be distributed to us for use in connection with our day-to-day operations (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Our Relationship with HSRE”); and (ii) upon completion of this offering, we will acquire 100% of the ownership interests in The Grove at Carrollton from this joint venture for a purchase price of approximately $1.9 million. If this joint venture with HSRE is not consummated prior to the completion of this offering, it will be abandoned and we will acquire 100% of the ownership interests in The Grove at Carrollton pursuant to the terms of the contribution agreements with MXT Capital, the Ricker Group and certain third-party investors as described above.

 

 

 

The number of OP units and cash amounts to be received by the parties specified above have been fixed and are not subject to change based upon the public offering price of the common stock to be sold in this offering or any other factor.

 

As a result of our formation transactions:

 

 

 

 

 

 

Consequences of this Offering and Our Formation Transactions

 

The following diagram depicts the ownership structure of our company, our operating partnership, certain subsidiaries through which we will conduct our development, construction, property management and asset management activities, and our joint venture with HSRE, upon completion of this offering and our formation transactions:

 

 

 

 

Benefits to Related Parties

 

In connection with this offering and our formation transactions, MXT Capital, the Ricker Group and certain of our executive officers, members of our management team and members of

our board of directors will receive material financial and other benefits, as described below. Each of Ted W. Rollins, our co-chairman and chief executive officer, and Michael S. Hartnett, our co-chairman and chief investment officer, will, through his respective ownership of MXT Capital, be entitled to participate in the benefits realized by MXT Capital in connection with our formation transactions. In addition, Carl H. Ricker, Jr. will, through his ownership in the Ricker Group, be entitled to participate in the benefits realized by the Ricker Group in connection with our formation transactions. We have included the Ricker Group as a related party due to the substantial investment that it held in our predecessor entities and the substantial returns paid to it by our predecessor entities. For a more detailed discussion of these benefits, see “Management” and “Certain Relationships and Related Party Transactions.”

 

 

 

The tax protection agreement will also require us to maintain a minimum level of indebtedness of $56.0 million throughout the ten-year tax protection period in order to allow a sufficient amount of debt to be allocable to MXT Capital to avoid certain adverse tax consequences. If we fail to maintain such minimum indebtedness throughout the ten-year tax protection period, and as a consequence the members of MXT Capital incur federal, state or local tax liabilities, we will be required to make indemnifying payments to them, computed in the manner described in the preceding paragraph.

 

 

 

 

 

 

 

Restrictions on Ownership of Our Capital Stock

 

Our charter, subject to certain exceptions and after the application of certain attribution rules, prohibits any person from directly or indirectly owning more than 9.8% by vote or value, whichever is more restrictive, of either our outstanding common stock or our outstanding capital stock in the aggregate, which we refer to in this prospectus collectively as the stock ownership limits. Our charter also prohibits any person from directly or indirectly owning any class of our capital stock if such ownership would result in us being “closely held” under Section 856(h) of the Internal Revenue Code of 1986, as amended, or the “Internal Revenue Code,” or otherwise cause us to fail to qualify as a REIT.

 

Our charter generally provides that any capital stock owned or transferred in violation of the foregoing restrictions will be deemed to be transferred to a charitable trust for the benefit of a charitable beneficiary, and the purported owner or transferee will acquire no rights in such stock. If the foregoing is ineffective for any reason to prevent a violation of these restrictions, then our charter provides that the transfer of such shares will be void.

 

No person may transfer our capital stock or any interest in our capital stock if the transfer would result in our capital stock being beneficially owned by fewer than 100 persons on or after the first day of our second taxable year. Our charter provides that any attempt to transfer our capital stock in violation of this minimum will be void.

 

Lock-up Agreements

 

We, each of our executive officers and directors, MXT Capital and Carl H. Ricker, Jr. have agreed with the underwriters not to offer, sell or otherwise dispose of any common stock or any securities convertible into or exercisable or exchangeable for common stock (including OP units) or any rights to acquire common stock for a period of one year after the date of this prospectus, without the prior written consent of Raymond James & Associates, Inc., Citigroup Global Markets Inc., Goldman, Sachs & Co., Barclays Capital Inc. and RBC Capital Markets Corporation, subject to limited exceptions.

 

Our Distribution Policy

 

We intend to pay regular quarterly distributions to our common stockholders. We intend to pay a pro rata initial distribution with respect to the period commencing on the completion of this offering and ending December 31, 2010, based on $0.16 per share for a full quarter. On an annualized basis, this would be $0.64 per share, or an initial annual distribution rate of approximately 4.7% based on an assumed initial public offering price of $13.50 per share (the mid-point of the price range set forth on the cover page of this prospectus). Our ability to fund this distribution will depend, in part, upon continued successful leasing of our existing portfolio, expected future development activity and fee income from development, construction and management services. To the extent these sources are insufficient, we intend to use our working capital or borrowings under our revolving credit facility to fund these distributions. To the extent we use working capital or borrowings under our revolving credit facility to fund these distributions, our cash available for investment in our business, including for property development and acquisition purposes, will decrease.

 

In addition, in order to qualify for taxation as a REIT, we must make annual distributions to stockholders of at least 90% of our REIT taxable income. If our cash available for distribution is not sufficient to meet the annual distribution requirements applicable to REITs, we would be required to fund the minimum required distribution from other sources, which could include asset sales (subject to the limitations imposed by the terms of the tax protection agreement) or borrowings. Funding a distribution through asset sales or borrowings could reduce our cash flow from operations, increase our interest expense and decrease our cash available for investment in our business. We may also choose to meet this distribution requirement by distributing a combination of cash and shares of our common stock. Under recent Internal Revenue Service, or “IRS,” guidance, up to 90% of any such distribution may be made in shares of our common stock. If we choose to make a distribution consisting in part of shares of our common stock, the holders of our common stock may be subject to adverse tax consequences. See “Risk Factors—Risks Related to this Offering—We may not be able to make an initial distribution or maintain any initial, or any subsequent, distribution rate and we may be required to fund the minimum distribution necessary to qualify as a REIT from sources that could reduce our cash flows.”

 

Our Tax Status

 

In connection with this offering, we intend to elect to be treated as a REIT under Sections 856 through 859 of the Internal Revenue Code commencing with our taxable year ending December 31, 2010. Our qualification as a REIT depends upon our ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels and the diversity of ownership of our stock. We believe that we will be organized in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code and that our intended manner of operation will enable us to meet the requirements for qualification and taxation as a REIT.

 

As a REIT, we generally will not be subject to U.S. federal income tax on our taxable income that we distribute currently to our stockholders. If we fail to qualify as a REIT in any taxable year and do not qualify for certain statutory relief provisions, we will be subject to U.S. federal income tax at regular corporate rates and generally will be precluded from qualifying as a REIT for the subsequent four taxable years following the year during which we lost our REIT qualification. Accordingly, our failure to qualify as a REIT could materially and adversely affect us, including our ability to make distributions to our stockholders in the future. Even if we qualify as a REIT, we may be subject to some U.S. federal, state and local taxes on our income or property and the income of our taxable REIT subsidiaries, or “TRSs,” will be subject to taxation at normal corporate rates. See “Federal Income Tax Considerations.”

SUMMARY SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION

 

You should read the following summary selected historical and pro forma financial information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the audited historical combined financial statements of our Predecessor (as defined below) and notes thereto, and our unaudited pro forma condensed consolidated financial statements and notes thereto. The summary selected historical and pro forma financial information contained in this section is not intended to replace the audited and unaudited financial statements included elsewhere in this prospectus.

 

Our “Predecessor” shall mean certain entities and their consolidated subsidiaries controlled by Campus Crest Group, LLC, and its consolidated subsidiaries, which carried out the development, construction, ownership and management of the properties that we will own interests in upon completion of this offering, including its interests in two joint ventures with HSRE.

 

The summary selected historical combined statements of operations and cash flows for the six months ended June 30, 2010 and 2009 and the summary selected historical combined balance sheet information as of June 30, 2010 have been derived from the unaudited historical combined financial statements of our Predecessor, included elsewhere in this prospectus. The unaudited historical combined financial statements have been prepared on the same basis as our audited historical combined financial statements and, in the opinion of our management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of this information. The results for any interim period are not necessarily indicative of the results that may be expected for a full year. The summary selected historical combined statements of operations and cash flows for the years ended December 31, 2009, 2008 and 2007 and the summary selected historical combined balance sheet information as of December 31, 2009 and 2008 have been derived from the audited historical combined financial statements of our Predecessor, included elsewhere in this prospectus. The summary selected pro forma condensed consolidated statements of operations for the six months ended June 30, 2010 and for the year ended December 31, 2009 and the summary selected pro forma condensed consolidated balance sheet information as of June 30, 2010 have been derived from our unaudited pro forma condensed consolidated financial statements, included elsewhere in this prospectus.

 

The summary selected pro forma condensed consolidated statements of operations and balance sheet information set forth below has been adjusted to reflect our formation transactions, the sale of the common stock offered hereby, the receipt of the estimated net proceeds from this offering, after deducting the underwriting discount and other estimated offering expenses payable by us, and the use of the estimated net proceeds as described under “Use of Proceeds.” The unaudited pro forma condensed consolidated financial information for the year ended December 31, 2009 and as of and for the six months ended June 30, 2010 is presented as if this offering, the use of net proceeds therefrom and our formation transactions all had occurred as of the last day of the period presented for the purposes of the unaudited pro forma condensed consolidated balance sheet information and on the first day of the period presented for the purposes of the unaudited pro forma condensed consolidated statements of operations.

 

The summary selected historical combined and pro forma condensed consolidated financial information set forth below and the financial statements included elsewhere in this prospectus do not necessarily reflect what our results of operations, financial condition or cash flows would have been if we had operated as a stand-alone company during all periods presented, and, accordingly, such information should not be relied upon as an indicator of our future performance, financial condition or liquidity.

Statement of Operations Information:

 

Balance Sheet Information:

 

Other Data:

 

 

 

Selected Property Information:

 

 

 

 

THE OFFERING