Notable Mergers and Acquisitions of the Day 02/27: (CCG) (AV)

February 27, 2013 10:07 AM EST Send to a Friend
* Campus Crest Communities (NYSE: CCG) has signed a purchase and sale agreement to acquire Copper Beech Townhome Communities, LLC and affiliates.

The initial stage of the investment represents a 48% equity interest in a portfolio of 35 student housing properties. Pursuant to the purchase and sale agreement, CCG has the right, but not the obligation, to acquire the remaining 52% interest in the Copper Beech portfolio in stages over a period of up to three years at fixed prices. Total consideration for the initial stage of the investment includes $230.2 million to acquire equity interests and repay debt in Copper Beech and a $31.7 million loan to the existing investors. The loan carries an interest rate of 8.5% per annum, has a term of three years and is secured by the investors’ remaining equity stakes in Copper Beech. CCG’s investment is contingent upon successful completion of a follow-on equity offering and does not include a break-up penalty. Upon completion of the initial stage of the investment, Copper Beech will have $469.1 million of mortgage debt with a weighted average interest rate of 5.7% per annum and an average term of 4.2 years to maturity(3).

Copper Beech, which was founded in 1994, is the fifth largest student housing operator in the United States, with a portfolio of approximately 16,645 beds(1). For 20 years, it has been a vertically integrated developer, owner and operator of a unique, market-tested, branded townhome student housing product. The Copper Beech portfolio consists of 35 student housing properties, including two phase II development properties scheduled to open in fall 2013, plus one undeveloped land parcel in Charlotte, NC and Copper Beech’s corporate office building in State College, PA. Copper Beech has utilized its vertically integrated platform to develop 30 of its 35 properties. As of February 13, 2013, the operating portfolio had an average occupancy of 98.5%, marking three consecutive years with occupancy levels in excess of 98%.

CCG’s investment will give it additional scale and diversification, with interests in a combined portfolio of nearly 42,000 beds (includes 2013 deliveries for CCG and Copper Beech and CCG’s Philadelphia, PA development), creating the second largest public student housing platform in the United States by beds. The high-quality, well-located townhome portfolio complements CCG’s existing portfolio and prototypical Grove product.

The transaction has been approved by CCG’s Board of Directors. Pursuant to the purchase agreement, CCG has the right, but not the obligation, to acquire additional interests in the Copper Beech portfolio over a period of up to three years at fixed prices. The initial investment of $261.9 million for the initial stage includes $230.2 million to acquire equity interests and to repay approximately $106.7 million existing debt in Copper Beech and an additional $31.7 million loan to the existing investors secured by the investors’ remaining equity stakes in Copper Beech. CCG will earn a preferred return of $13 million in the first year of the investment plus 48% of distributable cash flows plus interest on the loan to existing investors. Within 14 months of the initial close, CCG has the option to acquire an additional 27.0% interest in the Copper Beech portfolio; within 26 months of the initial close, CCG has the option to acquire an additional 13.9% interest; and, within 38 months of the initial close, CCG has the option to acquire the remaining 11.1% interest. If CCG exercises each of the purchase options, it expects that by the end of the second quarter of 2016 it will hold 100% of the interests in the Copper Beech portfolio. The aggregate purchase price upon exercise of the three purchase options is approximately $404.2 million plus total debt repayment of approximately $146.7 million.

CCG will name one member of the two member Copper Beech portfolio board of directors. Major decisions will require unanimous consent of the board. In addition, Copper Beech will continue to manage the day-to-day operations of the portfolio until CCG owns at least 88.9% of the Copper Beech portfolio.

Completion of the transaction is subject to the successful completion of a follow-on equity offering and customary closing conditions. CCG expects the initial stage of the acquisition to close during the first or second quarter of 2013, although there can be no assurance that the transaction will close or, if it does, when the closing will occur.

Barclays and Raymond James served as exclusive financial advisors to CCG, and Hogan Lovells US LLP and Bradley Arant Boult Cummings LLP acted as CCG’s legal advisors.

* Aviva plc (NYSE: AV) announces the sale of Aviva Russia to Blagosostoyanie, a non-state pension fund in Russia, for a consideration of EUR35 million. The consideration is payable in cash and represents a modest premium to IFRS book value. This transaction is consistent with Aviva's strategy to narrow the Group's focus to businesses and markets where Aviva has leadership positions.

The transaction, which is subject to the approval of the Federal Antimonopoly Service of the Russian Federation, is expected to complete in the first half of 2013.

Mark Wilson, Chief Executive Officer of Aviva plc, said:"We are pleased to have agreed the sale of our life and pensions operations in Russia to Blagosostoyanie. This transaction builds on the progress we have made to narrow Aviva's focus."

To keep up on all the Mergers & Acquisitions data in real-time, go to our new M&A Insider page.


Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Special Reports

Related Entities

Raymond James, Barclays, Notable Mergers and Acquisitions

Add Your Comment