6. Business Acquisitions

Denton, Texas Acquisition

In January 2014, the Company acquired HSRE’s 80% ownership interest in HSRE IV, in which the Company previously held a 20% interest and which owns The Grove at Denton, Texas, for approximately $7.7 million. Prior to the acquisition of this interest, the Company accounted for its ownership interest in the property under the equity method. In connection with evaluating the Company’s investment in HSRE IV for impairment as of December 31, 2013, the Company recognized a loss of approximately $0.3 million for the other than temporary decline in value of its previously held equity interest in the property. The acquisition date fair value of the Company’s equity interest in HSRE IV immediately before the acquisition of the remaining interest in HSRE IV was $1.9 million based on the purchase price of the transaction. Subsequent to the Company’s acquisition of this interest, the Company consolidated the balance sheet and results of operations of The Grove at Denton, Texas. For the year ended December 31, 2014, the acquired property contributed a total of $3.9 million in revenue and $1.0 million in expenses, which included $1.5 million of amortization expense of in-place intangible assets.

The following table is an allocation of the purchase price (in thousands):

Land	$	4,770
Buildings and improvements		18,276
Furniture, fixtures and equipment		2,284
In-place leases		1,524
Other		(377)
Fair value of debt at acquisition		(16,901)
		9,576
Less estimated fair value of interest owned prior to acquisition		(1,915)
	$	7,661

Acquisition of Properties Under Development

During the year ended December 31, 2013, the Company acquired land at nine project sites. The purchase price for these nine sites totaled approximately $32.4 million. The project sites were located in Slippery Rock, Pennsylvania, Grand Forks, North Dakota, Mt. Pleasant, Michigan, Philadelphia, Pennsylvania, Louisville, Kentucky, Greensboro, North Carolina, Gainesville, Florida, Bellingham, Washington, and Ames, Iowa. During 2013, the Company contributed its investment in the Philadelphia, Pennsylvania project to a joint venture with Brandywine and HSRE. The project sites in Louisville, Kentucky, and Greensboro, North Carolina, were contributed into a joint venture with HSRE during 2013. The investment in Ames, Iowa is a development project in conjunction with Copper Beech. The Company did not acquire land for development in 2014.

Copper Beech Acquisition

In February 2013, the Company entered into purchase and sale agreements to acquire a 48.0% interest in a portfolio of 35 student housing properties, one undeveloped land parcel and a corporate office building held by the members of Copper Beech Townhome Communities, LLC (“CBTC”) and Copper Beech Townhome Communities (PA), LLC (“CBTC PA”, together with CBTC, “Copper Beech” or the “Sellers”) (the “CB Portfolio”), and a fully integrated platform and brand with a management team, for an initial purchase price of approximately $230.2 million, including the repayment of $106.7 million of debt, with the remaining 52.0% interest in the CB Portfolio to be held by certain of the current members of CBTC and CBTC PA, (the “CB Investors”). To effect the acquisition of its 48.0% interest in the CB Portfolio, the Company entered into a purchase and sale agreement (the “Purchase Agreement”), and related transactions, with the members of CBTC and CBTC PA, to acquire in steps an additional 36.3% interest in the CB Portfolio. The Company also entered into a purchase and sale agreement with certain investors in the CB Portfolio who are not members of Copper Beech (the “Non-Member Investors”) to acquire the interests in the CB Portfolio held by such Non-Member Investors (the “Non-Member Purchase Agreement”). Pursuant to the Non-Member Purchase Agreement, the Company acquired approximately an 11.7% interest in the CB Portfolio from the Non-Member Investors. The Company refers to this transaction as the “CB Portfolio Acquisition.”

The CB Portfolio consists of 36 student housing properties, one undeveloped land parcel, and Copper Beech’s corporate office building in State College, Pennsylvania. The CB Portfolio consists primarily of townhouse units located in eighteen geographic markets in the United States across thirteen states, with 30 of the 36 student housing properties having been developed by Copper Beech. As of the date of the CB Portfolio Acquisition, the CB Portfolio comprised approximately 6,242 rentable units with approximately 16,645 rentable beds. As of the date of the CB Portfolio Acquisition, the student housing properties had an average age of approximately 8.2 years.

The Company’s investment in the CB Portfolio entitled it to a preferred payment of $13.0 million for the first year of its investment and 48% of remaining operating cash flows. In connection with the CB Portfolio Acquisition, the Company loaned approximately $31.7 million at an interest rate of 8.5% per annum to the CB Investors, which was repaid in connection with the Amendment to the Purchase Agreement (as described below).

Amendment to Copper Beech Purchase Agreement

On September 30, 2013 and effective subject to the receipt of required third party consents, the Company entered into an Amendment (the “Amendment”) to the Purchase Agreement. As consideration for entering into the Amendment, the Company paid the CB Investors $4.0 million.

Pursuant to the terms of the Amendment, following receipt of required third party consents, the Company will transfer its 48.0% interest in five properties in the Copper Beech Portfolio (Copper Beech Auburn, Copper Beech Kalamazoo Phase 1, Copper Beech Kalamazoo Phase 2, Copper Beech Oak Hill and Copper Beech Statesboro Phase 1) back to the CB Investors and defer the acquisition of the two Phase II development properties (Cooper Beech Mt. Pleasant Phase 2 and Cooper Beech Statesboro Phase 2) until August 18, 2014 as consideration for an additional 19.0% interest in each of the remaining 30 properties in the Copper Beech Portfolio (the “Initial Copper Beech Properties”). Following the transfer of such properties, the Company held a 67.0% interest in each of 30 properties in the Copper Beech Portfolio, with the CB Investors holding the remaining 33.0% interest.

In addition, under the terms of the Amendment, the Company has the option, exercisable from March 18, 2014 through August 18, 2014, to acquire an 18.0% interest in each of the seven properties whose acquisition is being deferred (collectively, the “Deferred Copper Beech Properties”), which will entitle the Company to 33.0% of the operating cash flows of such Deferred Copper Beech Properties. The purchase price for the exercise of this option is approximately $16.9 million. In order to exercise this option, the Company must also exercise the option to acquire an additional 18.0% interest in the Initial Copper Beech Properties, which is described below.

The Amendment was accounted for as a nonmonetary exchange. The interests in the five properties transferred were accounted for by the Company as investments under the equity method prior to the exchange. No gain or loss was recognized as a result of the transaction.

The Amendment also amends the Company’s options to acquire additional interests in the Copper Beech Portfolio as follows:

• Beginning March 18, 2014 through August 18, 2014, the Company had the option to acquire an additional 18.0% interest in the Initial Copper Beech Properties, increasing its aggregate interest in such properties to 85.0%, which entitled the Company to 100% of the operating cash flows of the Initial Copper Beech Properties. The aggregate purchase price for the exercise of this purchase option was approximately $93.5 million plus debt repayment of approximately $21.0 million.

• Subsequent to December 31, 2014, the Company completed the acquistition of the Copper Beech Portfolio (see Note 19). Prior to the acquisition, the Company had the option to acquire an additional 3.9% interest in the Initial Copper Beech Properties and an additional 70.9% interest in the Deferred Copper Beech Properties through May 2015, which would have increased its aggregate interest in all 37 properties in the Copper Beech Portfolio to 88.9% and entitled the Company to 100% of the operating cash flows of the Initial Copper Beech Properties and the Deferred Copper Beech Properties. The aggregate purchase price for the exercise of this purchase option was approximately $100.7 million plus debt repayment of approximately $19.0 million. Through May 2016, the Company had the option to acquire an additional 11.1% interest in the Copper Beech Portfolio, which would have increased its aggregate interest to 100%. The aggregate purchase price for the exercise of this purchase option was approximately $53.4 million.

In connection with the Amendment, in October 2013, the Sellers repaid the entire principal balance of $31.7 million outstanding under the loans previously provided by us.

Dilution of Ownership

On August 18, 2014, the Company elected not to exercise the first purchase option to acquire additional interests in the properties comprising the CB Portfolio. As a result of this decision, the Company is entitled to 48.0% of the operating cash flows in the 36 operating properties, one office building and one parcel of land as well as 45.0% of the proceeds of any sale of any portion of the CB Portfolio. In addition, any future purchase options to acquire additional interests in the CB Portfolio are forfeited. During the three months ended September 30, 2014, and as a result in the change in ownership percentage in the CB Portfolio, the Company incurred a non-cash charge of $33.4 million, which is included in the accompanying consolidated statements of operations and comprehensive income (loss).

Both the Company and the CB Investors hold joint approval rights for major decisions, including those regarding property acquisition and disposition as well as property operation. As such, the Company holds a noncontrolling interest in the CB Portfolio and accordingly applies the equity method of accounting. As of December 31, 2014, the Company held a 48% effective interest in 36 operating properties and two non-operating properties in the CB Portfolio.

The Company recognized approximately $1.6 million and $3.8 million in equity in losses of Copper Beech as well as no interest income and approximately $1.4 million interest income from the loan to the CB Investors for the years ended December 31, 2014 and December 31, 2013, respectively. Additionally, the Company recognized approximately $3.0 million and $1.1 million of transaction expenses related to the CB Portfolio Acquisition and incurred $4.0 million and $16.9 million of costs which were included in its investment basis in Copper Beech for the years ended December 31, 2014 and December 31, 2013, respectively.

Copper Beech Purchase

On January 30, 2015, the Company closed on a transaction to acquire the remaining interest in certain of the Copper Beech properties (see Note 19).

Toledo, Ohio Acquisition

On March 2, 2013, the Company acquired 100% of the ownership interests in Campus Crest at Toledo, Ohio, a 382 unit and 629 bed property on the campus of the University of Toledo for approximately $13.8 million. The following table is an allocation of the purchase price (in thousands):

Land	$	2,855
In-place leases		469
Buildings and improvements		9,496
Furniture and fixtures		102
Other		879
	$	13,801

Montreal, Quebec Acquisitions

In July 2013, the Company entered into a joint venture, DCV Holdings, LP (“DCV Holdings”) with Beaumont Partners SA (“Beaumont”) to acquire a 711 room, 33-story hotel in downtown Montreal, Quebec, Canada, for approximately CAD 60.0 million. The joint venture has since converted the property into an upscale student housing tower featuring a mix of single and double units serving McGill University, Concordia University and L’Ecole de Technologie.

In December 2013, the Company and Beaumont formed a holding company, CSH Montreal LP (“CSH Montreal”), and DCV Holdings was subsequently contributed to CSH Montreal, such that CSH Montreal became the sole limited partner in DCV Holdings. In addition, following the insertion of CSH Montreal as the holding company in the joint venture arrangement, CSH Montreal acquired ownership of HIM Holdings LP (“HIM Holdings”), an entity formed to facilitate the acquisition of the Holiday Inn property in Canada. In January 2014, HIM Holdings completed the acquisition of a hotel property, which has been converted into an upscale student housing property serving McGill University. As of December 31, 2014, the Company owned a 47.0% common interest in CSH Montreal, the holding company of DCV Holdings.