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 $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 $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 three months ended March 31, 2014, the acquired property contributed a total of $0.7 million in revenue and $0.3 million in expenses.

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

Copper Beech Acquisition

On February 26, 2013, the Company and subsidiaries of the Operating Partnership entered into a purchase and sale agreement (the “Initial Purchase Agreement”) with the then members of Copper Beech Townhome Communities, LLC (“CBTC”) and Copper Beech Townhome Communities (PA), LLC (“CBTC PA” and, together with CBTC, “Copper Beech”) (such former members of CBTC and CBTC PA, collectively, the “Sellers”). Pursuant to the terms of the Initial Purchase Agreement, the Company initially acquired a 48% interest in a portfolio of 35 student housing properties and 3 other entities (the “Copper Beech Portfolio”), for an initial purchase price of $230.6 million. The Initial Purchase Agreement provided the Company with options to acquire the remaining interests in the Copper Beech Portfolio over time. Subsequent to the Initial Purchase Agreement, the Company formed a variable interest entity (“VIE”) with the Sellers to develop, construct and manage the Copper Beech at Ames student housing property. The Company concluded that it was the primary beneficiary of Copper Beech at Ames as the Company funded all of the equity of the VIE, while holding only a 48% interest in the VIE.

On January 30, 2015, the Company completed the acquisition (the “First CB Closing”) of (i) substantially all of the Sellers’ remaining interests in 27 student housing properties, 2 undeveloped land parcels and a corporate office building and (ii) the Sellers’ remaining interests in Copper Beech at Ames pursuant to that certain Second Amendment (the “Second Amendment”) to the Initial Purchase Agreement.

Pursuant to the terms of the Second Amendment, the Company agreed to acquire the Sellers’ remaining interests in each of the properties comprising the Copper Beech Portfolio other than Copper Beech Kalamazoo Phase 1, Copper Beech Kalamazoo Phase 2, Copper Beech Morgantown, Copper Beech Harrisonburg, Copper Beech Greenville and Copper Beech Parkway. Following the consummation of the First CB Closing, and as of March 31, 2015, the Company held a 100% interest in Copper Beech at Ames and the following interests in the remaining Copper Beech Portfolio:

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100% interest in 25 student housing properties;

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100% interest in 2 undeveloped land parcels and 1 corporate office building;

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85% interest in 1 student housing property (Copper Beech Klondike or CBTC 8);

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84% interest in 1 student housing property (Copper Beech Northbrook or CBTC 9);

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48% interest in 7 student housing properties; and

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no ownership interest in 1 student housing property (Copper Beech Kalamazoo – Phase I).

As of April 30, 2015 (the "Second CB Closing"), the Company completed the acquisition of the Sellers’ interests in two of the properties in the Copper Beech Portfolio in which the Company previously held a 48% interest – Copper Beech San Marcos Phase 1 and Copper Beech IUP Buy.

As consideration for the additional interests acquired in the First CB Closing, the Company paid to the Sellers aggregate cash consideration of $58.9 million and the Operating Partnership issued to the Sellers an aggregate of approximately 10.4 million ($71.3 million) limited partnership units of the Operating Partnership (“OP Units”). As consideration for the Second CB Closing, the Company paid to the Sellers $1.4 million in cash and the Operating Partnership issued to the Sellers approximately 2.0 million ($13.0 million) in OP Units. The OP Units were valued at the closing price of the Company’s stock on the respective closing dates. Additionally, the Company surrendered all of its previous 48% ownership interest in one of the properties (Copper Beech Kalamazoo – Phase I) in the Copper Beech Portfolio as part of the terms of the Second Amendment. The Company continues to hold a 48% ownership interest in Copper Beech Kalamazoo – Phase II as a result of not receiving lender consent to reduce its ownership interest to zero.

Although the business combination was achieved in stages, the Company had negotiated with the Sellers that a significant portion of the Copper Beech Portfolio would be acquired in its entirety from the agreements that were entered into in 2013. When the Company entered into the Initial Purchase Agreement, it was the intent of the Company to exercise the purchase options to acquire the remaining interests in the Copper Beech Portfolio. Given the intent of the Company to exercise the purchase options to acquire the remaining interest in the Copper Beech Portfolio, the timing of the consideration paid differed from the timing of when the Company obtained its ownership interests in the Copper Beech Portfolio.

As the timing of the consideration paid and ownership interest acquired at each stage differed, for purposes of computing how much of the gain to recognize during the three months ended March 31, 2015, the Company allocated the total consideration paid in the First CB Closing and the Second CB Closing, based on the relative provisional fair values of the assets acquired and liabilities assumed in the two closings. As a result, a gain of $21.6 million was recognized and $6.3 million of additional gain on the First CB Closing was deferred and included in other liabilities in the accompanying consolidated balance sheet during the three months ended March 31, 2015. This deferred gain was recognized as part of the Second CB Closing which occurred on April 30, 2015.

The Company negotiated the purchase of a significant portion of the Copper Beech Portfolio at the inception of the Initial Purchase Agreement, notwithstanding the acquisition of ownership interests occurred in stages. During the year ended December 31, 2014, the Company recognized a $33.4 million loss on the effect of not exercising the Copper Beech option which correspondingly decreased the Company’s investment in the Copper Beech Portfolio. This loss resulted from the Company reducing its ownership interest in 28 properties in the Copper Beech Portfolio, from 67% to 48%. Additionally, included in the equity in losses recognized during the year ended December 31, 2014 and 2013, there were significant amounts of amortization expense for in-place lease intangible assets which also decreased the carrying value of our investment in the Copper Beech Portfolio. Primarily as a result of these decreases to our investment in the Copper Beech Portfolio, at the First and Second CB Closings, the Company realized a gain as the provisional fair value of the assets acquired and liabilities assumed exceeded the consideration of cash paid, OP Units issued and the carrying value of the investment in the Copper Beech Portfolio for these properties.

The following table summarizes the provisional fair values of the assets acquired and liabilities assumed from the First CB Closing discussed above:

	January 30,
	2015
Assets acquired:
Land	$	41,309
Buildings		504,960
Furniture, fixtures and equipment		19,192
Intangibles		29,692
Other assets, including cash of $5,074		7,882
Total assets acquired	$	603,035

Liabilities assumed:
Mortgage, construction loans and other debt	$	263,786
Other liabilities		9,378
Total liabilities assumed	$	273,164

Net assets acquired	$	329,871

Since the First CB Closing, the 28 Copper Beech properties that were acquired and consolidated contributed $9.2 million of revenues and $7.3 million of net loss for the three months ended March 31, 2015 that are included in the accompanying consolidated statement of operations and comprehensive income (loss). These results include depreciation of $2.8 million and amortization of in-place intangible assets for the Copper Beech Portfolio of $8.7 million for the period from January 30, 2015 (date of First CB Closing) through March 31, 2015. In connection with the First CB and Second CB Closings, the Company recognized $1.3 million of transaction costs for the three months ended March 31, 2015.

The acquired properties’ results of operations have been included in the accompanying consolidated statements of operations and comprehensive income (loss) since the respective acquisition closing dates. The following pro forma information for the three months ended March 31, 2015 and 2014 presents consolidated financial information for the Company as if the property acquisitions discussed above had occurred at the beginning of the earliest period presented. Excluded from the pro forma results below are $1.3 million and $0.5 million of transaction costs for the three months ended March 31, 2015 and 2014, respectively and $21.6 million of gain on purchase of Copper Beech for the three months ended March 31, 2015. Additionally, included in the pro forma results below for both the three months ended March 31, 2015 and 2014 is approximately $13.0 million of amortization expense of in-place intangible assets. The pro forma information is provided for informational purposes only and is not indicative of results that would have occurred or which may occur in the future:

	Pro Forma
	Three Months Ended March 31,
	2015		2014

Total revenues	$	48,298	$	38,422
Net loss	$	(11,761)	$	(9,885)
Net loss attributable to common shareholders	$	(10,773)	$	(11,333)

The initial accounting for the business combination is incomplete with respect to the values assigned to tangible and intangible assets acquired with liabilities assumed and OP Units issued as the Company did not have sufficient time to finalize these respective valuations and, accordingly, the amounts recognized in these consolidated financial statements are provisional.

As of June 25, 2015, the Company owned 100% of Copper Beech Klondike and Copper Beech Northbrook. See Note 18.

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 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 March 31, 2015 and December 31, 2014, the Company owned a 47.0% common interest in CSH Montreal, the holding company of DCV Holdings.