9. Debt

The following is a summary of the Company’s mortgage and construction notes payable, the Credit Facility (defined below), Exchangeable Senior Notes (defined below), and other debt (in thousands):

	March 31, 2015		December 31, 2014
Fixed-rate mortgage loans ⁽¹⁾	$	387,019	$	163,341
Variable-rate mortgage loans		16,548		16,613
Construction loans ⁽¹⁾		162,928		120,719
Line of credit ⁽¹⁾		263,500		217,500
Exchangeable senior notes		97,588		97,419
Other debt		6,888		2,827
	$	934,471	$	618,419

⁽¹⁾

As stated in Note 6, on January 30, 2015, the Company and certain of its affiliates completed the acquisition of substantially all of the Sellers’ remaining interests in most of the Copper Beech properties. This acquisition represents $220.5 million of the increase in the fixed-rate mortgage loans, $37.9 million of the increase in the construction loans and $4.5 million of the increase in other debt related to Copper Beech letters of credit.

Mortgage and Construction Loans

Mortgage and construction loans are collateralized by properties and their related revenue streams. Mortgage loans are not cross-defaulted or cross-collateralized with any other indebtedness. The Company’s mortgage loans generally may not be prepaid prior to maturity; however, in certain cases, prepayment is allowed subject to prepayment penalties. The Company’s construction note agreements contain representations, warranties, covenants (including financial covenants upon commencement of operations) and other terms that are customary for construction financing. Construction loans are generally secured by a first deed of trust or mortgage on each property, primary UCC filings, and an assignment of rents, leases and profits from the respective property. Mortgage and construction loans for the periods presented consisted of the following (in thousands):

	Face Amount		Principal Outstanding at 3/31/2015		Principal Outstanding at 12/31/2014			Stated Interest Rate		Interest Rate at 3/31/2015			Maturity Date ⁽¹⁾	Amortization
Construction loans
The Grove at Muncie	$	14,567	$	13,892	$	13,892			LIBOR + 225 BPS		2.43	%	7/31/2015		Interest only
The Grove at Slippery Rock		17,961		17,738		16,031			LIBOR + 215 BPS		2.33	%	6/21/2016		Interest only
The Grove at Fort Collins		19,073		19,073		19,073			LIBOR + 190 BPS		2.08	%	7/13/2016		Interest only
The Grove at Pullman		16,016		10,886		10,886			LIBOR + 220 BPS		2.38	%	9/5/2016		Interest only
The Grove at Grand Forks		16,916		15,414		12,474			LIBOR + 200 BPS		2.18	%	2/5/2016		Interest only
The Grove at Gainesville		30,069		25,593		22,836			LIBOR + 215 BPS		2.33	%	3/13/2017		Interest only
Copper Beech at Ames		23,551		21,797		21,170			LIBOR + 225 BPS		2.43	%	5/2/2017		Interest only
Toledo Vivo		9,404		4,377		4,357			LIBOR + 215 BPS		2.33	%	11/25/2017		Interest only
CMU Phase II—Mount Pleasant, MI		10,130		9,120		-	⁽⁶⁾		LIBOR + 250 BPS		2.68	%	2/1/2017		30 years	⁽⁷⁾
Statesboro, GA Phase II		9,703		9,288		-	⁽⁶⁾		LIBOR + 250 BPS		2.68	%	11/1/2016		30 years	⁽⁷⁾
Auburn, AL		15,750		15,750		-	⁽⁶⁾		LIBOR + 200 BPS		2.18	%	2/6/2017		Interest only
Mortgage loans
The Grove at Denton		17,167		16,549		16,613			LIBOR + 215 BPS		2.33	%	3/1/2017		30 years	⁽²⁾
The Grove at Milledgeville		16,250		15,583		15,640			6.12%		6.12	%	10/1/2016		30 years	⁽²⁾
The Grove at Carrollton and The Grove at Las Cruces		29,790		28,571		28,674			6.13%		6.13	%	10/11/2016		30 years	⁽²⁾
The Grove at Asheville		14,800		14,251		14,304			5.77%		5.77	%	4/11/2017		30 years	⁽²⁾
The Grove at Ellensburg		16,125		15,784		15,845			5.10%		5.10	%	9/1/2018		30 years	⁽³⁾
The Grove at Nacogdoches		17,160		16,792		16,857			5.01%		5.01	%	9/1/2018		30 years	⁽³⁾
The Grove at Greeley		15,233		14,880		14,945			4.29%		4.29	%	10/1/2018		30 years	⁽³⁾
The Grove at Clarksville		16,350		16,167		16,238			4.03%		4.03	%	7/1/2022		30 years	⁽⁴⁾
The Grove at Columbia		23,775		22,623		22,738			3.83%		3.83	%	7/1/2022		30 years	⁽²⁾
The Grove at Statesboro		18,100		18,047		18,100			4.01%		4.01	%	1/1/2023		30 years	⁽⁵⁾
Copper Beech I - State College		5,250		5,136		-	⁽⁶⁾		5.61%		5.61	%	2/11/2016		30 years	⁽²⁾
Copper Beech II - State College		8,805		9,446		-	⁽⁶⁾		5.97%		5.97	%	8/1/2019		30 years	⁽²⁾
Oakwood - State College		5,750		6,119		-	⁽⁶⁾		4.99%		4.99	%	10/1/2020		30 years	⁽²⁾
IUP Phase I - Indiana		6,500		6,500		-	⁽⁶⁾		2.15%		2.15	%	6/2/2017		Interest only
IUP Phase II - Indiana		6,250		6,027		-	⁽⁶⁾		5.90%		5.90	%	10/1/2015		30 years	⁽²⁾
Radford		12,400		12,624		-	⁽⁶⁾		5.99%		5.99	%	11/6/2016		30 years	⁽²⁾
Bloomington		10,860		7,873		-	⁽⁶⁾		6.22%		6.22	%	10/1/2016		30 years	⁽²⁾
CMU Phase I - Mount Pleasant, MI		20,000		18,455		-	⁽⁶⁾		5.47%		5.47	%	10/1/2015		30 years	⁽²⁾
Bowling Green Phase I		13,000		12,344		-	⁽⁶⁾		5.63%		5.63	%	10/1/2015		30 years	⁽²⁾
Allendale Phase I		23,780		24,110		-	⁽⁶⁾		5.98%		5.98	%	10/1/2016		30 years	⁽²⁾
Allendale Phase II		11,896		12,621		-	⁽⁶⁾		6.27%		6.27	%	9/6/2017		30 years	⁽²⁾
Columbia, MO		24,516		24,997		-	⁽⁶⁾		6.22%		6.22	%	10/1/2016		30 years	⁽²⁾
Statesboro, GA Phase I		31,000		32,455		-	⁽⁶⁾		5.81%		5.81	%	10/6/2017		30 years	⁽²⁾
Columbia, SC Phase I		36,936		38,995		-	⁽⁶⁾		6.27%		6.27	%	9/6/2017		30 years	⁽²⁾
Columbia, SC Phase II		6,300		6,618		-	⁽⁶⁾		5.41%		5.41	%	8/1/2020		30 years	⁽²⁾
			$	566,495	$	300,673

	⁽¹⁾	For the construction loans, the maturity date is the stated maturity date in the respective loan agreements, some of which can be extended for an additional one to two years, subject to the satisfaction of certain conditions, depending on the loan. Prior to the filing of this document, the construction loan for The Grove at Fort Collins was extended to July 31, 2016. The extension for the construction loan for The Grove at Muncie is pending an appraisal. Additionally, for loans that have matured or will mature during 2015, the Company is actively pursuing an extension or refinancing of those loans.
	⁽²⁾	Loan requires monthly payments of principal and interest, plus certain reserve and escrows, until maturity when all principal is due.
	⁽³⁾	Loan requires interest only payments plus certain reserves and escrows, payable monthly through September 2013. Thereafter, principal and interest, plus certain reserves and escrows, are payable monthly until maturity.
	⁽⁴⁾	Loan requires interest only payments plus certain reserves and escrows, payable monthly through August 2014. Thereafter, principal and interest, plus certain reserves and escrows, are payable monthly until maturity.
	⁽⁵⁾	Loan requires interest only payments plus certain reserves and escrows, payable monthly through January 2015. Thereafter, principal and interest, plus certain reserves and escrows, are payable monthly until maturity.
	⁽⁶⁾	As stated in Note 6, on January 30, 2015, the Company and certain of its affiliates completed the acquisition of substantially all of the Sellers’ remaining interests in 28 of the Copper Beech properties. Accordingly, these balances were not recognized by the Company as of December 31, 2014. As part of recording the mortgage loans from the First CB Closing at fair value, the outstanding amount, after giving effect for each loan’s respective provisional fair value adjustment, could result in an outstanding balance greater than the face amount of the mortgage loan. These fair value adjustments are amortized to interest expense over the term of the respective mortgage loans.
	⁽⁷⁾	Loan required interest only payments until the loan was extended in March of 2015. Thereafter, principal and interest, plus certain reserves, are payable monthly until maturity.

Line of Credit

In January 2013, the Company entered into the second amended and restated credit agreement (the "Second Amended and Restated Credit Agreement"), which provides for a $250.0 million senior unsecured revolving credit facility (the "Revolving Credit Facility") and a $50 million term loan (the “Term Loan”, together with the “Revolving Credit Facility”, the “Amended Credit Facility”). Additionally, under certain circumstances, there is an accordion feature that allows the Company to request an increase in the total commitments of an additional $300.0 million to a total commitment of $600.0 million. The Second Amended and Restated Credit Facility will mature in January 2017 and contains a one-year extension option, subject to certain terms and conditions. Amounts outstanding under the Second Amended and Restated Credit Facility bears interest at a floating rate equal to, at the Company’s election, the Eurodollar Rate or the Base Rate (each as defined in the Amended Credit Facility) plus a spread. The spread for borrowings under the Revolving Credit Facility ranges from 1.75% to 2.50% for Eurodollar Rate based borrowings and from 0.75% to 1.50% for Base Rate based borrowings, and the spread for the Term Loan ranges from 1.70% to 2.45% for Eurodollar Rate based borrowings and from 0.70% to 1.45% for Base Rate based borrowings. At March 31, 2015, the interest rate was 2.69% on the Revolving Credit Facility borrowings and 2.64% on the Term Loan.

As of March 31, 2015, the Company had $213.5 million outstanding under the Revolving Credit Facility and $50.0 million outstanding under the Term Loan. The amounts outstanding under the Revolving Credit Facility and Term Loan, as well as outstanding letters of credit of $3.4 million, will reduce the amount that the Company may be able to borrow under this facility for other purposes. At March 31, 2015, the Company had $36.5 million in borrowing capacity under the Revolving Credit Facility, and amounts borrowed under the facility are due at its maturity in January 2017, subject to a one-year extension, which the Company may exercise at its option, subject to the satisfaction of certain terms and conditions, including the payment of an extension fee. The amount available for the Company to borrow under the Amended Credit Facility is based on the sum of (a) the lesser of (i) 60.0% of the "as-is" appraised value of the Company’s properties that form the borrowing base of the Amended Credit Facility and (ii) the amount that would create a debt service coverage ratio of not less than 1.5, and (b) 50% of the aggregate of the lesser of (i) the book value of each of the Company’s development assets (as such term is defined in the Second Amended and Restated Credit Agreement) and (ii) the "as-is" appraised value of each of the Company’s development assets, subject to certain limitations in the Second Amended and Restated Credit Agreement.

The Company incurs an unused fee on the balance between the amount available under the Revolving Credit Facility and the amount outstanding under the Revolving Credit Facility of (i) 0.30% per annum if the Company’s average borrowing is less than 50.0% of the total amount available or (ii) 0.25% per annum if the Company’s average borrowing is greater than 50.0% of the total amount available.

On February 25, 2015, the Company entered into the Second Amendment to the Revolving Credit Facility, which amended, among other things, certain of the financial covenants from and including March 31, 2015 until and including September 30, 2015 (the “Relief Period”).

The Company’s ability to borrow under the Amended Credit Facility is subject to its ongoing compliance with a number of customary financial covenants during the Relief Period, including:

	·	a maximum leverage ratio of not greater than 0.65:1.00;
	·	a minimum fixed charge coverage ratio of not less than 1.30:1.00;
	·	a minimum ratio of fixed rate debt and debt subject to hedge agreements to total debt of not less than 66.67%;
	·	a maximum secured recourse debt ratio of not greater than 20.0%;
	·	a minimum tangible net worth of not less than the sum of $330,788,250 plus an amount equal to 75.0% of the net proceeds of any additional equity issuances; and
	·	a maximum secured debt ratio of not greater than 47.5%.

Pursuant to the terms of the Amended Credit Facility, the Company may not pay distributions that exceed the greater of (i) 95.0% of funds from operations, or (ii) the minimum amount required for the Company to qualify and maintain its status as a REIT. If a default or event of default occurs and is continuing, the Company also may be precluded from making certain distributions (other than those required to allow the Company to qualify and maintain its status as a REIT). On September 30, 2014, the Company received a waiver with respect to the distribution payout ratio for each distribution payout date through the end of 2015. The waiver was expressly conditioned on the following: (i) no default or event of default shall have occurred and be continuing and (ii) as each test date during 2015, the payout ratio shall be equal to or less than (A) 105% or (B) such greater amount as may be required by applicable law for the Company to maintain its status of a REIT. Additionally, on February 25, 2015, the dividend payout ratio was amended to be calculated on a rolling twelve month pro forma basis based on the current quarterly dividend of $0.09 per share.

The Company and certain of its subsidiaries guarantee the obligations under the Amended Credit Facility and the Company and certain of its subsidiaries have provided a negative pledge against specified assets (including real property), stock and other interests.

Exchangeable Senior Notes

The Company has outstanding $100.0 million of Exchangeable Senior Notes due 2018 (the “Exchangeable Senior Notes”) which bear interest at 4.75% per annum. Interest is payable on April 15 and October 15 of each year beginning April 15, 2014 until the maturity date of October 15, 2018. The Operating Partnership’s obligations under the Exchangeable Senior Notes are fully and unconditionally guaranteed by the Company. The Exchangeable Senior Notes are senior unsecured obligations of the Operating Partnership and rank equally in right of payment with all other existing and future senior unsecured indebtedness of the Operating Partnership. Although the indenture for the Exchangeable Senior Notes contains a cross-default provision, as of March 31, 2015, no event under any of the Company’s credit facilities has triggered that cross-default provision (see Note 18).

The Exchangeable Senior Notes contain an exchange settlement feature which allows the holder, under certain circumstances, to exchange its Exchangeable Senior Notes for cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the option of the Operating Partnership, based on an initial exchange rate of 79.602 shares of common stock per $1,000 principal amount of Exchangeable Senior Notes. At the initial exchange rate, the Exchangeable Senior Notes are exchangeable for common stock at an exchange price of $12.56 per share of common stock.

The Exchangeable Senior Notes will be exchangeable by the holder under the following circumstances on or prior to July 15, 2018: (i) during any calendar quarter beginning after December 31, 2013 (and only during such quarter) if the closing sale price of the common stock, $0.01 par value per share, of the Company is more than 130% of the then-current exchange price for at least 20 trading days (whether or not consecutive) in the period of the 30 consecutive trading days ending on the last trading day of the previous calendar quarter; (ii) during the five consecutive business-day period following any five consecutive trading-day period in which the trading price per $1,000 principal amount of notes for each trading day during such five trading day period was less than 98% of the closing sale price of the common stock of Campus Crest, or Campus Crest common stock, for each trading day during such five trading-day period multiplied by the then current exchange rate; or (iii) upon the occurrence of specified corporate transactions described in the indenture governing the Exchangeable Senior Notes. On or after July 15, 2018, and on or prior to the second scheduled trading day immediately preceding the maturity date, holders of the Exchangeable Senior Notes may exchange their notes without regard to the foregoing conditions. Following certain corporate transactions that occur prior to maturity of the Exchangeable Senior Notes and that also constitute a make-whole fundamental change, the Operating Partnership will increase the exchange rate for holders who elect to exchange notes in connection with such make-whole fundamental change in certain circumstances. If specified fundamental changes involving the Operating Partnership or the Company occur, holders may require the Operating Partnership to repurchase the Exchangeable Senior Notes for cash at a price equal to 100% of the principal amount of the Exchangeable Senior Notes to be purchased plus any accrued and unpaid interest to, but excluding, the repurchase date.

The Operating Partnership may not redeem the Exchangeable Senior Notes prior to the maturity date. At any time prior to July 15, 2018, the Operating Partnership may irrevocably elect, in its sole discretion without the consent of the holders of the Exchangeable Senior Notes, to settle all of the future exchange obligation entirely in shares of the Company's common stock. On or after July 15, 2018, the Exchangeable Senior Notes will be exchangeable at any time prior to the close of business on the second business day immediately preceding the maturity date.

In connection with the issuance of the Exchangeable Senior Notes, the Company recorded $97.6 million within line of credit and other debt on the accompanying consolidated balance sheet, based on the fair value of the instrument at the time of issuance, and $2.4 million in additional paid-in-capital, net of offering costs, in the accompanying consolidated statements of changes in equity. Amortization related to the $2.4 million in additional paid in capital was $0.2 million and $0.1 million for the three months ended March 31, 2015 and 2014, respectively.

On May 21, 2015, the Operating Partnership delivered a notice of sole remedy under the indenture governing the Exchangeable Senior Notes. See Note 18 for further details.

Other Debt

In June 2013, the Company entered into a $33.4 million (CAD 35.0 million) unsecured note payable in connection with its acquisition of a hotel in Montreal, Quebec, Canada. The note payable provided for interest-only payments at a variable interest rate equal to the Canadian Dealer Offered Rate (“CDOR”), which was 1.30% at December 31, 2014, plus a spread of 2.50%. During the year ended December 31, 2014, this facility was assigned to and assumed by CSH Montreal, an unconsolidated joint venture, at which time the Company became the sole guarantor of the facility. The note was repaid in full during the year ended December 31, 2014.

As stated in Note 6, on January 30, 2015, the Company, and certain of its affiliates, completed the acquisition of substantially all of the Sellers’ remaining interests in Copper Beech, which included $4.5 million of other debt. This other debt consists of three lines of credit averaging about $1.5 million each. The interest rate on these lines of credit range from 3.25% to 3.59% and the maturity dates on these lines of credit are between the dates of September 1, 2015 and July 1, 2017.

Schedule of Debt Maturities

Scheduled debt maturities for the remainder of 2015 and each of the four years subsequent to December 31, 2015 and thereafter, are as follows (in thousands):

2015	$	58,643
2016		187,846
2017		440,934
2018		164,684
2019		9,470
Thereafter		63,556
Total outstanding debt		925,133

Convertible note discount		(2,412)
Copper Beech debt fair value adjustment		11,750
Outstanding as of March 31, 2015, net of discount and fair value adjustment	$	934,471

The Copper Beech debt fair value adjustment relates to the difference between the carrying value and provisional fair value of the debt assumed by the Company on January 30, 2015 (see Note 6), net of amortization of $1.0 million. Amortization of deferred financing costs was $0.6 million and $0.7 million for the three months ended March 31, 2015 and 2014, respectively.

Covenant Renegotiation

On February 25, 2015, the Company received a unanimously approved waiver under its amended credit facility that provides relief from certain financial covenants during a relief period that runs from December 31, 2014 until and including September 30, 2015. During the relief period the following new measurements will apply to covenant tests: maximum leverage ratio of not greater than 0.65:1.00; maximum secured debt ratio of not greater than 47.5%; minimum fixed charge ratio of not less than 1.30:1.00; and a dividend payout ratio of not more than 105.0% calculated on a pro forma basis that applies the current quarterly dividend of $0.09 on a trailing twelve month basis.

Although the Company is currently in compliance with the terms of its Second Amended and Restated Credit Agreement, the Company’s Board has determined, based on an evaluation by management of the Company’s ability to satisfy all financial covenants in the credit agreement for the next four quarters, not to declare or pay dividends on its Common Stock or Series A Preferred Stock for the first quarter of 2015. In addition, the Board does not currently intend to declare or pay dividends on its Common Stock or Series A Preferred Stock for the remainder of 2015 unless the Company experiences sufficient improvement in its operating results, including successfully completing the sale of certain assets and enhancing the Company’s liquidity position by raising additional capital and/or refinancing its existing credit facilities.