S-11/A

As filed with the Securities and Exchange Commission on September 20, 2010

Registration Statement No. 333-166834

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 6

to

Form S-11

FOR REGISTRATION

UNDER

THE SECURITIES ACT OF 1933

OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES

CAMPUS CREST COMMUNITIES, INC.

(Exact Name of Registrant as Specified in Governing Instruments)

2100 Rexford Road, Suite 414
Charlotte, NC 28211
(704) 496-2500
(Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Ted W. Rollins
Chief Executive Officer
2100 Rexford Road, Suite 414
Charlotte, NC 28211
(704) 496-2500
(Name, Address, Including Zip Code and Telephone Number, Including Area Code, of Agent for Service)

Copies to:

Paul S. Ware
J. Andrew Robison
Bradley Arant Boult Cummings LLP
1819 Fifth Avenue North
Birmingham, AL 35203
(205) 521-8000 Jonathan Golden
Arnall Golden Gregory LLP
171 17th Street NW
Suite 2100
Atlanta, GA 30363-1031
(404) 873-8500 J. Gerard Cummins
Bartholomew A. Sheehan III
Sidley Austin LLP
787 Seventh Avenue
New York, NY 10019
(212) 839-5300

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the Securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box.  o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer þ
(Do not check if a smaller reporting company) Smaller reporting company o

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion dated September 20, 2010

PROSPECTUS

28,333,333 Shares

Campus Crest Communities, Inc.

Common Stock

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, LLC, 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. Upon completion of this offering and our formation transactions, we will own interests in 27 student housing properties containing approximately 13,580 beds.

This is our initial public offering. We are offering 28,333,333 shares of our common stock, $0.01 par value per share. We expect the initial public offering price of our common stock to be between $12.50 and $14.50 per share. Currently, no public market exists for our common stock. Our common stock has been approved for listing on the New York Stock Exchange under the symbol ‘‘CCG,” subject to official notice of issuance.

We are organized as a Maryland corporation and intend to elect and qualify to be taxed as a real estate investment trust for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2010. Subject to certain exceptions described in this prospectus, upon completion of this offering, our charter will provide that no person may own, or be deemed to own, 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.

Investing in our common stock involves significant risks. You should read the section entitled “Risk Factors” beginning on page 25 of this prospectus for a discussion of the risks that you should consider before investing in our common stock.

	Per
	Share	Total
Public offering price	$	$
Underwriting discount(1)	$	$
Proceeds, before expenses, to us	$	$

(1) Excludes a structuring fee payable to Raymond James & Associates, Inc. of 0.60% of the total public offering price of our common stock sold in this offering. See “Underwriting.”

The underwriters may purchase up to an additional 4,250,000 shares of our common stock from us at the initial public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover overallotments, if any.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the common stock on or before          , 2010.

Raymond James Citi Goldman, Sachs & Co. Barclays Capital RBC Capital Markets

Baird

The date of this prospectus is September  , 2010

TABLE OF CONTENTS

	Page
Prospectus Summary		1
Risk Factors		25
Cautionary Note Regarding Forward-Looking Statements		58
Use of Proceeds		60
Our Distribution Policy		63
Capitalization		72
Dilution		73
Selected Historical and Pro Forma Financial Information		74
Management’s Discussion and Analysis of Financial Condition and Results of Operations		79
Industry Outlook		112
Business and Properties		122
Management		166
Principal Stockholders		189
Certain Relationships and Related Party Transactions		190
Structure and Formation		194
Policies with Respect to Certain Activities		203
Description of Capital Stock		208
Certain Provisions of Maryland Law and of Our Charter and Bylaws		213
Shares Eligible for Future Sale		220
Our Operating Partnership and the Partnership Agreement		222
Federal Income Tax Considerations		227
ERISA Considerations		248
Underwriting		250
Legal Matters		257
Experts		257
Where You Can Find More Information		257
Index to Financial Statements		F-1

You should rely only on the information contained in this prospectus or in any free writing prospectus prepared by us. We have not, and the underwriters have not, authorized anyone to provide you with any additional or different information. If anyone provides you with additional or different information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus or such other date as specified herein. Our business, financial condition, liquidity, funds from operations, or “FFO,” results of operations and prospects may have changed since such dates.

Unless the context otherwise requires, references to “company,” “we,” “us” and “our” refer to (i) Campus Crest Communities, Inc., a Maryland corporation, and its consolidated subsidiaries, including Campus Crest Communities Operating Partnership, LP, a Delaware limited partnership, through which we will conduct substantially all of our business, which we refer to as “our operating partnership,” except where it is clear from the context that the term means only the

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issuer of the common stock offered hereby, Campus Crest Communities, Inc., and (ii) with respect to the period prior to the completion of this offering, the business of our predecessor entities through which Campus Crest Group, LLC, a North Carolina limited liability company, or “Campus Crest Group,” carried out the development, construction, ownership and management of the properties that we will own interests in upon completion of this offering and our formation transactions; references to “predecessor entities” refer to one or more of the joint venture arrangements that owned our properties and the entities through which Campus Crest Group carried out our business; references to “MXT Capital” refer to MXT Capital, LLC, a Delaware limited liability company, 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, and is the sole owner of Campus Crest Group; references to the “Ricker Group” refer to Carl H. Ricker, Jr. and the vehicles through which Mr. Ricker or an affiliated party held interests in our predecessor entities; references to “HSRE” refer to Harrison Street Real Estate Capital and its affiliates that held interests in our predecessor entities; references to “Encore” refer to Encore Interests, Inc., a Delaware corporation; references to “CC-Encore” refer to CC-Encore, LLC, a Delaware limited liability company; references to “common stock” refer to shares of common stock, $0.01 par value per share, in Campus Crest Communities, Inc.; and references to “OP units” refer to limited partnership units in our operating partnership that are exchangeable, subsequent to the one-year anniversary of the completion of this offering, for cash or, at our option, common stock on a one-for-one basis. Unless otherwise indicated, the information contained in this prospectus assumes that (a) the common stock to be sold in this offering is sold at $13.50 per share, the mid-point of the price range set forth on the cover page of this prospectus, and (b) the underwriters’ overallotment option is not exercised.

Industry and Market Data

We use market data, industry forecasts and projections throughout this prospectus. We have obtained portions of this information from a market study prepared for us by Michael Gallis & Associates, or “MGA,” a North Carolina-based strategic planning and design firm, in connection with this offering. The forecasts and projections are based on MGA’s experience and data published by the U.S. Department of Education and other sources, and there is no assurance that any of the projections will be accurate. We believe that the study is reliable, but we have not independently verified the information in the study nor have we ascertained any underlying assumptions relied upon therein. While we are not aware of any misstatements regarding the industry data presented herein, estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors.”

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PROSPECTUS SUMMARY

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:

•   3,920 apartment units; and

•   10,528 beds.

Our six joint venture properties contain approximately:

•   1,128 apartment units; and

•   3,052 beds.

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

•   average occupancy of approximately 90%; and

•   average monthly rental revenue per occupied bed of approximately $467.

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^®

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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,

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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

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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:

•   Developing properties will expose us to additional risks beyond those associated with owning and operating student housing properties, and could materially and adversely affect us.

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•   Adverse economic conditions and dislocation in the credit markets have had a material and adverse effect on us and may continue to materially and adversely affect us.

•   We rely on our relationships with the colleges and universities from which our properties draw student-tenants and the policies and reputations of these schools; any deterioration in our relationships with such schools or changes in the schools’ admissions or residency policies or reputations could materially and adversely affect us.

•   Our results of operations are subject to risks inherent in the student housing industry, such as an annual leasing cycle and limited leasing period, which could materially and adversely affect us.

•   Competition from other student housing properties, including on-campus housing and traditional multi-family housing located in close proximity to the colleges and universities from which we draw student-tenants, may reduce the demand for our properties, which could materially and adversely affect us.

•   Our success depends on key personnel whose continued service is not guaranteed, and their departure could materially and adversely affect us.

•   The current economic environment could reduce enrollments and limit the demand for our properties, which could materially and adversely affect us.

•   In each of the past five fiscal years, we have experienced significant net losses; if this trend continues, we could be materially and adversely affected.

•   If we are unable to acquire properties on favorable terms, our future growth could be materially and adversely affected.

•   Our strategy of investing in properties located in medium-sized college and university markets may not be successful, which could materially and adversely affect us.

•   Our indebtedness exposes us to a risk of default and will reduce our free cash flow, which could materially and adversely affect us.

•   Joint venture investments could be materially and adversely affected by our lack of sole decision-making authority, our reliance on our co-venturers’ financial condition and disputes between our co-venturers and us.

•   Our management team has not previously operated a REIT, and this inexperience could materially and adversely affect us.

•   Our performance and the value of our properties are subject to risks associated with real estate and with the real estate industry, which could materially and adversely affect us.

•   Provisions of our charter allow our board of directors to authorize the issuance of additional securities, which may limit the ability of a third party to acquire control of us through a transaction that our stockholders believe to be in their best interest.

•   Provisions of Maryland law may limit the ability of a third party to acquire control of us, which, in turn, may negatively affect our stockholders’ ability to realize a premium over the market price of our common stock.

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•   The ownership limitations in our charter may restrict or prevent you from engaging in certain transfers of our common stock, which may delay or prevent a change in control of us that our stockholders believe to be in their best interest.

•   We may not be able to make our initial distributions or maintain our initial, or any subsequent, distribution rate.

•   A public market for our common stock may never develop and your ability to sell your shares of our common stock may be limited.

•   Common stock eligible for future sale may adversely affect the market price of our common stock.

•   Future offerings of debt or equity securities ranking senior to our common stock may limit our operating and financial flexibility and may adversely affect the market price of our common stock.

•   We have not obtained appraisals of our properties in connection with this offering and the price we pay to our existing investors for their interests in our predecessor entities may exceed our properties’ market value.

•   Our failure to qualify or remain qualified as a REIT could have a material and adverse effect on us and the market price of our common stock.

•   To qualify and remain qualified as a REIT, we will likely rely on the availability of equity and debt capital to fund our business.

•   Complying with REIT requirements may cause us to forgo otherwise attractive investment opportunities, which could materially and adversely affect us.

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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.

															Occupancy			Average Monthly
					Fall 2009			Distance to			Number		Number		as of			Rental Revenue
			Year		Overall			Campus			of		of		September 15,			Per Occupied
	City	State	Opened	Primary University Served	Enrollment			(miles)			Units		Beds		2010 (1)			Bed
	Wholly-Owned Properties
1	Asheville	NC	2005	University of NC - Asheville		3,695			0.1			154		448		88	%	$	488
2	Carrollton	GA	2006	University of West Georgia		11,500			0.1			168		492		92	%	$	436
3	Las Cruces	NM	2006	New Mexico State University		18,497			0.4			168		492		83	%	$	440
4	Milledgeville	GA	2006	Georgia College & State University		6,633			0.1			168		492		99	%	$	524
5	Abilene	TX	2007	Abilene Christian University		4,838			0.5			192		504		87	%	$	435
6	Ellensburg	WA	2007	Central Washington University		10,187			0.5			192		504		96	% (2)	$	483	(2)
7	Greeley	CO	2007	University of Northern Colorado		12,711			1.0			192		504		98	%	$	463
8	Jacksonville	AL	2007	Jacksonville State University		9,351			0.2			192		504		81	%	$	429
9	Mobile—Phase I (3)	AL	2007	University of South Alabama		14,522			On- Campus			192		504		100	%	$	466
10	Mobile—Phase II (3)	AL	2008	University of South Alabama		14,522			On- Campus			192		504		100	%	$	466
11	Nacogdoches	TX	2007	Stephen F. Austin State University		12,845			0.4			196		522		100	%	$	508
12	Cheney	WA	2008	Eastern Washington University		11,302			0.5			192		512		71	% (2)	$	448	(2)
13	Jonesboro	AR	2008	Arkansas State University		12,156			0.2			192		504		99	%	$	440
14	Lubbock	TX	2008	Texas Tech University		30,049			2.1			192		504		92	%	$	473
15	Stephenville	TX	2008	Tarleton State University		8,598			0.8			192		504		75	%	$	470
16	Troy	AL	2008	Troy University		6,679			0.4			192		514		98	%	$	472
17	Waco	TX	2008	Baylor University		14,614			0.8			192		504		83	%	$	535
18	Wichita	KS	2008	Wichita State University		14,823			1.1			192		504		75	%	$	453
19	Wichita Falls	TX	2008	Midwestern State University		6,341			1.2			192		504		67	%	$	456
20	Murfreesboro	TN	2009	Middle Tennessee State University		25,188			0.8			186		504		98	%	$	442
21	San Marcos	TX	2009	Texas State University		30,816			1.7			192		504		100	%	$	554
Sub Total of Wholly-Owned Properties						13,327	(4)		0.6	(4)		3,920		10,528		90	% (5)	$	472	(5)

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															Occupancy			Average Monthly
					Fall 2009			Distance to							as of			Rental Revenue
			Year		Overall			Campus			Number		Number		September 15,			Per Occupied
	City	State	Opened	Primary University Served	Enrollment			(miles)			of Units		of Beds		2010 (1)			Bed
	Joint Venture Properties — 49.9% Ownership Interest
22	Lawrence	KS	2009	University of Kansas		29,242			1.6			172		500		76	%	$	457
23	Moscow (3)	ID	2009	University of Idaho		11,957			0.5			192		504		89	%	$	455
24	San Angelo	TX	2009	Angelo State University		6,387			0.3			192		504		84	%	$	469
25	Conway	AR	2010	University of Central Arkansas		11,781			0.4			180		504		93	%	$	441
26	Huntsville	TX	2010	Sam Houston State University		16,772			0.2			192		504		100	%	$	448
27	Statesboro	GA	2010	Georgia Southern University		19,086			0.7			200		536		100	%	$	447
Sub Total of Joint Venture Properties						15,871	(4)		0.6	(4)		1,128		3,052		91	% (5)	$	452	(5)
Total Properties						13,892	(4)		0.6	(4)		5,048		13,580		90	% (5)	$	467	(5)

(1)	Represents executed leases in hand for the 2010-2011 academic year.
(2)	The 2010-2011 academic year commences on September 22, 2010 at the primary university served by this property; accordingly, pre-academic year leasing is still ongoing at this property.
(3)	Property subject to a ground lease with an unaffiliated third-party.
(4)	Average.

(5) Weighted average by number of leased beds as of September 15, 2010.

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:

					Primary		Fall 2009			Distance to							Estimated
			Targeted		University		Overall			Campus			Number		Number		Cost(1)
City	State		Completion		Served		Enrollment			(miles)			of Units		of Beds		($ in thousands)
Fort Wayne		IN		August 2011		Indiana University/ Purdue University		13,675			1.1			204		540	$	19,926
Clarksville		TN		August 2011		Austin Peay State University		10,188			1.3			208		560		21,202
Ames		IA		August 2011		Iowa State University		27,945			0.3			216		584		21,411
Fort Collins		CO		August 2011		Colorado State University		25,413			On-Campus			224		624		25,380
Total Expected 2011 Consolidated Developments								19,305	(2)		0.7	(2)		852		2,308	$	87,919

(1)	Actual costs may vary significantly from estimated costs.
(2)	Average.

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

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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:

					Primary		Fall 2009			Distance to							Estimated
			Targeted		University		Overall			Campus			Number		Number		Cost(1)
City	State		Completion		Served		Enrollment			(miles)			of Units		of Beds		($ in thousands)
Denton		TX		August 2011		University of North Texas		36,123			0.8			216		584	$	24,873
Orono		ME		August 2011		University of Maine		11,867			0.5			188		620		24,278
Valdosta		GA		August 2011		Valdosta State University		12,391			1.9			216		584		21,150
Total Expected 2011 Joint Venture Developments								20,127	(2)		1.1	(2)		620		1,788	$	70,301

(1)	Actual costs may vary significantly from estimated costs. Under certain circumstances, we expect that we will be responsible for funding the amount by which actual development costs for a project pursued by the venture exceed the budgeted development costs of such project (without any increase in our interest in the project).
(2)	Average.

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.”

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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:

•   consolidate the ownership of our properties and the student housing business of Campus Crest Group into our operating partnership and its wholly-owned subsidiaries;

•   complete the repayment of all amounts outstanding under our mortgage loan with Silverton Bank that is currently secured by six of our properties (as described in this prospectus, we will repay, in aggregate, approximately $287.1 million of indebtedness with the (i) net proceeds from this offering and (ii) $39.6 million borrowed under our revolving credit facility);

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•   facilitate this offering; and

•   enable us to qualify as a REIT for federal income tax purposes commencing with our taxable year ending December 31, 2010.

Set forth below is an overview of our formation transactions:

•   Pursuant to the terms of a contribution agreement, MXT Capital will contribute to our operating partnership its student housing business and interests in the predecessor entities in exchange for approximately $4.5 million (which will immediately be used to make capital contributions to certain entities, which will in turn immediately use such capital contributions solely to repay indebtedness) and 973,333 OP units, representing a 3.3% limited partnership interest in our operating partnership.

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).

•   Campus Crest Group will distribute to MXT Capital its interests in two parcels of land consisting of 20.2 acres, with associated indebtedness of approximately $1.9 million, on which we have decided not to build student housing properties; MXT Capital has agreed not to build student housing properties on these parcels in the future.

•   Campus Crest Group will distribute to MXT Capital its interest in an entity that will own a minority interest in a 1999 Pilatus PC-12 single-engine turboprop airplane. Upon completion of this offering, we will lease this aircraft on payment terms structured to equal our pro rata carrying and operating costs of the aircraft based on our actual usage.

•   Pursuant to the terms of a contribution agreement, the Ricker Group will contribute to our operating partnership its interests in the predecessor entities and the entire ownership interest in the entities that own fee interests in certain properties that were subject to ground leases with the Ricker Group prior to the completion of our formation transactions in exchange for approximately $26.7 million and 66,667 OP units, representing a 0.2% limited partnership interest in our operating partnership.

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

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$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).

•   Pursuant to the terms of contribution agreements and purchase and sale agreements, certain third-party investors will contribute to our operating partnership all of their interests in the predecessor entities in exchange for approximately $10.7 million and 53,000 OP units, representing a 0.2% limited partnership interest in our operating partnership. Under the terms of these agreements, these third-party investors will also provide us with certain limited representations and warranties with respect to their ownership interests being contributed to our operating partnership, including the authority to enter into the agreement, the absence of claims or litigation involving the contributed interest and the obtaining of any necessary consents to the contribution of the interests. The third-party investors also provide covenants under the agreements, including not to transfer or dispose of any of their contributed interests, and will indemnify us for any losses resulting from breaches of their representations, warranties and covenants.

•   In exchange for approximately $29.1 million, HSRE will sell to our operating partnership (i) all of its interests in each of The Grove at Milledgeville and The Grove at San Marcos, with the result that we will own a 100% interest in each of these properties and (ii) a 49.8% interest in a joint venture that will own 100% of each of The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Moscow, The Grove at San Angelo and The Grove at Statesboro, with the result that we will own a 49.9% interest in these properties and HSRE will own a 50.1% interest in these properties. In addition, we will make a preferred investment in an aggregate amount of approximately $4.8 million in special-purpose subsidiaries of this joint venture that own The Grove at Moscow and The Grove at San Angelo, for which we will be entitled to a cumulative return of 9% compounded annually.

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.

•   We will 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 secured by six of our properties. As described in this prospectus, we will repay, in aggregate, approximately $287.1 million of indebtedness with the (i) net proceeds from this offering and (ii) $39.6 million borrowed under our revolving credit facility.

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•   We will purchase the preferred membership interest in our CC-Encore joint venture for $3.9 million and terminate CC-Encore.

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:

•   we will own approximately 95.8% of the outstanding OP units, MXT Capital will own approximately 3.3% of the outstanding OP units, the Ricker Group will own approximately 0.2% of the outstanding OP units and certain third-party investors will own, in the aggregate, approximately 0.2% of the outstanding OP units;

•   our operating partnership will own 100% interests in 21 of our properties;

•   our operating partnership will own an indirect 49.9% interest in The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Moscow, The Grove at San Angelo and The Grove at Statesboro;

•   our mortgage loan with Silverton Bank will be repaid in full (as described in this prospectus, we will repay, in aggregate, approximately $287.1 million of indebtedness with the (i) net proceeds from this offering and (ii) $39.6 million borrowed under our revolving credit facility); and

•   we will own each of the entities through which Campus Crest Group conducted its student housing business.

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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:

(1)	Includes an aggregate of 114,308 shares of restricted common stock to be granted to our independent directors, certain of our executive officers and certain members of our management team.
(2)	Represents a limited partnership interest in our operating partnership.
(3)	Represents 150,000 restricted OP units to be granted to Mr. Hartnett pursuant to his employment agreement upon completion of this offering. This award will vest ratably on each of the first, second and third anniversaries of the completion of this offering.

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

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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.”

•   Our operating partnership will issue to MXT Capital 973,333 OP units in exchange for MXT Capital’s contribution to our operating partnership of the interests owned by MXT Capital in the predecessor entities and its student housing business.

•   MXT Capital will enter into a tax protection agreement with us. Pursuant to the tax protection agreement, we will agree not to sell, exchange or otherwise dispose of nine of our properties for a period of ten years, or the “ten-year tax protection period,” in a transaction that would cause the members of MXT Capital to realize taxable gain that was built-in, or the “built-in gain,” to such properties at the time of their contribution to our operating partnership. If we sell one or more of these nine properties during the ten-year tax protection period, we will be required to pay to MXT Capital an amount equal to the federal, state and local taxes imposed on the built-in gain allocated to its members, with the amount of such taxes being computed based on the highest applicable federal, state and local marginal tax rates, as well as any “grossed up” taxes imposed on such payments. The amount otherwise payable in connection with such a transaction under the tax protection agreement will be reduced by 20% commencing on the fifth anniversary date of the closing date of this offering and an additional 20% on each successive anniversary date until the amount payable is reduced to zero on the tenth anniversary of the closing date. Consequently, our ability to sell or dispose of these nine properties will be substantially restricted by this obligation to make payments to MXT Capital during the ten-year tax protection period if we sell any such property. This requirement will also restrict our ability to arrange financing for our operations as well as our ability to manage our capital structure.

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.

•   We will enter into a registration rights agreement with MXT Capital pursuant to which we will agree, among other things, to register the resale of any common stock that may be exchanged for the OP units issued in our formation transactions. This agreement requires us to seek to register all common stock that may be exchanged for OP units effective as of that date which is 12 months following completion of this offering on a shelf registration statement under the Securities Act of 1933, as amended, or the “Securities Act.”

•   MXT Capital will receive Campus Crest Group’s interests in two parcels of land consisting of 20.2 acres, with associated indebtedness of approximately $1.9 million, on which we have decided not to build student housing properties.

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•   We will pay the Ricker Group approximately $26.7 million of the net proceeds from this offering and our operating partnership will issue to the Ricker Group 66,667 OP units in exchange for the Ricker Group’s contribution to our operating partnership of the interests owned by the Ricker Group in the predecessor entities and in the entities that have entered into ground leases with us relating to eight of our properties. As a result of our acquisition of the entities that previously had entered into ground leases with us relating to eight of our properties, we will have fee simple title to the real estate that is the subject of such leases.

•   Approximately $6.0 million of the net proceeds from this offering will be used to repay indebtedness owed by us to RHR, LLC, an entity owned by MXT Capital and the Ricker Group; RHR, LLC will, in turn, immediately repay an equal amount of indebtedness owed by it to an unaffiliated third party on substantially the same terms and conditions as the loan from RHR, LLC to us.

•   Approximately $4.0 million of the net proceeds from this offering will be used to repay our indebtedness to Capital Bank, an entity in which the Ricker Group has an ownership interest and of which Carl H. Ricker, Jr. is a director.

•   Each of Ted W. Rollins, Michael S. Hartnett and Carl H. Ricker, Jr. will be released from certain personal guarantees with respect to mortgage and construction indebtedness with an aggregate principal amount of approximately $243.3 million in the case of each of Messrs. Rollins and Hartnett and approximately $205.9 million in the case of Mr. Ricker, and from personal guarantees with respect to the RHR, LLC and Capital Bank indebtedness described above, and the MXT Capital indebtedness described below. Each of Messrs. Rollins and Hartnett will be released from certain personal guarantees with respect to the preferred membership interest in CC-Encore.

•   Indebtedness incurred by two entities through which MXT Capital conducts aspects of its business will be repaid by MXT Capital. MXT Capital will receive $4.5 million of the net proceeds from this offering, which it will immediately use to make capital contributions to these entities. These entities will, in turn, immediately use the capital contributions received from MXT Capital solely to repay indebtedness.

•   Our executive officers, directors and certain members of our management team will receive material benefits, including:

•   a grant of 114,308 shares of restricted common stock pursuant to the Campus Crest Communities, Inc. 2010 Incentive Award Plan, or the “2010 Incentive Award Plan” (including an aggregate grant of 80,973 shares of restricted common stock to certain of our executive officers and certain members of our management team and an aggregate grant of 33,335 shares of restricted common stock to our independent directors);

•   an aggregate of 512,361 shares of restricted common stock reserved under the 2010 Incentive Award Plan for issuance (i) one year after the termination of Campus Crest Group’s deferred compensation plan, or “DCP,” in satisfaction of vested interests in awards that were outstanding under the DCP; and (ii) in 2012 and 2013 pursuant to employment agreements to be entered into with our executive officers;

•   employment agreements providing for salary, bonus and other benefits, including severance upon a termination of employment under certain circumstances, and, in the case of Mr. Hartnett, a grant of 150,000 restricted OP units upon completion of this offering that will vest ratably on each of the first, second and third anniversaries of the

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completion of this offering, as described under “Management—Employment Agreements”;

•   indemnification by us for certain liabilities and expenses incurred as a result of actions brought, or threatened to be brought, against them as officers; and

•   upon completion of this offering we have agreed to pay to Donald L. Bobbitt, Jr., an executive vice president and our chief financial officer, Earl C. Howell, our president and chief operating officer, and Howard J. Weissman, a senior vice president and our corporate controller, cash bonuses of $300,000, $200,000 and $150,000, respectively.

•   Each of our non-employee directors will receive material benefits, including:

•   annual and per-meeting fees described under “Management—Director Compensation”; and

•   indemnification by us for certain liabilities and expenses incurred as a result of actions brought, or threatened to be brought, against him as a director.

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.

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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.”

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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.

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Statement of Operations Information:

	Pro Forma Campus						Historical Campus Crest Communities
	Crest Communities, Inc.						Predecessor
	Six Months			Year Ended			Six Months Ended
	Ended			December 31,			June 30,						Year Ended December 31,
	June 30, 2010			2009			2010			2009			2009			2008			2007
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
	(in thousands)
Revenues:
Student housing leasing	$	25,986		$	45,021		$	24,443		$	21,219		$	43,708		$	30,813		$	15,598
Student housing services		1,486			2,289			1,426			1,011			2,265			798			110
Development, construction and management services		17,311			24,540			30,738			37,258			60,711			2,505			—
Total revenues		44,783			71,850			56,607			59,488			106,684			34,116			15,708
Operating expenses:
Student housing operations		13,922			23,055			13,455			11,416			23,155			14,890			7,470
Development, construction and management services		16,140			24,847			28,644			35,693			60,200			2,147			—
General and administrative		3,500			6,572			2,618			2,454			5,617			5,422			3,467
Ground leases		94			264			94			96			264			224			40
Write-off of pre-development costs		—			1,211			—			—			1,211			203			—
Depreciation and amortization		9,792			18,598			9,429			9,115			18,371			13,573			5,765
Total operating expenses		43,448			74,547			54,240			58,774			108,818			36,459			16,742
Equity in loss of uncombined entities		(1,041	)		(506	)		(194	)		—			(59	)		—			—
Operating income (loss)		294			(3,203	)		2,173			714			(2,193	)		(2,343	)		(1,034	)
Nonoperating income (expenses):
Interest expense		(2,774	)		(5,530	)		(10,686	)		(7,369	)		(15,871	)		(14,946	)		(6,583	)
Change in fair value of interest rate derivatives		279			90			178			2,680			797			(8,758	)		(2,115	)
Income taxes		(128	)		(73	)		—			—			—			—			—
Other income (expense)		153			134			45			(19	)		44			(50	)		100
Total nonoperating expenses		(2,470	)		(5,379	)		(10,463	)		(4,708	)		(15,030	)		(23,754	)		(8,598	)
Net loss		(2,176	)		(8,582	)		(8,290	)		(3,994	)		(17,223	)		(26,097	)		(9,632	)
Net loss attributable to noncontrolling interest		(91	)		(360	)		(5,025	)		(2,060	)		(10,486	)		(870	)		(2,083	)
Net loss attributable to Campus Crest Communities, Inc./Predecessor	$	(2,085	)	$	(8,222	)	$	(3,265	)	$	(1,934	)	$	(6,737	)	$	(25,227	)	$	(7,549	)

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Balance Sheet Information:

	Pro Forma
	Campus Crest			Historical Campus Crest
	Communities, Inc.			Communities Predecessor
	As of			As of June 30,			As of December 31,
	June 30, 2010			2010			2009			2008
	(unaudited)			(unaudited)
	(in thousands)
Assets:
Student housing properties	$	370,400		$	348,466		$	347,157		$	326,217
Accumulated depreciation		(48,403	)		(48,403	)		(38,999	)		(20,794	)
Development in process		7,090			3,641			3,300			15,742
Investment in real estate, net		329,087			303,704			311,458			321,165
Investment in uncombined entity		21,472			3,257			2,980			776
Other assets		24,700			21,412			17,358			20,214
Total assets	$	375,259		$	328,373		$	331,796		$	342,155
Liabilities:
Mortgage and construction loans	$	60,840		$	329,374		$	329,102		$	322,426
Lines of credit and other debt		39,600			17,689			14,070			9,237
Other liabilities		21,650			34,756			31,340			32,606
Total liabilities		122,090			381,819			374,512			364,269
Equity:
Owners’ equity (deficit)		310,344			(54,245	)		(50,090	)		(42,502	)
Noncontrolling interest		(57,175	)		799			7,374			20,388
Total equity		253,169			(53,446	)		(42,716	)		(22,114	)
Total liabilities and equity	$	375,259		$	328,373		$	331,796		$	342,155

Other Data:

	Pro Forma
	Campus Crest
	Communities, Inc.
	Six Months			Year Ended
	Ended			December 31,
	June 30, 2010			2009
	(unaudited)
				(unaudited)
Funds from operations (“FFO”) (1):
Net loss	$	(2,176	)	$	(8,582	)
Real estate related depreciation and amortization		9,643			18,432
Real estate related depreciation and amortization — unconsolidated joint ventures		691			355
FFO	$	8,158		$	10,205

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	Historical Campus Crest Communities Predecessor
	Six Months Ended
	June 30,						Year Ended December 31,
	2010			2009			2009			2008			2007
	(unaudited)
	(in thousands)
Cash flow information:
Net cash provided by (used in) operations	$	2,739		$	2,068		$	4,353		$	1,264		$	(1,209	)
Net cash used in investing		(2,662	)		(12,830	)		(23,552	)		(148,385	)		(113,043	)
Net cash provided by financing		75			5,523			11,060			144,781			126,061

Selected Property Information:

	As of June 30,			As of December 31,
	2010			2009			2008			2007
Operating Properties		24			24			19			10
Units		4,476			4,476			3,542			1,814
Beds		12,036			12,036			9,520			4,966
Occupancy		89	%		84	%		78	%		91	%

(1) FFO is used by industry analysts and investors as a supplemental operating performance measure for REITs. We calculate FFO in accordance with the definition that was adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, or “NAREIT.” FFO, as defined by NAREIT, represents net income (loss) determined in accordance with accounting principles generally accepted in the United States of America, or “GAAP,” excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We use FFO as a supplemental performance measure because, in excluding real estate-related depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating expenses. We also believe that, as a widely recognized measure of the performance of equity REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially and adversely impact our results from operations, the utility of FFO as a measure of our performance is limited. While FFO is a relevant and widely used measure of operating performance of equity REITs, other equity REITs may use different methodologies for calculating FFO and, accordingly, FFO as disclosed by such other REITs may not be comparable to FFO published herein. Therefore, we believe that in order to facilitate a clear understanding of our historical operating results, FFO should be examined in conjunction with net income (loss) as presented in the combined financial statements and the other financial statements included elsewhere in this prospectus. FFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of the properties’ financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions.

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THE OFFERING

Common stock offered by us 28,333,333 shares⁽¹⁾

Common stock to be outstanding after this offering 28,447,641 shares⁽¹⁾⁽²⁾

Common stock and OP units to be outstanding after this offering 29,690,641 shares/units^(1)(2)(3)

Use of proceeds We estimate that the net proceeds from this offering, after deducting the underwriting discount, structuring fee and other estimated fees and expenses payable by us, will be approximately $348.9 million ($402.4 million if the underwriters exercise their overallotment option in full). We will contribute the net proceeds from this offering to our operating partnership, which will use the proceeds and approximately $39.6 of borrowings under our revolving credit facility as follows:

•  approximately $287.1 million to reduce outstanding mortgage and construction loan indebtedness and pay associated costs;

•  approximately $4.8 million to fund preferred investments in special-purpose subsidiaries of our joint venture with HSRE that own The Grove at Moscow and The Grove at San Angelo;

•  approximately $4.0 million to repay unsecured indebtedness to Capital Bank;

•  approximately $6.0 million to repay unsecured indebtedness to RHR, LLC; RHR, LLC will, in turn, immediately repay an equal amount of indebtedness owed by it to an unaffiliated third party on substantially the same terms and conditions as the loan from RHR, LLC to us;

•  approximately $4.5 million to MXT Capital, which will immediately use such amount to make capital contributions to certain entities that will, in turn, immediately use the capital contributions solely to repay indebtedness;

•  approximately $29.1 million to acquire interests in our properties from HSRE and satisfy associated obligations to HSRE⁽⁴⁾;

•  approximately $26.7 million to acquire interests in our properties from the Ricker Group;

•  approximately $10.7 million to acquire interests in our properties from certain third-party investors;

•  approximately $3.4 million to acquire land on which we expect to commence building four properties following the completion of this offering;

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•  $3.9 million to acquire the preferred membership interest in CC-Encore; and

•  approximately $8.3 million for working capital and general corporate purposes.

Ownership and transfer restrictions	Our charter, subject to certain exceptions, 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. See “Description of Capital Stock—Restrictions on Ownership and Transfer.”
Risk factors	Investing in our common stock involves significant risks. You should carefully read and consider the information set forth under “Risk Factors” and all other information in this prospectus before investing in our common stock.

New York Stock Exchange symbol “CCG”

(1) Excludes 4,250,000 shares of common stock issuable upon exercise of the underwriters’ overallotment option.

(2)	Includes an aggregate grant of 80,973 shares of restricted common stock to certain of our executive officers and certain members of our management team and an aggregate grant of 33,335 shares of restricted common stock to our independent directors, each of which is subject to a vesting schedule. Excludes 512,361 shares of common stock reserved under the 2010 Incentive Award Plan for issuance (i) one year after the termination of the DCP in satisfaction of vested interests in awards that were outstanding under the DCP; and (ii) in 2012 and 2013 pursuant to employment agreements to be entered into with our executive officers.
(3)	Includes the issuance of an aggregate of 1,093,000 OP units to MXT Capital, the Ricker Group and certain third-party investors in connection with our formation transactions and a grant of 150,000 restricted OP units to Mr. Hartnett pursuant to his employment agreement, which will vest ratably on each of the first, second and third anniversaries of the completion of this offering.
(4)	The amount of net proceeds to be paid to HSRE will increase to $31.0 million in the event that the lender consents relating to indebtedness secured by The Grove at Carrollton are received and our joint venture with HSRE acquires a 100% interest in The Grove at Carrollton.

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RISK FACTORS

Investment in our common stock involves significant risks. You should therefore carefully consider the material risks of an investment in our common stock that are discussed in this section, as well as the other information contained in this prospectus, before making an investment decision. The occurrence of any of the following risks could materially and adversely affect our financial condition, results of operations, cash flow, per share trading price and ability to satisfy our debt service obligations and pay dividends or distributions to you and could cause you to lose all or a significant part of your investment. Some statements in this prospectus, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to Our Business and Properties

Developing properties will expose us to additional risks beyond those associated with owning and operating student housing properties, and could materially and adversely affect us.

Our future growth will depend, in part, upon our ability to successfully complete the seven properties that we expect to commence building upon completion of this offering and to successfully identify and plan additional development opportunities. Our development activities, particularly those relating to the seven properties that we expect to develop with completion targeted for the 2011-2012 academic year, may be adversely affected by:

•   abandonment of development opportunities after expending significant cash and other resources to determine feasibility, requiring us to expense costs incurred in connection with the abandoned project;

•   construction costs of a project exceeding our original estimates;

•   failure to complete development projects on schedule or in conformity with building plans and specifications;

•   lower than anticipated occupancy and rental rates at a newly completed property, which rates may not be sufficient to make the property profitable; and

•   failure to obtain, or delays in obtaining, necessary zoning, land use, building, occupancy and other required governmental permits and authorizations.

The construction activities at our student housing properties expose us to liabilities and risks beyond those associated with the ownership and operation of student housing properties.

The construction of our student housing properties, including the seven properties that we expect to develop with completion targeted for the 2011-2012 academic year, involves risks associated with construction activities, including liability for workplace safety, such as injuries and accidents to persons and property occurring during the construction process. Construction activities also subject us to obligations relating to environmental compliance, such as management of storm water discharge and run-off, material handling, on-site storage of construction materials and off-site disposal of construction materials. These risks are in addition to those associated with owning or operating student housing properties, and the realization of any of these risks could materially and adversely affect us.

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Our development activities are subject to delays and cost overruns, which could materially and adversely affect us.

Our development activities, including those related to the seven properties targeted to be completed for the 2011-2012 academic year, may be adversely affected by circumstances beyond our control, including: work stoppages; labor disputes; shortages of qualified trades people, such as carpenters, roofers, electricians and plumbers; changes in laws or other governmental regulations, such as those relating to union organizing activity; lack of adequate utility infrastructure and services; our reliance on local subcontractors, who may not be adequately capitalized or insured; inclement weather; and shortages, delay in availability, or fluctuations in prices of building materials. Any of these circumstances could give rise to delays in the start or completion of, or could increase the cost of, developing one or more of our properties. If we are unable to recover these increased costs by raising our lease rates, our financial performance and liquidity could be materially and adversely affected.

We may not realize a return on our development activities in a timely manner, which could materially and adversely affect us.

Due to the amount of time required for planning, constructing and leasing of development properties, we may not realize a significant cash return for several years. Therefore, if any of our development activities are subject to delays or cost overruns, our growth may be hindered and our results of operations and cash flows may be adversely affected. In addition, new development activities, regardless of whether or not they are ultimately successful, typically require substantial time and attention from management. Furthermore, maintaining our development capabilities involves significant expense, including compensation expense for our development personnel and related overhead. To the extent we cease or limit our development activity, this expense will not be offset by revenues from our development activity. Therefore, if we do not realize a return on our development activities in a timely manner in order to offset these costs and expenses, we could be materially and adversely affected.

Adverse economic conditions and dislocation in the credit markets have had a material and adverse effect on us and may continue to materially and adversely affect us.

We have recently experienced unprecedented levels of volatility in the capital markets, a reduction in the availability of credit and intense recessionary pressures, which have had an adverse effect on our results of operations and our ability to borrow funds. For example, lenders are generally imposing more stringent lending standards and applying more conservative valuations to properties. This has limited the amount of indebtedness we have been able to obtain, and has impeded our ability to develop new properties and to replace construction financing with permanent financing. If these conditions continue, our business and our growth strategy, including our ability to develop the seven properties that we contemplate completing for the 2011-2012 academic year, may be materially and adversely affected. Although our business strategy contemplates access to debt financing (including our revolving credit facility and construction debt) to finance the construction of the seven properties we expect to commence building upon completion of this offering and to fund future development and working capital requirements, there can be no assurance that we will be able to obtain such financing on favorable terms or at all. Additionally, immediately upon completion of this offering we will borrow approximately $39.6 million under our revolving credit facility and issue letters of credit in an aggregate amount of $1.6 million under such facility. The amounts outstanding under our revolving credit facility immediately upon completion of this offering will reduce the amount that we can borrow under this facility for other purposes. Giving effect to the foregoing uses and our expected borrowing base, we expect to have approximately $61.2 million of borrowing capacity available under our revolving credit facility.

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The challenging economic environment may continue to adversely affect us by, among other things, limiting or eliminating our access to financing, which would adversely affect our ability to develop and refinance properties and pursue acquisition opportunities. Significantly more stringent lending standards and higher interest rates may reduce our returns on investment and increase our interest expense, which could adversely affect our financial performance and liquidity. Additionally, the limited amount of financing currently available may reduce the value of our properties, limit our ability to borrow against such properties and, should we choose to sell a property, impair our ability to dispose of such property at an attractive price or at all, which could materially and adversely affect us.

Certain of our properties are subject to liens and claims, which could materially and adversely affect us.

Twelve of our properties are subject to liens or claims for materials or labor relating to disputes with subcontractors or other parties that were involved in the development and construction process. We have recorded a liability of approximately $2.3 million related to these liens and claims as of June 30, 2010. There can be no assurance that we will not be required to pay amounts greater than our currently recorded liability in order to obtain the release of the liens or settle these claims. Further, we may not be able to obtain new financing for these properties until the liens are released.

Developing properties in new markets may materially and adversely affect us.

We may develop properties in markets within the United States in which we do not currently operate, including the seven markets in which we currently contemplate developing properties with completion targeted for the 2011-2012 academic year. To the extent we choose to develop properties in new markets, we will not possess the same level of familiarity with development in these markets, as we do in our current markets, which could adversely affect our ability to develop such properties successfully or at all or to achieve expected performance, which could materially and adversely affect us.

We rely on our relationships with the colleges and universities from which our properties draw student-tenants and the policies and reputations of these schools; any deterioration in our relationships with such schools or changes in the schools’ admissions or residency policies or reputations could materially and adversely affect us.

We rely on our relationships with colleges and universities for referrals of prospective student-tenants or for mailing lists of prospective student-tenants and their parents. Many of these schools own and operate on-campus student housing which compete with our properties for student-tenants. The failure to maintain good relationships with these schools could therefore have a material adverse effect on us. If schools refuse to provide us with referrals or to make lists of prospective student-tenants and their parents available to us or increase the cost of these lists, the lack of such referrals, lists or increased cost could have a material adverse effect on us.

Changes in admission and housing policies could adversely affect us. For example, if a school reduces the number of student admissions or requires that a certain class of students (e.g., freshman) live in on-campus housing, the demand for beds at our properties may be reduced and our occupancy rates may decline. While we may engage in marketing efforts to compensate for any such policy changes, we may not be able to effect such marketing efforts prior to the commencement of the annual lease-up period, or our additional marketing efforts may not be successful, which could reduce the demand for our properties and materially and adversely affect us.

It is also important that the schools from which our properties draw student-tenants maintain good reputations and are able to attract the desired number of incoming students. Any

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degradation in a school’s reputation could inhibit its ability to attract students and reduce the demand for our properties.

Our results of operations are subject to risks inherent in the student housing industry, such as an annual leasing cycle and limited leasing period; which could materially and adversely affect us.

We generally lease our properties for 11.5-month terms, and the related leases provide for 12 equal monthly payments of rent. Therefore, our properties must be entirely re-leased each year, exposing us to more leasing risk than property lessors that lease their properties for longer terms. Student housing properties are also typically leased during a limited leasing period that generally begins in January and ends in August of each year. We are therefore highly dependent on the effectiveness of our marketing and leasing efforts and personnel during this leasing period. We will be subject to heightened leasing risk at properties under development and at properties we may acquire in the future due to our lack of experience leasing such properties. Any significant difficulty in leasing our properties would adversely affect our results of operations, financial condition and ability to pay distributions on our common stock and would likely have a negative impact on the trading price of our common stock.

Additionally, student-tenants may be more likely to default on their lease obligations during the summer months, which could further reduce our revenues during this period. Although we typically require a student-tenant’s lease obligations to be guaranteed by a parent, we may have to spend considerable effort and expense in pursuing payment upon a defaulted lease, and our efforts may not be successful.

Competition from other student housing properties, including on-campus housing and traditional multi-family housing located in close proximity to the colleges and universities from which we draw student-tenants may reduce the demand for our properties, which could materially and adversely affect us.

Our properties compete with properties owned by universities, colleges, national and regional student housing businesses and local real estate concerns. On-campus student housing has inherent advantages over off-campus student housing (such as the majority of our properties), due to its physical location on the campus and integration into the academic community, which may cause student-tenants to prefer on-campus housing to off-campus housing. Additionally, colleges and universities may have financial advantages that allow them to provide student housing on more attractive terms than we are able to. For example, colleges and universities can generally avoid real estate taxes and borrow funds at lower interest rates than private, for-profit real estate concerns, such as us.

There are a number of student housing properties that are located near or in the same general vicinity of many of our properties and that compete directly with our properties. Such competing student housing properties may be newer, located closer to campus, charge less rent, possess more attractive amenities, offer more services or offer shorter lease terms or more flexible lease terms than our properties. Competing properties could reduce demand for our properties and materially and adversely affect us.

Revenue at a particular property could also be adversely affected by a number of other factors, including the construction of new on-campus and off-campus housing, decreases in the general levels of rents for housing at competing properties, decreases in the number of students enrolled at one or more of the colleges or universities from which the property draws student-tenants and other general economic conditions.

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Although we believe no participant in the student housing industry holds a dominant market share, we will compete with larger national companies, colleges and universities that have greater resources and superior access to capital. Furthermore, we believe that a number of other large national companies with substantial financial and marketing resources may be potential entrants in the student housing business. The activities of any of these companies, colleges or universities could cause an increase in competition for student-tenants and for the acquisition, development and management of other student housing properties, which could reduce the demand for our properties.

Our success depends on key personnel whose continued service is not guaranteed, and their departure could materially and adversely affect us.

We are dependent upon the efforts of our key personnel, particularly those of Ted W. Rollins, our co-chairman and chief executive officer, and Michael S. Hartnett, our co-chairman and chief investment officer. These individuals have extensive experience in our business, including sourcing attractive investment opportunities, development activities, financing activities, university relations and leasing. Messrs. Rollins and Hartnett have directed the operations of our predecessor entities and each has over 25 years of experience in providing service-enriched housing and approximately seven years of student housing experience. The loss of the services of either Mr. Rollins or Mr. Hartnett could materially and adversely affect us.

The current economic environment could reduce enrollments and limit the demand for our properties, which could materially and adversely affect us.

A continuation of ongoing economic conditions that adversely affect household disposable income, such as high unemployment levels, weak business conditions, reduced access to credit, increasing tax rates and high fuel and energy costs, could reduce overall student leasing or cause student-tenants to shift their leasing practices as students may determine to forego college or live at home and commute to college.

In addition, as a result of general economic weakness, many students may be unable to obtain student loans on favorable terms. If student loans are not available or their costs are prohibitively high, enrollment numbers for schools from which we draw student-tenants may decrease, resulting in a decrease in the demand for, and consequently the occupancy rates at and rental revenue from, our properties. Accordingly, the continuation or deterioration of current economic conditions could materially and adversely affect us.

In each of the past five fiscal years, we have experienced significant net losses; if this trend continues, we could be materially and adversely affected.

We have incurred significant net losses in each of the past five fiscal years. These results have had a negative impact on our financial condition. Although we anticipate that upon completion of this offering and our formation transactions we will be adequately capitalized and be able to resume our historical levels of development activity, there can be no assurance that our business will become profitable in the future and additional losses will not be incurred. If this trend continues in the future, our financial performance, liquidity and our ability to operate our business as a going concern could be materially and adversely affected.

If we are unable to acquire properties on favorable terms, our future growth could be materially and adversely affected.

Our future growth will depend, in part, upon our ability to acquire new properties on favorable terms. Acquisition opportunities may not be available to us on terms that we deem acceptable, and we may be unsuccessful in consummating acquisition opportunities. Our ability

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to acquire properties on favorable terms and successfully operate them may be adversely affected by:

•   an inability to obtain financing on attractive terms or at all;

•   competition from other real estate investors;

•   increased purchase prices and decreased expected yields due to competition from other potential acquirers;

•   the need to make significant and unexpected capital expenditures to improve or renovate acquired properties;

•   an inability to quickly and efficiently integrate acquisitions, particularly any acquisitions of portfolios of properties, into our existing operations;

•   market conditions may result in higher than expected vacancy rates and lower than expected rental rates at acquired properties; and

•   acquisition of properties subject to liabilities but without any recourse, or with only limited recourse, to the sellers, or with liabilities that are unknown to us, such as liabilities for clean-up of undisclosed environmental contamination, claims by tenants, vendors or other persons dealing with the former owners of our properties.

Our failure to identify and consummate property acquisitions on attractive terms or the failure of any acquired properties to meet our expectations could materially and adversely affect our future growth.

Our strategy of investing in properties located in medium-sized college and university markets may not be successful, which could materially and adversely affect us.

Our business strategy involves investing in properties located in medium-sized college and university markets, which are smaller than larger educational markets. Larger educational markets, such as Boston, Massachusetts or Washington, D.C., often have multiple colleges and universities that have larger enrollments than schools located in medium-sized college and university markets and attract students nationally and internationally. The colleges and universities that our properties draw student-tenants from typically have smaller enrollments than schools in larger educational markets and tend to attract students from within the region in which the school is located. If the schools in our markets experience reduced enrollment, for example due to adverse economic conditions, or are unable to attract sufficient students to achieve a desired class size, the pool of prospective student-tenants for our properties will be reduced. This could have the result of reducing our occupancy and lowering the revenue from our properties, which could materially and adversely affect our financial performance and liquidity.

Our indebtedness exposes us to a risk of default and will reduce our free cash flow, which could materially and adversely affect us.

Upon completion of this offering and the application of the net proceeds therefrom, our total consolidated indebtedness will be approximately $100.4 million, but does not include any indebtedness we may incur in connection with any future distributions. We also expect to incur significant additional indebtedness in connection with the development activities that we expect to undertake upon completion of this offering. Our debt service obligations will expose us to the risk of default and reduce cash available to invest in our business or pay distributions that are

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necessary to qualify and remain qualified as a REIT. Although we intend to limit the sum of the outstanding principal amount of our consolidated indebtedness to not more than 50% of our total market capitalization, our board of directors may modify or eliminate this limitation at any time without the approval of our stockholders. Furthermore, our charter does not contain any limitation on the amount of indebtedness that we may incur. In the future we may incur substantial indebtedness in connection with the development or acquisition of additional properties and for other working capital needs, or to fund the payment of distributions to our stockholders.

In addition, the tax protection agreement will 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 would be required to make indemnifying payments to them, which would inhibit our ability to reduce our indebtedness below the amount required to be maintained. This requirement will also restrict our ability to arrange financing for our operations as well as our ability to manage our capital structure.

Our indebtedness and the limitations imposed on us by our indebtedness could have significant adverse consequences, including the following:

•   we may be unable to borrow additional funds as needed or on favorable terms;

•   we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of the indebtedness being refinanced;

•   we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms;

•   we may default on our payment or other obligations as a result of insufficient cash flow or otherwise, which may result in a cross-default on our other obligations, and the lenders or mortgagees may foreclose on our properties that secure their loans and receive an assignment of rents and leases;

•   to the extent that we incur unhedged floating rate debt, we will have exposure to interest rate risk; and

•   foreclosures could create taxable income without accompanying cash proceeds, a circumstance which could hinder our ability to meet the distribution requirements necessary to enable us to qualify and remain qualified for taxation as a REIT.

Compliance with the provisions of our debt agreements, including the financial and other covenants, such as the maintenance of specified financial ratios, could limit our flexibility, and a default under these agreements could result in a requirement that we repay indebtedness, which could severely affect our liquidity and increase our financing costs, which could materially and adversely affect us. We are currently not in compliance with certain covenants under the loan documentation relating to various lending arrangements to which we are party. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Consents or Waivers Under our Loan Documents.” We have obtained waivers for these covenant violations and intend to repay a substantial portion of our outstanding indebtedness with a portion of the net proceeds from this offering; upon completion of this offering and the application of the net proceeds therefrom, we expect to be in compliance with all applicable debt covenants.

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However, if we do not complete this offering, we would need to access alternative capital resources to meet our cash requirements, and there is no assurance that we would be successful in doing so. An inability to refinance maturing indebtedness or obtain alternative financing would have a material adverse affect on our business and financial condition.

Our secured credit facility will restrict our ability to engage in some business activities.

We anticipate that our revolving credit facility will contain customary negative covenants and other financial and operating covenants that, among other things will:

•   restrict our ability to incur certain additional indebtedness;

•   restrict our ability to make certain investments;

•   restrict our ability to effect certain mergers;

•   restrict our ability to make distributions to stockholders; and

•   require us to maintain certain financial coverage ratios.

These limitations will restrict our ability to engage in some business activities, which could adversely affect our financial condition, results of operations, cash flow and the per share trading price of our common stock. In addition, failure to comply with any of these covenants, including the financial coverage ratios, could cause an event of default under and/or accelerate some or all of our indebtedness, which would have a material adverse effect on us. Furthermore, our secured credit facility will contain certain cross-default provisions with respect to specified other indebtedness, giving the lenders the right to declare a default if we are in default under other loans in some circumstances.

The contribution of certain of our properties is subject to lender consent. The failure to obtain these consents may adversely affect us.

In order to complete the contribution of The Grove at Asheville, The Grove at Carrollton, The Grove at Las Cruces and The Grove at Milledgeville to our operating partnership, we will need the consent of lenders relating to approximately $60.8 million of indebtedness secured by such properties. With respect to these properties, we have received conditional approval letters for the transfers and are negotiating final documentation. If we are unable to obtain the necessary lender consents on or before the closing of this offering, we may be required to prepay this indebtedness and refinance the properties through the use of our revolving credit facility. We could be adversely affected if we are unable to obtain these lender consents.

Joint venture investments could be materially and adversely affected by our lack of sole decision-making authority, our reliance on our co-venturers’ financial condition and disputes between our co-venturers and us.

Our properties located in Lawrence, Kansas, Moscow, Idaho, San Angelo and Huntsville, Texas, Conway, Arkansas and Statesboro, Georgia, comprising approximately 22.5% of our beds, will be held in a joint venture with HSRE, in which we will own a 49.9% interest upon completion of this offering. Additionally, we anticipate that we will enter into a new joint venture with HSRE, in which we will own a 20% interest and through which we expect to develop three properties with completion targeted for the 2011-2012 academic year. We anticipate that we may enter into other joint ventures with other parties in the future. We may not have a controlling interest in a joint venture and may share responsibility with our co-venturer for managing the property held by the joint venture. Under such circumstances, we may not have sole decision-

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making authority regarding the joint venture’s property. Investments in joint ventures, under certain circumstances, involve risks not present when we invest in a property without the involvement of a third party. For example, our co-venturer may have economic or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our preferences, policies or objectives. Additionally, it is possible that our co-venturer might become bankrupt, fail to fund its share of required capital contributions or block or delay decisions that we believe are necessary. Such investments may also have the potential risk of impasses on decisions, such as sales, because neither we nor our co-venturers may have full control over the joint venture. Disputes between us and our co-venturer may result in litigation or arbitration that would increase our expenses and divert the attention of our officers and directors from other aspects of our business. Consequently, actions by or disputes with our co-venturers might result in subjecting properties owned by the joint venture vehicle to additional risk. In addition, we may in certain circumstances be liable for the actions of our third-party co-venturers. Any of foregoing factors could materially and adversely affect our joint-venture investments.

No assurance can be given that we will be successful in establishing a new joint venture with HSRE or that any projects pursued by such a venture will be successful.

Although we have entered into a non-binding letter of intent with HSRE relating to a potential new joint venture in which we expect to own a 20% interest, no assurance can be given that we will reach a definitive agreement with HSRE regarding this joint venture or that the terms of any such agreement will not be materially different from those currently contemplated by the letter of intent. We expect to develop three new student housing properties through this joint venture with completion targeted for the 2011-2012 academic year; however, no assurance can be given that we will be successful in developing any of these three or other student housing properties developed through this joint venture. 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. In addition, under certain circumstances, we expect that we will be responsible for funding the amount by which actual development costs for a project pursued by the venture exceed the budgeted development costs of such project (without any increase in our interest in the project), which could materially and adversely affect the fee income realized from any such project. Finally, there can be no assurance that any properties developed through this joint venture will be successful in achieving attractive occupancy levels or rental rates.

Our management team has not previously operated either a REIT or a public company, and this inexperience could materially and adversely affect us.

Our management team has not operated a business that has sought to qualify for taxation as a REIT or in compliance with the numerous technical restrictions and limitations set forth in the Internal Revenue Code applicable to REITs. Managing a portfolio of assets under the REIT requirements of the Internal Revenue Code may limit the types of investments we are able to make or the activities that we may undertake. Furthermore, our management team has not previously operated a public company. The various regulatory requirements applicable to public companies will involve a significant investment of management time, since these requirements were not previously applicable to us as a closely held private company. Both federal laws and regulations and the New York Stock Exchange, or “NYSE,” rules impose numerous requirements relating to a public company’s corporate governance and disclosure obligations. We may be required to spend additional time addressing governance and disclosure obligations due to our inexperience, and we will be subject to fines and other penalties if we fail to comply in a timely manner with these obligations. Additionally, we may need to replace or supplement our existing management or staff in order to maintain operations as a public company, which may increase our costs of operations or

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delay implementation of our business strategies. We may not be able to operate a REIT or a public company as successfully or as efficiently as a more experienced management team.

Our investment in properties subject to ground leases with unaffiliated third parties exposes us to the potential loss of such properties upon the expiration or termination of the ground leases, and the realization of such loss could materially and adversely affect us. Our properties at the University of South Alabama are also subject to a right of first refusal that may inhibit our ability to sell them.

Our properties located on the campus of the University of South Alabama are subject to ground leases with affiliates of the university. We have another property located in Moscow, Idaho which is also subject to a ground lease with an unaffiliated third party. In addition, we may invest in additional properties that are subject to ground leases with unaffiliated third parties. As the lessee under a ground lease with an unaffiliated third party, we are exposed to the possibility of losing our leasehold interest in the land on which our buildings are located. A ground lease may not be renewed upon the expiration of its current term or terminated by the lessor pursuant to the terms of the lease if we do not meet our obligations thereunder.

In the event of an uncured default under any of our existing ground leases, the lessor may terminate our leasehold interest in the land on which our buildings are located. Any termination of our existing ground leases with unaffiliated third parties, unless in conjunction with the exercise of a purchase option, would also result in termination of our management agreement relating to the property. If we lose the leasehold interest in any of our properties, we could be materially and adversely affected.

Our properties located at the University of South Alabama are also subject to a right of first refusal pursuant to which the ground lessor entity related to the university has a right to purchase our leasehold interest in the relevant property in the event we decide to accept an offer to sell either property to a third party. This may inhibit our ability to sell these properties. Further, our right to transfer one of the on-campus properties is subject to the consent of the ground lessor, which consent may not be unreasonably withheld.

We may face risks associated with purchasing undeveloped land, and the occurrence of any of these risks could materially and adversely affect us.

We typically do not hold land for future development. We do, however, enter into purchase and sale agreements for undeveloped land from time to time in anticipation of obtaining construction financing and commencing development activities. A delay in obtaining construction financing may result in a delay in closing the acquisition of undeveloped land pursuant to a purchase and sale agreement. This may require us to pay to the seller of the land additional money in the form of an earnest money deposit, which may not be refundable or applicable against the purchase price.

It is possible that we will purchase property for development based on an erroneous estimate of the demand for student housing in the relevant market. This could result in us paying a purchase price for a property that ultimately proves to be in excess of such property’s value. As a result, we may acquire land for development at a cost that we may not be able to recover fully or on which we cannot build and develop a profitable student housing property. Real estate markets are highly uncertain and the value of such undeveloped land may fluctuate as a result of changing market conditions. Carrying costs can be significant and can result in losses or reduced margins. As a result, we may incur impairments on any land we acquire.

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We may incur losses on interest rate swap and hedging arrangements, which could materially and adversely affect us.

We may in the future enter into agreements to reduce the risks associated with increases in interest rates. Although these agreements may partially protect against rising interest rates, they also may reduce the benefits to us if interest rates decline. If an arrangement is not indexed to the same rate as the indebtedness that is hedged, we may be exposed to losses to the extent the rate governing the indebtedness and the rate governing the hedging arrangement change independently of each other. Finally, nonperformance by the other party to the arrangement may subject us to increased credit risks. The occurrence of any of the foregoing could materially and adversely affect us.

Our inability to pass-through increases in taxes or other real estate costs to our student-tenants could materially and adversely affect our financial performance and liquidity.

We generally are not able to pass through to our student-tenants under existing leases increases in taxes, including real estate and income taxes, or other real estate related costs, such as insurance or maintenance. Consequently, unless we are able to off-set any such increases with sufficient revenues, our financial performance and liquidity may be materially and adversely affected by any such increases.

The prior performance of our predecessor entities may not be indicative of our future performance.

All of our properties have been acquired or developed by our predecessor entities within the past six years and have limited operating histories. Consequently, the historical operating results of our properties and the financial data set forth in this prospectus may not be indicative of our future performance. The operating performance of the properties may decline and we could be materially and adversely affected.

As a result of operating as a public company, we will incur significant increased costs and our management will be required to devote substantial time to new compliance requirements, which could materially and adversely affect us.

We have never operated as a public company. As a public company, we will incur significant legal, accounting and other expenses, as well as expend significant management time, relating to various requirements applicable to public companies that were not applicable to our Predecessor as a closely held private company. The Securities Exchange Act of 1934, as amended, or the “Exchange Act,” the Sarbanes-Oxley Act of 2002, or the “Sarbanes-Oxley Act,” and the NYSE rules impose numerous requirements relating to a public company’s corporate governance and disclosure obligations. Compliance with these requirements will require us to hire additional employees, adopt new policies, procedures and controls, and cause us to incur significant costs. For example, we will be required to have specified board committees, adopt internal controls over financial reporting and disclosure controls and procedures, and file annual, quarterly and other reports and information with the Securities and Exchange Commission, or the “SEC.” If our prior history of incurring significant net losses continues following this offering, we will be unable to expend the funds necessary to hire additional employees and otherwise comply with our increased disclosure and reporting obligations. Our lack of prior experience in the operation of a public company may reduce the likelihood that we will be able to identify compliance and disclosure issues on a timely basis and our failure to address these issues could materially and adversely affect us due to fines and penalties associated with compliance failure, an inability to utilize certain SEC forms and offering methods to access the public equity and debt markets quickly and the inability to otherwise enjoy the benefits associated with our status as a public

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company. If we identify any issues in complying with requirements applicable to public companies, we would likely incur additional costs remediating those issues and such costs could be significant, and the existence of those issues could materially and adversely affect us, our reputation or investor perception of us. Failure to remediate compliance issues, whether due to cost or otherwise, may result in negative action against us, including fines, civil and criminal penalties or delisting from the NYSE. Identification of these types of compliance issues could also make it more difficult and expensive for us to obtain director and officer liability insurance, and we could be required to accept reduced policy limits and insurance coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it could become more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers. Any of the foregoing costs or factors could materially and adversely affect us.

We will be subject to the requirements of Section 302 and 404 of the Sarbanes-Oxley Act, which will be costly and challenging.

Our management will be required to deliver a report that assesses the effectiveness of our internal control over financial reporting, pursuant to Section 302 of the Sarbanes-Oxley Act, as of December 31 subsequent to the year in which the registration statement of which this prospectus forms a part becomes effective. Internal controls are intended to allow management or employees in the normal course of performing their functions to prevent or detect misstatements on a timely basis. A deficiency in internal controls exists when their design or operation does not permit such prevention or detection on a timely basis. Section 404 of the Sarbanes-Oxley Act requires our independent registered public accounting firm to deliver an attestation report on the operating effectiveness of our internal controls over financial reporting in conjunction with their opinion on our audited financial statements as of the same date.

Substantial work on our part is required to implement appropriate processes, document the system of internal control over key processes, assess their design, remediate any deficiencies identified and test their operation. This process is expected to be both costly and challenging. Our Predecessor had not previously prepared consolidated financial statements. Additionally, the financial statements of some of the entities that are included in our Predecessor’s financial statements were not individually audited. Consequently, it was necessary to consolidate numerous financial statements, some of which were unaudited, in anticipation of the audit of our Predecessor’s financial statements. In the course of such audit, it became necessary to prepare and record a number of adjustments to correct the initial combined financial statements. It was determined that these adjustments arose from weaknesses within our internal control over financial reporting, specifically our lack of policies, procedures and review controls with respect to consolidation and the financial reporting process and our lack of processes and procedures with respect to the application of GAAP to certain transactions.

As a closely held private company, our Predecessor has not been required to operate in compliance with the foregoing requirements of the Sarbanes-Oxley Act. We will be required to design, implement and effectively execute and monitor additional controls in order to comply with these requirements and remediate any identified deficiencies. We have implemented measures to address weaknesses in our internal control over financial reporting and intend to bring our operations into compliance with Section 404 of the Sarbanes-Oxley Act within one year following the completion of this offering as required, and comply with the other mandates of the Sarbanes-Oxley Act, but there can be no assurance that such compliance will be achieved or maintained. If we are unable to implement and monitor effective controls, we may be unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act within the required time period.

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We cannot give any assurances that we will successfully remediate any material weaknesses identified in connection with our compliance with the provisions of Sections 302 and 404 of the Sarbanes-Oxley Act. The existence of any material weakness would preclude a conclusion by management and our registered independent public accounting firm that we maintained effective internal control over financial reporting. Our management may be required to devote significant time and incur significant expense to remediate any material weaknesses that may be discovered and may not be able to remediate any material weaknesses in a timely manner. The existence of a material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations and cause stockholders to lose confidence in our reported financial information, any of which could materially and adversely affect us.

Reporting of on-campus crime statistics required of colleges and universities may negatively impact our properties.

Federal and state laws require colleges and universities to publish and distribute reports of on-campus crime statistics, which may result in negative publicity and media coverage associated with crimes occurring in the vicinity of, or on the premises of, our on-campus properties. Reports of crime or other negative publicity regarding the safety of the students residing on, or near, our properties may have an adverse effect on both our on-campus and off-campus properties.

We may be subject to liabilities from litigation which could materially and adversely affect us.

We may become involved in legal proceedings, including consumer, employment, tort or commercial litigation that, if decided adversely to or settled by us and not adequately covered by insurance, could result in liabilities that could materially and adversely affect us.

Risks Related to the Real Estate Industry

Our performance and the value of our properties are subject to risks associated with real estate and with the real estate industry, which could materially and adversely affect us.

Our ability to make distributions to our stockholders depends on our ability to generate cash revenues in excess of our expenses, including expenses associated with our development activities, indebtedness and capital expenditure requirements. The occurrence of certain events and conditions that are generally applicable to owners and operators of real estate, many of which are beyond our control, could materially and adversely affect us. These events and conditions include:

•   adverse national, regional and local economic conditions;

•   rising interest rates;

•   oversupply of student housing in our markets, increased competition for student-tenants or reduction in demand for student housing;

•   inability to collect rent from student-tenants;

•   vacancies at our properties or an inability to lease our properties on favorable terms;

•   inability to finance property development and acquisitions on favorable terms;

•   increased operating costs, including insurance premiums, utilities and real estate taxes;

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•   the need for capital expenditures at our properties;

•   costs of complying with changes in governmental regulations;

•   the relative illiquidity of real estate investments; and

•   civil unrest, acts of God, including earthquakes, floods, hurricanes and other natural disasters, which may result in uninsured losses, and acts of war or terrorism.

In addition, periods of economic slowdown or recession, such as the one the global economy is currently experiencing, rising interest rates or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in occupancy rates and rental revenue or an increased incidence of defaults under our existing leases, which could impair the value of our properties or reduce our cash flow.

Illiquidity of real estate investments could significantly impede our ability to sell our properties or otherwise respond to adverse changes in the performance of our properties, which could materially and adversely affect us.

From time to time, we may determine that it is in our best interest to sell one or more of our properties. However, because real estate investments are relatively illiquid, we may encounter difficulty in finding a buyer in a timely manner should we desire to sell one of our properties, especially if market conditions are poor at such time. Selling real estate has been difficult recently, since the availability of credit has become more limited, as lending standards have become more stringent. As a result, potential buyers have experienced difficulty in obtaining financing necessary to purchase a property. In addition, our properties are specifically designed for use as student housing, which could limit their marketability or affect their values for alternative uses. Consequently, should we desire to sell one or more of our properties, our ability to do so promptly or on terms that we deem to be acceptable may be limited, which could materially and adversely affect us.

We also may be required to expend funds to correct defects or to make improvements before a property can be sold. We cannot assure you that we will have funds available to correct any such defects or to make any such improvements. In connection with any future property acquisitions, we may agree to provisions that materially restrict our ability to sell the property for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be secured by or repaid with respect to such property.

In addition, in order to qualify for taxation as a REIT and to maintain such qualification, the Internal Revenue Code limits our ability to sell properties held for less than two years, which may cause us to incur losses thereby reducing our cash flows. These factors and any others that would impede our ability to respond to adverse changes in the performance of any of our properties or a need for liquidity could materially and adversely affect us.

Finally, MXT Capital will enter into a tax protection agreement with us that will significantly restrict our ability to sell nine of our properties. Pursuant to the tax protection agreement, we will agree not to sell, exchange or otherwise dispose of any of these nine properties for a ten-year tax protection period in a transaction that would cause the members of MXT Capital to realize built-in gain related to such properties at the time of their contribution to our operating partnership. If we sell one or more of these nine properties during the ten-year tax protection period, we will be required to pay to MXT Capital an amount equal to the federal, state and local taxes imposed on the built-in gain allocated to its members, with the amount of such taxes being computed based on the highest applicable federal, state and local marginal tax rates, as well as any “grossed up” taxes imposed on such payments. The amount otherwise payable in connection with such a

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transaction under the tax protection agreement will be reduced by 20% commencing on the fifth anniversary date of the closing date of this offering and an additional 20% on each successive anniversary date until the amount payable is reduced to zero on the tenth anniversary of the closing date. This requirement will also restrict our ability to arrange financing for our operations as well as our ability to manage our capital structure.

Increases in property taxes would increase our operating costs, which could materially and adversely affect our financial performance and liquidity.

Each of our properties will be subject to real and personal property taxes. These taxes may increase as tax rates change and as the properties are assessed or reassessed by taxing authorities. If property taxes increase, our operating costs will increase, and therefore our financial performance and liquidity could be materially and adversely affected.

We could incur significant costs related to government regulation and private litigation over environmental matters, which could materially and adversely affect us.

Under various environmental laws, including the Comprehensive Environmental Response, Compensation and Liability Act, or “CERCLA,” a current or previous owner or operator of real estate may be liable for contamination resulting from the release or threatened release of hazardous or toxic substances or petroleum at that property. Additionally, an entity that arranges for the disposal or treatment of a hazardous or toxic substance or petroleum at another property may be held jointly and severally liable for the cost of investigating and cleaning up such property or other affected property. Such parties are known as potentially responsible parties, or PRPs. These environmental laws often impose liability regardless of whether the PRP knew of, or was responsible for, the presence of the contaminants, and the costs of any required investigation or cleanup of these substances can be substantial. PRPs may also be liable to parties who have claims for contribution in connection with any such contamination, such as other PRPs or state and federal governmental agencies. The liability is generally not limited under such laws and therefore could easily exceed the property’s value and the assets of the liable party.

The presence of contamination, hazardous materials or environmental issues, or the failure to remediate such conditions, at a property may expose us to third-party liability for personal injury or property damage, remediation costs or adversely affect our ability to sell, lease or develop the property or to borrow using the property as collateral, which could materially and adversely affect us.

Environmental laws also impose ongoing compliance requirements on owners and operators of real estate. Environmental laws potentially affecting us address a wide variety of matters, including, but not limited to, asbestos-containing building materials, or “ACBMs,” storage tanks, storm water and wastewater discharges, lead-based paint, radon, wetlands and hazardous wastes. Failure to comply with these laws could result in fines and penalties or expose us to third-party liability, which could materially and adversely affect us. Some of our properties may have conditions that are subject to these requirements and we could be liable for such fines or penalties or liable to third parties, as described below in “Business and Properties—Regulation—Environmental Matters.”

The conditions at some of our properties may expose us to liability and remediation costs related to environmental matters, which could materially and adversely affect us.

Certain of our properties may contain, or may have contained, ACBMs. Environmental laws require that ACBMs be properly managed and maintained, and may impose fines and penalties on building owners and operators for failure to comply with these requirements. Also, some of our properties may contain, or may have contained, or are adjacent to or near other properties that may

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contain or may have contained storage tanks for the storage of petroleum products or other hazardous or toxic substances. Any of these conditions create the potential for the release of these contaminants. Third parties may be permitted by law to seek recovery from owners or operators for personal injury or property damage arising from such tanks. Additionally, third parties may be permitted by law to seek recovery from owners or operators for personal injury or property damage associated with exposure to these or other contaminants that may be present on, at or under the properties. Furthermore, some of our properties include regulated wetlands on undeveloped portions of such properties and mitigated wetlands on or near our properties, the existence of which can delay or impede development or require costs to be incurred to mitigate the impact of any disturbance. Absent appropriate permits, we can be held responsible for restoring wetlands and be required to pay fines and penalties, which could materially and adversely affect us.

Over the past several years there have been an increasing number of lawsuits against owners and operators of properties alleging personal injury and property damage caused by the presence of mold in real estate. Mold growth can occur when excessive moisture accumulates in buildings or on building materials, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Concern about indoor exposure to mold has been increasing as some molds have been shown to produce airborne toxins and irritants and exposure to these and other types of molds may lead to adverse health effects and symptoms, including allergic or other reactions. Some of our properties may contain microbial matter such as mold and mildew. The presence of significant mold at any of our properties could require us to undertake a costly remediation program to contain or remove the mold from the affected property and could expose us to liability from student-tenants, employees and others if property damage or health concerns arise, which could materially and adversely affect us.

If any of our properties are not properly connected to a water or sewer system, or if the integrity of such systems are breached, microbial matter or other contamination can develop. If this were to occur, we could incur significant remedial costs and we could also be subject to private damage claims and awards, which could be material. If we become subject to claims in this regard, it could materially and adversely affect us and our insurability for such matters in the future.

Independent environmental consultants have conducted Phase I environmental site assessments on all of our properties. These Phase I environmental site assessments are intended to evaluate information regarding the environmental condition of the surveyed property and surrounding properties based generally on visual observations, interviews and the review of publicly available information. These assessments do not typically take into account all environmental issues including, but not limited to, testing of soil or groundwater, a comprehensive asbestos survey or an invasive inspection for the presence of lead-based paint, radon or mold contamination. As a result, these assessments may have failed to reveal all environmental conditions, liabilities, or other compliance issues affecting our properties. Material environmental conditions, liabilities, or compliance issues may have arisen after the assessments were conducted or may arise in the future.

In addition, future laws, ordinances or regulations may impose material additional environmental liabilities. We cannot assure you that the cost of future environmental compliance or remedial measures will not affect our ability to make distributions to our stockholders or that such costs or other remedial measures will not be material to us.

In the event we decided to sell one of our properties, the presence of hazardous substances on such property may limit our ability to sell it on favorable terms or at all, and we may incur substantial remediation costs.

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The discovery of material environmental liabilities at one or more of our properties could subject us to unanticipated significant costs, which could materially and adversely affect us.

We may incur significant costs complying with the Americans with Disabilities Act, the Fair Housing Act and similar laws, which could materially and adversely affect us.

Under the Americans with Disabilities Act of 1990, or the “ADA,” all public accommodations must meet various federal requirements related to access and use by disabled persons. Compliance with the ADA’s requirements may require modifications to our properties, such as the removal of access barriers or restrict our ability to renovate or develop our properties in the manner we desire. In addition, in June 2008, the Department of Justice proposed a substantial number of changes to the accessibility guidelines under the ADA. In January of 2009, President Obama suspended final publication and implementation of these regulations, pending comprehensive review by his administration. If implemented as proposed, the new guidelines could cause some of our properties to incur costly measures to become fully compliant.

Additional federal, state and local laws may also require us to make similar modifications or impose similar restrictions on us. For example, the Fair Housing Act, or “FHA,” requires apartment properties first occupied after March 13, 1990 to be accessible to the handicapped.

We have not conducted an audit or investigation of all of our properties to determine our compliance with present requirements of the ADA, FHA or any similar laws. Noncompliance with any of these laws could result in us incurring significant costs to make substantial modifications to our properties or in the imposition of fines or an award or damages to private litigants. We cannot predict the ultimate amount of the cost of compliance with the ADA, FHA or other legislation. If we incur substantial costs to comply with the ADA, FHA or any other legislation, we could be materially and adversely affected.

We may incur significant costs complying with other regulatory requirements, which could materially and adversely affect us.

Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements. If we fail to comply with these various requirements, we might incur governmental fines or private damage awards. Furthermore, existing requirements could change and require us to make significant unanticipated expenditures, which could materially and adversely affect us.

Uninsured losses or losses in excess of insured limits could materially and adversely affect us.

We carry comprehensive liability, fire, extended coverage, terrorism and rental loss insurance covering all of our properties. Our insurance includes coverage for earthquake damage to properties located in seismically active areas, windstorm damage to properties exposed to hurricanes, and terrorism insurance on all of our properties. In each case, we believe the coverage limits and applicable deductibles are commercially reasonable. All insurance policies are subject to coverage extensions that are typical for our business. We do not carry insurance for generally uninsured losses such as loss from riots or acts of God.

In the event we experience a loss which is uninsured or which exceeds our policy limits, we could lose the capital invested in the damaged property as well as the anticipated future cash flows from such property. In addition, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property. Inflation, changes in building codes and ordinances, environmental considerations and other factors might also keep us from using insurance proceeds to replace or renovate a property after it has been damaged or destroyed.

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Under such circumstances, the insurance proceeds we receive might be inadequate to restore our economic position with respect to the damaged or destroyed property. Furthermore, in the event of a substantial loss at one or more of our properties that is covered by one or more policies, the remaining insurance under these policies, if any, could be insufficient to adequately insure our other properties. In such event, securing additional insurance policies, if possible, could be significantly more expensive than our current policies. Any loss of these types may materially and adversely affect us.

Future terrorist attacks in the U.S. or an increase in incidents of violence on college campuses could reduce the demand for, and the value of, our properties, which could materially and adversely affect us.

Future terrorist attacks in the U.S., such as the attacks that occurred in New York and Washington, D.C. on September 11, 2001, and acts of war, or threats of the same, could reduce the demand for, and the value of, our properties. Any such event in any of the markets in which our properties are located would make it difficult for us to maintain the affected property’s occupancy or to re-lease the property at rates equal to or above historical rates, which could materially and adversely affect us.

Incidents of violence on college campuses could pose similar problems, with respect to the potential for a reduction of demand for our properties if such an incident were to occur on a college campus in one of our markets. Such an event in any of our markets could not only adversely affect our occupancy rates, but would also likely lead to increased operating expenses for such properties due to increased security costs, which would likely be necessary to reassure our student-tenants in the wake of such an incident. Any such increase in operating expenses may have a material adverse effect on the results of operations of the affected property.

In addition, terrorist attacks or violent incidents could directly impact the value of our properties through damage, destruction or loss and the availability of insurance for such acts may be limited or prohibitively expensive. If we receive casualty proceeds, we may not be able to reinvest such proceeds profitably or at all, and we may be forced to recognize taxable gain on the affected property, which could materially and adversely affect us.

Risks Related to Our Company and Structure

Provisions of our charter allow our board of directors to authorize the issuance of additional securities, which may limit the ability of a third party to acquire control of us through a transaction that our stockholders believe to be in their best interest.

Upon completion of this offering, our charter will authorize our board of directors to issue up to 90,000,000 shares of common stock and up to 10,000,000 shares of preferred stock. In addition, our board of directors may, without stockholder approval, amend our charter to increase the aggregate number of our shares or the number of shares of any class or series that we have the authority to issue and to classify or reclassify any unissued common stock or preferred stock and to set the preferences, rights and other terms of the classified or reclassified stock. As a result, our board of directors may authorize the issuance of additional stock or establish a series of common or preferred stock that may have the effect of delaying, deferring or preventing a change in control of us, including through a transaction at a premium over the market price of our common stock, even if our stockholders believe that a change in control through such a transaction is in their best interest.

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Provisions of Maryland law may limit the ability of a third party to acquire control of us, which, in turn, may negatively affect our stockholders’ ability to realize a premium over the market price of our common stock.

Certain provisions of the Maryland General Corporation Law, or the “MGCL,” may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change in control under circumstances that otherwise could provide our stockholders with the opportunity to realize a premium over the market price of our common stock, including:

•   The Maryland Business Combination Act that, subject to limitations, prohibits certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our voting capital stock) or an affiliate of any interested stockholder for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes special appraisal rights and special stockholder voting requirements on these combinations; and

•   The Maryland Control Share Acquisition Act that provides that our “control shares” (defined as shares which, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

By resolution of our board of directors, we have opted out of the business combination provisions of the MGCL and provided that any business combination between us and any other person is exempt from the business combination provisions of the MGCL, provided that the business combination is first approved by our board of directors (including a majority of directors who are not affiliates or associates of such persons). Pursuant to a provision in our bylaws, we have opted out of the control share provisions of the MGCL. However, our board of directors may by resolution elect to opt in to the business combination provisions of the MGCL and we may, by amendment to our bylaws, opt in to the control share provisions of the MGCL in the future.

Additionally, Title 3, Subtitle 8 of the MGCL permits our board of directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement certain takeover defenses, such as a classified board, some of which we do not yet have. These provisions may have the effect of inhibiting a third party from making an acquisition proposal for us or of delaying, deferring or preventing a change in control of us that otherwise could provide our stockholders with the opportunity to realize a premium over the market price of our common stock.

The ownership limitations in our charter may restrict or prevent you from engaging in certain transfers of our common stock, which may delay or prevent a change in control of us that our stockholders believe to be in their best interest.

In order for us to qualify as a REIT for each taxable year after 2010, no more than 50% in value of the outstanding shares of our common stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the federal income tax laws to include various kinds of entities) during the last half of any taxable year. Attribution rules in the Internal Revenue Code determine if any individual or entity actually or constructively owns our common stock under this requirement. Additionally, at least 100 persons must beneficially own shares of our common stock during at least 335 days of a taxable year for each taxable year after 2010. To assist us in

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qualifying as a REIT, our charter contains a stock ownership limit which provides that, subject to certain exceptions, no person or entity may beneficially own, or be deemed to own by virtue of the applicable constructive ownership provisions of the Internal Revenue Code, 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. Generally, any of our shares of common stock owned by affiliated owners will be added together for purposes of the stock ownership limit.

If anyone transfers shares of our stock in a way that would violate the stock ownership limit or prevent us from qualifying as a REIT under the federal income tax laws, those shares instead will be transferred to a trust for the benefit of a charitable beneficiary and will be either redeemed by us or sold to a person whose ownership of the shares will not violate the stock ownership limit or we will consider the transfer to be null and void from the outset, and the intended transferee of those shares will be deemed never to have owned the shares. Anyone who acquires shares of our common stock in violation of the stock ownership limit or the other restrictions on transfer in our charter bears the risk of suffering a financial loss when the shares are redeemed or sold if their market price falls between the date of purchase and the date of redemption or sale.

The constructive ownership rules under the Internal Revenue Code are complex and may cause stock owned actually or constructively by a group of related individuals or entities to be owned constructively by one individual or entity. As a result, the acquisition of less than 9.8% of our stock (or the acquisition of an interest in an entity that owns, actually or constructively, our stock) by an individual or entity, could, nevertheless cause that individual or entity, or another individual or entity, to own constructively in excess of 9.8% of our outstanding stock and therefore they would be subject to the stock ownership limit. Our charter, however, allows exceptions to be made to this limitation if our board of directors determines that such exceptions will not jeopardize our tax status as a REIT.

In addition, the stock ownership limit and the other restrictions on transfer in our charter may have the effect of delaying, deferring or preventing a third party from acquiring control of us, whether such a transaction involved a premium price for our common stock or otherwise was in the best interest of our stockholders.

Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit the recourse available in the event actions are taken that are not in the best interest of our stockholders.

Maryland law provides that a director has no liability in connection with the director’s management of the business and affairs of a corporation if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in the best interests of the corporation and with the care that an ordinarily prudent person in a like position would use under similar circumstances. In addition, our charter exculpates our directors and officers from liability to us and our stockholders for money damages except for liability resulting from actual receipt of an improper benefit in money, property or services or active and deliberate dishonesty established by a final judgment and which is material to the cause of action. Our charter authorizes us to indemnify our directors and officers for actions taken by them in those capacities to the maximum extent permitted by Maryland law. Our bylaws require us to indemnify each director or officer, to the maximum extent permitted by Maryland law, in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service to us. In addition, we may be obligated to fund the defense costs incurred by our directors and officers. As a result, we and our stockholders may have more limited rights against our directors and officers, which could limit the recourse available in the event actions are taken that are not in our stockholders’ best interest.

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Our charter contains provisions that make removal of our directors difficult, which could make it difficult for our stockholders to effect changes to our management that our stockholders believe to be in their best interest.

Our charter provides that a director may be removed only for cause (as defined in our charter) and then only by the affirmative vote of at least two-thirds of the votes entitled to be cast generally in the election of directors. Our charter also provides that vacancies on our board of directors may be filled only by a majority of the remaining directors in office, even if less than a quorum. These requirements prevent stockholders from removing directors except for cause and with a substantial affirmative vote and from replacing directors with their own nominees. As a result, a change in our management that our stockholders believe is in their best interest may be delayed, deferred or prevented.

Our board of directors has approved very broad investment guidelines for us and will not review or approve each investment decision made by our management team.

Our management team is authorized to follow broad investment guidelines and, therefore, has great latitude in determining which are the proper investments for us, as well as the individual investment decisions. Our management team may make investments with lower rates of return than those anticipated under current market conditions and/or may make investments with greater risks to achieve those anticipated returns.

The ability of our board of directors to change some of our policies without the consent of our stockholders may lead to the adoption of policies that are not in the best interest of our stockholders.

Our major policies, including our policies with respect to investments, leverage, financing, growth, debt and capitalization, will be determined by our board of directors or those committees or officers to whom our board of directors may delegate such authority. Our board of directors will also establish the amount of any dividends or distributions that we may pay to our stockholders. Our board of directors or the committees or officers to which such decisions may be delegated will have the ability to amend or revise these and our other policies at any time without stockholder vote. Accordingly, our stockholders may not have control over changes in our policies, and we may adopt policies that may not prove to be in the best interests of our stockholders.

As a result of our formation transactions, which were not negotiated on an arm’s length basis, our existing investors will receive substantial economic benefits from this offering.

MXT Capital will receive 973,333 OP units for the contribution of its interests in the predecessor entities and its student housing business and $4.5 million of the net proceeds from this offering, which will be used for the repayment of certain indebtedness. Ted W. Rollins, our co-chairman and chief executive officer, and Michael S. Hartnett, our co-chairman and chief investment officer, by virtue of their indirect ownership in MXT Capital, and therefore the various entities that own interests in the predecessor entities, will be entitled to receive a significant portion of the benefits of this offering received by MXT Capital. MXT Capital, through Campus Crest Group, and the Ricker Group were the principal prior owners of our predecessor entities and MXT Capital played a significant role in structuring our formation. In the course of structuring our formation, MXT Capital had the ability to influence the type and level of benefits that it and our executive officers would receive from us. It also had the ability to influence the other terms of our formation transactions, including, without limitation, the representations and warranties that it made to us in our formation transactions and the indemnities that it provided to us for breaches of such representations and warranties. In addition, as a result of this offering and the application of the net proceeds therefrom,

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Mr. Rollins and Mr. Hartnett will each be released from certain personal guarantees with respect to mortgage and construction indebtedness with, in each case, an aggregate principal amount of approximately $243.3 million, and from personal guarantees with respect to the RHR, LLC and Capital Bank indebtedness described below, and the MXT Capital indebtedness described above. Each of Messrs. Rollins and Hartnett will be released from certain personal guarantees with respect to the preferred membership interest in CC-Encore. MXT Capital will also receive Campus Crest Group’s interests in two parcels of land consisting of 20.2 acres, with associated indebtedness of approximately $1.9 million, on which we have decided not to build student housing properties. In addition, we will enter into a registration rights agreement with MXT Capital pursuant to which we will agree, among other things, to register the resale of any common stock that may be exchanged for the OP units issued in our formation transactions.

The Ricker Group will receive approximately $26.7 million from the net proceeds from this offering and 66,667 OP units for the contribution of its interests in the predecessor entities and its interest in the entities that own fee interests in certain properties that were subject to ground leases such that our operating partnership will have, following the completion of this offering and our formation transactions, fee simple title to the real estate that is the subject of the leases. Following this transfer, none of the predecessor entities other than Campus Crest at Mobile, LLC and Campus Crest at Mobile Phase II, LLC (which own The Grove at Mobile in Mobile, AL) and Campus Crest at Moscow, LLC (which owns The Grove at Moscow in Moscow, ID) shall be subject to any ground lease with an unaffiliated third party. In addition, as a result of this offering and the use of the net proceeds therefrom, Mr. Ricker will be released from certain personal guarantees with respect to mortgage and construction indebtedness in an aggregate amount of approximately $205.9 million, and from personal guarantees with respect to the RHR, LLC and Capital Bank indebtedness described below, and the MXT Capital indebtedness described above.

Certain third-party investors will receive in aggregate approximately $10.7 million from the net proceeds from this offering and approximately 53,000 OP units for the contribution of their interests in the predecessor entities.

We will use approximately $4.0 million of the net proceeds from this offering to repay our indebtedness to Capital Bank, an entity in which the Ricker Group has an ownership interest and of which Carl H. Ricker, Jr. is a director.

We will use approximately $6.0 million of the net proceeds from this offering to repay indebtedness owed by us to RHR, LLC, an entity owned by MXT Capital and the Ricker Group. RHR, LLC will, in turn, immediately repay an equal amount of indebtedness owed by it to an unaffiliated third party on substantially the same terms and conditions as the loan from RHR, LLC to us.

Since we did not conduct arm’s length negotiations with our existing investors with respect to the terms of our formation transactions, the terms of the agreements we reached with these investors may not be as favorable to us as if they were so negotiated.

Members of our management and board of directors will be holders of OP units, and their interests may differ from those of our stockholders.

After the consummation of this offering, members of our management and board of directors will also be direct or indirect holders of OP units. As holders of OP units, they may have conflicting interests with our stockholders. For example, they may have different tax positions from our stockholders, which could influence their decisions regarding whether and when to dispose of assets, whether and when to incur new indebtedness or refinance existing indebtedness and how to structure future transactions. As a result, our management and board of directors may implement policies or make decisions that are not in the best interest of our stockholders.

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Members of our management will be beneficiaries of a tax protection agreement that will significantly restrict our ability to sell nine of our properties and may require us to maintain indebtedness that we otherwise would not.

MXT Capital will enter into a tax protection agreement with us. Pursuant to the tax protection agreement, we will agree not to sell, exchange or otherwise dispose of nine of our properties during a ten-year tax protection period in a transaction that would cause the members of MXT Capital to realize built-in gain. If we sell one or more of these nine properties during the ten-year tax protection period, we will be required to pay to MXT Capital an amount equal to the federal, state and local taxes imposed on the built-in gain allocated to its members, with the amount of such taxes being computed based on the highest applicable federal, state and local marginal tax rates, as well as any “grossed up” taxes imposed on such payments. The amount otherwise payable in connection with such a transaction under the tax protection agreement will be reduced by 20% commencing on the fifth anniversary date of the closing date of this offering and an additional 20% on each successive anniversary date until the amount payable is reduced to zero on the tenth anniversary of the closing date. Consequently, our ability to sell or dispose of these nine properties will be substantially restricted by this obligation to make payments to MXT Capital during the ten-year tax protection period if we sell any such property. This requirement will also restrict our ability to arrange financing for our operations as well as our ability to manage our capital structure.

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.

We will enter into employment agreements with certain of our executive officers that will require us to make payments in the event such officer’s employment is terminated by us without cause or by such officer for good reason. This may make it difficult for us to effect changes to our management or limit the ability of a third party to acquire control of us that would otherwise be in the best interest of our stockholders.

The employment agreements that we will enter into with certain of our executive officers upon completion of this offering provide benefits under certain circumstances that could make it more difficult for us to terminate these officers. Therefore, even if we sought to replace these officers, it may not be economically viable for us to do so. Furthermore, because an acquiring company would likely seek to replace these officers with their own personnel, these employment agreements could have the effect of delaying, deterring or preventing a change in control of us that would otherwise be in the best interest of our stockholders.

After the consummation of this offering and our formation transactions, our primary assets will be our general partner interest in our operating partnership and OP units and, as a result, we will depend on distributions from our operating partnership to pay dividends and expenses.

After the consummation of this offering and our formation transactions, we will be a holding company and will have no material assets other than our general partner interest and OP units. We intend to cause our operating partnership to make distributions to its limited partners, including us, in an amount sufficient to allow us to qualify as a REIT for federal income tax purposes and to pay all our expenses. To the extent we need funds and our operating partnership

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is restricted from making distributions under applicable law, agreement or otherwise, or if our operating partnership is otherwise unable to provide such funds, the failure to make such distributions could adversely affect our liquidity and financial condition and our ability to make distributions to our stockholders.

We operate through a partnership structure, which could materially and adversely affect us.

Our primary property-owning vehicle is our operating partnership, of which we are the sole general partner. Our acquisition of properties through our operating partnership in exchange, in part, for OP units may permit certain tax deferral advantages to the sellers of those properties. Since the properties contributed to our operating partnership may have unrealized gain attributable to the difference between the fair market value and adjusted tax basis in such properties prior to contribution, the sale of such properties could cause material and adverse tax consequences to the limited partners who contributed such properties. Although we, as the sole general partner of our operating partnership, generally have no obligation to consider the tax consequences of our actions to any limited partner, we have agreed to indemnify MXT Capital for certain tax consequences related to our properties and there can be no assurance that our operating partnership will not acquire properties in the future subject to material restrictions designed to minimize the adverse tax consequences to the limited partners who contribute such properties. Such restrictions could result in significantly reduced flexibility to manage our properties, which could materially and adversely affect us.

We have fiduciary duties as sole general partner of our operating partnership which may result in conflicts of interest in representing your interests as our stockholders.

After the consummation of this offering, conflicts of interest could arise in the future as a result of the relationship between us, on the one hand, and our operating partnership or any partner thereof, on the other. We, as the sole general partner of our operating partnership, will have fiduciary duties to the other limited partners in our operating partnership under Delaware law. At the same time, our directors and officers have duties to us and our stockholders under applicable Maryland law in connection with their management of us. Our duties as the sole general partner of our operating partnership may come in conflict with the duties of our directors and officers to us and our stockholders. For example, those persons holding OP units will have the right to vote on certain amendments to the partnership agreement (which require approval by a majority in interest of the limited partners, including us) and individually to approve certain amendments that would adversely affect their rights. These voting rights may be exercised in a manner that conflicts with the interests of our stockholders. We are unable to modify the rights of limited partners to receive distributions as set forth in the partnership agreement in a manner that adversely affects their rights without their consent, even though such modification might be in the best interest of our stockholders. Our partnership agreement will provide that if there is a conflict between the interests of our stockholders, on one hand, and the interests of the limited partners, on the other, we will endeavor in good faith to resolve the conflict in a manner not adverse to either our stockholders or the limited partners; provided, however, that for so long as we own a controlling interest in our operating partnership, we have agreed to resolve any conflict that cannot be resolved in a manner not adverse to either our stockholders or the limited partners in favor of our stockholders.

Changes in accounting rules, assumptions and/or judgments could materially and adversely affect us.

Accounting rules and interpretations for certain aspects of our operations are highly complex and involve significant assumptions and judgment. These complexities could lead to a delay in the preparation and public dissemination of our financial statements. Furthermore, changes in accounting rules and interpretations or in our accounting assumptions and/or judgments, such as

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asset impairments, could significantly impact our financial statements. Under any of these circumstances, we could be materially and adversely affected.

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 for taxation as a REIT from sources that could reduce our cash flows.

We intend to pay regular quarterly distributions to our common stockholders and 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. 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. If we need to fund future distributions with borrowings under our revolving credit facility or from working capital, or if we reduce our distribution rate, our stock price may be adversely affected. In addition, to the extent that we fund any distributions with borrowings under our revolving credit facility or from working capital, 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, among other requirements, we must make distributions to stockholders aggregating annually 90% of our REIT taxable income, excluding net capital gains. To the extent that, in respect of any calendar year, cash available for distribution to our stockholders is less than our REIT taxable income, we would be required to fund the minimum distribution necessary to qualify for taxation as a REIT 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 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 “—Federal Income Tax Risk Factors—We may in the future choose to pay dividends in our own stock, in which case you may be required to pay income taxes in excess of the cash dividends you receive” below.

Any distributions in excess of our current and accumulated earnings and profits will not be taxable to a holder to the extent that they do not exceed the adjusted basis of the holder’s shares in respect of which the distributions were made, but rather, will reduce the adjusted basis of these shares. To the extent that such distributions exceed the adjusted basis of a stockholder’s shares, they will generally be included in income as capital gains. For a more complete discussion of the tax treatment of distributions to our stockholders, see “Federal Income Tax Considerations.”

A public market for our common stock may never develop and your ability to sell your shares of our common stock may be limited.

Prior to this offering, there has been no public market for our common stock. Our common stock has been approved for listing on the NYSE under the symbol ‘‘CCG,” subject to official notice of issuance. However, an active trading market for our common stock may never develop or, even if one does develop, may not be sustained. In the absence of an active trading market, an investor may be unable to liquidate an investment in shares of our common stock at a favorable

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price or at all. The initial public offering price has been determined by us and the underwriters. We cannot assure you that the price at which the common stock will sell in the public market after the closing of this offering will not be lower than the price at which they are sold by the underwriters.

Common stock eligible for future sale may adversely affect the market price of our common stock.

We cannot predict the effect, if any, of future issuances of shares of our common stock or the availability of shares of our common stock for future sale on the market price of our common stock. Any sales of a substantial number of shares of our common stock in the public market (including shares issued to our directors and officers), or the perception that such sales might occur, may cause the market price of our common stock to decline.

We, each of our directors and executive officers, MXT Capital and Carl H. Ricker, Jr. have agreed, with limited exceptions, that we and they will not, 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, for a period of one year after the date of this prospectus (subject to extension under certain circumstances), among other things, directly or indirectly, offer to sell, sell or otherwise dispose of any shares of our common stock or securities that are convertible into or exchangeable for shares of common stock or file a registration statement with the SEC relating to the offering of any shares of our common stock or such convertible or exchangeable securities. In addition, we have agreed with the underwriters that we will not, during the same period of time, issue any shares of our common stock in exchange for any OP units. However, the underwriters named above may, at any time, release all or any portion of the shares of common stock subject to the foregoing lock-up provisions. If these restrictions are waived, the affected shares of common stock may be available for sale into the market which could reduce the market price of our common stock.

Under our 2010 Incentive Award Plan, we have the ability to issue options, stock appreciation rights, or “SARs,” restricted stock and restricted stock units, performance shares, performance units, dividend equivalents, restricted OP units and other stock-based awards to our executive officers, employees and non-employee directors. In connection with this offering, we intend to file a registration statement on Form S-8 to register all shares of common stock reserved for issuance under our 2010 Incentive Award Plan, and once we register these shares, they can be freely sold in the public market after issuance, subject to the terms of the plan and the lock-up provisions discussed above. MXT Capital will enter into a registration rights agreement with us. Pursuant to that agreement, we will agree, among other things, to register the resale of any common stock that may be exchanged for the OP units issued in our formation transactions. This agreement requires us to seek to register all common stock that may be exchanged for OP units effective as of that date which is 12 months following completion of this offering on a shelf registration statement under the Securities Act. We also may issue from time to time common stock or cause our operating partnership to issue OP units in connection with the acquisition of properties and we may grant demand or piggyback registration rights in connection with these issuances. Registration of the sales of these shares of our common stock would facilitate their sale into the public market. Sales of substantial amounts of our common stock, or the perception that such sales could occur, may have the effect of reducing the market price of our common stock and impeding our ability to raise future capital. In addition, any future sales of shares of our common stock may dilute the value of our common stock.

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The market price of our common stock may be volatile due to numerous circumstances, some of which are beyond our control.

Even if an active trading market develops for our common stock, the market price of our common stock may be highly volatile and subject to wide fluctuations. Our financial performance, government regulatory action, tax laws, interest rates and market conditions in general could have a significant impact on the market price of our common stock. Some of the factors that could negatively affect the market price or result in fluctuations in the market price of our common stock include:

•   actual or anticipated variations in our quarterly operating results;

•   changes in our financial performance or earnings estimates;

•   increases in market interest rates;

•   changes in market valuations of similar companies;

•   adverse market reaction to any indebtedness we incur in the future;

•   additions or departures of key personnel;

•   actions by our stockholders;

•   speculation in the press or investment community;

•   general market, economic and political conditions, including the recent economic slowdown and dislocation in the global credit markets;

•   our issuance of additional shares of common stock or other securities;

•   the performance of other similar companies;

•   changes in accounting principles;

•   passage of legislation or other regulatory developments that adversely affect us or our industry; and

•   the potential impact of the recent economic slowdown on the student housing industry and related budgets of colleges and universities.

Market interest rates may adversely affect the market price of our common stock.

One of the factors that investors may consider in deciding whether to buy or sell our common stock will be the dividend yield on our common stock as a percentage of our stock price, relative to market interest rates. An increase in market interest rates may lead prospective purchasers of our common stock to expect a higher dividend yield in order to maintain their investment, and higher interest rates would likely increase our borrowing costs which would reduce our cash flow, cash available to service our indebtedness or invest in our business and adversely affect our ability to make distributions to our stockholders. As a result, higher market interest rates could adversely affect the market price of our common stock.

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Future offerings of debt or equity securities ranking senior to our common stock may limit our operating and financial flexibility and may adversely affect the market price of our common stock.

If we decide to issue debt or equity securities in the future ranking senior to our common stock or otherwise incur indebtedness, it is possible that these securities or indebtedness will be governed by an indenture or other instrument containing covenants restricting our operating flexibility and limiting our ability to make distributions to our stockholders. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges, including with respect to distributions, more favorable than those of our common stock and may result in dilution to owners of our common stock. Because our decision to issue debt or equity securities in any future offering or otherwise incur indebtedness will depend on then current market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings or financings, any of which could adversely affect the market price, and dilute the value of, our common stock.

We have not obtained appraisals of our properties in connection with this offering. As a result, the price we pay to our existing investors for their interests in our predecessor entities, including the interests we intend to purchase from MXT Capital, which was not negotiated in an arm’s length transaction, may exceed our properties’ market value.

We have not obtained appraisals of our properties in connection with this offering. The consideration we have agreed to pay to our existing investors for their interests in our predecessor entities, including MXT Capital, which was not negotiated in an arm’s length transaction, was determined by our executive officers based upon 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. As a result, this consideration may exceed our properties’ individual market values.

The initial public offering price of our common stock was determined in consultation with the underwriters and does not necessarily bear any relationship to the book value or the market value of our properties. Factors considered in determining the initial public offering price included the valuation multiples of publicly traded companies that the underwriters believe to be comparable to us, our financial information, the history of, and the prospects for, us and the industry in which we compete, an assessment of our management, its past and present operations, and the prospects for, and timing of, our future revenues, the present state of our development, and the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours. As a result, our value, as represented by the initial public offering price of our common stock, may exceed the market value of our individual properties.

Purchasers of our common stock in this offering will experience immediate and substantial dilution.

The initial public offering price of our common stock is substantially higher than the net tangible book value per share of our common stock immediately after this offering. As of June 30, 2010, the aggregate historical combined net tangible book value of the interests and assets to be transferred to our operating partnership was approximately $(53.4) million, or $(48.90) per share of our common stock on a fully-diluted basis. The pro forma net tangible book value per share of our common stock after the consummation of this offering and our formation transactions will be less than the initial public offering price. You will therefore experience immediate dilution of $4.97 per share immediately after this offering.

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In addition to the underwriting discount and other fees, our underwriters and certain associated persons will receive other benefits from this offering.

In addition to the underwriting discount and other fees to be received by our underwriters in connection with this offering, we expect that affiliates of Raymond James & Associates, Inc., Citigroup Global Markets Inc., Goldman, Sachs & Co., Barclays Capital Inc. and RBC Capital Markets Corporation will be lenders under our revolving credit facility that will become effective immediately upon completion of this offering and satisfaction of customary loan closing conditions. Raymond James & Associates, Inc. is also entitled to a structuring fee in an amount equal to 0.60% of the total public offering price of the common stock sold in this offering and a payment of $1.5 million for services rendered in connection with various financing and purchase and sale arrangements. In addition, we will purchase the preferred membership interest of CC-Encore for $3.9 million out of the net proceeds of this offering from RJRC, LLC, an entity owned by certain associated persons of Raymond James & Associates, Inc., Encore and other third-party investors. These transactions create a potential conflict of interest because certain of the underwriters and certain associated persons of the underwriters have interests in the successful completion of this offering beyond the underwriting discount that the underwriters will receive. These interests may influence the decision regarding the terms and circumstances under which the offering and our formation transactions are completed. See “Underwriting—Other Relationships.”

The underwriters have engaged in commercial and investment banking transactions with our contributors in the ordinary course of their business and may in the future engage in commercial and investment banking transactions with us and/or our affiliates in the ordinary course of their business. They have received, and expect to receive, customary compensation and expense reimbursement for these commercial and investment banking transactions.

Federal Income Tax Risk Factors

Our failure to qualify or remain qualified as a REIT could have a material and adverse effect on us and the market price of our common stock.

We intend to operate in a manner that will allow us to qualify as a REIT for U.S. federal income tax purposes under the Internal Revenue Code. We have not requested and do not plan to request a ruling from the IRS, that we qualify as a REIT, and the statements in this prospectus are not binding on the IRS or any court. If we fail to qualify or lose our qualification as a REIT, we will face serious tax consequences that would substantially reduce the funds available for distribution to our stockholders for each of the years involved because:

•   we would not be allowed a deduction for distributions to stockholders in computing our taxable income and we would be subject to U.S. federal income tax at regular corporate rates;

•   we also could be subject to the U.S. federal alternative minimum tax and possibly increased state and local taxes; and

•   unless we are entitled to relief under applicable statutory provisions, we could not elect to be taxed as a REIT for four taxable years following a year during which we were disqualified.

In addition, if we lose our qualification as a REIT, we will not be required to make distributions to stockholders, and all distributions to our stockholders will be subject to tax as regular corporate dividends to the extent of our current and accumulated earnings and profits. This means that our U.S. individual stockholders would be taxed on our dividends at a maximum U.S. federal income tax rate currently at 15%, and our corporate stockholders generally would be entitled to the dividends received deduction with respect to such dividends, subject, in each case, to applicable limitations under the Internal Revenue Code.

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Qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions and regulations promulgated thereunder for which there are only limited judicial and administrative interpretations. Even a technical or inadvertent violation could jeopardize our ability to qualify as a REIT. The complexity of these provisions and of the applicable U.S. Treasury Department regulations, or “Treasury Regulations,” that have been promulgated under the Internal Revenue Code is greater in the case of a REIT that, like us, holds its assets through a partnership. The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT. In order to qualify as a REIT, we must satisfy a number of requirements on a continuing basis, including requirements regarding the composition of our assets, sources of our gross income and stockholder ownership. Also, we must make distributions to stockholders aggregating annually at least 90% of our REIT taxable income, excluding net capital gains.

As a result of these factors, our failure to qualify as a REIT could materially and adversely affect us and the market price of our common stock.

To qualify and remain qualified as a REIT, we will likely rely on the availability of equity and debt capital to fund our business.

To qualify and remain qualified as a REIT, we generally must distribute to our stockholders at least 90% of our REIT taxable income each year, excluding net capital gains, and we will be subject to regular corporate income taxes to the extent that we distribute less than 100% of our REIT taxable income each year. In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. Because of REIT distribution requirements, we may be unable to fund capital expenditures, such as our developments, future acquisitions or property upgrades or renovations from operating cash flow. Therefore, we may be dependent on the public equity and debt capital markets and private lenders to fund our growth and other capital expenditures. However, we may not be able to obtain this capital on favorable terms or at all. Our access to third-party sources of capital depends, in part, on:

•   general market conditions;

•   our current debt levels and the number of properties subject to encumbrances;

•   our current performance and the market’s perception of our growth potential;

•   our cash flow and cash dividends; and

•   the market price of our common stock.

If we cannot obtain capital from third-party sources, we may not be able to acquire or develop properties when strategic opportunities exist, satisfy our debt service obligations or make the cash distributions to our stockholders, including those necessary to qualify or maintain our qualification as a REIT, which could materially and adversely affect us.

Even if we qualify as a REIT, we may face other tax liabilities that have a material and adverse affect on our financial performance and liquidity.

Even if we qualify for taxation as a REIT, we may be subject to certain federal, state and local taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and

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transfer taxes. Any of these taxes would cause our operating costs to increase, and therefore our financial performance and liquidity could be materially and adversely affected.

In particular, various services provided at our properties are not permitted to be provided directly by our Operating Partnership, but must be provided through TRSs that are treated as fully taxable corporations. Although we do not anticipate this to be the case, it is possible that the income that is derived by, and subject to corporate income tax in the hands of, such TRSs may be significant.

To qualify or remain qualified as a REIT, we may be forced to limit the activities of our taxable REIT subsidiaries, which could materially and adversely affect us.

To qualify or remain qualified as a REIT, no more than 25% of the value of our total assets may consist of the securities of one or more TRSs. Certain of our activities, such as our third-party development, construction, management and leasing services, must be conducted through our TRSs for us to qualify or remain qualified as a REIT. In addition, certain non-customary services must be provided by a TRS or an independent contractor. If the revenues from such activities create a risk that the value of our TRSs, based on revenues or otherwise, approaches the 25% threshold, we will be forced to curtail such activities or take other steps to remain under the 25% threshold. Since the 25% threshold is based on value, it is possible that the IRS could successfully contend that the value of our TRSs exceeds the 25% threshold even if our TRSs account for less than 25% of our consolidated revenues, income or cash flow. After our formation transactions, our third-party services will be performed by our TRSs. Consequently, income earned from our third-party services and non-customary services will be subject to regular federal income taxation and state and local income taxation where applicable, thus reducing the amount of cash available for distribution to our stockholders.

A TRS is not permitted to directly or indirectly operate or manage a “hotel, motel or other establishment more than one-half of the dwelling units in which are used on a transient basis.” We have been advised by counsel that the proposed method of operating our TRSs will not be considered to constitute such an activity. Future Treasury Regulations or other guidance interpreting the applicable provisions might adopt a different approach, or the IRS might disagree with the conclusion of our counsel. In such event we might be forced to change our method of operating our TRSs, or one or more of the TRSs could fail to qualify as a TRS, which could cause us to fail to qualify as a REIT. Any of the foregoing circumstances could materially and adversely affect us.

If our operating partnership failed to qualify as a partnership for federal income tax purposes, we would cease to qualify as a REIT and we could be materially and adversely affected.

We believe that our operating partnership will qualify to be treated as a partnership for federal income tax purposes. As a partnership, our operating partnership will not be subject to federal income tax on its income. Instead, each of its partners, including us, will be required to pay tax on its allocable share of our operating partnership’s income. No assurance can be provided, however, that the IRS, will not challenge its status as a partnership for federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating our operating partnership as a corporation for tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, cease to qualify as a REIT. Also, the failure of the our operating partnership to qualify as a partnership would cause it to become subject to federal state and corporate income tax, which would reduce significantly the amount of cash available for debt service and for distribution to its partners, including us.

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Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends, which could materially and adversely affect the market price of our common stock.

The maximum tax rate applicable to income from “qualified dividends” payable to U.S. stockholders that are individuals, trusts and estates has been reduced by legislation to 15% (through the end of 2010). Dividends payable by REITs, however, generally are not eligible for the reduced rates. Although this does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to regular corporate qualified dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could materially and adversely affect the market price of the stock of REITs, including shares of our common stock.

We may in the future choose to pay dividends in our own stock, in which case you may be required to pay income taxes in excess of the cash dividends you receive.

We may in the future distribute taxable dividends that are payable in cash and shares of our common stock at the election of each stockholder. Under Revenue Procedure 2010-12 (which extends guidance previously issued by the IRS in Revenue Procedure 2009-15), up to 90% of any such taxable dividend through 2011 could be payable in our stock. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits for federal income tax purposes. As a result, stockholders may be required to pay income taxes with respect to such dividends in excess of the cash dividends received. If a U.S. stockholder sells the stock that it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at the time of the sale. Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock.

Further, while Revenue Procedure 2010-12 applies only to taxable dividends payable in cash or stock through 2011, it is unclear whether and to what extent we will be able to pay taxable dividends in cash and stock in later years. Moreover, various aspects of such a taxable cash/stock dividend are uncertain and have not yet been addressed by the IRS. No assurance can be given that the IRS will not impose additional requirements in the future with respect to taxable cash/stock dividends, including on a retroactive basis, or assert that the requirements for such taxable cash/stock dividends have not been met.

Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities, which could materially and adversely affect our financial performance and liquidity.

The REIT provisions of the Internal Revenue Code substantially limit our ability to hedge our liabilities. Any income from a hedging transaction we enter into to manage risk of interest rate changes with respect to borrowings made or to be made to acquire or carry real estate assets generally does not constitute “gross income” for purposes of the 75% gross income test or the 95% gross income test, if certain requirements are met. To the extent that we enter into other types of hedging transactions, the income from those transactions is likely to be treated as non-qualifying income for purposes of both of the gross income tests. As a result, we might have to limit our use of advantageous hedging techniques or implement those hedges through a TRS. This could increase the cost of our hedging activities because a domestic TRS would be subject to

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tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in our TRSs will generally not provide any tax benefit, except for being carried forward against future taxable income in the respective TRS. These increased costs could materially and adversely affect our financial performance and liquidity.

Complying with REIT requirements may cause us to forgo otherwise attractive investment opportunities, which could materially and adversely affect us.

To qualify as a REIT for U.S. federal income tax purposes, we continually must satisfy tests concerning, among other things, the sources of our income, the type and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our stock. We may be unable to pursue investments that would be otherwise advantageous to us in order to satisfy the source-of-income, asset-diversification or distribution requirements for qualifying as a REIT. Thus, compliance with the REIT requirements may hinder our ability to make certain attractive investments, which could materially and adversely affect us.

The ability of our board of directors to revoke our REIT election without stockholder approval may cause adverse consequences to our stockholders.

Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interests to continue to qualify as a REIT. If we cease to qualify as a REIT, we would become subject to federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on the total return to our stockholders.

New legislation, regulation or administrative or judicial action, in each instance potentially with retroactive effect, could make it more difficult or impossible for us to qualify as a REIT.

The present U.S. federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, regulation, administrative or judicial action at any time, which could affect the U.S. federal income tax treatment of an investment in our common stock. The U.S. federal income tax rules that affect REITs are under constant review by persons involved in the legislative process, the IRS and the U.S. Treasury Department, which results in statutory changes as well as frequent revisions to regulations and interpretations. Revisions in U.S. federal tax laws and interpretations thereof could cause us to change our investments and commitments, which could also affect the tax considerations of an investment in our common stock.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains certain forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” “continue,” “plan” or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain financial and operating projections or state other forward-looking information. Our ability to predict results or the actual effect of future events, actions, plans or strategies is inherently uncertain. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in, or implied by, the forward-looking statements. Factors that could materially and adversely affect our business, financial condition, cash flows, liquidity, results of operations, FFO and prospects include, but are not limited to:

•   the factors discussed in this prospectus, including those set forth under the section titled “Risk Factors”;

•   the performance of the student housing industry in general;

•   decreased occupancy or rental rates at our properties resulting from competition or otherwise;

•   the operating performance of our properties;

•   the success of our development and construction activities;

•   changes on the admissions or housing policies of the colleges and universities from which we draw student-tenants;

•   the availability of and our ability to attract and retain qualified personnel;

•   changes in our business and growth strategies and in our ability to consummate additional joint venture transactions;

•   our capitalization and leverage level;

•   our capital expenditures;

•   the degree and nature of our competition, in terms of developing properties, consummating acquisitions and in obtaining student-tenants to fill our properties;

•   volatility in the real estate industry, interest rates and spreads, the debt or equity markets, the economy generally or the local markets in which our properties are located, whether the result of market events or otherwise;

•   events or circumstances which undermine confidence in the financial markets or otherwise have a broad impact on financial markets, such as the sudden instability or collapse of large financial institutions or other significant corporations, terrorist attacks, natural or man-made disasters or threatened or actual armed conflicts;

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•   the availability and terms of short-term and long-term financing, including financing for development and construction activities;

•   the availability of attractive development and/or acquisition opportunities in properties that satisfy our investment criteria, including our ability to identify and consummate successful property developments and property acquisitions;

•   the credit quality of our student-tenants and parental guarantors;

•   changes in personnel, including the departure of key members of our senior management, and lack of availability of qualified personnel;

•   unanticipated increases in financing and other costs, including a rise in interest rates;

•   estimates relating to our ability to make distributions to our stockholders in the future and our expectations as to the form of any such distributions;

•   environmental costs, uncertainties and risks, especially those related to natural disasters;

•   the limitations imposed by the tax protection agreement on our ability to sell or dispose of nine of our properties during the ten-year tax protection period;

•   changes in governmental regulations, accounting treatment, tax rates and similar matters;

•   legislative and regulatory changes (including changes to laws governing the taxation of REITs); and

•   limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes and the ability of certain of our subsidiaries to qualify as TRSs for U.S. federal income tax purposes, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules.

When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this prospectus. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this prospectus. The matters summarized under “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business and Properties” and elsewhere in this prospectus could cause our actual results and performance to differ materially from those set forth in, or implied by, our forward-looking statements. Accordingly, we cannot guarantee future results or performance. Furthermore, except as required by law, we are under no duty to, and we do not intend to, update any of our forward-looking statements after the date of this prospectus, whether as a result of new information, future events or otherwise.

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USE OF PROCEEDS

Assuming an initial public offering price of $13.50 per share of common stock based upon the mid-point of the price range set forth on the cover page of this prospectus, we estimate we will receive gross proceeds from this offering of approximately $382.5 million or approximately $439.9 million if the underwriters’ overallotment option is exercised in full. After deducting the underwriting discount, structuring fee and other estimated fees and expenses payable by us, we expect net proceeds from this offering of approximately $348.9 million or approximately $402.4 million if the underwriters’ overallotment option is exercised in full.

We will contribute the net proceeds from this offering to our operating partnership. Assuming no exercise of the underwriters’ overallotment option, we intend to use the net proceeds from this offering and approximately $39.6 million of borrowings under our revolving credit facility as follows:

•   approximately $287.1 million to reduce outstanding mortgage and construction loan indebtedness and pay associated costs, as follows:

•   $104.0 million outstanding under our mortgage loan with Silverton Bank (this loan, or the Silverton Bank Mortgage Loan, is secured by six of our properties and has an aggregate outstanding principal amount of approximately $104.0 million, as of June 30, 2010, an interest rate of 6.4% per annum and a maturity date of February 28, 2013);

•   $15.6 million outstanding under our construction loan with Wachovia Bank relating to The Grove at Mobile-Phase II (this loan, or The Grove at Mobile-Phase II Construction Loan, is secured by The Grove at Mobile-Phase II, has an aggregate outstanding principal amount of approximately $15.6 million, as of June 30, 2010, an interest rate of LIBOR plus 300 basis points (with a 5.5% interest rate floor) and a maturity date of October 31, 2010);

•   $150.2 million to Wachovia Bank as it relates to nine of our properties (this loan, or the Wachovia Bank Nine Property Construction Loan, is secured by nine of our properties and has an aggregate outstanding principal amount of approximately $148.9 million, as of June 30, 2010, an interest rate of LIBOR plus 280 basis points (with a 6.00% interest rate floor through October 31, 2010 with respect to approximately $136.4 million), a maturity date of January 31, 2011 and an additional loan extension fee of $1.3 million);

•   $14.9 million outstanding under our construction loan with Wachovia Bank as it relates to The Grove at San Marcos (this loan, or the Wachovia Bank Three Property Construction Loan, is secured by three of our properties and has an aggregate outstanding principal amount of approximately $14.9 million, as of June 30, 2010, an interest rate of LIBOR plus 250 basis points (with a 5.94% interest rate floor) and a maturity date of May 15, 2011); and

•   $2.4 million to pay costs associated with the termination of interest rate swaps and hedges relating to the repayment of this debt (based on the settlement value as of June 30, 2010);

•   approximately $4.8 million to fund preferred investments in asset-owning entities that will use the net proceeds from such investments to reduce the outstanding principal balance of the Wachovia Bank Three Property Construction Loan that is secured, in part,

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by The Grove at San Marcos, in connection with our purchase of The Grove at San Marcos and its removal from the collateral pool securing such loan;

•   approximately $4.0 million to repay indebtedness owed to Capital Bank, which has an interest rate of prime plus 1.0% and a maturity date of October 5, 2010;

•   approximately $6.0 million to repay unsecured indebtedness owed by us to RHR, LLC, an entity owned by MXT Capital and the Ricker Group, which has an interest rate of 12% and a maturity date of April 30, 2011; RHR, LLC will, in turn, immediately repay an equal amount of indebtedness owed by it to an unaffiliated third party on substantially the same terms and conditions as the loan from RHR, LLC to us;

•   approximately $4.5 million to MXT Capital, which will immediately use such amount to make capital contributions to certain entities that will, in turn, immediately use the capital contributions solely to repay indebtedness;

•   approximately $29.1 million to acquire interests in our properties from HSRE and satisfy associated obligations to HSRE (this amount will equal $31.0 million in the event that the lender consents relating to indebtedness secured by The Grove at Carrollton are received and our joint venture with HSRE acquires a 100% interest in The Grove at Carollton);

•   approximately $26.7 million to acquire interests in our properties from the Ricker Group;

•   approximately $10.7 million to acquire interests in our properties from certain third-party investors; 

•   approximately $3.4 million to acquire land on which we expect to commence building four properties following the completion of this offering;

•   $3.9 million to acquire the preferred membership interest in CC-Encore (which includes repayment of the $2.35 million loan from CC-Encore to Campus Crest Ventures I, LLC, or “CCV I”); and

•   approximately $8.3 million for working capital and general corporate purposes.

If the underwriters’ overallotment option is exercised, we expect to use the additional net proceeds (which, if the underwriters’ overallotment is exercised in full, will be approximately $53.5 million (based upon the mid-point of the price range set forth on the cover page of this prospectus)) for working capital and general corporate purposes, which may include funding a portion of our expected development activity and other growth strategies and distributions to our stockholders.

Pending application of any portion of the net proceeds from this offering, we will invest it in interest-bearing accounts and short-term, interest-bearing securities as is consistent with our intention to qualify for taxation as a REIT for federal income tax purposes. Such investments may include, for example, obligations of the U.S. federal government and governmental agency securities, certificates of deposit and interest-bearing bank deposits.

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The following table provides information related to the expected sources and uses of the proceeds from this offering (assuming the underwriters’ overallotment option is not exercised) and borrowings under our revolving credit facility.

Sources			Uses
(in millions)			(in millions)
Gross offering proceeds (1)	$	382.5	Underwriting discount	$	23.3
Draw under our revolving credit facility		39.6	Structuring fee		2.3
			Other fees and expenses		8.0
			Reduction of outstanding mortgage and construction loan indebtedness and payment of associated costs		287.1
			Preferred investments		4.8
			Repayment of unsecured indebtedness (Capital Bank and RHR, LLC)		10.0
			Payment to MXT Capital for repayment of certain indebtedness		4.5
			Payment to HSRE for interests in our properties and associated obligations(2)		29.1
			Payment to the Ricker Group for interests in our properties		26.7
			Payment to certain third-party investors for interests in our properties		10.7
			Acquisition of land		3.4
			Acquisition of CC-Encore preferred membership interest		3.9
			Working capital		8.3
Total Sources	$	422.1	Total Uses	$	422.1

(1) This amount assumes 28,333,333 shares of common stock are sold in this offering and will increase or decrease depending upon whether such shares are sold above or below $13.50 per share (the mid-point of the price range set forth on the cover page of this prospectus).

(2) The amount of net proceeds to be paid to HSRE will increase to $31.0 million in the event that the lender consents relating to indebtedness secured by The Grove at Carrollton are received and our joint venture with HSRE acquires a 100% interest in The Grove at Carrollton.

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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. This estimate is based on our historical operating results, adjusted as described below, and does not take into account the four wholly-owned and three joint venture properties that we expect to commence building upon completion of this offering, with completion targeted for the 2011-2012 academic year, nor does it take into account any unanticipated expenditures we may have to make or any new debt we may have to incur.

Our estimate of cash available for distribution does not reflect:

•   fee income from development, construction and management services that we may provide with respect to future joint venture properties, including the three joint venture properties that we expect to develop through a new joint venture that we expect to establish with HSRE, with completion targeted for the 2011-2012 academic year (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Expected to Affect Our Operating Results—Development, Construction and Management Services”);

•   cash to be used for capital expenditures, such as development and construction activities (including four wholly-owned properties and three joint venture properties that we expect to commence building upon completion of this offering) and property acquisitions, other than an estimate of recurring capital expenditures at our combined properties and our uncombined joint venture properties; or

•   cash estimated to be used for financing activities, other than scheduled amortization payments on mortgage indebtedness that will be outstanding upon completion of this offering.

During the 12 months ending June 30, 2011, we expect to incur capital expenditures in connection with the development and construction of four student housing properties that we expect to build for our own account, with completion and occupancy targeted for the 2011-2012 academic year. In addition, we expect to pay a pro rata share of capital expenditures incurred by a joint venture in which we expect to own a 20% interest relating to the construction of three student housing properties, also with completion and occupancy targeted for the 2011-2012 academic year. We intend to fund these expenditures primarily with borrowings under our revolving credit facility and new construction indebtedness. As a result, we do not expect that these development activities will have a meaningful effect on our estimate of cash available for distribution for the 12 months ending June 30, 2011.

Although we currently have no additional commitments with respect to investing or financing activities, we may choose to undertake additional investing and/or financing activities in the future, which may have a material effect on our estimate of cash available for distribution. Because we have made the assumptions set forth above in estimating cash available for

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distribution, we do not intend this estimate to be a projection or forecast of our actual results of operations or our liquidity, and have estimated cash available for distribution for the sole purpose of determining our initial annual distribution amount and corresponding payout ratio. Our estimate of cash available for distribution should not be considered as an alternative to cash flow from operating activities (computed in accordance with GAAP) or as an indicator of our liquidity or our ability to pay dividends or make distributions. In addition, the methodology upon which we made the adjustments described below is not necessarily intended to be a basis for determining future distributions.

We intend to maintain our initial distribution rate for the 12-month period following completion of this offering unless actual results of operations, economic conditions or other factors differ materially from the assumptions used in our estimate. Distributions made by us will be authorized and determined by our board of directors out of funds legally available therefor and will depend upon a number of factors, including restrictions under applicable law or contained in agreements relating to our indebtedness (including our revolving credit facility) or any future preferred stock. We believe that our estimate of cash available for distribution constitutes a reasonable basis for setting the initial distribution; however, no assurance can be given that the estimate will prove accurate, and actual distributions, if any, may therefore be significantly different from the expected distributions. We do not intend to reduce the expected distribution per share if the underwriters’ overallotment option is exercised; however, this could require us to pay distributions from the net proceeds of this offering.

We anticipate that, at least initially, our distributions will exceed our then current and then accumulated earnings and profits as determined for U.S. federal income tax purposes due to non-cash expenses, primarily depreciation and amortization charges that we expect to incur. Therefore, a portion of these distributions will represent a return of capital for federal income tax purposes. Distributions in excess of our current and accumulated earnings and profits and not treated by us as a dividend will not be taxable to a taxable U.S. stockholder under current federal income tax law to the extent those distributions do not exceed the stockholder’s adjusted tax basis in such common stock, but rather will reduce the adjusted basis of the common stock. Therefore, the gain (or loss) recognized on the sale of that common stock or upon our liquidation will be increased (or decreased) accordingly. To the extent those distributions exceed a taxable U.S. stockholder’s adjusted tax basis in such common stock, they generally will be treated as a capital gain realized from the taxable disposition of those shares. We expect that approximately 51% of our estimated initial annual distribution will represent a return of capital for federal income tax purposes. The percentage of our stockholder distributions that exceeds our current and accumulated earnings and profits may vary substantially from year to year. For a more complete discussion of the tax treatment of distributions to holders of our common stock, see “Federal Income Tax Considerations.”

We cannot assure you that our estimated distributions will be made at all, or at the rate estimated below, or if made, that such distributions will be sustained. Any distributions we pay in the future will depend upon our actual results of operations, economic conditions and other factors that could differ materially from our current expectations. Our actual results of operations will be affected by a number of factors, including the revenue we receive from our properties and our development, construction and management services, our operating expenses and interest expense, the ability of our student-tenants to meet their obligations and unanticipated expenditures. For more information regarding risk factors that could materially and adversely affect our actual results of operations, see “Risk Factors.”

If our properties do not generate sufficient cash flow with which to pay our estimated distributions, we will be required either to fund distributions from working capital or borrowings under our revolving credit facility or to reduce our distributions. Our revolving credit facility will

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contain covenants that restrict our ability to pay distributions or other amounts to our stockholders unless certain financial tests are satisfied and will limit distributions to the greater of 90% of our FFO or the amount required for us to qualify and maintain our status as a REIT. In addition, our revolving credit facility will contain certain provisions restricting or limiting our ability to draw funds under the facility.

Federal income tax law requires that a REIT distribute annually at least 90% of its REIT taxable income determined without regard to the dividends paid deduction and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its REIT taxable income, including capital gains. For more information, please see “Federal Income Tax Considerations.” We anticipate that our estimated cash available for distribution and our estimated initial annual distribution will exceed the annual distribution requirements applicable to REITs. However, if our cash available for distribution does not exceed such requirements, we may be required to pay distributions in excess of cash available for distribution. In such a case, 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 such distribution requirement by distributing a combination of cash and shares of our common stock, which may subject the holders of our common stock 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 subsequent, distribution rate, and we may be required to fund the minimum distribution necessary to qualify for taxation as a REIT from sources that could reduce our cash flows.”

The following table describes our pro forma net loss for the 12 months ended June 30, 2010, and the adjustments we have made thereto in order to estimate our cash available for distribution for the 12 months ending June 30, 2011 (amounts in thousands except share data, per share data, per bed data and percentages):

Pro forma net loss before noncontrolling interest for the year ended December 31, 2009		$	(8,582	)
Less:	Pro forma net loss before noncontrolling interest for the six months ended June 30, 2009		(3,771	)
Add:	Pro forma net loss before noncontrolling interest for the six months ended June 30, 2010		(2,176	)
Pro forma net loss for the 12 months ended June 30, 2010			(6,987	)
Add:	Pro forma depreciation and amortization for the 12 months ended June 30, 2010		20,321	(1)
Add:	Increase in net income before depreciation from existing development and construction services contracts for the 12 months ending June 30, 2011 compared to the 12 months ended June 30, 2010		432	(2)
Add:	Increase in revenue from existing management services contracts for the 12 months ending June 30, 2011 compared to the 12 months ended June 30, 2010		384	(3)
Add:	Increase in revenue from the anticipated increase in occupancy for the 12 months ending June 30, 2011 compared to the 12 months ended June 30, 2010 based on executed leases		2,138	(4)
Add:	Increase in revenue from the anticipated increase in average rental rate for the 12 months ending June 30, 2011 compared to the 12 months ended June 30, 2010 based on executed leases		1,845	(5)
Add:	Increase in net income before depreciation from a full year’s operation of two consolidated properties that opened in August 2009		252	(6)

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Less:	Decrease in net income before depreciation from a full year’s operation of three unconsolidated joint venture properties that opened in August 2009		(121	) (7)
Add:	Increase in net income before depreciation from the initial operations of three unconsolidated joint venture properties that opened in August 2010 for the 2010-2011 academic year based on executed leases		739	(8)
Add:	Decrease in expense from the non-recurring charge related to the write-off of pre-development costs that was recorded in September 2009		1,171	(9)
Add:	Non-cash compensation expense		318	(10)
Add:	Non-cash interest expense		110	(11)
Estimated cash flows from operating activities for the 12 months ending June 30, 2011			20,602
Estimated cash flows used in investing activities:
Less:	Annual provision for recurring capital expenditures — consolidated properties		(372	) (12)
Less:	Pro rata share of annual provision for recurring capital expenditures — unconsolidated joint venture properties		(27	) (13)
Total estimated cash flow used in investing activities			(399	)
Estimated cash flows used in financing activities:
Less:	Scheduled loan principal repayments — consolidated properties		—	(14)
Less:	Pro rata share of scheduled loan principal repayments — unconsolidated joint venture properties		—	(15)
Add:	Interest expense funded from construction loan draws — unconsolidated joint venture properties		502	(16)
Total estimated cash flows used in financing activities			502
Total estimated cash available for distribution for the 12 months ending June 30, 2011		$	20,705	(17)
Total estimated initial annual distribution to stockholders and holders of OP units		$	19,002	(18)
Estimated annual distribution per share/OP unit		$	0.64
Payout ratio based on estimated cash available for distribution			91.8	%(19)
Estimated cash available for distribution to:
OP units		$	867
Shares of common stock		$	19,838

(1)

Includes $19,275 of depreciation and amortization from our consolidated properties and $1,046 of our pro rata share of depreciation and amortization from our unconsolidated joint venture properties.

(2)

The following table reflects the economic impact on the 12 months ending June 30, 2011 resulting from anticipated changes in contractual development and construction services revenue and expenses, as compared to the 12 months ended June 30, 2010. Revenue and expenses from development and construction services for the 12 months ending June 30, 2011 relate primarily to the completion of the three joint venture properties that opened in August 2010 for the 2010-2011 academic year.

	12 mos. Ended			Six mos. Ended		Six mos. Ended		12 mos. Ended		12 mos. Ending
	12/31/09			6/30/09		6/30/10		6/30/10		6/30/11		Increase/
	(Pro Forma)			(Pro Forma)		(Pro Forma)		(Pro Forma)		(Existing Contracts)		(Decrease)
Revenues from External Customers		24,505			13,192		17,264		28,577		3,470		(25,107	)
Operating Expenses (External)		24,847			12,959		16,140		28,028		2,489		(25,539	)
Net Income before Depreciation		(342	)		233		1,124		549		981		432

(3) Adjustment reflects the net increase in contractual management fee revenues for the 12 months ending June 30, 2011 compared to the 12 months ended June 30, 2010 from contracts in place during the 12 months ended June 30, 2010. The increase in revenue from management services for the 12 months ending June 30, 2011 relates primarily to the impact

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of a full year of management services revenue for the three joint venture properties that opened in August 2009 and the initiation of management services for the three joint venture properties that opened in August 2010.

(4) The following table reflects the economic impact on the 12 months ending June 30, 2011 resulting from anticipated changes in our occupancy based on our executed lease status for our operating properties (excluding the three properties that opened in August 2010) as of September 15, 2010, as compared to the 12 months ended June 30, 2010 as follows:

																Impact on Net
										Executed Lease			Pro Forma			Income before
				Occupancy for the						Status for the			Occupancy for			Depreciation
		Total Beds		12 mos. Ended			Occupancy			2010-2011 AY			12 mos. Ending			for the 12 mos.
		at Property		6/30/10(a)			as of 6/30/10			as of 9/15/10(b)			6/30/11(c)			Ending 6/30/11(d)
Wholly-Owned Properties
1	Asheville, NC		448		91	%		97	%		88	%		89	%	$	(65	)
2	Carrollton, GA		492		98	%		99	%		92	%		93	%		(125	)
3	Las Cruces, NM		492		84	%		87	%		83	%		83	%		(41	)
4	Milledgeville, GA		492		98	%		97	%		99	%		99	%		29
5	Abilene, TX		504		77	%		81	%		87	%		87	%		274
6	Ellensburg, WA		504		97	%		99	%		96	%		97	%		(3	)
7	Greeley, CO		504		74	%		79	%		98	%		97	%		594
8	Jacksonville, AL		504		81	%		85	%		81	%		81	%		(5	)
9	Mobile, AL Phase I		504		94	%		96	%		100	%		100	%		162
10	Mobile, AL Phase II		504		96	%		98	%		100	%		100	%		96
11	Nacogdoches, TX		522		95	%		96	%		100	%		100	%		154
12	Cheney, WA		512		95	%		98	%		71	%		76	%		(538	)
13	Jonesboro, AR		504		72	%		82	%		99	%		97	%		652
14	Lubbock, TX		504		79	%		86	%		92	%		92	%		366
15	Stephenville, TX		504		96	%		99	%		75	%		77	%		(528	)
16	Troy, AL		514		95	%		94	%		98	%		98	%		77
17	Waco, TX		504		86	%		89	%		83	%		83	%		(92	)
18	Wichita, KS		504		79	%		92	%		75	%		77	%		(54	)
19	Wichita Falls, TX		504		69	%		71	%		67	%		67	%		(50	)
20	Murfreesboro, TN		504		90	%		90	%		98	%		98	%		198
21	San Marcos, TX		504		98	%		97	%		100	%		100	%		53
Sub Total			10,528		88	%		91	%		90	%		90	%	$	1,154
Joint Venture Properties
22	Lawrence, KS (e)		500		37	%		42	%		76	%		73	%	$	446(f	)
23	Moscow, ID		504		43	%		50	%		89	%		86	%		538(f	)
24	San Angelo, TX		504		84	%		88	%		84	%		84	%		—(f	)
Sub Total			1,508		55	%		60	%		83	%		81	%	$	984
Total			12,036													$	2,138

(a) Occupancy for the historical 12 months ended June 30, 2010 reflects the average occupancy during that period, which generally includes one month of occupancy results from the 2008-2009 academic year (i.e., July 2009) and 11 months of occupancy results from the 2009-2010 academic year (i.e., August 2009 through June 2010).

(b) Executed lease status for the 2010-2011 academic year is based on the number of executed leases in hand for the 2010-2011 academic year as of September 15, 2010.

(c) Occupancy for the 12 months ending June 30, 2011 is generally based on one month (i.e., July 2010) of in-place occupancy as of June 30, 2010 and 11 months (i.e., August 2010 through June 2011) of occupancy based on executed leases in hand for the 2010-2011 academic year as of September 15, 2010. For Ellensburg, Washington and Cheney, Washington, occupancy for the 12 months ending June 30, 2011 is based on two months (i.e., July and August 2010) of in-place occupancy as of June 30, 2010 and 10 months (i.e., September 2010 through June 2011) of occupancy based on executed leases in hand for the 2010-2011 academic year as of September 15, 2010.

(d) Impact on net income before depreciation for the 12 months ending June 30, 2011 is based on the increase or decrease in occupancy assuming average monthly rental revenue per occupied bed for the 12 months ending June 30, 2011 is equal to average monthly rental revenue per occupied bed for the 12 months ended June 30, 2010.

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(e)	Occupancy figures for Lawrence, Kansas based on 500 total beds. The property opened for the 2009-2010 academic year with 300 beds available, but was expanded to 500 beds for the 2010-2011 academic year.
(f)	Adjusted to reflect: (i) impact of increase in management fee expense resulting from expected increase in revenue and net income before depreciation; and (ii) equity method of accounting assuming 49.9% ownership of each property.

(5) The following table reflects the economic impact on the 12 months ending June 30, 2011 resulting from anticipated changes in our average rental revenue per leased bed based on our executed lease status for our operating properties as of September 15, 2010, as compared to the 12 months ended June 30, 2010 as follows:

		Average		Average						Average
		Monthly Rental		Monthly Rental				Average		Monthly Rental		Impact on Net
		Revenue		Revenue		Total Beds		Monthly Rental		Revenue		Income before
		per Occupied Bed		per Occupied Bed		Leased for		Revenue		per Leased Bed		Depreciation
		for the 12 mos.		For the Month		the 2010-2011 AY		per Leased Bed		for the 12 mos.		for the 12 mos.
		Ended 6/30/10(a)		Ended 6/30/10		as of 9/15/10(b)		for the 2010-2011 AY(b)		Ending 6/30/11(c)		Ending 6/30/11(d)
Wholly-Owned Properties
1	Asheville, NC	$	467	$	484		394	$	488	$	488	$	99
2	Carrollton, GA		414		426		453		436		435		117
3	Las Cruces, NM		437		441		406		440		440		13
4	Milledgeville, GA		495		500		489		524		522		160
5	Abilene, TX		440		442		440		435		435		(22	)
6	Ellensburg, WA		459		462		486		483		480		123
7	Greeley, CO		439		439		495		463		461		132
8	Jacksonville, AL		408		424		406		429		429		101
9	Mobile, AL Phase I		450		453		504		466		465		92
10	Mobile, AL Phase II		450		453		504		466		465		94
11	Nacogdoches, TX		482		484		522		508		506		153
12	Cheney, WA		448		450		366		448		448		(1	)
13	Jonesboro, AR		428		426		498		440		439		63
14	Lubbock, TX		466		473		466		473		473		42
15	Stephenville, TX		449		451		376		470		469		87
16	Troy, AL		456		455		504		472		470		89
17	Waco, TX		517		516		418		535		534		86
18	Wichita, KS		430		440		380		453		452		100
19	Wichita Falls, TX		442		451		336		456		456		57
20	Murfreesboro, TN		452		452		496		442		442		(58	)
21	San Marcos, TX		527		528		504		554		552		151
Sub Total			NM		NM		9,443	$	472	$	471	$	1,678
Joint Venture Properties
22	Lawrence, KS	$	439	$	444		380	$	457	$	456	$	36(e	)
23	Moscow, ID		435		453		450		455		455		49(e	)
24	San Angelo, TX		435		470		424		469		469		82(e	)
Sub Total			NM		NM		1,254	$	460	$	460	$	167
Total							10,697					$	1,845

(a) Average monthly rental revenue per occupied bed for the historical 12 months ended June 30, 2010 generally includes one month of results from the 2008-2009 academic year (i.e., July 2009) and 11 months of results from the 2009-2010 academic year (i.e., August 2009 through June 2010).

(b) Total beds leased and average monthly rental revenue per leased bed for the 2010-2011 academic year is based on executed leases in hand for the 2010-2011 academic year as of September 15, 2010 and is net of the economic impact of any lease concessions.

(c) Estimated average monthly rental revenue per leased bed for the 12 months ending June 30, 2011 is generally based on one month (i.e., July 2010) of in-place average monthly rental revenue per occupied bed as of the month ended June 30, 2010 and 11 months (i.e., August 2010 through June 2011) of estimated average monthly rental revenue per leased bed based on executed leases in hand for the 2010-2011 academic year as of September 15, 2010. For Ellensburg, Washington and Cheney, Washington, economic occupancy for the 12 months ending June 30, 2011 is based on two months (i.e., July and August 2010) of in-place average monthly rental revenue per occupied bed as of June 30, 2010 and 10 months (i.e., September 2010 through June 2011) of estimated average monthly rental revenue per leased bed

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based on executed leases in hand for the 2010-2011 academic year as of September 15, 2010.

(d) Impact on net income before depreciation is based on the difference between the estimated average monthly rental revenue per leased bed for the 12 months ending June 30, 2011 and the historical average monthly rental revenue per occupied bed for the 12 months ended June 30, 2010, multiplied by the number of executed leases in hand as of September 15, 2010, multiplied by 12 months.

(e) Adjusted to reflect: (i) impact of increase in management fee expense resulting from expected increase in revenue and net income before depreciation; and (ii) equity method of accounting assuming 49.9% ownership of each property.

(6) The following table reflects the economic impact on the 12 months ending June 30, 2011 resulting from a full year’s operation of two consolidated properties that opened in August 2009 (The Grove at Murfreesboro and The Grove at San Marcos).

								Annualized		Impact on Net
				Annualized		Operating		Operating		Income before
		Revenue		Revenue		Expenses		Expenses		Depreciation
		for the 11 mos.		for the 12 mos.		for the 11 mos.		for the 12 mos.		for the 12 mos.
		Ended 6/30/10		Ending 6/30/11(a)		Ended 6/30/10		Ending 6/30/11(a)		Ending 6/30/11(b)
Wholly-Owned Properties
1	Murfreesboro, TN	$	2,348	$	2,561	$	1,240	$	1,353	$	100
2	San Marcos, TX		2,940		3,207		1,265		1,380		152
Total		$	5,288	$	5,768	$	2,505	$	2,733	$	252

(a)	Based on average monthly revenue or operating expenses for the 11 months ended June 30, 2010 multiplied by 12.
(b)	Represents the amount by which net income before depreciation (i.e., revenue less operating expenses) for the 12 months ending June 30, 2011 exceeds net income before depreciation for the 11 months ended June 30, 2010.

(7) The following table reflects the economic impact on the 12 months ending June 30, 2011 resulting from a full year’s operation of three unconsolidated joint venture properties that opened in August 2009 (The Grove at Lawrence, The Grove at Moscow and The Grove at San Angelo).

								Annualized				Estimated		Impact on Net
				Annualized		Operating		Operating		Interest		Interest		Income before
		Revenue		Revenue		Expenses		Expenses		Expense		Expense		Depreciation
		for the 11 mos.		for the 12 mos.		for the 11 mos.		for the 12 mos.		for the 11 mos.		for the 12 mos.		for the 12 mos.
		Ended 6/30/10		Ending 6/30/11(a)		Ended 6/30/10		Ending 6/30/11(a)		Ended 6/30/10		Ending 6/30/11(b)		Ending 6/30/11(c)
Joint Venture Properties
1	Lawrence, KS	$	937	$	1,022	$	858	$	936	$	869	$	1,000	$	(62	)
2	Moscow, ID		1,103		1,203		1,007		1,099		822		951		(60	)
3	San Angelo, TX		2,251		2,456		1,182		1,289		763		859		1
Total		$	4,291	$	4,681	$	3,047	$	3,324	$	2,454	$	2,810	$	(121	)

(a)	Based on average monthly revenue or operating expenses for the 11 months ended June 30, 2010 multiplied by 12.
(b)	Estimated interest expense based on contractual interest rates and loan balances as of June 30, 2010.
(c)	Represents the amount by which net income before depreciation (i.e., revenue less operating expenses less interest expense) for the 12 months ending June 30, 2011 exceeds net income before depreciation for the 11 months ended June 30, 2010, as adjusted to reflect equity method of accounting assuming 49.9% ownership of each property.

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(8) Represents expected net income before depreciation from leasing activities related to three unconsolidated joint venture properties that opened in August 2010 for the 11 month period from August 2010 through June 2011, as follows:

				Total Beds												Impact on Net
				Leased		Average Monthly		Contribution to		Average Monthly		Estimated		Estimated Interest		Income before
				for the		Rental Revenue per		Revenue for the		Historical Portfolio		Expenses for the		Expense for the		Depreciation
		Total Beds		2010-2011 AY		Leased Bed		11 mos. Ending		Operating Expense		11 mos. Ending		11 mos. Ending		for the 12 mos.
		at Property		as of 9/15/10(a)		for the 2010-2011 AY(a)		6/30/11(b)		Per Bed(c)		6/30/11(d)		6/30/11(e)		Ending 6/30/11(f)
Joint Venture Properties
1	Conway, AR		504		470	$	441	$	2,278	$	205	$	1,138	$	1,080	$	30
2	Huntsville, TX		504		504		448		2,481		205		1,138		703		319
3	Statesboro, GA		536		536		447		2,637		205		1,211		644		390
Total			1,544		1,510		N/A	$	7,396		N/A	$	3,487	$	2,427	$	739

(a) Total beds leased and average monthly rental revenue per leased bed for the 2010-2011 academic year is based on executed leases in hand for the 2010-2011 academic year as of September 15, 2010 and is net of the economic impact of any lease concessions.

(b)	Calculated as average monthly rental revenue per leased bed (excluding student housing services revenue) multiplied by 11 months (August 2010 through June 2011) multiplied by the number of signed leases.
(c)	Represents the average monthly operating cost per bed at our operating properties for the 12 months ended June 30, 2010.
(d)	Calculated as average monthly historical portfolio operating expense per bed multiplied by 11 months (August 2010 through June 2011) multiplied by the number of beds at the property.
(e)	Estimated interest expense for the 11 months ending June 30, 2011 based on contractual interest rates and projected loan balances.
(f)	Impact on net income before depreciation for the 12 months ending June 30, 2011 based on equity method of accounting assuming 49.9% ownership of each property.

(9)	Write-off of pre-development costs represents a portion of a non-cash impairment charge incurred during the 12 months ended June 30, 2010 related to the write-off of capitalized expenditures for projects that were commenced but not completed due to unforeseen events, including significant limitations in the availability of debt financing to fund construction costs. We expect, subject to completion of this offering, to commence building four wholly-owned and three joint venture properties with completion targeted for the 2011-2012 academic year, and we anticipate obtaining adequate financing to fund our developments over the next 12 months through our revolving credit facility and construction debt. Therefore, we do not anticipate having to write-off significant pre-development expenditures for the 12 months ending June 30, 2011 as a result of the unavailability of financing.
(10)	Represents pro forma non-cash compensation expense related to the vesting of awards granted under the 2010 Incentive Award Plan for the 12 months ended June 30, 2010.
(11)	Represents pro forma non-cash amortization of deferred financing costs for the 12 months ended June 30, 2010.

(12) Represents estimated recurring capital expenditures for our consolidated properties for the 12 months ending June 30, 2011 based on estimated recurring capital expenditures of $35.31 per bed multiplied by 10,528 total beds at our consolidated properties. Recurring capital expenditures were estimated based on a weighted average of capital expenditures per bed for the three fiscal years ended December 31, 2009. For more information regarding our recurring capital expenditures, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Recurring Capital Expenditures.”

(13) Represents our pro rata share of estimated recurring capital expenditures for our joint venture properties for the 12 months ending June 30, 2011 based on estimated recurring capital expenditures of $35.31 per bed multiplied by 1,508 total beds at our joint venture properties (excluding beds at our three joint venture properties that opened in August 2010, which we

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anticipate will not require material recurring capital expenditures for the 12 months ending June 30, 2011). Recurring capital expenditures were estimated based on a weighted average of capital expenditures per bed for the three fiscal years ended December 31, 2009. For more information regarding our recurring capital expenditures, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Recurring Capital Expenditures.”

(14)	Represents required mortgage loan payments for our consolidated properties after the repayment of certain indebtedness with the net proceeds from this offering.
(15)	Represents our pro rata share of required mortgage loan payments for our unconsolidated joint venture properties.
(16)	Represents our pro rata share of the interest expense at our three unconsolidated joint venture properties that opened in August 2010 that we expect to fund with draws under the construction facilities for these properties pursuant to the terms of such facilities, which generally provide that up to a specified amount of interest expense can be funded with incremental loan draws.
(17)	Reflects estimated operating cash flows less cash flows used in financing and investing activities.

(18) Estimated initial annual distribution calculated by multiplying the assumed issued shares of 28,447,641 and OP units of 1,243,000 by the assumed initial distribution amount per share of $0.64.

(19) Payout ratio calculated by dividing the estimated initial annual distribution to stockholders and holders of OP units by the estimated annual cash available for distribution.

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CAPITALIZATION

The following table sets forth the capitalization of our Predecessor as of June 30, 2010 and our capitalization on a pro forma basis as of June 30, 2010, adjusted to reflect our formation transactions, this offering and the use of the net proceeds from this offering as described in “Use of Proceeds.” You should read this table in conjunction with “Use of Proceeds,” “Selected Historical and Pro Forma Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and pro forma financial statements and the notes to those financial statements appearing elsewhere in this prospectus.

	Predecessor			Pro Forma
	as of			as of
	June 30,			June 30,
	2010			2010 (1)
	(unaudited)			(unaudited)
	(in thousands)
Mortgage and construction loans	$	329,374		$	60,840
Lines of credit and other debt		10,018			39,600	(2)
Related party loan (3)		7,671			—
Equity (deficit):
Noncontrolling interest		799			(57,175	)
Common stock, $.01 par value, 90,000,000 shares authorized, 28,447,641 shares issued and outstanding on a pro forma basis (4)		—			284
Additional paid in capital and accumulated losses		—			310,060
Owners’ equity (deficit)		(54,245	)		—
Total owners’ equity (deficit)		(53,446	)		253,169
Total capitalization	$	293,617		$	353,609

(1) Assumes 28,333,333 shares are sold in this offering at $13.50 per share (the mid-point of the price range set forth on the cover of this prospectus).

(2) Upon completion of this offering and satisfaction of customary loan closing conditions, we will have a three-year, $125 million revolving credit facility, with approximately $61.2 million of borrowing capacity after giving effect to an expected draw upon completion of this offering and the issuance of letters of credit.

(3) Represents the proceeds from sale of The Grove at Milledgeville to HSRE, sale of 99% of our interest in HSRE I and prepaid management fees. These transactions are accounted for as financing arrangements.

(4) Does not include (i) any shares of common stock that may be issued pursuant to the underwriters’ overallotment option to purchase up to an additional 4,250,000 shares of common stock or (ii) OP units issued as part of our formation transactions or restricted OP units to be granted to Mr. Hartnett pursuant to his employment agreement. Includes 114,308 shares of restricted common stock to be granted at the time of the offering to our independent directors, certain of our executive officers and certain members of our management team under our 2010 Incentive Award Plan.

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DILUTION

Purchasers of our common stock in this offering will experience an immediate and substantial dilution of net tangible book value of their common stock from the assumed initial public offering price based on the mid-point of the price range set forth on the cover page of this prospectus. At June 30, 2010, we had a tangible net book value of approximately $(53.4) million or $(48.90) per share of common stock assuming the issuance of the OP units in our formation transactions and the exchange of the OP units into shares of our common stock on a one-for-one basis. After giving effect to the sale of the shares of our common stock offered hereby, the deduction of the underwriting discount, structuring fee and other estimated fees and expenses, the receipt by us of the net proceeds from this offering and the use of these net proceeds by us as described under “Use of Proceeds” and the consummation of our formation transactions, the pro forma net tangible book value at June 30, 2010 would have been $253.2 million or $8.53 per share of common stock. This amount represents an immediate increase in net tangible book value of $57.43 per share to existing holders of our common stock and an immediate dilution in pro forma net tangible book value of $4.97 per share from the assumed initial public offering price of $13.50 per share, which is the mid-point of the price range set forth on the cover page of this prospectus, to purchasers of common stock in this offering. The following table illustrates this per share dilution⁽¹⁾:

Assumed initial public offering price per share based on the mid-point of the price range set forth on the cover page of this prospectus				$	13.50
Net tangible book value per share before our formation transactions and this offering (2)	$	(48.90	)
Net increase in pro forma net tangible book value per share attributable to our formation transactions and this offering(3)		57.43
Pro forma net tangible book value per share after our formation transactions and this offering					8.53
Dilution in pro forma net tangible book value per share to purchasers of common stock in this offering				$	4.97

(1)	The calculations above assume that the initial public offering price of our common stock is at the mid-point of the price range set forth on the cover page of this prospectus.
(2)	Net tangible book value per share before our formation transactions and this offering is determined by dividing the net book value of the tangible assets of our Predecessor by the number of shares of our common stock held by continuing investors after this offering, assuming the exchange in full of 1,093,000 OP units (excludes OP units to be granted to Mr. Hartnett pursuant to his employment agreement) to be issued to the continuing investors for shares of our common stock on a one-for-one basis.
(3)	Represents increase in net tangible book value per share attributable to this offering and our formation transactions assuming the negative net tangible book value existing before this offering is spread among purchasers of common stock in this offering. This amount is calculated after deducting the underwriting discount and estimated expenses payable by us.

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SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION

You should read the following 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 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 selected historical combined statements of operations and cash flows for the six months ended June 30, 2010 and 2009 and the 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 selected historical combined statements of operations and cash flows for the years ended December 31, 2009, 2008 and 2007 and the 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 selected historical combined statements of operations for the years ended December 31, 2006 and 2005 and the selected historical combined balance sheet data for the years ended December 31, 2007, 2006 and 2005 have been derived from the unaudited combined financial statements of our Predecessor, not included in this prospectus. The 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 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 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 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.

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Statement of Operations Information:

	Pro Forma
	Campus Crest
	Communities, Inc.						Historical Campus Crest Communities Predecessor
	Six Months			Year Ended			Six Months Ended
	Ended			December 31,			June 30,						Year Ended December 31,
	June 30, 2010			2009			2010			2009			2009			2008			2007			2006			2005
	(unaudited)			(unaudited)			(unaudited)			(unaudited)												(unaudited)			(unaudited)
	(in thousands)
Revenues:
Student housing leasing	$	25,986		$	45,021		$	24,443		$	21,219		$	43,708		$	30,813		$	15,598		$	5,335		$	1,034
Student housing services		1,486			2,289			1,426			1,011			2,265			798			110			115			156
Development, construction and management services		17,311			24,540			30,738			37,258			60,711			2,505			—			—			—
Total revenues		44,783			71,850			56,607			59,488			106,684			34,116			15,708			5,450			1,190
Operating expenses:
Student housing operations		13,922			23,055			13,455			11,416			23,155			14,890			7,470			2,149			528
Development, construction and management services		16,140			24,847			28,644			35,693			60,200			2,147			—			—			—
General and administrative		3,500			6,572			2,618			2,454			5,617			5,422			3,467			1,747			459
Ground leases		94			264			94			96			264			224			40			—			—
Write-off of pre-development costs		—			1,211			—			—			1,211			203			—			—			—
Depreciation and amortization		9,792			18,598			9,429			9,115			18,371			13,573			5,765			1,708			529
Total operating expenses		43,448			74,547			54,240			58,774			108,818			36,459			16,742			5,604			1,516
Equity in loss of uncombined entities		(1,041	)		(506	)		(194	)		—			(59	)		—			—			—			—
Operating income (loss)		294			(3,203	)		2,173			714			(2,193	)		(2,343	)		(1,034	)		(154	)		(326	)
Nonoperating income (expense):
Interest expense		(2,774	)		(5,530	)		(10,686	)		(7,369	)		(15,871	)		(14,946	)		(6,583	)		(1,954	)		(223	)
Change in fair value of interest rate derivatives		279			90			178			2,680			797			(8,758	)		(2,115	)		—			—
Income taxes		(128	)		(73	)		—			—			—			—			—			—			—
Other income (expense)		153			134			45			(19	)		44			(50	)		100			110			—
Total nonoperating expenses		(2,470	)		(5,379	)		(10,463	)		(4,708	)		(15,030	)		(23,754	)		(8,598	)		(1,844	)		(223	)
Net loss		(2,176	)		(8,582	)		(8,290	)		(3,994	)		(17,223	)		(26,097	)		(9,632	)		(1,998	)		(549	)
Net income (loss) attributable to noncontrolling interest		(91	)		(360	)		(5,025	)		(2,060	)		(10,486	)		(870	)		(2,083	)		1,078			(192	)
Net loss attributable to Campus Crest Communities, Inc./ Predecessor	$	(2,085	)	$	(8,222	)	$	(3,265	)	$	(1,934	)	$	(6,737	)	$	(25,227	)	$	(7,549	)	$	(3,076	)	$	(357	)

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Balance Sheet Information:

	Pro Forma Campus
	Crest Communities,
	Inc.			Historical Campus Crest Communities Predecessor
	As of			As of June 30,			As of December 31,
	June 30, 2010			2010			2009			2008			2007			2006			2005
	(unaudited)			(unaudited)									(unaudited)			(unaudited)			(unaudited)
	(in thousands)
Assets:
Student housing properties	$	370,400		$	348,466		$	347,157		$	326,217		$	182,788		$	48,775		$	12,691
Accumulated depreciation		(48,403	)		(48,403	)		(38,999	)		(20,794	)		(7,752	)		(2,066	)		(506	)
Development in process		7,090			3,641			3,300			15,742			18,929			25,667			15,827
Investment in real estate, net		329,087			303,704			311,458			321,165			193,965			72,376			28,012
Investment in uncombined entity		21,472			3,257			2,980			776			—			—			—
Other assets		24,700			21,412			17,358			20,214			19,939			5,269			1,721
Total assets	$	375,259		$	328,373		$	331,796		$	342,155		$	213,904		$	77,645		$	29,733
Liabilities:
Mortgage and construction loans	$	60,840		$	329,374		$	329,102		$	322,426		$	166,905		$	65,560		$	21,784
Lines of credit and other debt		39,600			17,689			14,070			9,237			6,579			771			419
Other liabilities		21,650			34,756			31,340			32,606			25,533			6,370			4,455
Total liabilities		122,090			381,819			374,512			364,269			199,017			72,701			26,658
Equity:
Owners’ equity (deficit)		310,344			(54,245	)		(50,090	)		(42,502	)		(14,589	)		(4,974	)		(383	)
Noncontrolling interest		(57,175	)		799			7,374			20,388			29,476			9,918			3,458
Total equity		253,169			(53,446	)		(42,716	)		(22,114	)		14,887			4,944			3,075
Total liabilities and equity	$	375,259		$	328,373		$	331,796		$	342,155		$	213,904		$	77,645		$	29,733

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Other Data:

	Pro Forma
	Campus Crest						Historical
	Communities, Inc.						Campus Crest Communities Predecessor
	Six Months Ended			Year Ended			Six Months Ended
	June 30,			December 31,			June 30,						Year Ended December 31,
	2010			2009			2010			2009			2009			2008			2007			2006			2005
	(unaudited and in thousands)
Funds from operations (“FFO”) (1):
Net loss	$	(2,176	)	$	(8,582	)	$	(8,290	)	$	(3,994	)	$	(17,223	)	$	(26,097	)	$	(9,632	)	$	(1,998	)	$	(549	)
Real estate related depreciation and amortization		9,643			18,432			9,280			8,918			18,205			13,042			5,721			1,696			521
Real estate related depreciation and amortization — unconsolidated joint ventures		691			355			157			—			52			—			—			—			—
FFO	$	8,158		$	10,205		$	1,147		$	4,924		$	1,034		$	(13,055	)	$	(3,911	)	$	(302	)	$	(28	)
FFO	$	8,158		$	10,205		$	1,147		$	4,924		$	1,034		$	(13,055	)	$	(3,911	)	$	(302	)	$	(28	)
Elimination of change in fair value of interest rate derivatives		(279	)		(90	)		(2,893	)		(2,990	)		(3,480	)		7,414			2,115			—			—
Elimination of development cost write-off		—			1,211			—			—			1,211			203			—			—			—
Funds from operations adjusted (“FFOA”) (2)	$	7,879		$	11,326		$	(1,746	)	$	1,934		$	(1,235	)	$	(5,438	)	$	(1,796	)	$	(302	)	$	(28	)

	Historical Campus Crest Communities Predecessor
	Six Months Ended
	June 30,						Year Ended December 31,
	2010			2009			2009			2008			2007			2006			2005
	(unaudited)															(unaudited)			(unaudited)
	(in thousands)
Cash flow information:
Net cash provided by (used in) operations	$	2,739		$	2,068		$	4,353		$	1,264		$	(1,209	)	$	395		$	4,394
Net cash used in investing		(2,662	)		(12,830	)		(23,552	)		(148,385	)		(113,043	)		(48,328	)		(28,036	)
Net cash provided by financing		75			5,523			11,060			144,781			126,061			48,607			24,381

Selected Property Information:

	As of
	June 30,			As of December 31,
	2010			2009			2008			2007			2006			2005
Operating Properties		24			24			19			10			4			1
Units		4,476			4,476			3,542			1,814			658			154
Beds		12,036			12,036			9,520			4,966			1,924			448
Occupancy		89	%		84	%		78	%		91	%		92	%		73	%

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(1)

FFO is used by industry analysts and investors as a supplemental operating performance measure for REITs. We calculate FFO in accordance with the definition that was adopted by the Board of Governors of NAREIT. FFO, as defined by NAREIT, represents net income (loss) determined in accordance with GAAP, excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We use FFO as a supplemental performance measure because, in excluding real estate-related depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating expenses. We also believe that, as a widely recognized measure of the performance of equity REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially and adversely impact our results from operations, the utility of FFO as a measure of our performance is limited. While FFO is a relevant and widely used measure of operating performance of equity REITs, other equity REITs may use different methodologies for calculating FFO and, accordingly, FFO as disclosed by such other REITs may not be comparable to FFO published herein. Therefore, we believe that in order to facilitate a clear understanding of our historical operating results, FFO should be examined in conjunction with net income (loss) as presented in the combined financial statements and the other financial statements included elsewhere in this prospectus. FFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of the properties’ financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions.

(2)

When considering our FFO, we believe it is also a meaningful measure of our performance to adjust FFO to exclude the change in fair value of interest rate derivatives and the write-off of development costs. Excluding the change in fair value of interest rate derivatives and development cost write-offs adjusts FFO to be more reflective of operating results prior to capital replacement or expansion, debt amortization of principal or other commitments and contingencies. This measure is referred to herein as “FFOA.”

78

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with “Selected Historical and Pro Forma Financial Information,” “Structure and Formation,” our pro forma condensed consolidated financial statements and related notes and the historical combined financial statements and related notes of our Predecessor. Where appropriate, the following discussion includes an analysis of the effects of our formation transactions and this offering. These effects are reflected in the pro forma condensed consolidated financial statements located elsewhere in this prospectus. This discussion also analyzes the effects of certain matters that may occur following the completion of this offering.

Overview

Our Company

We are a self-managed, self-administered and vertically-integrated developer, builder, owner and manager of high-quality, purpose-built student housing. 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.

We were formed as a Maryland corporation on March 1, 2010 and our operating partnership, of which we, through our wholly-owned subsidiary, Campus Crest Communities GP, LLC, are the sole general partner, was formed as a Delaware limited partnership on March 4, 2010. As of the date of this prospectus, we have a single stockholder, MXT Capital. Upon completion of this offering and our formation transactions, we will own a 95.8% limited partnership interest in our operating partnership.

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, containing approximately 3,920 apartment units and 10,528 beds, will be wholly-owned and six, containing approximately 1,128 apartment units and 3,052 beds, 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, which commenced operations in August 2010. All of our communities contain modern apartment units with many resort-style amenities.

We derive substantially all of our revenue from student housing leasing, student housing services, construction and development services and management services. As of September 15, 2010, the average occupancy for our 27 properties was approximately 90%. Our properties are primarily located 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.

Following this offering, we intend to pay regular quarterly distributions to our common stockholders in amounts that meet or exceed the requirements for our qualification as a REIT. Although we currently anticipate making distributions to our common stockholders in cash to the extent cash is available for such purpose, we may, in the sole discretion of our board of directors, make a distribution of capital or of assets or a taxable distribution of our stock (as part of a distribution in which stockholders may elect to receive stock or, subject to a limit measured as a percentage of the total distribution, cash). See “Our Distribution Policy.”

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Our Business Segments

Management evaluates operating performance through the analysis of results of operations of two distinct business segments: (i) student housing operations and (ii) development, construction and management services. Management evaluates each segment’s performance by net operating income, which we define as operating income before depreciation and amortization. The accounting policies of our reportable business segments are described in more detail in the summary of significant accounting policies footnote to the combined financial statements of our Predecessor. Intercompany fees are reflected at the contractually stipulated amounts, as adjusted to reflect our proportionate ownership of unconsolidated entities.

Student Housing Operations

Our student housing operations are comprised of leasing and other service revenues, such as application fees, pet fees and late payment fees. We opened our first student housing property in Asheville, North Carolina in 2005 for the 2005-2006 academic year. We subsequently opened three additional properties in 2006 for the 2006-2007 academic year, six additional properties in 2007 for the 2007-2008 academic year and nine additional properties in 2008 for the 2008-2009 academic year. In 2009, we opened one additional property that was combined by our Predecessor and four additional properties that were owned by a joint venture in which we have a noncontrolling interest. Due to the continuous opening of new properties in consecutive years and annual lease terms that do not coincide with our reported fiscal years, the comparison of our consolidated financial results from year to year may not provide a meaningful measure of our operating performance. For this reason, we divide the results of operations in our student housing operations segment between new property operations and “same-store” operations, which we believe provides a more meaningful indicator of comparative historical performance.

Development, Construction and Management Services

Development and Construction Services. In addition to our wholly-owned properties, all of which were developed and built by us, we also provide development and construction services to uncombined joint ventures in which we have an ownership interest. We act as a general contractor on all of our construction projects. When building properties for our own account (i.e., for entities that are combined in our financial statements), construction revenues and expenses are eliminated for accounting purposes and construction costs are ultimately reflected as capital additions. Thus, building properties for our own account does not typically generate any revenues or expenses in our development, construction and management services segment on a combined basis. Alternatively, when performing these services for uncombined joint ventures, we recognize construction revenues based on the costs that have been contractually agreed to with the joint venture for the construction of the property and expenses based on the actual costs incurred. Construction revenues are recognized using the percentage of completion method, as determined by construction costs incurred relative to total estimated construction costs, as adjusted to eliminate our proportionate ownership of each entity. Actual construction costs are expensed as incurred and are likewise adjusted to eliminate our proportionate ownership of each entity. Operating income generated by our development and construction activities generally reflects the development fee and construction fee income that is realized by providing these services to uncombined joint ventures (i.e., the “spread” between the contractual cost of construction and the actual cost of construction).

Management Services. In addition to our wholly-owned properties, all of which are managed by us, we also provide management services to uncombined joint ventures in which we have an ownership interest. We recognize management fees from these entities as earned in accordance with the property management agreement with these entities, as adjusted to eliminate our proportionate ownership of each entity.

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Our Relationship With HSRE

We have entered into two joint venture arrangements with HSRE. HSRE is a real estate private equity firm founded in 2005 that owns approximately $2.1 billion in real estate assets, including student housing properties, senior housing/assisted living units, self-storage units, boat storage facilities and medical office space. As described below, we have developed seven properties in partnership with HSRE with total aggregate cost of approximately $130.4 million.

On March 26, 2010, we entered into an agreement for the formation of a third joint venture arrangement with HSRE that is contingent upon the receipt of certain lender consents described below. Upon completion of this offering and our formation transactions, we will be party only to one of the foregoing joint venture arrangements relating to six properties, in which we will own a 49.9% interest and which will be accounted for as an investment in an unconsolidated joint venture. Additionally, we expect to establish a new joint venture with HSRE, in which we expect to own a 20% interest, that will build three student housing properties with completion targeted for the 2011-2012 academic year.

HSRE I. Our first joint venture with HSRE, HSRE-Campus Crest I, LLC, which we refer to as HSRE I, indirectly owns 100% interests in the following seven properties: The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Moscow, The Grove at San Angelo, The Grove at San Marcos and The Grove at Statesboro. We own a 0.1% interest in HSRE I and HSRE owns the remaining 99.9% (prior to the March 2010 transactions described below, we owned a 10% interest in HSRE I and HSRE owned the remaining 90%).

In general, we are responsible for the day-to-day management of HSRE I’s business and affairs, provided that major decisions must be approved by us and HSRE. In addition to distributions to which we are entitled as an investor in HSRE I, we receive or have in the past received fees for providing services to the properties held by HSRE I pursuant to development and construction agreements and property management agreements. We have granted to an entity related to HSRE I a right of first opportunity with respect to certain development or acquisition opportunities identified by us. This right of first opportunity will terminate at such time as HSRE shall have funded at least $40 million of equity to HSRE I and/or certain related ventures. As of August 31, 2010, HSRE has funded approximately $35 million of the $40 million right of first opportunity. HSRE I will dissolve upon the disposition of substantially all of its assets or the occurrence of certain events specified in the agreement between us and HSRE. As described in “—Additional HSRE Joint Venture,” we expect that HSRE will release us from this right of first opportunity.

Through the HSRE I joint venture, we developed the following seven properties: The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Moscow, The Grove at San Angelo, The Grove at San Marcos and The Grove at Statesboro. Information regarding the cost of developing these properties is set forth in the following table ($ in thousands):

Property	Land		Improvements		Total Cost
The Grove at Conway(1)	$	2,421	$	16,523	$	18,944
The Grove at Huntsville(2)	$	3,362	$	16,293	$	19,655
The Grove at Lawrence(3)	$	2,195	$	14,649	$	16,844
The Grove at Moscow(3)	$	92	$	19,734	$	19,826
The Grove at San Angelo(3)	$	776	$	16,476	$	17,252
The Grove at San Marcos (3)(4)	$	1,791	$	15,520	$	17,311
The Grove at Statesboro(5)	$	2,790	$	17,784	$	20,574

(1) Total cost includes $14.8 million in costs incurred through June 30, 2010 and $4.1 million in costs expected to be incurred after that date and through completion of the property.

(2) Total cost includes $17.3 million in costs incurred through June 30, 2010 and $2.4 million in costs expected to be incurred after that date and through completion of the property.

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(3) Total cost includes all costs incurred through December 31, 2009.

(4) In connection with our formation transactions we will acquire a 100% interest in The Grove at San Marcos. See “—Post-Offering Transactions” and “Structure and Formation—Formation Transactions.”

(5) Total cost includes $15.4 million in costs incurred through June 30, 2010 and $5.2 million in costs expected to be incurred after that date and through completion of the property.

Pursuant to the terms of the HSRE I joint venture, we have the right to purchase our joint venture partner’s interest (which, upon completion of the formation transactions, will be a 50.1% interest) in The Grove at Conway, The Grove at Huntsville and The Grove at Statesboro for an aggregate purchase price equal to $13.1 million at any time through December 31, 2010. If we exercise this purchase right, we will assume approximately $44.4 million of mortgage indebtedness relating to these properties, which may be pre-paid at anytime without penalty.

HSRE II. Our second joint venture with HSRE, HSRE-Campus Crest II, LLC, which we refer to as HSRE II, indirectly owns a 100% interest in The Grove at Milledgeville. In November 2009, an entity in which we hold a 50% interest sold a 100% interest in The Grove at Milledgeville to HSRE II, and retained an ownership interest in HSRE II of 10%. Upon completion of this offering and our formation transactions, HSRE II will be dissolved, and we will own 100% of The Grove at Milledgeville.

HSRE III. On March 26, 2010, we entered into an agreement with HSRE to form a third joint venture, HSRE-Campus Crest III, LLC, which we refer to as HSRE III, predicated upon the receipt of certain lender consents described below. HSRE III currently does not own any assets and will indirectly acquire a 100% interest in The Grove at Carrollton, subject to receiving certain lender consents relating to indebtedness secured by The Grove at Carrollton. If these consents are received, upon HSRE III’s acquisition of The Grove at Carrollton, we will own a 0.1% interest in HSRE III and HSRE will own the remaining 99.9%. Upon completion of this offering and our formation transactions, HSRE III will be dissolved, and we will acquire the remaining 99.9% of The Grove at Carrollton. If this joint venture with HSRE is not consummated prior to 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 herein.

March 2010 Transactions. In March 2010, we consummated the following transactions with HSRE, for which we received cash proceeds of approximately $2.25 million:

•   the sale of a 9.9% interest in HSRE I to HSRE; and

•   the pre-payment by HSRE to us of management fees relating to the following properties: The Grove at Carrollton, The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Milledgeville, The Grove at Moscow, The Grove at San Angelo, The Grove at San Marcos and The Grove at Statesboro.

In addition, we agreed to sell a 100% interest in The Grove at Carrollton to HSRE III, which will result in aggregate cash proceeds to us of approximately $1.3 million. The foregoing transaction has not been consummated and is subject to receiving certain lender consents relating to indebtedness secured by The Grove at Carrollton. If this transaction is not consummated prior to 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 herein.

All of the transactions that we entered into with HSRE in March 2010, including the agreement to sell a 100% interest in The Grove at Carrollton to HSRE III (for which we have not yet received necessary lender consents), were for the purpose of providing short-term financing for our ongoing working capital needs, including the costs of our corporate overhead, development and construction staffs, pre-development expenditures with respect to our expected 2011 development properties, and certain costs incurred in connection with this offering.

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Post-Offering Transactions. Upon completion of this offering, we have agreed to consummate the following transactions:

•   purchase a 49.8% interest in HSRE I from HSRE, with the result that we will own 49.9% of HSRE I;

•   purchase a 50.1% interest in The Grove at San Marcos from HSRE I, with the result that we will own 100% of The Grove at San Marcos;

•   purchase approximately $4.8 million of preferred interests in special-purpose subsidiaries of HSRE I that own The Grove at Moscow and The Grove at San Angelo, with the net proceeds of such investments together with net proceeds from our purchase of a 50.1% interest in The Grove at San Marcos from HSRE I, used to reduce the outstanding principal balance under our Wachovia Bank Three Property Construction Loan (that is currently secured by The Grove at San Marcos, The Grove at Moscow and The Grove at San Angelo) by approximately $19.7 million, in connection with our purchase of HSRE I’s interest in The Grove at San Marcos and its removal from the collateral pool securing such loan;

•   purchase HSRE’s entire interest in HSRE II, with the result that we will own 100% of The Grove at Milledgeville;

•   in the event that we receive the lender consents that allow us to sell a 100% interest in The Grove at Carrollton to HSRE III, purchase a 99.9% interest in HSRE III from HSRE, with the result that we will own 100% of The Grove at Carrollton; and

•   repay to HSRE the pre-paid management fees relating to the following properties: The Grove at Carrollton, The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Milledgeville, The Grove at Moscow, The Grove at San Angelo, The Grove at San Marcos and The Grove at Statesboro.

The foregoing will result in a payment to HSRE out of the net proceeds from this offering, subject to certain adjustments, of approximately $29.1 million, an amount that does not include the sale and subsequent repurchase of an interest in The Grove at Carrollton to HSRE III, which is subject to receiving certain lender consents relating to indebtedness secured by The Grove at Carrollton that have not yet been obtained. The amount of net proceeds from this offering to be paid to HSRE will increase to $31.0 million in the event that we receive the lender consents that allow us to sell a 100% interest in The Grove at Carrollton to HSRE III and consummate the transaction.

Upon completion of the foregoing transactions, we will own:

•   a 49.9% interest in HSRE I, which will own 100% interests in the following six properties: The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Moscow, The Grove at San Angelo and The Grove at Statesboro; and

•   100% interests in The Grove at Carrollton, The Grove at Milledgeville and The Grove at San Marcos.

New HSRE Joint Venture. We expect to enter into a new joint venture with HSRE, to which HSRE will contribute up to $50 million, that will develop and operate additional purpose-built student housing properties. We currently expect that we will own a 20% interest in this venture and that affiliates of HSRE will own the balance.

In general, we expect that we will be responsible for the day-to-day management of the venture’s business and affairs, provided that major decisions (including deciding to pursue a particular development opportunity) must be approved by us and HSRE. In addition to distributions to which we would be entitled as an investor in the venture, we expect that we will receive fees for providing services to the venture pursuant to development and construction agreements and property management agreements. In general, we expect to earn development fees equal to approximately 4% of the total cost of each property developed by the venture (excluding the cost of land and financing costs), construction fees equal to approximately 5% of the construction costs of each property developed by the venture and management fees equal to approximately 3%

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of the gross revenues and 3% of the net operating income of operating properties held by the venture. In addition, we expect to receive a reimbursement of a portion of our overhead relating to each development project at a negotiated rate. Under certain circumstances, we expect that we will be responsible for funding the amount by which actual development costs for a project pursued by the venture exceed the budgeted development costs of such project (without any increase in our interest in the project), which could materially and adversely affect the fee income realized from any such project. We expect to grant the venture a right of first opportunity to develop all future student housing development opportunities identified by us that are funded in part with equity investments by parties unaffiliated with us, until such time as affiliates of HSRE have invested $50 million in the venture or caused the venture to decline three development opportunities in any calendar year. In connection with granting the foregoing right of first opportunity, we expect that HSRE will release us from the right of first opportunity currently contained in our HSRE I joint venture agreement, under which HSRE has the right to invest approximately $5 million of additional equity. The terms of this potential venture would not prohibit us from developing a wholly-owned student housing property for our account.

Subject to obtaining adequate financing, we expect that this new venture will build three new student housing properties with completion targeted for the 2011-2012 academic year. We expect that such properties will be located in Denton, Texas, Orono, Maine and Valdosta, Georgia, will contain an aggregate of approximately 1,788 beds and will have an estimated cost of approximately $70.3 million.

Although we have entered into a non-binding letter of intent with HSRE relating to this potential joint venture, no assurance can be given that we will reach a definitive agreement with HSRE regarding this potential new joint venture or that the terms of any such agreement will not be materially different from those described above. Similarly, no assurance can be given that, if such a joint venture is consummated, it will be successful in building the currently identified or other student housing properties. Further, if these three or other properties are developed, there can be no assurance that we will be able to achieve attractive occupancy levels or rental rates.

     Our Relationship with Encore

On August 2, 2010, subsidiaries of MXT Capital entered into an agreement with Encore for the formation of CC-Encore. Encore contributed $2.5 million to CC-Encore in exchange for a preferred membership interest, and subsidiaries of MXT Capital contributed to CC-Encore and pledged to Encore interests in certain properties and subsidiaries. The Ricker Group also is a party to this agreement, and it contributed to CC-Encore and pledged to Encore interests that it owned in certain properties. Subsidiaries of MXT Capital contributed to CC-Encore the following ownership interests:

•   49% of Campus Crest at Abilene, LP;

•   49% of Campus Crest at Nacogdoches, LP;

•   47% of Campus Crest at Ellensburg, LLC;

•   39% of Campus Crest at Greeley, LLC;

•   49% of Campus Crest at Mobile, LLC; and

•   49% of Campus Crest at Jacksonville, AL, LLC.

Additionally, subsidiaries of MXT Capital and the Ricker Group, collectively, contributed to CC-Encore rights to distributions from the following entities:

•   90% of any distributions from Campus Crest at Las Cruces, LLC;

•   100% of any distributions from Campus Crest at Mobile—Phase II, LLC;

•   62% of any distributions from Campus Crest at Asheville, LLC;

•   51% of any distributions from Campus Crest at Abilene, LP;

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•   51% of any distributions from Campus Crest at Nacogdoches, LP;

•   51% of any distributions from Campus Crest at Ellensburg, LLC;

•   51% of any distributions from Campus Crest at Greeley, LLC;

•   51% of any distributions from Campus Crest at Mobile, LLC;

•   51% of any distributions from Campus Crest at Jacksonville, AL, LLC; and

•   100% of any distributions from The Grove Student Properties, LLC.

Upon our purchase of the preferred membership interest in CC-Encore with a portion of the net proceeds from this offering, CC-Encore will distribute the ownership interests in the contributed entities to the parties that contributed them, and our operating partnership will acquire such interests from MXT Capital and the Ricker Group in connection with the formation transactions.

CC-Encore loaned the net proceeds of $2.35 million from Encore’s contribution, after payment to Encore of $150,000 in origination fees, to CCV I. The loan has an interest rate of 0.7% per annum, and all principal and interest is payable on January 1, 2014 unless CC-Encore exercises a payment demand prior to such date. CC-Encore may demand the repayment of the loan to CCV I at any time upon the determination of a majority of its managers to do so, which Encore effectively controls as it has appointed two of the three managers of CC-Encore. In the event that the demand right is exercised, CCV I is obligated to repay the outstanding balance of the loan plus accrued interest to CC-Encore.

The purpose of this transaction with Encore was to provide short-term financing for our ongoing working capital needs, including the costs of our corporate overhead, development and construction staffs, pre-development expenditures with respect to our expected 2011 development properties, and certain costs incurred in connection with this offering. The effect of this transaction with Encore was that we acquired short-term financing in the amount of $2.35 million and incurred an obligation to repay the financing in the amount of $3.9 million.

We are obligated to purchase the preferred membership interest upon completion of this offering for $3.9 million, at which time the joint venture with Encore will be terminated. Upon our purchase of the preferred membership interest in CC-Encore, the distribution of the ownership interests in the contributed entities to the parties that contributed them, the termination of CC-Encore, the termination of the pledge of interests to Encore and the transactions set forth in the contribution agreements entered into by MXT Capital, the Ricker Group and certain third party investors, we will own 100% of the interests contributed to CC-Encore and pledged to Encore. The $3.9 million purchase price to be paid by us for the preferred membership interest was the result of an arm’s length negotiation between Encore (an unaffiliated third party) and us at the time of Encore’s purchase of the preferred membership interest and, in our determination, represented a market transaction at the time of its consummation for a preferred equity financing by CC-Encore, a private company whose sole assets consist of interests in private operating companies and student housing properties.

Prior to the completion of this offering and while the preferred membership interest remains outstanding, we are subject to financial and other covenants under the terms of the agreement pursuant to which Encore purchased the preferred membership interest, and we have the right to repurchase the preferred membership interest under certain circumstances. In addition, while the preferred membership interest remains outstanding through December 31, 2013, Encore has agreed to purchase, at our option, an additional preferred membership interest in CC-Encore (subject to a maximum additional preferred investment of $2.5 million) equal to the amount of net operating income in excess of $1.9 million multiplied by 1.35 generated by the following entities: Campus Crest at Las Cruces, LLC; Campus Crest at Mobile–Phase II, LLC; Campus Crest at Asheville, LLC; Campus Crest at Abilene, LP; Campus Crest at Nacogdoches, LP; Campus Crest at Ellensburg, LLC; Campus Crest at Greeley, LLC; Campus Crest at Mobile, LLC; and Campus

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Crest at Jacksonville, AL, LLC. We do not expect that we will exercise our option to cause Encore to purchase any additional preferred membership interest in CC-Encore. However, if Encore were to make the maximum additional preferred investment of $2.5 million in CC-Encore, we would be obligated to purchase this additional interest for approximately $3.75 million upon completion of the offering and we would use additional net proceeds from this offering to do so. Subsequent to the formation of CC-Encore, Encore assigned its preferred membership interest to RJRC, LLC. See “Underwriting—Other Relationships.”

Revolving Credit Facility

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, which will become effective immediately upon completion of this offering and satisfaction of customary loan closing conditions. For additional information regarding the secured credit facility, please refer to “—Liquidity and Capital Resources—Principal Capital Resources” below.

Income Taxation

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 on 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 REIT 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 may be precluded from qualifying as a REIT for the subsequent four taxable years following the year during which we lost our REIT qualification. 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.

Factors Expected to Affect Our Operating Results

Unique Leasing Characteristics

Student housing properties are typically leased by the bed on an individual lease liability basis, unlike multi-family housing where leasing is by the unit. Individual lease liability limits each student-tenant’s liability to his or her own rent without liability for a roommate’s rent. A parent or guardian is required to execute each lease as a guarantor unless the student-tenant provides adequate proof of income. The number of lease contracts that we administer is therefore equivalent to the number of beds occupied rather than the number of units.

Due to our predominantly private bedroom accommodations, the high level of student-oriented amenities offered at our properties and the individual lease liability for our student-tenants and their parents, we believe that we typically command higher per-unit and per-square foot rental rates than many multi-family properties located in the markets in which we operate. We are also typically able to charge higher rental rates than on-campus student housing, which generally offers fewer amenities.

Unlike traditional multi-family housing, most of our leases commence and terminate on the same dates. In the case of our typical 11.5-month leases (which provide for 12 equal monthly payments), these dates coincide with the commencement of the fall academic term and typically

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terminate at the completion of the last subsequent summer school session. As such, we must re-lease each property in its entirety each year, resulting in significant turnover in our tenant population from year to year. As a result, we are highly dependent upon the effectiveness of our marketing and leasing efforts during the annual leasing season that typically begins in January and ends in August of each year. Our properties’ occupancy rates are therefore typically relatively stable during the August to July academic year, but are susceptible to fluctuation at the commencement of each new academic year, which may be greater than the fluctuation in occupancy rates experienced by traditional multi-family properties. For most of our properties, the primary leasing season concludes by the end of August (our properties located in Ellensburg, Washington and Cheney, Washington are exceptions, where the primary leasing season typically extends into September, as the academic year for the primary university served by each of these properties typically starts in late September).

Development, Construction and Management Services

The amount and timing of revenues from development, construction and management services will typically be contingent upon the number and size of development projects that we are able to successfully structure and finance in our current and future uncombined joint ventures. In particular, subject to completion of this offering, we expect to enter into a new joint venture with HSRE, in which we expect to have a 20% interest, that will build three student housing properties with completion targeted for the 2011-2012 academic year. Subject to negotiating definitive terms relating to this joint venture, we expect to receive fees for providing development and construction services to this joint venture. Similarly, we expect to receive management fees for managing properties owned by this joint venture once they are placed in service. No assurance can be given that we will reach a definitive agreement with HSRE regarding this potential joint venture or the terms of any such agreement. Similarly, no assurance can be given that if such a joint venture is entered it will be successful in developing student housing properties as currently contemplated.

Results of Operations

We have not had any corporate activity since our formation, other than the issuance of one share of common stock to MXT Capital in connection with our initial capitalization and activities in preparation for this offering. Accordingly, we believe that a discussion of our results of operations would not be meaningful, and we have therefore set forth a discussion regarding the historical results of operations of our Predecessor only. The historical results of operations presented below should be reviewed along with the pro forma financial information contained elsewhere in this prospectus, which includes adjustments related to the effects of the repayment of certain indebtedness and the completion of this offering and our formation transactions.

Comparison of Six Months Ended June 30, 2010 and June 30, 2009

As of June 30, 2010, our property portfolio consisted of 20 combined properties, containing approximately 3,728 apartment units and 10,024 beds, four operating properties held in uncombined joint ventures, containing approximately 748 apartment units and 2,012 beds, and three properties under construction and held in an uncombined joint venture, containing approximately 572 apartment units and 1,544 beds. In November 2009, we sold The Grove at Milledgeville to HSRE II, an affiliate of HSRE, and we retained an indirect ownership interest of 5%. Since we have the contractual ability and intend to repurchase those ownership interests in The Grove at Milledgeville which we had previously sold, we have not accounted for this transaction as a sale for financial reporting purposes. Accordingly, The Grove at Milledgeville has been combined for the six months ended June 30, 2010.

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The following table presents our results of operations for the six months ended June 30, 2010 and 2009, including the amount and percentage change in these results between the periods:

	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,			Change			Change
	2010			2009			($)			(%)
	(unaudited and in thousands)
Revenues:
Student housing leasing	$	24,443		$	21,219		$	3,224			15.2	%
Student housing services		1,426			1,011			415			41.0	%
Development, construction and management services		30,738			37,258			(6,520	)		(17.5	)%
Total revenues		56,607			59,488			(2,881	)		(4.8	)%
Operating expenses:
Student housing operations		13,455			11,416			2,039			17.9	%
Development, construction and management services		28,644			35,693			(7,049	)		(19.7	)%
General and administrative		2,618			2,454			164			6.7	%
Ground leases		94			96			(2	)		(2.1	)%
Depreciation and amortization		9,429			9,115			314			3.4	%
Total operating expenses		54,240			58,774			(4,534	)		(7.7	)%
Equity in loss of uncombined entities		(194	)		—			(194	)		N/A
Operating income		2,173			714			1,459			204.3	%
Nonoperating income (expenses):
Interest expense		(10,686	)		(7,369	)		(3,317	)		45.0	%
Change in fair value of interest rate derivatives		178			2,680			(2,502	)		(93.4	)%
Other income (expense)		45			(19	)		64			(336.8	)%
Total nonoperating expenses		(10,463	)		(4,708	)		(5,755	)		122.2	%
Net loss		(8,290	)		(3,994	)		(4,296	)		107.6	%
Net loss attributable to noncontrolling interest		(5,025	)		(2,060	)		(2,965	)		143.9	%
Net loss attributable to Predecessor	$	(3,265	)	$	(1,934	)	$	(1,331	)		68.8	%

Student Housing Operations

Revenues (which include student housing leasing and student housing service revenues) and operating expenses in the student housing operations segment increased by approximately $3.6 million and approximately $2.0 million, respectively, for the six months ended June 30, 2010 as compared to 2009. The increase in revenues was primarily due to the inclusion of results from The Grove at Murfreesboro for the six months ended June 30, 2010 as well as increases in occupancy and monthly revenue per bed at our other combined properties. The increase in operating expenses was primarily due to increases in property-level payroll expenses, utilities, repairs and maintenance and real estate taxes.

New Property Operations. In August of 2009, we opened five new properties that were developed by us. As of June 30, 2010, four of these properties were owned by an uncombined joint venture in which we had a 0.1% ownership interest, while the remaining property, The Grove at Murfreesboro, was reflected in our combined operating results. The Grove at Murfreesboro contributed approximately $1.3 million of revenues and approximately $0.7 million of operating expenses for the six months ended June 30, 2010 as compared to no contribution to revenues and operating expenses for the six months ended June 30, 2009. The other four properties that opened in 2009 are discussed below under the heading “—Equity in Loss of Uncombined Entities.”

“Same-Store” Property Operations. We had 19 properties that were operating for the six months ended June 30, 2010 and 2009. These properties contributed approximately $24.6 million of revenues and approximately $12.8 million of operating expenses for the six months ended June 30, 2010 as compared to approximately $22.2 million of revenues and approximately $11.4 million of operating

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expenses for the six months ended June 30, 2009. Average occupancy at our “same-store” properties increased to approximately 88.2% for the six months ended June 30, 2010 as compared to approximately 80.1% for the six months ended June 30, 2009 and average monthly revenue per occupied bed increased to approximately $488 for the six months ended June 30, 2010 as compared to approximately $486 for the six months ended June 30, 2009. The increase in operating expenses was primarily due to increases in property-level payroll expenses, utilities, repairs and maintenance and real estate taxes.

Development, Construction and Management Services

Revenues and operating expenses in the development, construction and management services segment decreased by approximately $6.5 million and approximately $7.0 million, respectively, for the six months ended June 30, 2010 as compared to the six months ended June 30, 2009. Our development, construction and management services segment recognizes revenues and operating expenses for development, construction and management services provided to uncombined joint ventures in which we have an ownership interest. We eliminate revenue and related expenses on such transactions with our uncombined entities to the extent of our ownership interest. The decreases in development, construction and management services revenues and operating expenses were primarily due to a decreased level of construction activity on the three uncombined joint venture properties under construction for the six months ended June 30, 2010 as compared to the four uncombined joint venture properties under construction for the six months ended June 30, 2009.

We continued to generate development, construction and management services revenues and operating expenses in 2010 with respect to the three uncombined joint venture properties that opened in August 2010. Our ability to generate revenues and expenses related to future development and construction projects will depend upon our ability to enter into and provide services to new joint ventures, including our expected joint venture with HSRE through which we expect to develop three properties with completion targeted for the 2011-2012 academic year, as well as our proportionate ownership of any such joint ventures. We intend to commence building four additional student housing properties for our own account upon completion of this offering, which will be included in our consolidated financial statements and will not generate development, construction and management services revenues and operating expenses for us on a consolidated basis.

General and Administrative

General and administrative expenses increased from approximately $2.5 million for the six months ended June 30, 2009 to approximately $2.6 million for the six months ended June 30, 2010. This increase was primarily due to increased professional fees for accounting and legal services, partially offset by a decrease in travel related expenses. Approximately $0.5 million of general and administrative expense incurred during the six months ended June 30, 2010 related to audits conducted in 2010 related to prior years. We anticipate that general and administrative expenses will increase in 2010 as compared to prior periods as a result of the incremental costs associated with being a public company.

Ground Leases

Ground lease expense remained flat at approximately $0.1 million for the six months ended June 30, 2009 and the six months ended June 30, 2010. We currently are party to ground leases with unaffiliated third parties related to two of our combined properties, Mobile Phase I and Mobile Phase II, both on the campus of the University of South Alabama. We expect ground lease expense to remain relatively flat for the remainder of 2010, unless we enter into additional ground leases with unaffiliated third parties with respect to future development properties.

Depreciation and Amortization

Depreciation and amortization expense increased from approximately $9.1 million for the six months ended June 30, 2009 to approximately $9.4 million for the six months ended June 30, 2010. This increase was primarily due to depreciation and amortization related to The Grove at

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Murfreesboro, which opened in 2009. We expect depreciation and amortization to increase in 2010 due to the full year impact of depreciation and amortization for The Grove at Murfreesboro and the inclusion of The Grove at San Marcos in our consolidated results for a part of 2010.

Equity in Loss of Uncombined Entities

Equity in loss of uncombined entities, which represents our share of the net loss from uncombined entities in which we have a noncontrolling interest, increased from $0 for the six months ended June 30, 2009 to a loss of approximately $0.2 million for the six months ended June 30, 2010. This increase was primarily due to a loss from our real estate venture with HSRE, which owned four properties that commenced operations in August 2009.

Nonoperating Income (Expenses)

Interest Expense. Interest expense increased from approximately $7.4 million for the six months ended June 30, 2009 to approximately $10.7 million for the six months ended June 30, 2010. This increase was primarily due to interest expense associated with related party loans, which was $1.4 million for the six months ended June 30, 2010 as compared to $0 for the six months ended June 30, 2009 and $1.2 million of loan extension fees incurred during the six months ended June 30, 2010. Additionally, interest previously capitalized during the six months ended June 30, 2009 related to The Grove at Murfreesboro was expensed during the six month period ended June 30, 2010.

Change in Fair Value of Interest Rate Derivatives. Change in fair value of interest rate derivatives decreased from a gain of approximately $2.7 million for the six months ended June 30, 2009 to a gain of approximately $0.2 million for the six months ended June 30, 2010. This decrease was primarily due to monthly net cash settlements paid on interest rate swaps of approximately $2.7 million for the six months ended June 30, 2010 compared to $0.3 million for the six months ended June 30, 2009.

Other Income/(Expense). Other expense, net was approximately $0.1 million for the six months ended June 30, 2009 as compared with other income, net of approximately $0.1 million for the six months ended June 30, 2010. Other income increased primarily as a result of slightly higher interest earned on invested cash balances.

Comparison of Years Ended December 31, 2009 and December 31, 2008

As of December 31, 2009, our property portfolio consisted of 20 combined properties, containing approximately 3,728 apartment units and 10,024 beds, four operating properties held in uncombined joint ventures, containing approximately 748 apartment units and 2,012 beds, and three properties under construction and held in an uncombined joint venture, containing approximately 572 apartment units and 1,544 beds. In November 2009, we sold The Grove at Milledgeville to HSRE II, an affiliate of HSRE, and we retained an indirect ownership interest of 5%. Since we have the contractual ability and intend to repurchase those ownership interests in The Grove at Milledgeville which we had previously sold, we have not accounted for this transaction as a sale for financial reporting purposes. Accordingly, The Grove at Milledgeville has been combined for the full year ended December 31, 2009.

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The following table presents our results of operations for the years ended December 31, 2009 and 2008, including the amount and percentage change in these results between the periods:

	Year Ended			Year Ended
	December 31,			December 31,			Change			Change
	2009			2008			($)			(%)
				(in thousands)
Revenues:
Student housing leasing	$	43,708		$	30,813		$	12,895			41.8	%
Student housing services		2,265			798			1,467			183.8	%
Development, construction and management services		60,711			2,505			58,206			2,323.6	%
Total revenues		106,684			34,116			72,568			212.7	%
Operating expenses:
Student housing operations		23,115			14,890			8,225			55.2	%
Development, construction and management services		60,200			2,147			58,053			2,703.9	%
General and administrative		5,617			5,422			195			3.6	%
Ground leases		264			224			40			17.9	%
Write-off of pre-development costs		1,211			203			1,008			496.6	%
Depreciation and amortization		18,371			13,573			4,798			35.3	%
Total operating expenses		108,818			36,459			72,359			198.5	%
Equity in loss of uncombined entities		(59	)		—			(59	)		N/A
Operating loss		(2,193	)		(2,343	)		150			(6.4	)%
Nonoperating income (expenses):
Interest expense		(15,871	)		(14,946	)		(925	)		6.2	%
Change in fair value of interest rate derivatives		797			(8,758	)		9,555			(109.1	)%
Other income (expense)		44			(50	)		94			(188.0	)%
Total nonoperating expenses		(15,030	)		(23,754	)		8,724			(36.7	)%
Net loss		(17,223	)		(26,097	)		8,874			(34.0	)%
Net loss attributable to noncontrolling interest		(10,486	)		(870	)		(9,616	)		1,105.3	%
Net loss attributable to Predecessor	$	(6,737	)	$	(25,227	)	$	18,490			(73.3	)%

Student Housing Operations

Revenues (which include student housing leasing and student housing service revenues) and operating expenses in the student housing operations segment increased by approximately $14.4 million and approximately $8.2 million, respectively, in 2009 as compared to 2008. These increases were primarily due to the inclusion of a full year of operations in 2009 for the nine properties opened in 2008, whereas the 2008 results included only five months of operations for eight of these properties and four months of operations for the remaining property.

New Property Operations. In August and September of 2008, we opened nine new properties that were developed by us. These properties contributed approximately $20.5 million of revenues and approximately $10.8 million of operating expenses in 2009 as compared to approximately $7.3 million of revenues and approximately $3.5 million of operating expenses in 2008. The average occupancy at these properties was approximately 84.9% for the five months ended December 31, 2009, as compared to approximately 72.6% for the five months ended December 31, 2008.

In August of 2009, we opened five new properties that were developed by us. As of December 31, 2009, four of these properties were owned by an uncombined joint venture in which we had a 10% ownership interest, while the remaining property, The Grove at Murfreesboro, was reflected in our combined operating results. The Grove at Murfreesboro contributed approximately $1.1 million of revenues and approximately $0.5 million of operating expenses in 2009 as compared to no contribution to revenues and operating expenses in 2008. The other four

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properties that opened in 2009 are discussed further below under the heading “—Equity in Loss of Uncombined Entities.”

“Same-Store” Property Operations. We had ten properties that were operating for the full year during both 2009 and 2008. These properties contributed approximately $24.3 million of revenues and approximately $11.8 million of operating expenses in 2009 as compared to approximately $24.3 million of revenues and approximately $11.4 million of operating expenses in 2008. Average occupancy at our “same-store” properties decreased to approximately 86.4% in 2009 as compared to approximately 86.5% in 2008, and average monthly revenue per occupied bed increased to approximately $473 in 2009 as compared to approximately $472 in 2008. The increase in operating expenses was primarily due to increases in marketing, administration, taxes and insurance costs, which were partially offset by decreases in utilities and professional fees.

Development, Construction and Management Services

Revenues and operating expenses in the development, construction and management services segment increased by approximately $58.2 million and approximately $58.1 million, respectively, in 2009 as compared to 2008. Our development, construction and management services segment recognizes revenues and operating expenses for development, construction and management services provided to uncombined joint ventures in which we have an ownership interest. We eliminate revenue and related expenses on such transactions with our uncombined joint ventures to the extent of our ownership interest. During 2009, we completed the construction of four properties owned by uncombined joint ventures and also commenced construction of three additional properties owned by uncombined joint ventures, which opened in August 2010. The significant increases in development, construction and management services revenues and operating expenses were primarily due to our development, construction and management activities related to these new properties.

General and Administrative

General and administrative expenses increased from approximately $5.4 million in 2008 to approximately $5.6 million in 2009. This increase was primarily due to increased payroll expense partially offset by a decrease in corporate travel and other administrative costs. Approximately $0.2 million of general and administrative expense incurred during the year ended December 31, 2009 related to audits conducted in 2009 related to prior years. We anticipate that general and administrative expenses will increase in 2010 as a result of the incremental costs associated with being a public company.

Ground Leases

Ground lease expense increased from approximately $0.2 million in 2008 to approximately $0.3 million in 2009, primarily due to the inclusion of a full year of expense in 2009 for the ground lease with an unaffiliated third party relating to Phase II of our Mobile property, which commenced in 2008.

Write-off of Pre-Development Costs

Write-off of pre-development costs increased from approximately $0.2 million in 2008 to approximately $1.2 million in 2009 as a result of events that occurred in 2009 which led management to conclude that several pre-development projects would not result in either the acquisition of a site or commencement of construction.

Depreciation and Amortization

Depreciation and amortization increased from approximately $13.6 million in 2008 to approximately $18.4 million in 2009. This increase was primarily due to the inclusion of a full year of depreciation and amortization in 2009 for the nine properties opened in 2008. We expect

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depreciation and amortization to increase in 2010 due to the full year impact of depreciation and amortization for The Grove at Murfreesboro and the inclusion of The Grove at San Marcos in our consolidated results for a part of 2010.

Equity in Loss of Uncombined Entities

Equity in loss of uncombined entities, which represents our share of the net loss from our joint ventures in which we have a noncontrolling interest, increased from approximately $0 in 2008 to a loss of approximately $0.1 million in 2009. This increase was primarily due to a loss from our joint venture with HSRE, which owned four properties that commenced operations in 2009.

Nonoperating Income (Expenses)

Interest Expense. Interest expense increased from approximately $14.9 million in 2008 to approximately $15.9 million in 2009. This increase was primarily due to an increase in the outstanding principal balance on the construction loan related to our 2008 property deliveries, which was partially offset by a decrease in interest rates.

Change in Fair Value of Interest Rate Derivatives. Change in fair value of interest rate derivatives increased from a loss of approximately $8.8 million in 2008 to a gain of approximately $0.8 million in 2009. This increase was primarily due to the increase in the fair value, or mark-to-market value, of our interest rate swaps, which was partially offset by higher monthly net cash settlement costs on these instruments in 2009.

Other Income / (Expense). Other income, net was approximately $0.1 million in 2009 as compared with other expense, net of approximately $0.1 million in 2008. Other income increased primarily as a result of higher interest income earned on invested cash balances.

Comparison of Years Ended December 31, 2008 and December 31, 2007

As of December 31, 2008, our property portfolio consisted of 20 combined properties, containing approximately 3,728 apartment units and 10,024 beds (including one property, The Grove at Murfreesboro, that was under construction), and three properties under construction and held in uncombined joint ventures, containing approximately 576 apartment units and 1,512 beds. These figures exclude The Grove at Lawrence, which commenced construction in early 2009.

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The following table presents our results of operations for the years ended December 31, 2008 and 2007, including the amount and percentage change in these results between the periods:

	Year Ended			Year Ended
	December 31,			December 31,			Change			Change
	2008			2007			($)			(%)
				(in thousands)
Revenues:
Student housing leasing	$	30,813		$	15,598		$	15,215			97.5	%
Student housing services		798			110			688			625.5	%
Development, construction and management services		2,505			—			2,505			N/A
Total revenues		34,116			15,708			18,408			117.2	%
Operating expenses:
Student housing operations		14,890			7,470			7,420			99.3	%
Development, construction and management services		2,147			—			2,147			N/A
General and administrative		5,422			3,467			1,955			56.4	%
Ground leases		224			40			184			460.0	%
Write-off of pre-development costs		203			—			203			N/A
Depreciation and amortization		13,573			5,765			7,808			135.4	%
Total operating expenses		36,459			16,742			19,717			117.8	%
Operating loss		(2,343	)		(1,034	)		(1,309	)		126.6	%
Nonoperating income (expenses):
Interest expense		(14,946	)		(6,583	)		(8,363	)		127.0	%
Change in fair value of interest rate derivative		(8,758	)		(2,115	)		(6,643	)		314.1	%
Other income (expense)		(50	)		100			(150	)		(150.0	)%
Total nonoperating expenses		(23,754	)		(8,598	)		(15,156	)		176.3	%
Net loss		(26,097	)		(9,632	)		(16,465	)		170.9	%
Net loss attributable to noncontrolling interest		(870	)		(2,083	)		1,213			(58.2	)%
Net loss attributable to Predecessor	$	(25,227	)	$	(7,549	)	$	(17,678	)		234.2	%

Student Housing Operations

Revenues (which include student housing leasing and student housing service revenues) and operating expenses in the student housing operations segment increased by approximately $15.9 million and approximately $7.4 million, respectively, in 2008 as compared to 2007. These increases were primarily due to the inclusion of a full year of operations in 2008 for the six properties opened in 2007, whereas the 2007 results included only five months of operations for five of these properties and four months of operations for the remaining property.

New Property Operations. In August and September of 2007, we opened six new properties that were developed by us. These properties contributed approximately $14.8 million of revenues and approximately $7.0 million of operating expenses in 2008 as compared to approximately $6.6 million of revenues and approximately $2.6 million of operating expenses in 2007. The average occupancy at these properties was approximately 80.7% for the five months ended December 31, 2008 as compared to approximately 95.7% for the five months ended December 31, 2007.

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In August and September of 2008, we opened nine new properties that were developed by us and reflected in our 2008 combined operating results. These properties contributed approximately $7.3 million of revenues and approximately $3.5 million of operating expenses in 2008 as compared to no contribution to revenues and operating expenses in 2007.

“Same-Store” Property Operations. We had four properties that were operating for the full year during both 2008 and 2007. These properties contributed approximately $9.5 million of revenues and approximately $4.4 million of operating expenses in 2008 as compared to approximately $9.1 million of revenues and approximately $4.8 million of operating expenses in 2007. Average occupancy at our “same-store” properties decreased to approximately 87.0% in 2008 as compared to approximately 87.9% in 2007, while average monthly revenue per occupied bed increased to approximately $474 in 2008 as compared to approximately $448 in 2007. The decrease in operating expenses was primarily due to decreases in administration and maintenance costs, which were partially offset by increases in utilities costs, taxes and insurance.

Development, Construction and Management Services

Revenues and operating expenses in the development, construction and management services segment increased by approximately $2.5 million and approximately $2.1 million, respectively, in 2008 as compared to 2007. Our development, construction and management services segment recognizes revenues and operating expenses for development, construction and management services provided to uncombined joint ventures in which we have an ownership interest. We eliminate revenue and related expenses on such transactions with our uncombined real estate ventures to the extent of our ownership interest. During 2008 and the early part of 2009, we commenced the construction of four properties owned by uncombined joint ventures, which were completed in 2009. The increases in development, construction and management services revenues and operating expenses were primarily due to our development, construction and management activities relating to these new properties. During 2007 we had no material construction and development services revenues or operating expenses related to uncombined joint ventures.

General and Administrative

General and administrative expenses increased from $3.5 million in 2007 to approximately $5.4 million in 2008. This increase was primarily due to an increase in payroll, travel and associated overhead expenses related to the increase in the size and scope of our business.

Ground Leases

Ground lease expense increased from less than $0.1 million in 2007 to approximately $0.2 million in 2008, primarily due to the new ground lease with an unaffiliated third party executed in 2008 for the land at The Grove at Mobile Phase II.

Write-off of Pre-Development Costs

Write-off of pre-development costs increased from $0 in 2007 to approximately $0.2 million in 2008 as a result of events that occurred in 2008 which led management to conclude that several pre-development projects would not result in either the acquisition of a site or commencement of construction.

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Depreciation and Amortization

Depreciation and amortization increased from approximately $5.8 million in 2007 to approximately $13.6 million in 2008. This increase was primarily due to the inclusion of a full year of depreciation and amortization in 2008 for the six properties opened in 2007, as well as the inclusion of partial year depreciation and amortization in 2008 for the nine properties that opened in the fall of 2008.

Nonoperating Income (Expenses)

Interest Expense. Interest expense increased from approximately $6.6 million in 2007 to approximately $14.9 million in 2008. This increase was primarily due to an increase in the outstanding principal balance on mortgage and construction loans, which was partially offset by a decrease in interest rates throughout 2008.

Change in Fair Value of Interest Rate Derivatives: Change in fair value of interest rate derivatives decreased from approximately $(2.1) million in 2007 to approximately $(8.8) million in 2008. This fluctuation was primarily due to the change in the fair value, or mark-to-market value, of our interest rate swaps, due to a decrease in interest rates throughout 2008.

Other Income / (Expense). Other income, net was approximately $0.1 million in 2007 as compared with other expense, net of approximately $0.1 million in 2008. Other income decreased in 2008 primarily as a result of lower interest income earned on invested cash balances.

Cash Flows

Comparison of Six Months Ended June 30, 2010 and June 30, 2009

Operating Activities

Net cash provided by operating activities was approximately $2.7 million for the six months ended June 30, 2010 as compared to approximately $2.1 million for the six months ended June 30, 2009, an increase of approximately $0.6 million. Changes in working capital accounts provided approximately $2.3 million for the six months ended June 30, 2010 while approximately $0.9 million was used by working capital accounts for the six months ended June 30, 2009, representing an increase in cash provided of approximately $3.2 million. This change was driven by improvement in the timing of construction cash collections during the six months ended June 30, 2010.

Investing Activities

Net cash used in investing activities totaled approximately $2.7 million for the six months ended June 30, 2010 as compared to approximately $12.8 million for the six months ended June 30, 2009, a decrease of approximately $10.1 million. This decrease was primarily due to significantly curtailed development and construction activity related to combined properties in the six months ended June 30, 2010 as compared to the six months ended June 30, 2009. Investing activities in 2009 related primarily to the completed construction of The Grove at Murfreesboro as well as investments in uncombined joint ventures.

Financing Activities

Net cash provided by financing activities totaled approximately $0.1 million for the six months ended June 30, 2010 as compared to approximately $5.5 million for the six months ended June 30, 2009, a decrease of approximately $5.4 million. This decrease was primarily due to significantly less development and construction activity related to combined properties and lower

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corresponding debt financing activity. Financing activities for the six months ended June 30, 2009 included borrowings to fund the construction of The Grove at Murfreesboro and borrowings to fund other debt repayment.

Comparison of Years Ended December 31, 2009 and December 31, 2008

Operating Activities

Net cash provided by operating activities was approximately $4.4 million in 2009 as compared to approximately $1.3 million in 2008, an increase of approximately $3.1 million. Changes in working capital accounts provided approximately $2.7 million in 2009 as compared to approximately $4.3 million in 2008, an increased use of approximately $1.6 million. This change was driven by increased investment in our platform infrastructure as a result of the growth in our business from 2008 to 2009.

Investing Activities

Net cash used in investing activities totaled approximately $23.6 million in 2009 as compared to approximately $148.4 million in 2008, a decrease of approximately $124.8 million. This decrease was primarily due to significantly curtailed development and construction activity related to combined properties in 2009 as compared to 2008. Investing activities in 2009 related primarily to the completed construction of The Grove at Murfreesboro as well as investments in our joint ventures. Investing activities in 2008 related primarily to the construction activity related to the nine combined properties that were opened in the fall of 2008.

Financing Activities

Net cash provided by financing activities totaled approximately $11.1 million in 2009 as compared to approximately $144.8 million in 2008, a decrease of approximately $133.7 million. This decrease was primarily due to significantly less development and construction activity related to combined properties and correspondingly lower debt financing activity. Financing activities in 2009 included borrowings to fund the construction of The Grove at Murfreesboro and borrowings to fund other debt repayment. Financing activities in 2008 included borrowings to fund the construction activity of the nine new properties opened in 2008 and borrowings to repay construction financing on the six properties opened in 2007.

Comparison of Years Ended December 31, 2008 and December 31, 2007

Operating Activities

Net cash provided by operating activities was approximately $1.3 million in 2008 as compared to approximately $1.2 million used in operating activities in 2007, representing an increase in cash provided of approximately $2.5 million. Changes in working capital accounts provided approximately $4.3 million in 2008 while approximately $0.7 million was used by working capital accounts in 2007, representing an increase in cash provided of approximately $5.0 million. This change was primarily due to the increase in the number of operating properties in 2008 as compared to 2007.

Investing Activities

Net cash used in investing activities totaled approximately $148.4 million in 2008 as compared to approximately $113.0 million in 2007, an increase of approximately $35.4 million. This increase was primarily due to increased development and construction activity in 2008 as compared to 2007. Investing activities in 2008 related primarily to the completed construction of the nine combined

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properties that were opened in the fall of 2008. Investing activities in 2007 related primarily to the completed construction of the six combined properties that were opened in 2007 as well as the commencement of construction on the nine combined properties that were opened in 2008.

Financing Activities

Net cash provided by financing activities totaled approximately $144.8 million in 2008 as compared to approximately $126.1 million in 2007, an increase of approximately $18.7 million. This increase was primarily due to increased development and construction activity and correspondingly higher debt financing activity. Financing activities in 2008 included borrowings to fund the completed construction of the nine new properties opened in the fall of 2008 and borrowings to repay construction financing on the six properties opened in the fall of 2007. Financing activities in 2007 included borrowings to fund the construction of six new properties opened in the fall of 2007 and borrowings to fund the commencement of construction on the nine new properties opened in the fall of 2008.

Liquidity and Capital Resources

As a REIT, we generally must distribute annually at least 90% of our REIT taxable income, excluding any net capital gain, in order for corporate income tax not to apply to earnings that we distribute. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we distribute to our stockholders in a calendar year is less than a minimum amount specified under U.S. federal income tax laws. We intend to make distributions to our stockholders to comply with the requirements of the Internal Revenue Code and to avoid paying corporate tax on undistributed income. In addition, as discussed under “Our Distribution Policy,” we intend to make distributions that exceed these requirements. We may need to obtain financing to meet our distribution requirements because:

•   our income may not be matched by our related expenses at the time the income is considered received for purposes of determining taxable income; and

•   non-deductible capital expenditures, creation of reserves or debt service requirements may reduce available cash but not taxable income.

In these circumstances, we may be forced to obtain third-party financing on terms we might otherwise find unfavorable, and we cannot assure you that we will be able to obtain such financing. Alternatively, if we are unable or unwilling to obtain third-party financing on the available terms, we could choose to pay a portion of our distributions in stock instead of cash, or we may fund distributions through asset sales (subject to limitations in the tax protection agreement).

Upon completion of this offering, the application of the net proceeds therefrom and our formation transactions, we will have approximately $100.4 million of total consolidated indebtedness (which does not include any indebtedness we may incur in connection with any future distributions or any other unanticipated borrowings under our revolving credit facility), representing an initial debt to total market capitalization ratio of approximately 20.0% based on the mid-point of the price range set forth on the cover page of this prospectus. We define our debt to total market capitalization ratio as our total outstanding consolidated indebtedness divided by the sum of the market value of our outstanding common stock and preferred stock (which may decrease, thereby increasing our debt to total market capitalization ratio), including shares of restricted stock or restricted stock units that we may issue to our officers and directors under our 2010 Incentive Award Plan, plus the aggregate value of OP units, plus the book value of our total

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consolidated indebtedness (excluding indebtedness encumbering our current and future joint venture properties). As of June 30, 2010, on a pro forma basis, our pro rata share of indebtedness encumbering properties held in unconsolidated joint ventures was approximately $38.7 million.

Principal Capital Resources

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, which will become effective immediately upon completion of this offering and satisfaction of customary loan closing conditions. This facility will be secured by 12 of our properties. Affiliates of Citigroup Global Markets Inc. will act as administrative agent, collateral agent, lead arranger and book running manager, and affiliates of Raymond James & Associates, Inc., Citigroup Global Markets Inc., Goldman, Sachs & Co., Barclays Capital Inc. and RBC Capital Markets Corporation (together with other financial institutions) will act as lenders under our revolving credit facility. 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. Upon completion of this offering and giving effect to the foregoing uses and our expected borrowing base, we expect to have approximately $61.2 million of borrowing capacity available under our revolving credit facility. Amounts drawn under our revolving credit facility immediately upon completion of this offering will reduce the amount that we can borrow under this facility for other purposes. We also intend to use this facility for general corporate purposes and to finance, among other things, 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.

The amount available for us to borrow under the facility will be based on a percentage of the appraisal value of our properties that form the borrowing base of the facility. Upon completion of this offering, we expect to be able to borrow up to approximately $102.4 million of the $125 million of commitments under the facility. We will 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 secured by six of our properties. In addition, we will issue letters of credit with an aggregate amount of approximately $1.6 million relating to indebtedness secured by The Grove at Carrollton, The Grove at Mobile—Phase II and The Grove at Las Cruces. Giving effect to the foregoing, we will have approximately $61.2 million of borrowing capacity under our revolving credit facility. We intend to pursue alternative, longer-term financing for some or all of the properties currently securing our mortgage loan with Silverton Bank when they are released from the lien of the mortgage in connection with our formation transactions. For eligible properties, this may include debt financing provided by Freddie Mac or Fannie Mae. Additionally, the facility will have an accordion feature that allows us to request an increase in the total commitments of up to $75 million to $200 million. 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.

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Our ability to borrow under our revolving credit facility will be subject to our ongoing compliance with a number of customary financial covenants, including:

•   a maximum leverage ratio of 0.60 : 1.00;

•   a minimum fixed charge coverage ratio of 1.50 : 1.00;

•   a minimum ratio of fixed rate debt and debt subject to hedge agreements to total debt of 66.67%;

•   a maximum secured recourse debt ratio of 20%; and

•   a minimum tangible net worth of the sum of 75% of our tangible net worth plus an amount equal to 75% of the net proceeds of any additional equity issuances.

Under our revolving credit facility, our distributions may not exceed the greater of (i) 90.0% of our FFO or (ii) the amount required for us to qualify and maintain our status as a REIT. If a default or event of default occurs and is continuing, we may be precluded from making certain distributions (other than those required to allow us to qualify and maintain our status as a REIT).

We expect that we and certain of our subsidiaries will guarantee the obligations under our revolving credit facility and that we and certain of our subsidiaries will pledge specified assets (including real property), stock and other interests as collateral for our revolving credit facility obligations.

The commitments from the lenders are subject to closing conditions that are expected to include, among other things, satisfactory review by lenders of appraisals, environmental reports, engineering reports and seismic reports, successful completion of this offering, absence of material adverse changes, payment of fees, and the negotiation, execution and delivery of definitive documentation satisfactory to Citibank, N.A. and the other lenders. Although we currently expect to meet these requirements, there can be no assurance that all of the closing conditions will be satisfied.

The foregoing is only a summary of the material terms of our revolving credit facility that will become effective immediately upon completion of this offering and satisfaction of customary loan closing conditions. For more information, see the credit agreement, which is filed as an exhibit to the registration statement of which this prospectus constitutes a part.

In addition to borrowings under our revolving credit facility, we may also use non-recourse mortgage financing to make acquisitions or refinance short-term borrowings under our revolving credit facility. We may also seek to raise additional capital through the issuance of our common stock, preferred stock, OP units and debt or other securities or through property dispositions or joint venture transactions. Any debt incurred or issued by us may be secured or unsecured, long-term or short-term, fixed or variable interest rate and may be subject to such other terms as we deem prudent. Our ability to access the lending and capital markets will be dependent on a number of factors, including general market conditions for REITs, our historical and anticipated financial condition, liquidity, results of operations and FFO and market perceptions about us and our competitors.

We derive the majority of our cash flow from operations from student-tenants who lease beds from us at our properties. Therefore, our ability to generate cash flow from operations is dependent on the rents that we are able to charge and collect from our tenants. General economic downturns or downturns in the markets in which we own properties may adversely affect the

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ability of our student-tenants to meet their lease obligations to us. In that event, our cash flow from operations could be materially and adversely affected.

Short-Term Liquidity Needs

The nature of our business, coupled with the requirement imposed by REIT rules that we distribute a substantial majority of our REIT taxable income on an annual basis in order for us to qualify as a REIT, will cause us to have substantial liquidity needs. Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our properties, recurring capital expenditures, development costs, interest expense, scheduled debt service payments and expected distribution payments (including distributions to persons who hold OP units). We expect to meet our short-term liquidity needs through cash flow from operations and, to the extent necessary, borrowings under our revolving credit facility. Assuming completion of this offering and the application of the net proceeds therefrom, we expect that cash flow from operations and borrowings under our anticipated revolving credit facility will be sufficient to meet our liquidity requirements for at least the next 12 months. In the event that we do not complete this offering, we would likely reduce our capital expenditures and development plans and pursue alternative financing arrangements, that may include selling operating properties, as necessary in order to meet our cash requirements for the next 12 months.

Recurring Capital Expenditures

Our properties require periodic investments of capital for general maintenance. These recurring capital expenditures vary in size annually based upon the nature of the maintenance required for that time period. For example, recently developed properties typically do not require major maintenance such as the replacement of a roof. In addition, capital expenditures associated with newly acquired or developed properties are typically capitalized as part of their acquisition price or development budget, so that such properties typically begin to require recurring capital expenditures only following their first year of ownership.

Our historical recurring capital expenditures at our combined properties are set forth below:

	2009		2008		2007
Total Beds as of January 1 (1)		9,520		4,966		1,924
Total Recurring Capital Expenditures	$	183,513	$	261,048	$	134,877
Average Per Bed	$	19	$	53	$	70

(1) Total number of beds is as of January 1 of the year indicated, excluding beds at combined properties that commenced operations during the year indicated, as they did not require material recurring capital expenditures.

In 2007, we had four properties with 1,924 beds and an average age of approximately 0.6 years, excluding properties which commenced operation in that year, that required maintenance capital expenditures. Such expenditures included large scale furniture replacements in common areas associated with an updated layout at two properties. In 2008, we had ten properties with 4,966 beds and an average age of approximately 0.9 years, excluding properties which commenced operation in that year, that required maintenance capital expenditures. Such expenditures included furniture, fitness equipment, landscaping and a major ADA-related renovation at one of our properties which we have included as a maintenance capital expenditure because this amount was not part of the initial construction budget for this property and is not considered revenue enhancing. In 2009, we had 19 properties with 9,520 beds and an average age of approximately 1.2 years, excluding properties which commenced operation in that year, that required maintenance capital expenditures. Such expenditures included furniture replacement.

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Upon completion of this offering and our formation transactions, we will have 27 properties with 13,580 beds. We estimate that we will incur approximately $35.31 of maintenance capital expenditures per bed during 2010 at our combined properties. Such expenditures are estimated to be primarily for furniture replacement. The differential in per bed recurring maintenance capital expenditures from 2007 through our 2010 estimate is a function of the uneven nature of the timing of such expenditures and the amplified effects of these costs over a smaller base of beds historically.

Additionally, we are contractually required to fund reserves for capital repairs at certain mortgaged properties. In particular, our indebtedness relating to our Asheville property requires us to fund a monthly reserve of $5,000 for capital repairs and our indebtedness relating to our Carrollton, Las Cruces and Milledgeville properties requires us to fund a monthly reserve of $5,125 per property for capital repairs. Indebtedness relating to our Conway property, in which we will own a 49.9% interest, requires a monthly reserve of $4,167 for capital repairs, subject to a maximum reserve of $150,000.

Development Expenditures

Our development activities have historically required us to fund pre-development expenditures such as architectural fees, engineering fees and earnest deposits. Because the closing of a development project’s financing is often subject to various delays, we cannot always predict accurately the liquidity needs of these activities. We frequently incur these pre-development expenditures before a financing commitment has been obtained and, accordingly, bear the risk of the loss of these pre-development expenditures if financing cannot ultimately be arranged on acceptable terms.

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 that we expect to establish with HSRE and 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. We estimate that the cost to complete all four wholly-owned properties will be approximately $87.9 million. Additionally, we will be obligated to fund our pro rata portion of the development costs of our expected joint venture with HSRE, and we estimate that the cost to complete the three joint venture properties will be approximately $70.3 million and our pro rata share will be approximately $14.1 million. No assurance can be given that we will complete construction of these seven properties in accordance with our current expectations (including the estimated cost thereof). We expect to finance the construction of these seven properties through borrowings under our revolving credit facility, new project-specific construction indebtedness and contributions from HSRE. However, we may not be able to obtain financing on terms acceptable to us.

Long-Term Liquidity Needs

Our long-term liquidity needs consist primarily of funds necessary to pay for long-term development activities, non-recurring capital expenditures, potential acquisitions of properties and payments of debt at maturity. Long-term liquidity needs may also include the payment of unexpected contingencies, such as remediation of unknown environmental conditions at our properties or at additional properties that we develop or acquire, or renovations necessary to comply with the ADA or other regulatory requirements. We do not expect that we will have sufficient funds on hand to cover all of our long-term liquidity needs. We will therefore seek to satisfy these needs through cash flow from operations, additional long-term secured and unsecured debt, including borrowings under our revolving credit facility, the issuance of debt securities, the issuance of equity securities and equity-related securities (including OP units), property dispositions and joint venture transactions. We believe that we will have access to these

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sources of capital to fund our long-term liquidity requirements, but, as a new public company, we cannot make any assurance that this will be the case, especially in difficult market conditions. In addition, pursuant to the tax protection agreement, we have agreed not to sell, exchange or otherwise dispose of nine of our properties for a period of ten years. This could impair our liquidity and operating flexibility if sales of such properties were necessary to generate capital or otherwise. See “Certain Relationships and Related Party Transactions—Tax Protection Agreement” for a further discussion of this agreement.

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.

Commitments

The following table summarizes amounts due as of December 31, 2009, in connection with the contractual obligations described below (including future interest payments):

			Less than		1-3				More than 5
Contractual Obligations	Total		1 Year		Years		3-5 Years		Years
	(in thousands)
Long-Term Debt Obligations (1)	$	343,172	$	172,315	$	6,744	$	105,547	$	58,566
Operating Lease Obligations		11,279		457		1,006		1,128		8,688
Purchase Obligations (2)		21,520		21,520		—		—		—
Other Long-Term Liabilities		6,049		4,424		1,625		—		—
Total	$	382,020	$	198,716	$	9,375	$	106,675	$	67,254

(1)	We have executed an agreement with a lender to extend the maturity date of approximately $148.4 million of these obligations to January 31, 2011.
(2)	Obligations relate to subcontracts executed by Campus Crest Construction, LLC, to complete projects under construction at December 31, 2009.

Long-Term Indebtedness to Be Outstanding Following this Offering

Upon completion of this offering and our formation transactions, we will have total consolidated indebtedness of approximately $100.4 million. The following table summarizes our consolidated indebtedness to be outstanding following the completion of this offering and our formation transactions.

	Total
	(in thousands)
2010	$	—
2011		85
2012		643
2013		40,349
2014		797
Thereafter		58,566
Total	$	100,440

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The following table sets forth the information about our consolidated indebtedness to be outstanding following the completion of this offering, the use of the net proceeds therefrom and our formation transactions:

	Principal				Interest Rate
	Outstanding as of			Maturity	as of
Property	June 30, 2010			Date	June 30, 2010	Amortization
	(in thousands)
Revolving Credit Facility	$	39,600	(1)	(2)	(1)	Interest only
The Grove at Asheville (3)(4)		14,800		4/11/2017	5.77%	Interest only until April 11, 2012, then 30 year amortizing
The Grove at Carrollton (3)(4)(5)		14,650		10/11/2016	6.13%	Interest only until October 11, 2011, then 30 year amortizing
The Grove at Las Cruces (3)(4)(5)		15,140		10/11/2016	6.13%	Interest only until October 11, 2011, then 30 year amortizing
The Grove at Milledgeville (4)(6)		16,250		10/1/2016	6.12%	Interest only until October 11, 2011, then 30 year amortizing
Total	$	100,440

(1) We expect to borrow approximately $39.6 million under our revolving credit facility immediately upon completion of this offering; this amount 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.

(2) Amounts outstanding under our revolving credit facility will be due on the third anniversary of the completion of this offering.

(3) Wachovia Bank as lender.

(4) No financial covenants.

(5) We expect to issue letters of credit with an aggregate amount of approximately $1.6 million relating to indebtedness secured by The Grove at Carrollton, The Grove at Mobile—Phase II and The Grove at Las Cruces.

(6) GE Capital as lender.

Following this offering, the pro forma weighted average annual interest rate on our total long-term indebtedness as of June 30, 2010 will be approximately 4.90%, and all of our outstanding indebtedness will be fixed rate except for any borrowings under our revolving credit facility. After completion of this offering and our formation transactions, and based upon an offering price of our common stock equal to the mid-point of the price range set forth on the cover page of this prospectus, our ratio of debt to total market capitalization will be approximately 20.0% (18.0% if the underwriters’ over-allotment option is exercised in full), excluding indebtedness encumbering our current and future joint venture properties. However, we expect to incur additional indebtedness, consistent with our financing policy, in connection with our development activities following this offering. For further information concerning our long-term indebtedness, see “Policies with Respect to Certain Activities—Financing Policies.”

Consents or Waivers Under our Loan Documents

At June 30, 2010, March 31, 2010 and December 31, 2009, we were not in compliance with covenants relating to (a) unresolved liens and claims for materials or labor, and (b) debt service coverage under the Wachovia Bank Nine Property Construction Loan (which is secured by The Grove at Cheney, The Grove at Jonesboro, The Grove at Lubbock, The Grove at Murfreesboro, The Grove at Stephenville, The Grove at Troy, The Grove at Waco, The Grove at Wichita and The Grove at Wichita Falls). On May 7, 2010, we received a commitment (i) allowing us until August 31, 2010 to bond over and/or cause to be released all remaining unresolved liens, (ii) waiving our non-compliance with the debt service coverage covenant as of December 31, 2009 and March 31, 2010 and substituting a debt yield covenant in lieu of a debt service covenant and (iii) committing to extend the maturity of the construction loan to January 31, 2011. On August 16, 2010, we entered

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into an agreement, the execution of which memorializes the terms and conditions of the May 7, 2010 commitment, as extended from time to time, including a waiver of non-compliance with the debt service coverage covenant as of June 30, 2010. On August 31, 2010, we entered into an agreement allowing us until October 31, 2010 to bond over and/or cause all remaining unresolved liens to be released. We intend to repay the indebtedness under this credit facility in full with a portion of the net proceeds from this offering.

At December 31, 2009, we were not in compliance with the covenant relating to unresolved liens and claims for materials or labor under the Wachovia Bank Three Property Construction Loan (which is secured by The Grove at Moscow, The Grove at San Angelo and The Grove at San Marcos). On May 12, 2010, the lender under this construction loan acknowledged and consented to our proposal for the satisfaction of the liens and claims with a portion of the net proceeds from this offering, and waived our non-compliance with the covenant. On August 31, 2010, we entered into an agreement allowing us until October 31, 2010 to satisfy the liens and claims with a portion of the net proceeds from this offering.

We were not in compliance with covenants under the Silverton Bank Mortgage Loan (which is secured by The Grove at Abilene, The Grove at Ellensburg, The Grove at Greeley, The Grove at Jacksonville, The Grove at Mobile—Phase I and The Grove at Nacogdoches) for the borrowing quarters ended October 31, 2009, January 31, 2010 and April 30, 2010 as a result of non-compliance with the debt service coverage covenant and debt yield percentage covenant set forth in the loan documents. Additionally, based on current operating projections, we do not expect to satisfy either covenant through the end of 2010. On April 9, 2010, we received a waiver of non-compliance with these covenants from the lender under this mortgage loan for the borrowing quarters ended October 31, 2009 and January 31, 2010. On May 13, 2010, we received a waiver of non-compliance with the covenants from the lender under this mortgage loan for the borrowing quarter ended April 30, 2010. We have also obtained a waiver of non-compliance for the borrowing quarters ended July 31, 2010 and a forward waiver of non-compliance for the borrowing quarters ending October 31, 2010 and January 31, 2011. We intend to repay the indebtedness under this credit facility in full with a portion of the net proceeds of this offering and borrowings under our revolving credit facility.

Upon completion of this offering and the application of a portion of the net proceeds therefrom to reduce outstanding indebtedness, as described above, we expect to be in compliance with all applicable debt covenants. However, if we do not complete this offering we would need to access alternative capital resources, and there is no assurance that we would be successful in doing so. An inability to refinance maturing indebtedness or obtain alternative financing would have a material adverse affect on our business and financial condition.

Off-Balance Sheet Arrangements

HSRE Joint Venture

We use joint venture arrangements to finance certain of our properties. As discussed above, we have entered into two joint venture arrangements with HSRE. On March 26, 2010, we entered into an agreement for the formation of a third joint venture arrangement with HSRE that is contingent upon the receipt of certain lender consents. Upon completion of this offering and our formation transactions, we will be party only to one of the foregoing joint venture arrangements relating to six properties, in which we will own a 49.9% interest and which will be accounted for as an investment in an unconsolidated joint venture. Additionally, we expect to establish a new joint venture with HSRE, in which we expect to own a 20% interest that will build three student housing properties with completion targeted for the 2011-2012 academic year. As of June 30, 2010, on a pro forma basis, our pro rata share of indebtedness encumbering properties held in the unconsolidated entity in which we own a 49.9% interest was approximately $38.7 million.

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Funds From Operations (FFO)

FFO is used by industry analysts and investors as a supplemental operating performance measure for REITs. We calculate FFO in accordance with the definition that was adopted by the Board of Governors of NAREIT. FFO, as defined by NAREIT, represents net income (loss) determined in accordance with GAAP, excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.

We use FFO as a supplemental performance measure because, in excluding real estate-related depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating expenses. We also believe that, as a widely recognized measure of the performance of equity REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially and adversely impact our results of operations, the utility of FFO as a measure of our performance is limited.

While FFO is a relevant and widely used measure of operating performance of equity REITs, other equity REITs may use different methodologies for calculating FFO and, accordingly, FFO as disclosed by such other REITs may not be comparable to FFO published herein. Therefore, we believe that in order to facilitate a clear understanding of our historical operating results, FFO should be examined in conjunction with net income (loss) as presented in the combined financial statements and the other financial statements included elsewhere in this prospectus. FFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of our properties’ financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions.

The following table presents a reconciliation of our FFO to our net loss for the six months ended June 30, 2010 and 2009 and years ended December 31, 2009, 2008 and 2007:

	Pro Forma
	Campus Crest
	Communities, Inc.
	Six Months			Year			Historical Campus Crest Communities Predecessor
	Ended			Ended			Six Months
	June 30,			December 31,			Ended June 30,						Year Ended December 31,
	2010			2009			2010			2009			2009			2008			2007
	(unaudited and in thousands)
Net loss	$	(2,176	)	$	(8,582	)	$	(8,290	)	$	(3,994	)	$	(17,223	)	$	(26,097	)	$	(9,632	)
Real estate related depreciation and amortization		9,643			18,432			9,280			8,918			18,205			13,042			5,721
Real estate related depreciation and amortization — unconsolidated joint ventures		691			355			157			—			52			—			—
Funds from operations (“FFO”)	$	8,158		$	10,205		$	1,147		$	4,924		$	1,034		$	(13,055	)	$	(3,911	)

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In addition to FFO, we believe it is also a meaningful measure of our performance to adjust FFO to exclude the change in fair value of interest rate derivatives and the write-off of development costs. Excluding the change in fair value of interest rate derivatives and development cost write-offs adjusts FFO to be more reflective of operating results prior to capital replacement or expansion, debt service obligations or other commitments and contingencies. This measure is referred to herein as FFOA.

	Pro Forma
	Campus Crest
	Communities, Inc.
	Six Months			Year			Historical Campus Crest Communities Predecessor
	Ended			Ended			Six Months
	June 30,			December 31,			Ended June 30,						Year Ended December 31,
	2010			2009			2010			2009			2009			2008			2007
	(unaudited and in thousands)
FFO	$	8,158		$	10,205		$	1,147		$	4,924		$	1,034		$	(13,055	)	$	(3,911	)
Elimination of change in fair value of interest rate derivatives		(279	)		(90	)		(2,893	)		(2,990	)		(3,480	)		7,414			2,115
Elimination of development cost write-off		—			1,211			—			—			1,211			203			—
Funds from operations adjusted (“FFOA”)	$	7,879		$	11,326		$	(1,746	)	$	1,934		$	(1,235	)	$	(5,438	)	$	(1,796	)

Inflation

Our leases do not typically provide for rent escalations. However, they typically do not have terms that extend beyond 12 months. Accordingly, although on a short-term basis we would be required to bear the impact of rising costs resulting from inflation, we have the opportunity to raise rental rates at least annually to offset such rising costs. However, a weak economic environment or declining student enrollment at our principal colleges and universities may limit our ability to raise rental rates.

Quantitative and Qualitative Disclosures About Market Risk

Following this offering, all of our outstanding indebtedness will have a fixed rate of interest except for amounts outstanding under our revolving credit facility that will become effective immediately upon completion of this offering and satisfaction of customary loan closing conditions, which 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.

We may in the future use derivative financial instruments to manage, or hedge, interest rate risks related to such variable rate borrowings. We do not, and do not expect to, use derivatives for trading or speculative purposes, and we expect to enter into contracts only with major financial institutions.

Critical Accounting Policies

Set forth below is a summary of the accounting policies that management believes are critical to the preparation of the historical combined financial statements included in this prospectus. Certain of these accounting policies are particularly important for an understanding of the

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financial position and results of operations presented in the historical combined financial statements included in this prospectus. These policies require the application of judgment and assumptions by management and, as a result, are subject to a degree of uncertainty. Actual results could differ as a result of such judgment and assumptions.

Our historical combined financial statements include the accounts of all investments, which include joint ventures in which we have a controlling interest, and the combined subsidiaries of the Predecessor. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions combined that affect amounts reported in our historical combined financial statements and related notes. In preparing these combined financial statements, management has utilized all available information, including its past history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments of certain amounts included in the historical combined financial statements, giving due consideration to materiality. Our estimates may not be ultimately realized. Application of the critical accounting policies below involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results will differ from these estimates. In addition, other companies in similar businesses may utilize different estimation policies and methodologies, which may impact the comparability of our results of operations and financial condition to those companies.

Valuation of Investment in Real Estate

Investment in real estate is recorded at historical cost. Pre-development expenditures include items such as entitlement costs, architectural fees and deposits associated with the pursuit of partially-owned and wholly-owned development projects. These costs are capitalized until such time that management believes it is probable that a contract will be executed and/or construction will commence. Management evaluates the status of projects where we have not yet acquired the target property or where we have not yet commenced construction on a periodic basis and writes off any pre-development costs related to projects whose current status indicates the commencement of construction is not probable. Such write-offs are included within operating expenses in the accompanying combined statements of operations.

Management assesses whether there has been impairment in the value of our investment in real estate whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of investment in real estate is measured by a comparison of the carrying amount of a student housing property to the estimated future undiscounted cash flows expected to be generated by the property. Impairment is recognized when estimated future undiscounted cash flows are less than the carrying value of the property. The estimation of expected future cash flows is inherently uncertain and relies on assumptions regarding current and future economics and market conditions. If such conditions change, then an adjustment to the carrying value of our long-lived assets could occur in the future period in which conditions change. To the extent that a property is impaired, the excess of the carrying amount of the property over its estimated fair value is charged to operating earnings. Fair value is determined based upon the discounted cash flows of the property, quoted market prices or independent appraisals, as considered necessary.

Under the equity method, investments are initially recognized in the balance sheet at cost and are subsequently adjusted to reflect our proportionate share of net earnings or losses of the entity, distributions received, contributions, and certain other adjustments, as appropriate. When circumstances indicate there may have been a loss in value of an equity method investment, we evaluate the investment for impairment by estimating our ability to recover the investment from future expected discounted cash flows. If we determine the loss in value is other than temporary, we recognize an impairment charge to reflect the investment at fair value.

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Student Housing Revenue

Students are required to execute lease contracts with payment schedules that vary from annual to monthly payments. We recognize revenues and related lease incentives on a straight-line basis over the term of the lease contracts. Generally, each executed contract is required to be accompanied by a signed parental guaranty. Amounts received in advance of the occupancy period are recorded as deferred revenues and included in other liabilities on the accompanying combined balance sheets. Service revenue is recognized when earned.

Development, Construction and Management Services

Development and construction service revenue is recognized using the percentage of completion method, as determined by construction costs incurred relative to total estimated construction costs. Any changes in significant judgments and/or estimates used in determining construction and development revenue could significantly change the timing or amount of construction and development revenue recognized.

Development and construction service revenues are recognized for contracts with entities we do not combine. For projects where the revenue is based on a fixed price, any cost overruns incurred during construction, as compared to the original budget, will reduce the net profit ultimately recognized on those projects. Profit derived from these projects is eliminated to the extent of the predecessor entities’ ownership interest in the uncombined entity. Any incentive fees, net of the impact of our ownership interest if the entity is an uncombined entity, are recognized when the project is complete and performance has been agreed upon by all parties, or when performance has been verified by an independent third party. When total development or construction costs at completion exceed the fixed price set forth within the related contract, such cost overruns are recorded as an additional investment in the uncombined entity.

Management fees, net of elimination to the extent of our ownership in uncombined entities, are recognized when earned in accordance with each management contract for entities we do not combine. Incentive management fees are recognized when the incentive criteria are met.

Allowance for Doubtful Accounts

Allowances for student receivables are established when management determines that collections of such receivables are doubtful. Balances are considered past due when payment is not received on the contractual due date. When management has determined receivables are uncollectible, they are written off against the allowance for doubtful accounts.

Derivative Instruments and Hedging Activities

In certain instances, interest rate swap agreements used to manage floating interest rate exposure are executed with respect to amounts borrowed, or forecasted to be borrowed, under credit facilities. These contracts effectively exchange existing or forecasted obligations to pay interest based on floating rates for obligations to pay interest based on fixed rates. All derivative instruments are recognized as either assets or liabilities on the combined balance sheet at their respective fair values. Our derivatives have not met the requirements for hedge accounting treatment; therefore, all gains and losses related to derivative instruments are recorded in the combined statements of operations.

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Fair Value of Financial Instruments

Financial instruments consist primarily of cash, cash equivalents, investments, student receivables, accounts payable, mortgages, construction notes payable and lines of credit. The carrying value of cash, cash equivalents, investments, student receivables and accounts payable are representative of their respective fair values due to the short-term nature of these instruments. The estimated fair values of mortgages, construction notes payable and lines of credit are determined by comparing current borrowing rates and risk spreads offered in the market to the stated interest rates and spreads on our current mortgages, construction notes payable and lines of credit.

The fair value of the interest rate swaps is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves, implied volatilities and the creditworthiness of the swap counterparties.

On January 1, 2008, we adopted guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the combined financial statements on a recurring basis. On January 1, 2009, we adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the combined financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1 —	Observable inputs, such as quoted prices in active markets at the measurement date for identical, unrestricted assets or liabilities.
Level 2 —	Other inputs that are observable directly or indirectly, such as quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 —	Unobservable inputs for which there is little or no market data and which the Predecessor makes its own assumptions about how market participants would price the asset or liability.

Fair value is defined as the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). In instances where inputs used to measure fair value fall into different levels of the fair value hierarchy, the level in the fair value hierarchy within which the fair value measurement in its entirety has been determined is based on the lowest level input significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board, or “FASB,” issued new accounting guidance which establishes accounting and reporting standards for the noncontrolling interest in a subsidiary (previously referred to as minority interest). It also requires that a retained

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noncontrolling interest upon the deconsolidation of a subsidiary be initially measured at its fair value. We are required to report any noncontrolling interests as a separate component of equity and present any net income allocable to noncontrolling interests and net income attributable to the Predecessor separately in the combined statements of operations. As required, we adopted this new guidance beginning January 1, 2009. As a result of the adoption, the former minority interest classification was eliminated and related amounts are now reflected as a component of equity. Additionally, during 2009, noncontrolling interests were attributed the full amount of their portion of any net losses. Previously, they were only allocated losses up to their remaining investment balance. It requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. All other requirements are applied prospectively.

In March 2008, the FASB issued new accounting guidance requiring enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for, and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The Predecessor adopted the new guidance beginning January 1, 2009. The adoption did not have a significant effect on our combined financial statements.

In April 2009, the FASB issued new accounting guidance requiring disclosure of the fair value of all financial instruments (recognized or unrecognized) when practicable to do so. These fair value disclosures must be presented together with the related carrying amount of the financial instruments in a manner that clearly distinguishes between assets and liabilities and indicates how the carrying amounts relate to the amounts reported on the balance sheet. The new guidance is effective for interim reporting periods ending after June 15, 2009. The adoption did not have a material impact on our combined financial statements.

In May 2009, the FASB issued new accounting guidance regarding subsequent events. The new guidance sets forth the period after the balance sheet date during which management should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The Predecessor adopted this guidance during 2009 and the adoption did not have a material impact on our combined financial statements.

In June 2009, the FASB issued new accounting guidance changing the consolidation analysis for variable interest entities, or “VIEs,” and requiring a qualitative analysis to determine the primary beneficiary. The determination of the primary beneficiary of a VIE is based on whether the entity has the power to direct matters which most significantly impact the activities of the VIE and has the obligation to absorb losses, or the right to receive benefits, of the VIE which could potentially be significant to the VIE. It requires additional disclosures for VIEs, including disclosures about a reporting entity’s involvement with VIEs, how a reporting entity’s involvement with a VIE affects the reporting entity’s financial statements, and significant judgments and assumptions made by the reporting entity to determine whether it must combine the VIE. It is effective for us beginning on January 1, 2010. We are currently evaluating what impact, if any, its adoption will have on our combined financial statements.

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INDUSTRY OUTLOOK

The following information is derived from a market study prepared for us by MGA in connection with this offering. The forecasts and projections are based on MGA’s experience and data published by the U.S. Department of Education and other sources, and there is no assurance that any of the projections will be accurate. We believe that the study is reliable, but we have not independently verified the information in the study nor have we ascertained any underlying assumptions relied upon therein. While we are not aware of any misstatements regarding the industry data presented herein, estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors.”

Understanding Student Housing

Student housing is broadly defined to include housing designed to accommodate students enrolled in either full-time or part-time post-secondary, public and private four-year colleges and universities, including those that offer advanced degrees. The student housing market generally does not seek to address the housing needs of students enrolled in two-year community colleges and technical colleges, as these institutions do not generate sufficient and consistent demand for student housing.

The student housing market is a specialized segment of the residential real estate market. The residential real estate market is comprised of single-family and multi-family products. The single-family market is primarily a for-sale market, although single-family dwellings can also be offered for rent, particularly as housing market conditions deteriorate and the ability to sell houses declines. The multi-family market can be divided into the for-sale market (i.e., condominiums) and the for-rent market (i.e., apartments), with the latter category generally considered as a crossover with commercial real estate, in that such properties are constructed as income-generating properties, similar to retail, office or industrial properties. Both single-family for-rent and multi-family apartments compete directly with student housing.

Overall, the student housing market has certain unique characteristics that distinguish it from other segments of the housing market. First, student housing is aimed only at those persons enrolled in college and not at the general population of renters. Second, the leasing cycle for student housing properties is defined by the academic calendar, which results in a finite leasing window and relatively low month-to-month turnover following the start of the academic year. Finally, student housing properties are designed to accommodate and appeal to the college lifestyle, which is significantly different from the lifestyle of a typical multi-family renter.

There are two major types of student housing properties: on-campus and off-campus. On-campus housing is generally owned and operated by educational institutions and is located on school property near or adjacent to classroom buildings and other campus facilities. Off-campus housing is generally owned and operated by private investors and is located in close proximity to campus (i.e., generally within a two-mile radius of the campus).

Purpose-built student housing refers to off-campus housing that is specifically designed and constructed as student housing with a view towards accommodating the unique characteristics of the student-tenant. While purpose-built student housing is classified as a multi-family housing product, it is significantly different from and more specialized than traditional multi-family housing products, which are offered to the broader pool of multi-family renters. Key features of

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purpose-built student housing that differentiate such properties from traditional multi-family apartments include:

•   “by the bed” lease terms and rental rates (as opposed to “by the unit” apartment leases);

•   bed/bath parity with private en suite baths;

•   fully furnished units;

•   bundled pricing, which typically includes utilities, cable and Internet;

•   enhanced security features, including keyed bedroom locks and gated entrances;

•   resort-style amenities (e.g., oversized pools, volleyball / basketball courts, clubhouses etc.); and

•   active residence life and student support programs.

Student Housing Demand Drivers

We believe that increasing demand for student housing will be driven primarily by four factors: population and enrollment growth, changing student preferences, institutional considerations and economic factors.

Population and Enrollment Growth

The primary driver of demand for student housing is college enrollment growth, which is in turn driven by population growth, family formation, birth rate and college attendance rates. College enrollment growth has been increasing steadily since the early 1990s as the “Echo Boom” generation started to reach college age. The Echo Boom generation is comprised of children of the Baby Boomers. The term “Baby Boomer” generally refers to individuals born in the U.S. between 1946 and 1964, a period of time during which there was a dramatic increase in births (i.e., a “baby boom”), and the term “Echo Boomers” refers to the children of Baby Boomers born between the mid-1970s and the end of the century. While the Echo Boomers can be considered to have started to turn 18 in the early 1990s through roughly 2020, as the graph below shows, the main period is estimated to be between approximately 1996 and 2012.

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U.S. Population Turning 18 (1960-2020)

Another major driver of college enrollments is the increasing percentage of graduating high school students attending college. Following the original Baby Boom, the U.S. birth rate declined significantly and reached a trough in the mid-1970s. Despite this decline in birth rate and the corresponding decline in the number of people turning 18 through the 1980s and early 1990s, college enrollments actually continued to increase during this period, as a higher percentage of 18 to 24 year-olds went to college. According to the U.S. Census Bureau, the share of 18 to 24 year-old high school graduates choosing to attend college increased from 31.8% in 1980 to 46.1% in 2007, a trend which is expected to continue.

As of 2008, an estimated 18.7 million students were enrolled in colleges and universities, representing an increase of 28.9% from 10 years earlier. The Department of Education projects that college enrollments in the U.S. will further increase to 20.4 million by 2017, representing a total increase of 1.7 million students, or 9.1%, over the 2008 enrollment estimates.

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College Enrollments (1957-2012)

Several other trends are also expected to influence college enrollments and the demand for student housing, including an increase in the percentage of full-time (versus part-time) enrollments and a trend toward longer enrollments.

Full-time Undergraduate Enrollments as % of Total Undergraduate Enrollments (2000-2016)

As illustrated below, only 29% of students that enrolled in public colleges in 2000 graduated within four years, and 55% graduated within six years. This trend toward longer time to degree

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completion has led to an increase in overall college enrollments and a corresponding increase in demand for student housing.

Time to Completion of Undergraduate Degree (Based on Enrollments in 2000)

Changing Student Preferences

We believe that other major factors driving the growth of the student housing market are the evolving preferences of student consumers and the perceived impact of student housing on the overall college experience. Modern-day college students tend to have a higher standard of living than previous generations of students, and such students are increasingly attracted to housing alternatives that offer a superior level of accommodations and amenities relative to traditional on-campus, “dormitory style” residence halls. Traditional on-campus housing alternatives have generally consisted of shared rooms, communal bathroom facilities and extremely limited (if any) amenities and parking. However, today’s college student is increasingly consumer-oriented and averse to the utilitarian and largely outdated design of traditional dormitory-style facilities. This ongoing evolution of student preferences should drive increased demand for purpose-built student housing, which is specifically designed to appeal to the modern day college student with broad amenities, enhanced privacy and a focus on improving the overall student lifestyle experience.

Institutional Considerations

While indications of overall demand trends can be measured using national statistics, student housing is ultimately a localized market with unique characteristics among individual local markets. Thus, when evaluating the attractiveness of a particular geographic market, it is important to consider the growth trends specific to the local college(s) in that market as well as the available housing stock (both on-campus and off-campus) within the market. Ultimately, institutional growth rates and their corresponding impact on student housing demand are dependent upon two important factors: student choice and institutional enrollment limits.

Students typically apply to more than one college in a prioritized hierarchy from a first choice institution through a sequence of descending choices. When first choice institutions are

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filled, students are forced to attend their second, third or other choice. As a result, enrollment limits and, in certain cases, the smaller increases in capacity at “first choice” institutions, are driving increasing numbers of students to enroll in schools located in alternative, medium-sized college markets. Thus, while large and established universities typically have the largest need for student housing in terms of absolute numbers, the most favorable growth characteristics are often found at schools located in medium-sized college markets.

Economic Factors

Macroeconomic variables can also play a significant role in college enrollment trends. Generally, economic expansion leads to job creation and drives the need for a more highly trained and well-educated workforce, which has been a key driver of the increase in the percentage of high school graduates choosing to enroll in college. However, college enrollments have also historically demonstrated some counter-cyclical characteristics that have yielded strong enrollment growth even during recessionary periods. During periods of high unemployment and limited job creation, more people are inclined to pursue higher education, often as a means to upgrade their employment prospects. As shown in the shaded areas below, college enrollments have consistently increased during recessionary periods.

Enrollment Growth and Recessions (1969-2008)

Economic conditions can also impact a student’s choice of college. As families come under increasing financial pressure, college-bound students are often forced to re-evaluate their options with a view toward finding more affordable educational alternatives. According to a survey referenced in US News and World Report (December 2008), out of 2,500 prospective college students nationwide, 57% indicated that they were considering a more affordable college because they were concerned about cost. As cost becomes a key consideration in the evaluation of college alternatives, students are increasingly considering schools located in alternative, medium-sized

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college markets, which can offer an attractive educational experience often for a fraction of the cost of private or flagship public institutions.

Change in Tuition at Public and Private Institutions (1964-2008)

Student Housing Supply Considerations

The supply of student housing has continued to decline due to several key factors, including institutional capital allocation policies and preferences, state budget cuts and other economic factors.

Institutional Capital Allocation

While colleges and universities are generally obligated to provide adequate classroom facilities and educational resources to accommodate their student bodies, these institutions are generally not required to provide housing options commensurate with enrollment levels. Similarly, college students are generally not required to live on-campus (although some smaller private colleges do have on-campus residency requirements). Due to budget cuts and capital allocation policies, institutions have increasingly limited their expenditures on the construction and renovation of on-campus housing, preferring instead to invest in programs and facilities that enhance their educational and research capabilities. As a result, a significant and increasing percentage of college students satisfy their housing needs with off-campus, private-market alternatives.

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On-Campus Housing Capacity as a % of Undergraduate Enrollments at Public Universities

On-campus housing capacity is a measure of the amount of dormitory space available relative to the total number of students enrolled. As seen in the above chart, on-campus student housing capacity at public universities has declined since 1990. As of 2004, U.S. public universities had, on average, capacity to provide housing to only 24.8% of their undergraduate populations. This trend is expected to continue as state budget deficits increase and the financial ability of institutions to invest in new housing capacity remains constrained.

Dorm Capacity at Four-Year Schools, Top 15 States by Enrollment in (000s) (2004)

	Undergraduate		Dorm		Capacity as %			Capacity
State	Enrollment		Capacity		Enrollment			Shortfall
California		480.5		92.7		19	%		387.8
Texas		391.7		77.9		20	%		313.8
Florida		310.7		36.8		12	%		273.8
New York		287		77.9		27	%		209.1
Michigan		221.5		70.2		32	%		151.3
Ohio		217.2		54.2		25	%		163
Pennsylvania		211.3		70.5		33	%		140.8
Indiana		163.3		38.7		24	%		124.6
Georgia		160.6		36.2		23	%		124.5	(1)
North Carolina		150		50.5		34	%		99.6	(1)
Illinois		149.4		45.3		30	%		104	(1)
Virginia		140.4		54.2		39	%		86.2
Louisiana		131.8		26.5		20	%		105.4	(1)
Wisconsin		128.1		35.9		28	%		92.3	(1)
Colorado		124.2		25.3		20	%		98.9
Total		3,267.7		792.8		24	%		2,475.1	(1)

Source: National Center for Education Statistics, RREEF Research.

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(1) Capacity shortfall may not equal the difference between undergraduate enrollment and dorm capacity due to rounding.

Educational Budget Cuts

As state deficits increase, governments face difficult budget choices that often result in educational budget cuts. Budget cuts limit the ability of public institutions to invest in non-core assets such as on-campus student housing, thereby shifting the burden of providing student housing to the private sector. In the recent recessionary period, 38 states cut their educational budgets, while only 11 states increased their funding of higher education. Even well-funded private institutions are coping with budgetary pressures, as they seek to recoup significant endowment losses through reduced spending. As educational budgets continue to come under pressure and as student housing slips further down the list of spending priorities, the supply of suitable on-campus student housing is expected to continue to decline despite significantly increased enrollments.

% Change in Total Higher Education Funding by State (FY 2009 to FY 2010)

Other Economic Factors

As on-campus housing stock continues to decline in relation to enrollments, students are increasingly reliant on private-sector development to satisfy housing needs. However, funding for new development projects has become increasingly constrained amid the current economic environment. Refinancing initiatives have also been difficult as banks continuously look to reduce their exposure to commercial real estate loans. Together, these factors create a material restriction on the available supply of student housing, while demand for such housing continues to increase.

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The Future of Student Housing

While the current accelerated growth in enrollments is projected to stabilize by 2016, as the Echo Boomer phase of population growth completes its cycle, college and university enrollments are nevertheless projected to continue rising over the next four decades throughout the first half of the century. Colleges and universities will have to find new ways to supply student housing as the supply of on-campus housing becomes obsolete and institutions are unable to fund the replacement of these beds. This should provide opportunities for private development and ownership of high-quality, purpose-built student housing.

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BUSINESS AND PROPERTIES

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 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. Our properties are located in 11 states and are all recently built, with an average age of approximately 2.2 years as of August 31, 2010. Twenty-one of our properties, containing approximately 3,920 apartment units and 10,528 beds, will be wholly-owned. Six of our properties, containing approximately 1,128 apartment units and 3,052 beds, 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. As of September 15, 2010, the average occupancy for our 27 properties was approximately 90% and the average monthly rental revenue per occupied bed was approximately $467. Our properties are primarily located 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.

We were formed to continue and expand the student housing business of Campus Crest Group, which has been engaged in this business since 2004. 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.

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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 and has grown our business to approximately 13,580 beds since 2004.

Modern, Well-Located Portfolio. The average age of our student housing properties is approximately 2.2 years as of August 31, 2010, which we believe is generally lower than most of our competitors’ properties. Our properties have all been developed and constructed based on a prototypical building design to essentially the same specifications. All of our properties (i) offer student-tenants bed-bath parity (private bathrooms), which we believe provides an advantage over older properties that generally have 3-2 and 4-2 bed bath configurations, (ii) have been configured with the latest Internet connectivity, which is critical to attracting student-tenants and (iii) offer a variety of modern amenities, which are designed to enhance the lifestyle of our student-tenants and facilitate a sense of community. In addition, 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, thereby offering the “best of both worlds”—amenity-rich, apartment-style living and near, or on, campus convenience. We believe that our properties are generally among the most appealing in their respective markets, and we further believe that replication of our properties by existing local competitors would be difficult and expensive to effect.

Attractive, Branded Properties. All of our properties operate under The Grove^® brand, and use the federally registered trademarks, The Grove^® or The Grove—Fully Loaded College Living^® to identify and promote the properties. All of our properties offer our student-tenants private bedrooms with en suite bathrooms, full furnishings, full kitchens with modern appliances, washers and dryers inside each unit, state-of-the-art technology, ample parking, and a broad array of other on-site amenities, such as resort-style swimming pools, tanning booths, basketball and volleyball courts, game rooms, coffee bars 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. This experience is anchored by our “RockStar” / Community Assistant program, through which we seek to employ local students who demonstrate leadership on campus (e.g., student council members, student athletes, extracurricular club officers) to help manage our student lifestyle programs and support our leasing efforts. We believe that The Grove^® experience, coupled with our focused branding and marketing initiatives, differentiates our properties from those of our competitors.

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 believe that our use of a prototypical building design and volume purchasing, as well as our established relationships with student-housing focused regional subcontractors, provide us with an ability to achieve economies that may not be available to many competitors. 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.

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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. For example, the enrollment growth rates in these markets often tend to be higher than in the larger educational markets as capacity constraints at larger universities and economic considerations are increasingly driving students toward these more accessible and affordable schools. Moreover, the supply of competitive alternative housing stock, both multi-family apartments and purpose-built student housing, often tends to be lower in these markets, which we believe allows us to achieve favorable leasing results on a relatively limited marketing and incentive budget.

Conservative Capitalization. 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), resulting in a debt to total market capitalization ratio of approximately 20.0%, which we believe will provide us with incremental financing capacity to fund future growth opportunities. 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. We expect that this facility will be used for repaying a portion of our mortgage loan with Silverton Bank, general corporate purposes 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. Campus Crest Development, LLC, a North Carolina limited liability company, or “Campus Crest Development,” identifies markets, selects sites and acquires all entitlements; Campus Crest Construction, LLC, a North Carolina limited liability company, or “Campus Crest Construction,” oversees the design and construction of each project; The Grove Student Properties LLC, a North Carolina limited liability company doing business as Campus Crest Real Estate Management, or “The Grove Student Properties,” serves as our marketing, leasing and property management arm; and Campus Crest Asset Management, a division of Campus Crest Group, or “Campus Crest Asset Management,” oversees our capital structure, investment underwriting and investor relations. Our vertically-integrated platform allows us to become familiar with every facet of our student housing properties. We believe that the ongoing feedback and accountability

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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. Prior to investing in a market, we conduct extensive due diligence to assess the market’s attractiveness (e.g., demographics and student population trends), as well as the available supply of on- and off-campus housing alternatives. We utilize a proprietary underwriting model with over 60 inputs to evaluate the relative attractiveness of each potential development market. While our market strategy considers a variety of factors, we generally focus on markets where: (i) total student enrollment exceeds 8,000; (ii) a majority of the student population resides off-campus; and (iii) sites that are in close proximity to campus can be purchased or leased at a reasonable cost. Our due diligence process is designed to identify markets in which we can operate successfully.

Optimize Our Properties and Brand Value. A key element of our strategy is to optimize the student lifestyle experience at our properties and enhance the value and recognition of our brand, The Grove^®, through a consistent set of operating principles. We strive to offer properties that are designed to meet the unique needs of student-tenants, and to offer a variety of social activities and other programs that build a sense of community at our properties. Our property management group continually works with our “RockStar” / Community Assistant teams to design student lifestyle programs involving social, cultural, outreach, recreational, educational and spiritual activities, which we refer to as our “SCORES” program. 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. For these reasons, among others, we anticipate that in-house development will remain the primary driver of our growth. 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. Additionally, 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 four wholly-owned properties and three joint venture properties discussed above. 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. See “—Expected 2011 Development Properties.”

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. However, we may also seek to make opportunistic acquisitions of properties that we believe we can purchase at attractive pricing, reposition and operate successfully.

History

Campus Crest Communities, Inc., a Maryland corporation, was formed on March 1, 2010, at the direction of MXT Capital to continue and expand the student housing business of our predecessor entities that have been engaged in the student housing business since 2004. Our

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operating partnership, Campus Crest Communities Operating Partnership, LP, a Delaware limited partnership, was formed on March 4, 2010.

Ted W. Rollins, our co-chairman and chief executive officer, and Michael S. Hartnett, our co-chairman and chief investment officer are our initial directors, and MXT Capital is our sole stockholder. Accordingly, MXT Capital and Messrs. Rollins and Hartnett may be considered our promoters. From 2004 to 2010, our predecessor entities operated primarily as owners of student housing and providers of related development, construction and management services; our predecessor entities developed 27 properties, including three properties that opened in August 2010.

Our Properties

Upon completion of this offering and our formation transactions we will own interests in 27 properties. All of our properties are less than six years old and more than half of our properties are less than three years old. No single property accounts for more than 10% of our total assets or gross revenue as of and for the six months ended June 30, 2010 or as of and for the year ended December 31, 2009.

We have focused our investment activities on properties located in medium-sized college and university markets where we believe the overall market dynamics are favorable. We believe that 11 of our properties are the only purpose-built student housing properties serving the schools from which they draw student-tenants. All of our properties are modern facilities with private baths for each bedroom and are largely uniform throughout the portfolio, with each property having a similar appearance and amenities package along with The Grove^® branding. We own and maintain federal trademark registrations on The Grove^® and The Grove Fully Loaded College Living^®, each of which we registered on November 20, 2007. Both registrations are valid for a term of ten years from the registration date, provided that between the fifth and sixth anniversary of the registration date we file affidavits and evidence of continued use under the Lanham Trademark Act. All of our properties are operated under the brand The Grove^®. Our brand provides an identity for our marketing and selling activities, our operations and other on-site activities. The brand figures prominently on our web site, promotional materials and local signage and all of our properties, in general, have been based upon our common prototypical design.

Amenities at our properties generally include: a resort style swimming pool, basketball courts, beach volleyball courts, fire pits and barbeque areas and a large clubhouse featuring a 24-hour fitness center, library and computer center, tavern style game room with billiards and other games, tanning beds, coffee shop and study areas. All of our properties are fully furnished with ultrasuede upholstered couches and chairs and durable wood case goods, and have full kitchens as well as washers and dryers.

Each student-tenant at our properties executes an individual lease agreement with us that is generally guaranteed by a parent or guardian. Lease terms are generally 11.5 months, which provides us with approximately two weeks to prepare a unit for a new tenant if the current tenant is vacating upon the expiration of the lease. Rent is payable monthly in 12 equal installments. In addition to unlimited use of all the property amenities listed above, each tenant is entitled to cable, water/sewer and a $30 per month electricity allowance. Student-tenants are prohibited from subletting units without our prior written consent, which is conditional on, among other things, the payment of a transfer fee. Student-tenants are responsible for the outstanding lease obligations in the event that they are denied admission to, withdraw from or are placed on academic suspension or dismissed by, the college or university that our property services.

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The following table presents certain summary information about our properties:

																		Average
															Occupancy			Monthly
				Primary	Fall 2009			Distance to							as of			Rental Revenue
			Year	University	Overall			Campus			Number		Number		September 15,			Per
	City	State	Opened	Served	Enrollment			(miles)			of Units		of Beds		2010 (1)			Occupied Bed
	Wholly-Owned Properties
1	Asheville	NC	2005	University of NC Asheville		3,695			0.1			154		448		88	%	$	488
2	Carrollton	GA	2006	University of West Georgia		11,500			0.1			168		492		92	%	$	436
3	Las Cruces	NM	2006	New Mexico State University		18,497			0.4			168		492		83	%	$	440
4	Milledgeville	GA	2006	Georgia College & State University		6,633			0.1			168		492		99	%	$	524
5	Abilene	TX	2007	Abilene Christian University		4,838			0.5			192		504		87	%	$	435
6	Ellensburg	WA	2007	Central Washington University		10,187			0.5			192		504		96	% (2)	$	483	(2)
7	Greeley	CO	2007	University of Northern Colorado		12,711			1.0			192		504		98	%	$	463
8	Jacksonville	AL	2007	Jacksonville State University		9,351			0.2			192		504		81	%	$	429
9	Mobile—Phase I (3)	AL	2007	University of South Alabama		14,522			On- Campus			192		504		100	%	$	466
10	Mobile—Phase II (3)	AL	2008	University of South Alabama		14,522			On- Campus			192		504		100	%	$	466
11	Nacogdoches	TX	2007	Stephen F. Austin State University		12,845			0.4			196		522		100	%	$	508
12	Cheney	WA	2008	Eastern Washington University		11,302			0.5			192		512		71	% (2)	$	448	(2)
13	Jonesboro	AR	2008	Arkansas State University		12,156			0.2			192		504		99	%	$	440
14	Lubbock	TX	2008	Texas Tech University		30,049			2.1			192		504		92	%	$	473
15	Stephenville	TX	2008	Tarleton State University		8,598			0.8			192		504		75	%	$	470
16	Troy	AL	2008	Troy University		6,679			0.4			192		514		98	%	$	472
17	Waco	TX	2008	Baylor University		14,614			0.8			192		504		83	%	$	535
18	Wichita	KS	2008	Wichita State University		14,823			1.1			192		504		75	%	$	453
19	Wichita Falls	TX	2008	Midwestern State University		6,341			1.2			192		504		67	%	$	456
20	Murfreesboro	TN	2009	Middle Tennessee State University		25,188			0.8			186		504		98	%	$	442
21	San Marcos	TX	2009	Texas State University		30,816			1.7			192		504		100	%	$	554
Sub Total of Wholly-Owned Properties						13,327	(4)		0.6	(4)		3,920		10,528		90	% (5)	$	472	(5)
	Joint Venture Properties—49.9% Ownership Interest
22	Lawrence	KS	2009	University of Kansas		29,242			1.6			172		500		76	%	$	457
23	Moscow (3)	ID	2009	University of Idaho		11,957			0.5			192		504		89	%	$	455
24	San Angelo	TX	2009	Angelo State University		6,387			0.3			192		504		84	%	$	469
25	Conway	AR	2010	University of Central Arkansas		11,781			0.4			180		504		93	%	$	441
26	Huntsville	TX	2010	Sam Houston State University		16,772			0.2			192		504		100	%	$	448
27	Statesboro	GA	2010	Georgia Southern University		19,086			0.7			200		536		100	%	$	447
Sub Total of Joint Venture Properties						15,871	(4)		0.6	(4)		1,128		3,052		91	% (5)	$	452	(5)
Total Properties						13,892	(4)		0.6	(4)		5,048		13,580		90	% (5)	$	467	(5)

(1)	Represents executed leases in hand for the 2010-2011 academic year.
(2)	The 2010-2011 academic year commences on September 22, 2010 at the primary university served by this property; accordingly, pre-academic year leasing is still ongoing at this property.
(3)	Property subject to a ground lease with an unaffiliated third-party.
(4)	Average.

(5) Weighted average by number of leased beds as of September 15, 2010.

127

The following describes each of our wholly-owned properties:

The Grove at Asheville
Address:	600 Bulldog Drive Asheville, NC 28801		Year Opened:     2005
Market Information
Institution Served:		University of North Carolina, Asheville
Fall 2009 Overall Enrollment:		3,695
Property Statistics
Land Acreage:		16.60		Units	Beds
Square Feet:		182,488	2bed/2bath	14	28
Parking Spaces:		447	3bed/3bath	140	420
Distance to Campus:		0.1 miles	Total:	154	448
Occupancy (1):		88%
Average rental revenue per occupied bed (1):		$488
(1) As of September 15, 2010.
Financing
Debt:	$14,800,000		Post Offering Debt:  $14,800,000
Rate:	5.77% fixed
Amortization:	Interest only until April 11, 2012, then 30 year amortizing
Maturity:	April 11, 2017; loan may be defeased

The University of North Carolina Asheville, or “UNCA,” is located in Asheville, North Carolina. As of the 2009 fall semester, UNCA had an overall enrollment of 3,695 students, with a full-time undergraduate enrollment of 3,132 students. All first year UNCA students are required to live on campus, and UNCA has capacity to house students on campus in several suite-style options. We do not believe that UNCA has any plans to renovate any of its existing beds or to develop any additional beds.

The Asheville, North Carolina student housing market is limited in scope due to the smaller size of UNCA. The properties we consider to be our main competitors are conventional multi-family options that rent by the unit. The Grove at Asheville is the market’s only purpose-built off-campus student housing community. We are not aware of any existing beds being renovated or additional beds being developed to serve this market.

128

The Grove at Carrollton
Address:	912 Lovorn Road Carrollton, GA 30117		Year Opened:     2006
Market Information
Institution Served:		University of West Georgia
Fall 2009 Overall Enrollment:		11,500
Property Statistics
Land Acreage:		14.93		Units	Beds
Square Feet:		198,797	2bed/2bath	12	24
Parking Spaces:		470	3bed/3bath	156	468
Distance to Campus:		0.1 miles	Total:	168	492
Occupancy (1):		92%
Average rental revenue per occupied bed (1):		$436
(1) As of September 15, 2010.
Financing
Debt:	$14,650,000		Post Offering Debt:  $14,650,000
Rate:	6.13% fixed
Amortization:	Interest only until October 11, 2011, then 30 year amortizing
Maturity:	October 11, 2016; loan may be defeased

The University of West Georgia, or “UWG,” is located in Carrollton, Georgia, approximately 50 miles southwest of Atlanta, Georgia. As of the 2009 fall semester, UWG had an overall enrollment of 11,500 students, with a full-time undergraduate enrollment of 8,126 students. All UWG freshmen are required to live on campus, and UWG has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. We do not believe that UWG has any plans to renovate any of its existing beds or develop any additional beds.

The Carrollton, Georgia student housing market offers several purpose-built options in addition to traditional multi-family options that compete with The Grove at Carrollton. We are not aware of any existing beds being renovated or any additional beds being developed to serve this market.

129

The Grove at Las Cruces
Address:	320 East Union Avenue Las Cruces, NM 88001		Year Opened:     2006
Market Information
Institution Served:		New Mexico State University
Fall 2009 Overall Enrollment:		18,497
Property Statistics
Land Acreage:		9.96		Units	Beds
Square Feet:		198,797	2bed/2bath	12	24
Parking Spaces:		504	3bed/3bath	156	468
Distance to Campus:		0.4 miles	Total:	168	492
Occupancy (1):		83%
Average rental revenue per occupied bed (1):		$440
(1) As of September 15, 2010.
Financing
Debt:	$15,140,000		Post Offering Debt:  $15,140,000
Rate:	6.13% fixed
Amortization:	Interest only until October 11, 2011, then 30 year amortizing
Maturity:	October 11, 2016; loan may be defeased

New Mexico State University, or “NMSU,” is located in Las Cruces, New Mexico. As of the 2009 fall semester, NMSU had an overall enrollment of 18,497 students, with a full-time undergraduate enrollment of 12,621 students. NMSU does not require certain students to live on campus, although NMSU has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. NMSU has plans to build a 300-bed apartment-style community to deliver in August 2011. It will be a second phase to an existing on-campus community.

The Las Cruces, New Mexico student housing market is mainly comprised of traditional multi-family options that rent by the unit. The Grove at Las Cruces is the market’s only purpose-built off-campus student housing community. We are not aware of any existing beds being renovated or any additional beds being developed to serve the off campus market.

130

The Grove at Milledgeville
Address:	500 West Franklin Street Milledgeville, GA 31061		Year Opened:     2006
Market Information
Institution Served:		Georgia College & State University
Fall 2009 Overall Enrollment:		6,633
Property Statistics
Land Acreage:		19.83		Units	Beds
Square Feet:		198,797	2bed/2bath	12	24
Parking Spaces:		459	3bed/3bath	156	468
Distance to Campus:		0.1 miles	Total:	168	492
Occupancy (1):		99%
Average rental revenue per occupied bed (1):		$524
(1) As of September 15, 2010.
Financing
Debt:	$16,250,000		Post Offering Debt:  $16,250,000
Rate:	6.12% fixed
Amortization:	Interest only until October 11, 2011, then 30 year amortizing
Maturity:	October 1, 2016; loan may be defeased

Georgia College & State University, or “GCSU,” is located in Milledgeville, Georgia, approximately 100 miles southeast of Atlanta, Georgia. As of the 2009 fall semester, GCSU had an overall enrollment of 6,633 students, with a full-time undergraduate enrollment of 5,092 students. All first year GCSU students, with limited exceptions, are required to live on campus, and GCSU has capacity to house students on campus in suite-style and apartment-style options. We do not believe that GCSU has any plans to renovate any of its existing beds or to develop any additional beds.

The Milledgeville, Georgia student housing market offers a mix of purpose-built and traditional multi-family options that compete with The Grove at Milledgeville. One competitor property opened for the 2009 fall semester.

131

The Grove at Abilene
Address:	2702 North Judge Ely Boulevard Abilene, TX 79601		Year Opened:     2007
Market Information
Institution Served:		Abilene Christian University
Fall 2009 Overall Enrollment:		4,838
Property Statistics
Land Acreage:		9.22		Units	Beds
Square Feet:		209,999	2bed/2bath	72	144
Parking Spaces:		521	3bed/3bath	120	360
Distance to Campus:		0.5 miles	Total:	192	504
Occupancy (1):		87%
Average rental revenue per occupied bed (1):		$435
(1) As of September 15, 2010.
Financing
Debt:	$16,120,000		Post Offering Debt:  $0
Rate:	6.40% fixed
Amortization:	Interest only for entire term
Maturity:	February 28, 2013; may be pre-paid at any time without penalty

Abilene Christian University, or “ACU,” is located in Abilene, Texas, approximately 185 miles west of Dallas, Texas. As of the 2009 fall semester, ACU had overall enrollment of 4,838 students. All ACU first and second year students, with limited exceptions, are required to live on campus, and ACU has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. We do not believe that ACU has any plans to renovate any of its existing beds or to develop any additional beds.

The Abilene, Texas student housing market offers one purpose-built property in addition to The Grove at Abilene, as well as traditional multi-family options that rent by the unit that compete with The Grove at Abilene. We are not aware of any existing beds being renovated or any additional beds being developed to serve this market.

132

The Grove at Ellensburg
Address:	2420 Airport Road Ellensburg, WA 98926		Year Opened:     2007
Market Information
Institution Served:		Central Washington University
Fall 2009 Overall Enrollment:		10,187
Property Statistics
Land Acreage:		13.53		Units	Beds
Square Feet:		209,999	2bed/2bath	72	144
Parking Spaces:		566	3bed/3bath	120	360
Distance to Campus:		0.5 miles	Total:	192	504
Occupancy (1):		96%
Average rental revenue per occupied bed (1):		$483
(1) As of September 15, 2010. The 2010-2011 academic year commences on September 22, 2010 at the primary university served by this property; accordingly, pre-academic year leasing is still ongoing at this property.
Financing
Debt:	$18,757,143		Post Offering Debt:  $0
Rate:	6.40% fixed
Amortization:	Interest only for entire term
Maturity:	February 28, 2013; may be pre-paid at any time without penalty

Central Washington University, or “CWU,” is located in Ellensburg, Washington, approximately 110 miles southeast of Seattle, Washington. As of the 2009 fall semester, CWU had an overall enrollment of 10,187 students. CWU does not publish full-time overall or undergraduate enrollment information specific to the Ellensburg, Washington campus. All CWU freshmen, with limited exceptions, are required to live on campus, and CWU has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. A newly-constructed residence hall opened in fall 2009. We do not believe that CWU has any plans to develop any new residential projects.

The Ellensburg, Washington student housing market primarily offers traditional multi-family options that compete with The Grove at Ellensburg. While a number of properties target their marketing to CWU students, The Grove at Ellensburg is the market’s only purpose-built student housing community. We are not aware of any existing beds being renovated or any additional beds being developed to serve this market.

133

The Grove at Greeley
Address:	3202 11th Avenue Evans, CO 80620		Year Opened:     2007
Market Information
Institution Served:		University of Northern Colorado
Fall 2009 Overall Enrollment:		12,711
Property Statistics
Land Acreage:		11.47		Units	Beds
Square Feet:		209,999	2bed/2bath	72	144
Parking Spaces:		549	3bed/3bath	120	360
Distance to Campus:		1.0 miles	Total:	192	504
Occupancy (1):		98%
Average rental revenue per occupied bed (1):		$463
(1) As of September 15, 2010.
Financing
Debt:	$19,128,571		Post Offering Debt:  $0
Rate:	6.40% fixed
Amortization:	Interest only for entire term
Maturity:	February 28, 2013; may be pre-paid at any time without penalty

University of Northern Colorado, or “UNC,” is located in Greeley, Colorado, approximately 65 miles north of Denver, Colorado. As of the 2009 fall semester, UNC had an overall enrollment of 12,711 students. Full-time undergraduate enrollment for fall 2009 has not been published. All newly admitted UNC students, with limited exceptions, are required to live on campus, and UNC has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. UNC recently completed phase two of a new residence hall, and we do not believe that UNC has further plans to renovate any of its existing beds or to develop any additional beds.

The Greeley, Colorado student housing market offers a mix of purpose-built, traditional multi-family, and single-family options that compete with The Grove at Greeley. We are not aware of any existing beds being renovated or additional beds being developed to serve this market.

134

The Grove at Jacksonville
Address:	351 Nisbet Street NW Jacksonville, AL 36265		Year Opened:     2007
Market Information
Institution Served:		Jacksonville State University
Fall 2009 Overall Enrollment:		9,351
Property Statistics
Land Acreage:		15.82		Units	Beds
Square Feet:		209,999	2bed/2bath	72	144
Parking Spaces:		710	3bed/3bath	120	360
Distance to Campus:		0.2 miles	Total:	192	504
Occupancy (1):		81%
Average rental revenue per occupied bed (1):		$429
(1) As of September 15, 2010.
Financing
Debt:	$16,417,143		Post Offering Debt:  $0
Rate:	6.40% fixed
Amortization:	Interest only for entire term
Maturity:	February 28, 2013; may be pre-paid at any time without penalty

Jacksonville State University, or “JSU,” is located in Jacksonville, Alabama, approximately 75 miles northeast of Birmingham, Alabama. As of the 2009 fall semester, JSU had an overall enrollment of 9,351 students, with a full-time undergraduate enrollment of 5,957 students. Beginning in the 2010 fall semester, all JSU freshmen, with limited exceptions, will be required to live on campus, and JSU has capacity to house students on campus in traditional dormitory-style and apartment-style options. Currently, JSU has one new residence hall under construction which is scheduled to deliver in time for the 2010 fall semester.

The Jacksonville, Alabama student housing market offers one purpose-built option (other than The Grove at Jacksonville) in addition to traditional multi-family and single-family options. We are not aware of any existing beds being renovated or any additional beds being developed to serve this market.

135

The Grove at Mobile—Phase I
Address:	375 Cleverdon Parkway Mobile, AL 36688		Year Opened:     2007
Market Information
Institution Served:		University of South Alabama
Fall 2009 Overall Enrollment:		14,522
Property Statistics
Land Acreage:		12.40		Units	Beds
Square Feet:		209,999	2bed/2bath	72	144
Parking Spaces:		551	3bed/3bath	120	360
Distance to Campus:		On-Campus	Total:	192	504
Occupancy (1):		100%
Average rental revenue per occupied bed (1):		$466
(1) As of September 15, 2010.
Financing
Debt:	$15,971,429		Post Offering Debt:  $0
Rate:	6.40% fixed
Amortization:	Interest only for entire term
Maturity:	February 28, 2013; may be pre-paid at any time without penalty

The Grove at Mobile—Phase II
Address:	375 Cleverdon Parkway Mobile, AL 36688		Year Opened:     2008
Property Statistics
Land Acreage:		10.45		Units	Beds
Square Feet:		203,856	2bed/2bath	72	144
Parking Spaces:		527	3bed/3bath	120	360
Distance to Campus:		On-Campus	Total:	192	504
Occupancy (1):		100%
Average rental revenue per occupied bed (1):		$466
(1) As of September 15, 2010.
Financing
Debt:	$15,874,109		Post Offering Debt:  $0
Rate:	LIBOR + 300bps; rate floor of 5.50%
Amortization:	25 year, with $1 million curtailment (2)
Maturity:	October 31, 2010; may be pre-paid at any time without penalty
(2) On the earliest to occur of the completion of this offering, the completion of a private placement of the equity interests in MXT Capital or Campus Crest Group, or October 31, 2010.

136

The University of South Alabama, or “USA,” is located in Mobile, Alabama. As of the 2009 fall semester, USA had an overall enrollment of 14,522 students, with a full-time undergraduate enrollment of 8,527 students. USA does not have a policy requiring students to live on campus. USA has capacity to house students on campus in suite-style and apartment-style options. USA has plans to build a 300-bed residence hall targeted for completion in the summer of 2011.

The Mobile, Alabama student housing market is primarily comprised of traditional multi-family and single-family options that compete with The Grove at Mobile.

The Grove at Mobile—Phase I opened in August of 2007. The Grove at Mobile—Phase II opened in August of 2008. Both properties were built on campus-owned land and operate under a long-term ground lease with USA. Each phase has a separate ground lease, and these ground leases are coterminous. A cross easement agreement allows all student-tenants full access to amenities in both phases. The physical structure of both phases differs from other Grove properties in that the exterior is all brick and each building has a metal roof. Additionally, ceilings in the units are approximately a foot higher than other Grove properties.

Discussion of Mobile, AL Ground Leases

We currently own two on-campus properties where we hold the land under ground lease agreements from USA Research and Technology Corporation, or “USART,” a related entity of USA, in Mobile, Alabama. USART leases the land from USA. Under the terms of these arrangements, our subsidiaries lease the real estate from USART and fund the development and construction costs generally with financing that is secured by our leasehold interest. Legal title to the real estate is owned by USA and legal title to the leasehold interest and the improvements is owned by us. We manage both properties in a manner consistent with all of our other properties.

Phase I Ground Lease Summary

•   Term: The initial term ends October 31, 2046, with a 20-year first renewal term and a 15-year second renewal term.

•   Rent: The annual base rent for the first five years of the initial term shall be equal to 8.5% of the appraised fair market value of the land. Beginning with the sixth year of the initial term and every five years thereafter until the termination of the lease, the annual base rent is subject to a Consumer Price Index, or “CPI,” increase that is not less than 5% or more than 7.5%. Annual base rent for the first five years of the first renewal term shall be equal to 8.5% of the then-appraised fair market value of the land. Annual base rent during the remainder of the renewal terms shall be adjusted every five years as provided above using the CPI for the last month of the initial term.

•   Property Manager: The manager of this property is The Grove Student Properties. The management agreement has an initial 10-year term, and thereafter is automatically renewed on a month-to-month basis with mutual termination rights upon 90 days’ notice. Our duties as manager are similar to those as a manager of our owned properties. The management agreement terminates upon termination of our ground lease.

•   Transferability: USART’s consent is not required for us to assign or sublease the premises. Prior to any assignment or subleasing to a third party other than one of our affiliates or a current USA student then leasing a portion of the premises, USART has the right of first opportunity to lease the premises under the same terms as those offered to the third party.

137

•   Right of First Refusal: USART has a right of first refusal to purchase our leasehold interest in the event we decide to accept a bona fide offer to sell it to any third party.

Phase II Ground Lease Summary

•   Term: The initial term ends October 31, 2046, with a 20-year first renewal term and a 15-year second renewal term.

•   Rent: The annual base rent for the first five years of the initial term is $125,000. Beginning with the sixth year of the initial term and every five years thereafter until the termination of the lease, the annual base rent is subject to a CPI increase that is not less than 7.5% or more than 11%. Annual base rent for the first five years of the first renewal term shall be equal to 8.5% of the then-appraised fair market value of the land. Annual base rent during the remainder of the renewal terms shall be adjusted every five years as provided above using the CPI for the last month of the initial term.

•   Property Manager: The manager of this property is The Grove Student Properties. The management agreement has an initial 10-year term, and thereafter is automatically renewed on a month-to-month basis with mutual termination rights upon 90 days’ notice. Our duties as manager are similar to those as a manager of our owned properties. The management agreement terminates upon termination of our ground lease.

•   Transferability: USART’s consent, which shall not be unreasonably withheld, is required prior to our assignment of the ground lease or our subleasing of the entirety of our interest in the premises. Prior to any assignment or subleasing to a third party other than one of our affiliates or a current USA student then leasing a portion of the premises, USART has the right of first opportunity to lease the premises under the same terms as those offered to the third party.

•   Right of First Refusal: USART has a right of first refusal to purchase our leasehold interest in the event we decide to accept a bona fide offer to sell it to any third party.

138

The Grove at Nacogdoches
Address:	1602 Cardinal Street Nacogdoches, TX 75961		Year Opened:     2007
Market Information
Institution Served:		Stephen F. Austin State University
Fall 2009 Overall Enrollment:		12,845
Property Statistics
Land Acreage:		13.85		Units	Beds
Square Feet:		217,493	2bed/2bath	66	132
Parking Spaces:		600	3bed/3bath	130	390
Distance to Campus:		0.4 miles	Total:	196	522
Occupancy (1):		100%
Average rental revenue per occupied bed (1):		$508
(1) As of September 15, 2010.
Financing
Debt:	$17,605,714		Post Offering Debt:  $0
Rate:	6.40% fixed
Amortization:	Interest only for entire term
Maturity:	February 28, 2013; may be pre-paid at any time without penalty

Stephen F. Austin State University, or “SFA,” is located in Nacogdoches, Texas, approximately 140 miles north of Houston, Texas. As of the 2009 fall semester, SFA had an overall enrollment of 12,845 students, with a full-time undergraduate enrollment of 9,663 students. Undergraduate students under the age of 21 with fewer than 60 semester hours are required to live in on-campus residence halls, and SFA has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. SFA has recently demolished an aged residence hall and has plans to build a replacement student living center to be completed and occupied for the 2010-2011 academic year.

The Nacogdoches, Texas student housing market is primarily comprised of traditional multi-family and single-family options that compete with The Grove at Nacogdoches. The Grove at Nacogdoches is the market’s only purpose-built student housing community. We are not aware of any existing beds being renovated or additional beds being developed to serve in the off campus market.

139

The Grove at Cheney
Address:	240 S. Cheney-Spangle Road Cheney, WA 99004		Year Opened:     2008
Market Information
Institution Served:		Eastern Washington University
Fall 2009 Overall Enrollment:		11,302
Property Statistics
Land Acreage:		13.10		Units	Beds
Square Feet:		214,935	2bed/2bath	64	128
Parking Spaces:		554	3bed/3bath	128	384
Distance to Campus:		0.5 miles	Total:	192	512
Occupancy (1):		71%
Average rental revenue per occupied bed (1):		$448
(1) As of September 15, 2010. The 2010-2011 academic year commences on September 22, 2010 at the primary university served by this property; accordingly, pre-academic year leasing is still ongoing at this property.
Financing
Debt:	$16,080,000		Post Offering Debt:  $0
Rate:	LIBOR + 180bps; rate floor of 6.00% (1)
Amortization:	Interest only for entire term
Maturity:	January 31, 2011; may be pre-paid at any time without penalty
(1) $14,780,000 has a rate floor of 6.00% through October 31, 2010

Eastern Washington University, or “EWU,” is located in Cheney, Washington, approximately 18 miles south of Spokane, Washington. As of the 2009 fall semester, EWU had an overall enrollment of 11,302 students, with a full-time undergraduate enrollment of 8,631 students. EWU does not have a policy requiring students to live on campus. EWU has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. We are not aware of any plans that EWU has to renovate any of its existing beds or to develop additional beds.

The Cheney, Washington student housing market is primarily comprised of traditional multi-family and single-family options that compete with The Grove at Cheney. We are not aware of any existing beds being renovated or any additional beds being developed to serve this market.

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The Grove at Jonesboro
Address:	500 N. Caraway Road Jonesboro, AR 72401		Year Opened:     2008
Market Information
Institution Served:		Arkansas State University
Fall 2009 Overall Enrollment:		12,156
Property Statistics
Land Acreage:		14.00		Units	Beds
Square Feet:		211,943	2bed/2bath	72	144
Parking Spaces:		575	3bed/3bath	120	360
Distance to Campus:		0.2 miles	Total:	192	504
Occupancy (1):		99%
Average rental revenue per occupied bed (1):		$440
(1) As of September 15, 2010.
Financing
Debt:	$17,075,098		Post Offering Debt:  $0
Rate:	LIBOR + 180bps; rate floor of 6.00%(1)
Amortization:	Interest only for entire term
Maturity:	January 31, 2011; may be pre-paid at any time without penalty
(1) $14,893,598 has a rate floor of 6.00% through October 31, 2010

Arkansas State University, or “A-State,” is located in Jonesboro, Arkansas, approximately 130 miles northeast of Little Rock, Arkansas and approximately 70 miles northwest of Memphis, Tennessee. As of the 2009 fall semester, A-State had an overall enrollment of 12,156 students, with a full-time undergraduate enrollment of 7,732 students. All A-State freshmen, with limited exceptions, are required to live on campus, and A-State has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. A-State currently has two 50-bed residence halls under construction expected to be completed and occupied for the 2010-2011 academic year.

The Jonesboro, Arkansas student housing market is mainly comprised of traditional multi-family and single-family options that compete with The Grove at Jonesboro. The Grove at Jonesboro is the market’s only purpose-built student housing community. We are not aware of any existing beds being renovated or any additional beds being developed to serve this market.

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The Grove at Lubbock
Address:	315 N. Utica Drive Lubbock, TX 79416		Year Opened:     2008
Market Information
Institution Served:		Texas Tech University
Fall 2009 Overall Enrollment:		30,049
Property Statistics
Land Acreage:		14.54		Units	Beds
Square Feet:		211,943	2bed/2bath	72	144
Parking Spaces:		654	3bed/3bath	120	360
Distance to Campus:		2.1 miles	Total:	192	504
Occupancy (1):		92%
Average rental revenue per occupied bed (1):		$473
(1) As of September 15, 2010.
Financing
Debt:	$16,440,000		Post Offering Debt:  $0
Rate:	LIBOR + 180bps; rate floor of 6.00% through October 31, 2010
Amortization:	Interest only for entire term
Maturity:	January 31, 2011; may be pre-paid at any time without penalty

Texas Tech University, or “TTU,” is located in Lubbock, Texas. As of the 2009 fall semester, TTU had an overall enrollment of 30,049 students, with a full-time undergraduate enrollment of 22,061 students. TTU students with less than 30 hours of post-high school academic credit, with limited exceptions, are required to live on campus, and TTU has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. We do not believe that TTU has any plans to renovate any of its existing beds or to develop any additional beds.

The Lubbock, Texas student housing market offers several purpose-built options in addition to traditional multi-family options that compete with The Grove at Lubbock. We are not aware of any existing beds being renovated or any additional beds being developed in this market.

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The Grove at Stephenville
Address:	2825 W. Frey Street Stephenville, TX 76401		Year Opened:     2008
Market Information
Institution Served:		Tarleton State University
Fall 2009 Overall Enrollment:		8,598
Property Statistics
Land Acreage:		12.00		Units	Beds
Square Feet:		211,943	2bed/2bath	72	144
Parking Spaces:		533	3bed/3bath	120	360
Distance to Campus:		0.8 miles	Total:	192	504
Occupancy (1):		75%
Average rental revenue per occupied bed (1):		$470
(1) As of September 15, 2010.
Financing
Debt:	$16,080,000		Post Offering Debt:  $0
Rate:	LIBOR + 180bps; rate floor of 6.00% (1)
Amortization:	Interest only for entire term
Maturity:	January 31, 2011; may be pre-paid at any time without penalty
(1) $14,830,000 has a rate floor of 6.00% through October 31, 2010

Tarleton State University, or “Tarleton,” is located in Stephenville, Texas, approximately 115 miles southwest of Dallas, Texas. As of the 2009 fall semester, Tarleton had an overall enrollment of 8,598 students, with a full-time undergraduate enrollment of 5,865 students. All first time freshman students who are under 21 years of age, prior to the start of his/her registered semester, and all transfer students who are under 21 years of age, prior to the start of his or her registered semester with less than 12 credits hours, are required to live on campus for two academic years. Tarleton has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. Two residence halls were recently demolished to create space for the construction of a new residence hall with approximately 300 beds expected to be completed and occupied for the 2010-2011 academic year. There will be a net gain of approximately 118 beds on campus.

The Stephenville, Texas student housing market offers one purpose-built option (other than The Grove at Stephenville) in addition to traditional multi-family and single-family options that compete with The Grove at Stephenville. We are not aware of any existing beds being renovated or additional beds being developed to serve this market.

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The Grove at Troy
Address:	920 E. Academy Street Troy, AL 36081		Year Opened:     2008
Market Information
Institution Served:		Troy University
Fall 2009 Overall Enrollment:		6,679 (Troy campus only)
Property Statistics
Land Acreage:		21.00		Units	Beds
Square Feet:		215,683	2bed/2bath	62	124
Parking Spaces:		560	3bed/3bath	130	390
Distance to Campus:		0.4 miles	Total:	192	514
Occupancy (1):		98%
Average rental revenue per occupied bed (1):		$472
(1) As of September 15, 2010.
Financing
Debt:	$17,440,000		Post Offering Debt:  $0
Rate:	LIBOR + 180bps; rate floor of 6.00%(1)
Amortization:	Interest only for entire term
Maturity:	January 31, 2011; may be pre-paid at any time without penalty
(1) $16,115,000 has a rate floor of 6.00% through October 31, 2010

Troy University, or “Troy,” has its main campus in Troy, Alabama, approximately 50 miles southeast of Montgomery, Alabama. Troy University also has a large network of online course offerings and satellite campuses. For purposes of our property underwriting, we focus solely on demographics of the main campus in Troy, Alabama. As of the 2009 fall semester, the Troy, Alabama campus had an overall enrollment of 6,679 students, with a full-time undergraduate enrollment of 5,100 students. Students under 19 years of age are required to live on campus, with limited exceptions, and the Troy campus has capacity to house students on campus in traditional dormitory- style, suite-style, and apartment-style options. We do not believe that Troy has any plans to renovate any of its existing beds or to develop any additional beds.

The Troy, Alabama student housing market offers one purpose-built option (other than The Grove at Troy) in addition to traditional multi-family and single-family options that compete with The Grove at Troy. We are not aware of any existing beds being renovated or any additional beds being developed to serve this market.

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The Grove at Waco
Address:	2826 S. University Parks Drive Waco, TX 76706		Year Opened:     2008
Market Information
Institution Served:		Baylor University
Fall 2009 Overall Enrollment:		14,614
Property Statistics
Land Acreage:		11.30		Units	Beds
Square Feet:		213,958	2bed/2bath	72	144
Parking Spaces:		519	3bed/3bath	120	360
Distance to Campus:		0.8 miles	Total:	192	504
Occupancy (1):		83%
Average rental revenue per occupied bed (1):		$535
(1) As of September 15, 2010.
Financing
Debt:	$16,741,718		Post Offering Debt:  $0
Rate:	LIBOR + 180bps; rate floor of 6.00%(1)
Amortization:	Interest only for entire term
Maturity:	January 31, 2011; may be pre-paid at any time without penalty
(1) $15,741,718 has a rate floor of 6.00% through October 31, 2010

Baylor University, or “Baylor,” is located in Waco, Texas, approximately 100 miles south of Dallas, Texas. As of the 2009 fall semester, Baylor had an overall enrollment of 14,614 students, with a full-time undergraduate enrollment of 11,905 students. All Baylor freshmen are required to live on campus, and Baylor has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. Baylor has indicated a desire to have sufficient beds on campus to house 50% of its students. Approximately 39% of Baylor students currently are housed on campus.

The Waco, Texas student housing market offers several purpose-built options in addition to traditional multi-family and single-family options that compete with The Grove at Waco. We are not aware of any existing beds being renovated or any additional beds being developed to serve this market.

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The Grove at Wichita
Address:	2909 N. Oliver Street Wichita, KS 67220		Year Opened:     2008
Market Information
Institution Served:		Wichita State University
Fall 2009 Overall Enrollment:		14,823
Property Statistics
Land Acreage:		18.65		Units	Beds
Square Feet:		211,943	2bed/2bath	72	144
Parking Spaces:		592	3bed/3bath	120	360
Distance to Campus:		1.1 miles	Total:	192	504
Occupancy (1):		75%
Average rental revenue per occupied bed(1):		$453
(1) As of September 15, 2010.
Financing
Debt:	$16,062,180		Post Offering Debt:  $0
Rate:	LIBOR + 180bps; rate floor of 6.00%(1)
Amortization:	Interest only for entire term
Maturity:	January 31, 2011; may be pre-paid at any time without penalty
(1) $15,184,180 has a rate floor of 6.00% through October 31, 2010

Wichita State University, or “WSU,” is located in Wichita, Kansas. As of the 2009 fall semester, WSU had an overall enrollment of 14,823 students, and had a full-time undergraduate enrollment of 8,138 students. All WSU freshmen, with limited exceptions, are required to live on campus, and WSU has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. We do not believe that WSU has any plans to renovate any of its existing beds or to develop any additional beds.

The Wichita, Kansas student housing market offers primarily traditional multi-family options. The Grove at Wichita is the market’s only purpose-built student housing community. We are not aware of any existing beds being renovated or additional beds being developed to serve in this market.

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The Grove at Wichita Falls
Address:	5005 Lake Park Drive Wichita Falls, TX 76302		Year Opened:     2008
Market Information
Institution Served:		Midwestern State University
Fall 2009 Overall Enrollment:		6,341
Property Statistics
Land Acreage:		14.48		Units	Beds
Square Feet:		211,943	2bed/2bath	72	144
Parking Spaces:		604	3bed/3bath	120	360
Distance to Campus:		1.2 miles	Total:	192	504
Occupancy (1):		67%
Average rental revenue per occupied bed (1):		$456
(1) As of September 15, 2010.
Financing
Debt:	$16,280,000		Post Offering Debt:  $0
Rate:	LIBOR + 180bps; rate floor of 6.00% (1)
Amortization:	Interest only for entire term
Maturity:	January 31, 2011; may be pre-paid at any time without penalty
(1) $14,205,000 has a rate floor of 6.00% through October 31, 2010

Midwestern State University, or “MSU,” is located in Wichita Falls, Texas, approximately 145 miles northwest of Dallas, Texas. As of the 2009 fall semester, MSU had an overall enrollment of 6,341 students, with a full-time undergraduate enrollment of 4,168 students. Students under 21 years of age are required to live on campus unless they are married or live with their parents, and MSU has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. A new residence hall was delivered in time for the 2009 fall semester. We do not believe that MSU has any plans to renovate any of its existing beds or to develop any additional beds.

The Wichita Falls, Texas student housing market is primarily comprised of traditional multi-family and single-family options. The Grove at Wichita Falls is the market’s only purpose-built student housing community. We are not aware of any existing beds being renovated or any additional beds being developed to serve in this market.

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The Grove at Murfreesboro
Address:	1320 Journey Drive Murfreesboro, TN 37130		Year Opened:     2009
Market Information
Institution Served:		Middle Tennessee State University
Fall 2009 Overall Enrollment:		25,188
Property Statistics
Land Acreage:		13.63		Units	Beds
Square Feet:		212,213	2bed/2bath	60	120
Parking Spaces:		583	3bed/3bath	120	360
Distance to Campus:		0.8 miles	4bed/4bath	6	24
Occupancy (1):		98%	Total:	186	504
Average rental revenue per occupied bed (1):		$442
(1) As of September 15, 2010.
Financing
Debt:	$16,720,000		Post Offering Debt:  $0
Rate:	LIBOR + 180bps; rate floor of 6.00% (1)
Amortization:	Interest only for entire term
Maturity:	January 31, 2011; may be pre-paid at any time without penalty
(1) $14,220,000 has a rate floor of 6.00% through October 31, 2010

Middle Tennessee State University, or “MTSU,” is located in Murfreesboro, Tennessee, approximately 35 miles southeast of Nashville, Tennessee. As of the 2009 fall semester, MTSU had an overall enrollment of 25,188 students, with a full-time undergraduate enrollment of 18,911 students. MTSU does not have a policy in place requiring certain students to live on campus. MTSU has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. Three residence halls were recently renovated, and one residence hall currently is undergoing renovation.

The Murfreesboro, Tennessee student housing market offers several purpose-built options in addition to traditional multi-family and single-family options. We are not aware of any existing beds being renovated or additional beds being developed to serve this market.

148

The Grove at San Marcos
Address:	1200 East River Ridge Parkway San Marcos, TX 78666		Year Opened:     2009
Market Information
Institution Served:		Texas State University
Fall 2009 Overall Enrollment:		30,816
Property Statistics
Land Acreage:		19.39		Units	Beds
Square Feet:		211,943	2bed/2bath	72	144
Parking Spaces:		601	3bed/3bath	120	360
Distance to Campus:		1.7 miles	Total:	192	504
Occupancy (1):		100%
Average rental revenue per occupied bed (1):		$554
(1) As of September 15, 2010.
Financing
Debt:	$15,131,700		Post Offering Debt:  $0
Rate:	LIBOR + 250bps; rate floor of 5.94%
Amortization:	Interest only for entire term
Maturity:	May 15, 2011 (with a one-year extension option); may be pre-paid at any time without penalty

Texas State University, or “TSU,” is located in San Marcos, Texas, approximately 35 miles southwest of Austin, Texas. As of the 2009 fall semester, TSU had an overall enrollment of 30,803 students, with a full-time undergraduate enrollment of 21,213 students. For the academic year beginning fall 2010, students under the age of 20 with fewer than 30 credit hours and students who graduated from high school within the preceding 12 months of the semester of their admission to TSU are required to live on campus, and TSU has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. We are not aware of any plans that TSU has to renovate or develop additional beds on campus.

The San Marcos student housing market offers several purpose-built options in addition to traditional multi-family options. We are not aware of any existing beds being renovated or additional beds being developed to serve this market.

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The following describes our Joint Venture properties:

The Grove at Lawrence
Address:	4301 West 24th Place Lawrence, KS 66047		Year Opened:     2009 Ownership %:     49.9%
Market Information
Institution Served:		University of Kansas
Fall 2009 Overall Enrollment:		29,242
Property Statistics
Land Acreage:		12.55		Units	Beds
Square Feet:		214,751	2bed/2bath	16	32
Parking Spaces:		523	3bed/3bath	156	468
Distance to Campus:		1.6 miles	Total:	172	500
Occupancy (1):		76%
Average rental revenue per occupied bed (1):		$457
(1) As of September 15, 2010.
Financing
Current Debt:	$16,000,000		Post Offering Debt:  $16,000,000
Rate:	Prime + 150bps; rate floor of 6.25%
Amortization:	Interest only for entire term
Maturity:	February 4, 2012; may be pre-paid at any time without penalty

The University of Kansas, or “KU,” is located in Lawrence, Kansas, approximately 40 miles west of Kansas City. As of the 2009 fall semester, KU had an overall enrollment of 29,242 students, with a full-time undergraduate enrollment of 18,930 students. KU has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. KU does not have a policy requiring students to live on campus. We are not aware of any plans that KU has to renovate or develop additional beds on campus.

The Lawrence, Kansas student housing market offers several purpose-built options in addition to traditional multi-family and single-family options. Two properties, in addition to The Grove at Lawrence, opened at the start of the 2009 fall semester.

150

The Grove at Moscow
Address:	209 East Southview Avenue Moscow, ID 83843		Year Opened:     2009 Ownership %:     49.9%
Market Information
Institution Served:		University of Idaho
Fall 2009 Overall Enrollment:		11,957
Property Statistics
Land Acreage:		13.80		Units	Beds
Square Feet:		211,256	2bed/2bath	72	144
Parking Spaces:		502	3bed/3bath	120	360
Distance to Campus:		0.5 miles	Total:	192	504
Occupancy (1):		89%
Average rental revenue per occupied bed (1):		$455
(1) As of September 15, 2010.
Financing
Current Debt:	$17,268,300		Post Offering Debt:  $17,268,300
Rate:	LIBOR + 250bps; rate floor of 5.94%
Amortization:	Interest only for entire term
Maturity:	May 15, 2011 (with a one-year extension option); may be pre-paid at any time without penalty

The University of Idaho, or “UI,” is located in Moscow, Idaho, approximately 350 miles north of Boise, Idaho and 80 miles southeast of Spokane, Washington. As of the 2009 fall semester, UI had an overall enrollment of 11,957 students, with a full-time undergraduate enrollment of 8,288 students. Beginning in fall 2010, all first year students, with limited exceptions, will be required to live on campus, and UI has capacity to house students on campus in traditional dormitory-style, suite-style, apartment-style and Greek options. We are not aware of any plans that UI has to renovate or develop additional beds on campus.

The Moscow, Idaho student housing market is mainly comprised of traditional multi-family options. The Grove at Moscow is the market’s only purpose-built student housing community. We are not aware of any existing beds being renovated or additional beds being developed to serve this market.

We currently lease the real estate for this property from Indian Hills Trading Company, LLC, or “Indian Hills,” pursuant to a long-term ground lease. Legal title to the real estate is owned by Indian Hills, and legal title to the leasehold interest and the improvements is owned by us. The ground lease has an initial term of 99 years commencing July 28, 2008, with a 25-year extension option. The annual base rent is $78,000 for the first 2 years following the earlier to occur of the rent commencement date and the date we began grading the land and is $144,000 per annum thereafter. Our joint venture has the right to purchase the land and terminate the ground lease at any time during the term of the lease after September 1, 2009, for $1,000,000. In addition, Indian Hills owns certain other property that is adjacent to or near the property. For a period of two years from July 28, 2008, we have a right of first refusal to purchase such property if (a) Indian Hills receives a bona fide written offer for the purchase of all or any part of the other property or

151

(b) Indian Hills intends to use any part of the property for multifamily or student housing purposes.

The manager of this property is The Grove Student Properties. The management agreement has an initial one-year term, and thereafter is automatically renewed on an annual basis with mutual termination rights upon 60 days’ notice. Our duties as manager are similar to those as a manager of our owned properties. The management agreement terminates upon termination of our ground lease.

The Grove at San Angelo
Address:	4225 S. Jackson Street San Angelo, TX 76903		Year Opened:     2009 Ownership %:     49.9%
Market Information
Institution Served:		Angelo State University
Fall 2009 Overall Enrollment:		6,387
Property Statistics
Land Acreage:		32.06		Units	Beds
Square Feet:		211,943	2bed/2bath	72	144
Parking Spaces:		544	3bed/3bath	120	360
Distance to Campus:		0.3 miles	Total:	192	504
Occupancy (1):		84%
Average rental revenue per occupied bed (1):		$469
(1) As of September 15, 2010.
Financing
Current Debt:	$14,668,000		Post Offering Debt:  $14,668,000
Rate:	LIBOR + 250bps; rate floor of 5.94%
Amortization:	Interest only for entire term
Maturity:	May 15, 2011 (with a one-year extension option); may be pre-paid at any time without penalty

Angelo State University, or “ASU,” is located in San Angelo, Texas, approximately 200 miles northwest of Austin, Texas. As of the 2009 fall semester, ASU had an overall enrollment of 6,387 students, with a full-time undergraduate enrollment of 4,899 students. Single undergraduate students with less than 60 semester credit hours, with limited exceptions, are required to live on campus, and ASU has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. ASU recently completed construction of a new residence hall in early 2009. We are not aware of any plans that ASU has to renovate or develop additional beds on campus.

The San Angelo, Texas student housing market is comprised of one purpose-built option (other than The Grove at San Angelo) in addition to several traditional multi-family and single-family options that compete with The Grove at San Angelo. We are not aware of any existing beds being renovated or any additional beds being developed to serve this market.

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The Grove at Conway
Address:	2730 Dave Ward Drive Conway, AR 72032	Year Opened:  2010 Ownership %:  49.9%
Market Information
Institution Served:		University of Central Arkansas
Fall 2009 Overall Enrollment:		11,781
Property Statistics
Land Acreage:		12.84		Units	Beds
Square Feet:		212,483	2bed/2bath	48	96
Parking Spaces:		539	3bed/3bath	120	360
Distance to Campus:		0.4 miles	4bed/4bath	12	48
Occupancy (1):		93%	Total:	180	504
Average rental revenue per occupied bed (1):		$441
(1) As of September 15, 2010.
Financing
Current Debt:	$16,000,000		Post Offering Debt:  $16,000,000
Rate:	7.50% fixed
Amortization:	Interest only for entire term
Maturity:	July 2, 2012; may be pre-paid at any time without penalty

The University of Central Arkansas, or “UCA,” is located in Conway, Arkansas, approximately 30 miles northwest of Little Rock, Arkansas. As of the 2009 fall semester, UCA had an overall enrollment of 11,781 students, with a full-time undergraduate enrollment of 8,507 students. All UCA freshmen, with limited exceptions, are required to live on campus, and UCA has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. We are not aware of any plans that UCA has to renovate or develop additional beds on campus.

The Conway, Arkansas student housing market is primarily comprised of traditional multi-family and single-family options. The Grove at Conway will be the market’s first purpose-built student housing community. We are not aware of any existing beds being renovated or any additional beds being developed to serve this market.

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The Grove at Huntsville
Address:	2015 Sycamore Avenue Huntsville, TX 77340	Year Opened:  2010 Ownership %:  49.9%
Market Information
Institution Served:		Sam Houston State University
Fall 2009 Overall Enrollment:		16,772
Property Statistics
Land Acreage:		19.40		Units	Beds
Square Feet:		211,943	2bed/2bath	72	144
Parking Spaces:		594	3bed/3bath	120	360
Distance to Campus:		0.2 miles	Total:	192	504
Occupancy (1):		100%
Average rental revenue per occupied bed (1):		$448
(1) As of September 15, 2010.
Financing
Current Debt:	$13,355,000		Post Offering Debt:  $13,355,000
Rate:	LIBOR + 400bps with floor of 6.00%
Amortization:	Interest only for entire term
Maturity:	January 1, 2012; may be pre-paid at any time without penalty

Sam Houston State University, or “SHSU,” is located in Huntsville, Texas, approximately 70 miles north of Houston, Texas. As of the 2009 fall semester, SHSU had an overall enrollment of 16,772 students, with a full-time undergraduate enrollment of 12,223 students, and SHSU has capacity to house students on campus in suite-style and apartment-style options. According to SHSU’s master plan, SHSU plans to develop an additional 731 beds in the future.

The Huntsville, Texas student housing market offers several purpose-built options in addition to traditional multi-family options. We are not aware of any existing off-campus beds being renovated or any additional beds being developed to serve this market.

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The Grove at Statesboro
Address:	1150 Brampton Avenue Statesboro, GA 30458	Year Opened:  2010 Ownership %:  49.9%
Market Information
Institution Served:		Georgia Southern University
Fall 2009 Overall Enrollment:		19,086
Property Statistics
Land Acreage:		31.83 (includes pond)		Units	Beds
Square Feet:		226,035	2bed/2bath	64	128
Parking Spaces:		558	3bed/3bath	136	408
Distance to Campus:		0.7 miles	Total:	200	536
Occupancy (1):		100%
Average rental revenue per occupied bed (1):		$447
(1) As of September 15, 2010.
Financing
Current Debt:	$15,057,000, with possible increase to $16,130,000		Post Offering Debt:  $15,057,000, with possible increase to $16,130,000
Rate:	LIBOR + 350bps, with floor of 5.00%
Amortization:	Interest only for entire term
Maturity:	February 12, 2012; may be pre-paid at any time without penalty

Georgia Southern University, or “GSU,” is located in Statesboro, Georgia, approximately 55 miles northwest of Savannah, Georgia. As of the 2009 fall semester, GSU had an overall enrollment of 19,086 students, with a full-time undergraduate enrollment of 14,799 students. All first year students, with limited exceptions, are required to live on campus and GSU has capacity to house students on campus in traditional dormitory-style, suite-style, and apartment-style options. A new 1,001-bed residence hall was delivered in time for the 2009 fall semester.

The Statesboro, Georgia student housing market offers several purpose-built options in addition to traditional multi-family options. We are not aware of any existing off campus beds being renovated or any additional beds being developed to serve this market.

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Historical Occupancy and Monthly Revenue per Occupied Bed Data

The following tables set forth information about our properties’ historical occupancy and monthly revenue per occupied bed.

     Historical Average Occupancy by Property

																		2010-11
																		Academic
																Six Months		Year
							Year Ended									Ended		Based on
			Year		Number		December 31,									June 30,		Executed
Property			Opened		of Beds		2007			2008			2009			2010		Leases(1)
2005 and 2006 Openings
	1	Asheville, NC		2005		448		81%			76%			81%			95%		88%
	2	Carrollton, GA		2006		492		93%			92%			97%			98%		92%
	3	Las Cruces, NM		2006		492		84%			81%			84%			84%		83%
	4	Milledgeville, GA		2006		492		93%			97%			99%			98%		99%
2007 Openings
	5	Abilene, TX		2007		504		92%	(2)		75%			72%			77%		87%
	6	Ellensburg, WA		2007		504		99%	(2)		89%			89%			99%		96%	(3)
	7	Greeley, CO		2007		504		98%	(2)		89%			76%			75%		98%
	8	Jacksonville, AL		2007		504		90%	(2)		73%			77%			81%		81%
	9	Mobile, AL — Phase I		2007		504		99%	(2)		96%			93%			94%		100%
	10	Nacogdoches, TX		2007		522		95%	(2)		94%			95%			96%		100%
2008 Openings
	11	Cheney, WA		2008		512		—			82%	(2)		92%			97%		71%	(3)
	12	Jonesboro, AR		2008		504		—			91%	(2)		71%			76%		99%
	13	Lubbock, TX		2008		504		—			69%	(2)		75%			82%		92%
	14	Mobile, AL — Phase II		2008		504		—			88%	(2)		95%			96%		100%
	15	Stephenville, TX		2008		504		—			64%	(2)		82%			97%		75%
	16	Troy, AL		2008		514		—			99%	(2)		96%			94%		98%
	17	Waco, TX		2008		504		—			34%	(2)		62%			89%		83%
	18	Wichita, KS		2008		504		—			50%	(2)		68%			83%		75%
	19	Wichita Falls, TX		2008		504		—			74%	(2)		74%			67%		67%
2009 Openings
	20	Murfreesboro, TN		2009		504		—			—			91%	(2)		90%		98%
	21	San Marcos, TX		2009		504		—			—			99%	(2)		98%		100%
	22	Lawrence, KS (4)		2009		500		—			—			59%	(2)		64%		76%
	23	Moscow, ID		2009		504		—			—			38%	(2)		46%		89%
	24	San Angelo, TX		2009		504		—			—			81%	(2)		88%		84%
2010 Openings
	25	Conway, AR		2010		504		—			—			—			—		93%
	26	Huntsville, TX		2010		504		—			—			—			—		100%
	27	Statesboro, GA		2010		536		—			—			—			—		100%
Weighted Averages (5)
Properties 1-4 (2005 and 2006 Openings)								88%			87%			91%			94%		91%
Properties 5-10 (2007 Openings)								96%			86%			84%			87%		94%
Properties 1-10 (2005 to 2007 Openings)								—			87%			86%			89%		93%
Properties 11-19 (2008 Openings)								—			73%			80%			87%		84%
Properties 1-19 (2005 to 2008 Openings)								—			—			83%			88%		89%
Properties 20-24 (2009 Openings)								—			—			69%			78%		90%
Properties 1-24 (2005 to 2009 Openings)								—			—			—			86%		89%
Properties 25-27 (2010 Openings)								—			—			—			—		98%
Properties 1-27 (2005 to 2010 Openings)								—			—			—			—		90%

(1) As of September 15, 2010.

(2)	Average occupancy data in the year of opening generally reflects five months of results (i.e., August through December), except for Ellensberg, Washington and Cheney, Washington, each of which reflects four months of results (i.e., September through December).
(3)	The 2010-2011 academic year commences on September 22, 2010 at the primary university served by this property; accordingly, pre-academic year leasing is still ongoing at this property.
(4)	Occupancy for the year ended December 31, 2009 and the six months ended June 30, 2010 based on 300 available beds for the 2009-2010 academic year; the property has been expanded and now has a total of 500 beds available for the 2010-2011 academic year.

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(5) Weighted average by number of leased beds for each period and for each property grouping.

     Historical Average Monthly Revenue per Occupied Bed by Property⁽¹⁾

																Six Months
																Ended
			Year		Number		Year Ended December 31,									June 30,
Property			Opened		of Beds		2007			2008			2009			2010
2005 and 2006 Openings
	1	Asheville, NC		2005		448	$	486		$	536		$	507		$	515
	2	Carrollton, GA		2006		492		414			434			433			453
	3	Las Cruces, NM		2006		492		410			457			459			468
	4	Milledgeville , GA		2006		492		486			481			503			526
2007 Openings
	5	Abilene, TX		2007		504		453	(2)		485			470			477
	6	Ellensburg, WA		2007		504		506	(2)		475			473			491	(3)
	7	Greeley, CO		2007		504		471	(2)		476			477			498
	8	Jacksonville, AL		2007		504		451	(2)		459			440			456
	9	Mobile, AL — Phase I		2007		504		476	(2)		454			459			482
	10	Nacogdoches, TX		2007		522		473	(2)		475			504			523
2008 Openings
	11	Cheney, WA		2008		512		—			447	(2)		454			468	(3)
	12	Jonesboro, AR		2008		504		—			430	(2)		465			480
	13	Lubbock, TX		2008		504		—			479	(2)		486			498
	14	Mobile, AL — Phase II		2008		504		—			435	(2)		465			479
	15	Stephenville, TX		2008		504		—			454	(2)		486			486
	16	Troy, AL		2008		514		—			446	(2)		465			484
	17	Waco, TX		2008		504		—			497	(2)		538			539
	18	Wichita, KS		2008		504		—			442	(2)		459			463
	19	Wichita Falls, TX		2008		504		—			470	(2)		452			473
2009 Openings
	20	Murfreesboro, TN		2009		504		—			—			476	(2)		478
	21	San Marcos, TX		2009		504		—			—			540	(2)		543
	22	Lawrence, KS		2009		500		—			—			436	(2)		476
	23	Moscow, ID		2009		504		—			—			467	(2)		470
	24	San Angelo, TX		2009		504		—			—			467	(2)		493
Weighted Averages (4)
Properties 1-4 (2005 and 2006 Openings)							$	448		$	474		$	474		$	491
Properties 5-10 (2007 Openings)								472			471			472			489
Properties 1-10 (2005 to 2007 Openings)								—			472			473			489
Properties 11-19 (2008 Openings)								—			454			473			486
Properties 1-19 (2005 to 2008 Openings)								—			—			473			488
Properties 20-24 (2009 Openings)								—			—			486			498
Properties 1-24 (2005 to 2009 Openings)								—			—			—			489

(1)	Reflects historical average total revenue per occupied bed (i.e., rental revenue and services revenue).
(2)	Average monthly revenue per occupied bed data in the year of opening generally reflects five months of results (i.e., August through December), except for Ellensberg, Washington and Cheney, Washington, each of which reflects four months of results (i.e., September through December).
(3)	The 2010-2011 academic year commences on September 22, 2010 at the primary university served by this property; accordingly, pre-academic year leasing is still ongoing at this property.
(4)	Weighted average by number of leased beds for each period and for each property grouping.

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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:

					Primary		Fall 2009			Distance to							Estimated
			Targeted		University		Overall			Campus			Number		Number		Cost (1)
City	State		Completion		Served		Enrollment			(miles)			of Units		of Beds		($ in thousands)
Fort Wayne		IN		August 2011		Indiana University/ Purdue University		13,675			1.1			204		540	$	19,926
Clarksville		TN		August 2011		Austin Peay State University		10,188			1.3			208		560		21,202
Ames		IA		August 2011		Iowa State University		27,945			0.3			216		584		21,411
Fort Collins		CO		August 2011		Colorado State University		25,413			On-Campus			224		624		25,380
Total Expected 2011 Consolidated Developments								19,305	(2)		0.7	(2)		852		2,308	$	87,919

(1)	Actual costs may vary significantly from estimated costs.
(2)	Average.

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:

					Primary		Fall 2009			Distance to							Estimated
			Targeted		University		Overall			Campus			Number		Number		Cost (1)
City	State		Completion		Served		Enrollment			(miles)			of Units		of Beds		($ in thousands)
Denton		TX		August 2011		University of North Texas		36,123			0.8			216		584	$	24,873
Orono		ME		August 2011		University of Maine		11,867			0.5			188		620		24,278
Valdosta		GA		August 2011		Valdosta State University		12,391			1.9			216		584		21,150
Total Expected 2011 Joint Venture Developments								20,127	(2)		1.1	(2)		620		1,788	$	70,301

(1)	Actual costs may vary significantly from estimated costs. Under certain circumstances, we expect that we will be responsible for funding the amount by which actual development costs for a project pursued by the venture exceed the budgeted development costs of such project (without any increase in our interest in the project).
(2)	Average.

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. Additionally, we expect to develop three properties through a new joint venture with HSRE, and no assurance can be given that we will reach a definitive agreement with HSRE regarding this joint venture or that the terms of any such agreement will not be materially different from those currently contemplated. We do not plan to commence construction of these three properties until such time as a definitive agreement is reached with HSRE.

For each of our expected 2011 development properties, we have conducted significant pre-development activities and are in the process of obtaining the necessary zoning and site plan approvals, as well as other required permits. Additionally, our ability to commence construction of these properties will depend upon obtaining property-specific construction financing or financing these developments through other means. We have entered into agreements to acquire or ground lease the land necessary for the development of these properties, but we do not expect to close on the agreements until after the closing of this offering. No assurance can be given that these developments will be undertaken as currently expected, or, if undertaken, that they will be

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completed in accordance with our current expectations, including those with respect to targeted completion and estimated cost. In addition, with respect to any properties developed through the new joint venture that we expect to establish with HSRE, we expect that we will be responsible for funding the amount by which actual development costs for a project pursued by the venture exceed the budgeted development costs of such project (without any increase in our interest in the project). Moreover, no assurance can be given that these properties, if completed, will perform in accordance with our expectations. See “Risk Factors—Risks Related to Our Business and Properties—Developing properties will expose us to additional risks beyond those associated with owning and operating student housing properties, and could materially and adversely affect us”; “—The construction activities at our student housing properties expose us to liabilities and risks beyond those associated with the ownership and operation of student housing properties”; “—Our development activities are subject to delays and cost overruns, which could materially and adversely affect us”; “—We may not realize a return on our development activities in a timely manner, which could materially and adversely affect us”; “—Adverse economic conditions and dislocation in the credit markets have had a material and adverse effect on us and may continue to materially and adversely affect us”; “—Developing properties in new markets may materially and adversely affect us”; and “—Joint venture investments could be materially and adversely affected by our lack of sole decision-making authority, our reliance on our co-venturers’ financial condition and disputes between our co-venturers and us.”

Property Management and Monitoring

We maintain an on-site staff at each property, including a General Manager, Sales Manager and Facilities Manager. The on-site staff is responsible for all aspects of the property’s operations, including marketing, leasing administration, business administration, financial reporting, ongoing property maintenance, capital projects and residence life and student development. In addition, each property typically has nine student-tenants that live on-site and work for us on a part-time basis. These individuals, who we refer to as “Community Assistants” or “RockStars,” assist in developing lifestyle programming, among other things. We provide oversight to each property on an area basis, with each “area” typically comprised of six properties. Each area is staffed with an Area Manager, Area Sales Manager and Area Business Manager. The roles of our various staff members are described in greater detail below.

General Managers, Sales Managers and Facilities Managers. The General Manager is responsible for all facets of a property’s operation, including the development and implementation of student lifestyle programs, annual budgeting, collection of rents, administration of accounts payable, implementation of the annual marketing plan, administration of all leasing and marketing functions, coordination of property maintenance, asset preservation and capital improvement projects. The General Manager also supervises the residence life program and conducts all hiring, termination, and staff development of on-site personnel. The Sales Manager supports the General Manager and focuses on the leasing and lifestyle programs at the property. The Facilities Manager is responsible for coordinating all maintenance activity at the property and serving as a liaison for larger capital projects in concert with our in-house facilities group.

Community Assistants (“CAs” or “RockStars”). At each of our properties, we also have a work/live program, typically consisting of nine part-time positions for student staff members, who we refer to as our CAs or RockStars. At each property we generally maintain a ratio of 50-70 students per CA/RockStar. Our CAs/RockStars are selected by our management based upon a set of criteria, including interpersonal skills, leadership capabilities, responsibility, maturity and willingness to meet the challenges and expectations of the position. We use these positions to interface on a peer basis with our student-tenants and to assist with various duties at the properties. Further, we use this position as a feeder for us, which allows us to evaluate these part-time employees for potential full-time managerial positions with us after they graduate. It is

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a position that fits well with many students’ academic goals while affording them opportunities for personal growth and leadership development. The CAs/RockStars perform the duties of their position in exchange for their room and a stipend. CAs/RockStars are trained to provide support and assistance to our student-tenants on a variety of issues. The CAs/RockStars act as community facilitators by developing an atmosphere that promotes a sense of belonging, support and affiliation. In addition, the CAs/RockStars participate actively in developing and implementing the property’s programs and events in connection with our SCORES program. At all times, our CAs/RockStars are expected to be role models and maintain the highest standards of personal conduct. Through observation and interaction with the community, the CAs/RockStars help to identify potential problems and make appropriate referrals so that students may overcome obstacles to their academic achievement. Through their efforts to provide timely, accurate and thorough information in the appropriate format, CAs/RockStars contribute to the smooth and effective operations of our properties. We believe that this position is critical to the success of our properties.

Area Managers, Area Sales Managers, and Area Business Managers. The Area Manager is responsible for all facets of the operations of properties in his or her area, typically six properties per area. He or she monitors the performance of the properties and the compliance of each of the General Managers with our programs and policies to preserve operational standards across all of the properties in his or her area. The Area Manager is the conduit between centralized planning at our corporate level and decentralized execution at each of the properties. Similar to the property-level Sales Manager, the Area Sales Manager provides support to the leasing and lifestyle programming at all the properties in his or her area. As the corporate marketing department’s liaison to area and property operations, the Area Sales Manager monitors the consistency of The Grove^® brand across the properties and collaborates with the Area and General Managers to market each property effectively. The Area Business Manager is a specialist in accounts receivable who reports to the Area Manager. He or she administers all charges and payments on resident accounts, performs daily deposits and bank statement reconciliations, manages collection efforts for both current and former residents, and supports the properties in matters of customer service.

Leasing and Marketing

Student housing properties are typically leased by the bed on an individual lease liability basis, unlike multi-family housing where leasing is by the unit. Individual lease liability limits each student-tenant’s liability to his or her own rent without liability for a roommate’s rent. A parent or guardian is required to execute each lease as a guarantor unless the student-tenant provides adequate proof of income. The number of lease contracts that we administer is therefore equivalent to the number of beds occupied rather than the number of units occupied.

Unlike traditional multi-family housing, most of our leases commence and terminate on the same dates each year. In the case of our typical 11.5-month leases, these dates coincide with the commencement of the universities’ fall academic term and typically terminate at the completion of the last subsequent summer school session. As such, we must re-lease each property in its entirety each year, resulting in significant turnover in our tenant population from year to year. As a result, we are highly dependent upon the effectiveness of our marketing and leasing efforts during the annual leasing season that typically begins in January and ends in August of each year.

Each year we implement a marketing and leasing plan to re-lease each property. We advertise through various media, including print advertising in newspapers, magazines and trade

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publications; direct mailers; radio advertising; promotional events and supporting public relation campaigns. We typically compete in the off-campus student housing market on the basis of:

•   the quality of our facilities, including their proximity to campus, as well as our properties’ physical location, the size and layout of units and the types of amenities offered;

•   rental terms, including price, which varies based on the market in which the property is located, and per-bed rental (individual lease liability), which allows individual student-tenants to avoid responsibility for the rental of an entire apartment unit;

•   community environment, including community facilities, amenities and programming, which is overseen by our staff of CAs/RockStars; and

•   our relationships with colleges and universities, which may result in our properties being recommended or listed in recruiting and admissions literature provided to incoming and prospective students.

Student Programming / SCORES Program

We believe that our success has been driven, in part, by our focus on student lifestyle programming, including our SCORES program. Our SCORES program is designed to enhance the student lifestyle by facilitating activities at our properties in the following areas:

•   Social: parties, group events, movie nights, bonfires, concerts, tavern/game nights, tailgating and homecoming events;

•   Cultural: attending plays, concerts, readings, art galleries and open microphone nights;

•   Outreach: blood drives, big brother/big sister programs, mentoring, food drives/themed activities;

•   Recreational: intramural sports teams and volleyball and basketball tournaments;

•   Educational: CPR training, resume writing workshops, nutrition classes, self-defense training and job interview rehearsals; and

•   Spiritual: bible studies, sing-alongs, campus church, guest speakers and reading groups.

We believe that our student programming enhances the lifestyle of our student-tenants and helps to create an environment that is conducive to academic and social success. We do not approach our properties as simply a place for students to live, but rather we seek to assist our student-tenants in building connections with their fellow student-tenants, their communities and the colleges and universities that they attend. We believe that our focus on student lifestyle programming differentiates us from our competitors and makes our properties more attractive to prospective student-tenants and their parents.

GO Team (Grove Outreach)

The Grove Outreach Team, or “GO Team,” is our service program that supports the various charitable initiatives that we implement at our properties and our corporate office. GO Teams are groups of student-tenants and non-student-tenants that support charitable work in the communities in which we operate. We believe that the GO Team creates emotional attachments to our communities through service while contributing to the areas in which we operate.

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Transportation Arrangements

Upon completion of this offering and our formation transactions, we will enter into certain transportation arrangements. We will lease an automobile for each of Messrs. Rollins, Hartnett, Howell, and Bobbitt and Ms. King, with a cost not to exceed $12,000 per year per officer. We will also lease two aircraft from entities in which Ted W. Rollins, our co-chairman and chief executive officer, and Michael S. Hartnett, our co-chairman and chief investment officer, have indirect minority interests. Our payments under the leases are structured to equal our pro rata carrying and operating costs of the aircraft based on our actual usage. As such, it is not expected that the lessors of the aircraft will receive any material profit from the lease payments.

We will own interests in 27 student housing properties located in 11 states. Additionally, our current business plan contemplates the development of approximately five to seven new student housing properties per year. Our properties are located in, and we expect that properties that we develop in the future likely will be located in, medium-sized college and university markets, many of which are not easily accessible by commercial airline service. Our senior officers and management are frequently required to travel to our properties, development sites and potential development sites on short notice in connection with the performance of their obligations to us. We believe that our leased aircraft provide an efficient and appropriate means for our management team to monitor our operating properties and supervise our development activities, as well as identify and perform diligence on sites for potential future development.

Competition and Competitive Advantages

Competition from Universities and Colleges

We are subject to competition for student-tenants from on-campus housing owned by universities and colleges. On-campus student housing has inherent advantages over off-campus student housing (such as the majority of our properties) in integration with the academic community, which may cause student-tenants to prefer on-campus housing to off-campus housing. Additionally, colleges and universities may have financial advantages that allow them to provide student housing on more attractive terms than we are able to. For example, colleges and universities can generally avoid real estate taxes and borrow funds at lower interest rates than private, for profit real estate concerns, such as us. However, residence halls owned and operated by the primary colleges and universities in the markets in which we operate typically charge lower rental rates but offer fewer amenities than those offered at our properties.

Despite the inherent advantages of on-campus housing, most universities are able to house only a small percentage of their overall enrollment, and are therefore highly dependent on the off-campus market to provide housing for their students. High-quality and well run off-campus student housing can therefore be a critical component of an institution’s ability to attract and retain students. Accordingly, universities and colleges often have an interest in encouraging and facilitating the construction of modern off-campus housing alternatives.

Competition from Private Owners

We also compete with other regional and national owner-operators of off-campus student housing in a number of markets as well as with smaller local owner-operators. Currently, the industry is fragmented with no participant holding a dominant market share. There are a number of student housing properties that are located near or in the same general vicinity of many of our properties and that compete directly with our properties. We believe that a number of other large national companies with substantial financial and marketing resources may be potential entrants in the student housing business. The activities of any of these companies could cause an increase

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in competition for student-tenants and for the acquisition, development and management of other student housing properties, which could reduce the demand for our properties.

University Relations Advisory Board

We are in the process of forming a university relations advisory board that we expect will be effective upon completion of this offering. This board will be charged with facilitating our communication with the academic community, further developing our relationships with colleges and universities, and improving our understanding of the evolving needs and preferences of our student tenants. The advisory board will be chaired by Mr. Howell, who will be our president and chief operating officer upon completion of this offering, and is expected to have at least three additional members that will be selected from the faculties and administrations of various universities. We expect that the advisory board will meet semi-annually to discuss and evaluate opportunities to enhance our business model and to better serve our college, university and student constituents. Members of the advisory board will not be compensated for their services; however, we will reimburse members who are not employees of the company for their out-of-pocket expenses incurred in connection with attending board meetings. We have identified and confirmed the intended participation of the following individuals: Jacquelyn Carr McHargue, Dean of Students, The University of North Carolina at Asheville; Herbert Reeves, Dean of Student Services, Troy University; and John W. Smith, Vice President for Student Affairs, University of South Alabama. While we believe that the advisory board will be a useful resource in continuing to refine our business model and student housing product, no assurance can be given that we will be successful in forming our advisory board or, if formed, that such advisory board will lead to increased opportunities for us.

Insurance

We carry comprehensive liability, fire, extended coverage, terrorism and rental loss insurance covering all of the properties in our portfolio. Our insurance includes coverage for earthquake damage to properties located in seismically active areas, windstorm damage to properties exposed to hurricanes, and terrorism insurance on all of our properties. In each case, we believe the coverage limits on applicable deductibles are commercially reasonable. All insurance policies are subject to coverage extensions that are typical for our business. We do not carry insurance for generally uninsured losses such as loss from riots or acts of God. We believe the policy specifications and insured limits are appropriate given the relative risk of loss, the cost of the coverage and industry practice and, in the opinion of our management, the properties in our portfolio are adequately insured. See “Risk Factors—Risks Related to the Real Estate Industry—Uninsured losses or losses in excess of insured limits could materially and adversely affect us.”

Regulation

General

Student housing properties are subject to various laws, ordinances and regulations, including regulations relating to common areas. We believe that each of our operating properties has the necessary permits and approvals to operate its business. Apartment community properties are subject to various laws, ordinances and regulations, including regulations relating to recreational facilities, such as swimming pools, activity centers and other common areas.

Americans With Disabilities Act

Our properties must comply with Title III of the ADA, to the extent that such properties are “public accommodations” as defined by the ADA. The ADA may require removal of structural

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barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable. We believe that our properties are in substantial compliance with the ADA and that we will not be required to make substantial capital expenditures to address the requirements of the ADA. However, noncompliance with the ADA could result in imposition of fines or an award of damages to private litigants. The obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties and to make alterations as appropriate in this respect.

Fair Housing Act

The FHA, its state law counterparts and the regulations promulgated by the U.S. Department of Housing and Urban Development, or “HUD,” and various state agencies, prohibit discrimination in housing on the basis of race or color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women and people securing custody of children under 18) or handicap (disability) and, in some states, on financial capability. A failure to comply with these laws in our operations could result in litigation, fines, penalties or other adverse claims, or could result in limitations or restrictions on our ability to operate, any of which could have an adverse effect on our cash flows from operations. We believe that our properties are in substantial compliance with the Federal Fair Housing Act.

Environmental Matters

Some of our properties contain, or may have contained, or are adjacent to or near other properties that have contained or currently contain storage tanks for the storage of petroleum products or other hazardous or toxic substances. These operations create a potential for the release of petroleum products or other hazardous or toxic substances. Third parties may be permitted by law to seek recovery from owners or operators for personal injury or property damages arising from releases from such tanks. Additionally, third parties may be permitted by law to seek recovery from owners or operators for personal injury or property damage associated with exposure to other contaminants that may be present on, at or under the properties, including, but not limited to, petroleum products and hazardous or toxic substances. Also, some of the properties include regulated wetlands on undeveloped portions of such properties and mitigated wetlands on or near our properties, the existence of which can delay or impede development or require costs to be incurred to mitigate the impact of any disturbance. Absent appropriate permits, we can be held responsible for restoring wetlands and be required to pay fines and penalties.

When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. Some of our properties may contain microbial matter such as mold and mildew. The presence of significant mold at any of our properties could require us to undertake a costly remediation program to contain or remove the mold from the affected property. The presence of significant mold could expose us to liability from student-tenants, employees and others if property damage or health concerns arise.

If any property in our portfolio is not properly connected to a water or sewer system, or if the integrity of such systems are breached, microbial matter or other contamination can develop. If this were to occur, we could incur significant remedial costs and we may also be subject to private damage claims and awards, which could be material. If we become subject to claims in this regard, it could materially and adversely affect us and our insurability for such matters in the future.

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Independent environmental consultants conducted Phase I environmental site assessments on all of our properties. Phase I environmental site assessments are intended to evaluate information regarding the environmental condition of the surveyed property and surrounding properties based generally on visual observations, interviews and certain publicly available databases. These assessments do not typically take into account all environmental issues including, but not limited to, testing of soil or groundwater, comprehensive asbestos survey or an invasive inspection for the presence of mold contamination. In some cases where prior use was a concern, additional study was undertaken.

These assessments may have failed to reveal all environmental conditions, liabilities, or compliance concerns. Material environmental conditions, liabilities, or compliance concerns may have arisen after the assessments were conducted or may arise in the future. In addition, future laws, ordinances or regulations may impose material additional environmental liability. The costs of future environmental compliance may affect our ability to pay distributions to our stockholders and such costs or other remedial measures may be material to us.

We cannot assure you that costs of future environmental compliance will not affect our ability to pay distributions to our stockholders or that such costs or other remedial measures will not be material to us. See “Risk Factors—Risks Related to the Real Estate Industry—The conditions at some of our properties may expose us to liability and remediation costs related to environmental matters, which could materially and adversely affect us.”

Employees

As of August 31, 2010, we had approximately 527 employees, consisting of:

•   approximately 466 on-site employees, including 334 Community Assistants/RockStars (who we employ on a part-time basis);

•   approximately 15 persons in The Grove Student Properties;

•   two persons in Campus Crest Development;

•   approximately 20 persons in Campus Crest Construction and its facilities division; and

•   approximately 24 executive, corporate administration and financial personnel.

Our employees are not currently represented by a labor union.

Offices

Our principal executive offices are located at 2100 Rexford Road, Suite 414, Charlotte, NC 28211. We also have management offices at each of our properties.

Legal Proceedings

In the normal course of business, we are subject to claims, lawsuits and legal proceedings. While it is not possible to ascertain the ultimate outcome of such matters, we believe that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on our financial position or results of operations. We are not involved in any material litigation nor, to our knowledge, is any material litigation currently threatened against us or our properties or subsidiaries, other than routine litigation arising in the ordinary course of business.

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MANAGEMENT

Directors, Director Nominees, Executive Officers and Senior Management

Upon completion of this offering, our board of directors will consist of seven members, a majority of which will be independent in accordance with the general independence standards of the NYSE. All of our directors will be elected at each annual meeting of our stockholders to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified. Subject to rights granted under any employment agreements, officers serve at the pleasure of our board of directors.

Our directors, director nominees, executive officers and certain other members of our senior management team, their ages and titles are as follows:

Name	Age		Titles
Ted W. Rollins		48	Co-Founder, Co-Chairman of the Board and Chief Executive Officer
Michael S. Hartnett		51	Co-Founder, Co-Chairman of the Board and Chief Investment Officer
Earl C. Howell		60	President and Chief Operating Officer
N. Anthony Coles		50	Independent Director Nominee
Richard S. Kahlbaugh		50	Independent Director Nominee
Denis L. McGlynn		64	Independent Director Nominee
William G. Popeo		52	Independent Director Nominee
Daniel L. Simmons		57	Independent Director Nominee
Donald L. Bobbitt, Jr.		41	Executive Vice President and Chief Financial Officer
Shannon N. King		38	Executive Vice President and Chief Marketing Officer
Brian L. Sharpe		51	Executive Vice President and Division President—Development, Construction and Facilities
Howard J. Weissman		41	Senior Vice President—Corporate Controller

The following is a biographical summary of the experience of our directors, director nominees, executive officers and certain other senior officers.

Ted W. Rollins. Mr. Rollins is the co-chairman of our board of directors and our chief executive officer. Mr. Rollins, together with Mr. Hartnett, founded Campus Crest Group in 2004. As a co-founder and co-owner of Campus Crest Group, Mr. Rollins has a comprehensive knowledge of our history and operations and is therefore well qualified to serve as the co-chairman of our board of directors. His core focus has been on operations and finance, while working together with Mr. Hartnett to source development opportunities and oversee construction. Prior to founding us in 2004, Mr. Rollins, together with Mr. Hartnett, co-founded and managed companies that have successfully developed and operated service-enriched housing properties. Mr. Rollins is an owner of MXT Capital, which is a holding company whose primary holding is its interest in Campus Crest Group. Mr. Rollins has also directed several private real estate focused investment funds. From 1998 through 2002, he was president of St. James Capital, an investment company focused on research-based, structural land investment and niche income property opportunities. From 1991 to 1996, Mr. Rollins served as president of The Balance Group, a private equity investment group focused on investing in and providing advisory services to small operating companies. Mr. Rollins founded The Balance Group in 1991. He was president of Rollins Investments, Inc., a real estate development and property management company with investments in retail, hospitality and mixed-use developments, or “Rollins Investments,” from 1988 to 1991, and chief financial officer of RealtiCorp^®, a research-based land fund which focused

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on procurement of land for multi-site users such as retail chains, restaurants and convenience stores from 1996 to 1998. He began his career at Drexel Burnham Lambert as a real estate investment banker in 1985. Mr. Rollins received his BSBA from the Citadel and his MBA from the Fuqua School of Business at Duke University.

Michael S. Hartnett. Mr. Hartnett is the co-chairman of our board of directors and our chief investment officer. Mr. Hartnett, together with Mr. Rollins, founded Campus Crest Group in 2004. As a co-founder and co-owner of Campus Crest Group, Mr. Hartnett has a comprehensive knowledge of our history and operations and is therefore well qualified to serve as the co-chairman of our board of directors. His core focus has been on building the development and construction organizations, while working together with Mr. Rollins to oversee operations and finance. Mr. Hartnett is also an owner of MXT Capital. Prior to founding us in 2004, Mr. Hartnett has co-founded and managed companies that have successfully developed and operated service-enriched housing properties. He was founder and president of the Percheron Group, a real estate development management services company, and partnered with several ownership groups that focused on student housing opportunities across the southeast United States. He was a co-founder and executive vice president of Senior LifeChoice, LLC, a nationally recognized regional developer and operator of service-enriched senior housing communities. He was vice president of Rollins Investments, from 1990 to 1994. Mr. Hartnett received his BS degree in structural engineering from the University of Maine and his MBA from the Fuqua School of Business at Duke University.

Earl C. Howell. Mr. Howell will be our president and chief operating officer upon completion of this offering. Mr. Howell has been providing consulting services to us since October 2009. From 2002 to April 2009, he served in multiple positions with Silverton Bank and its predecessor, The Bankers Bank, including serving as chief operating officer of Silverton Bank, N.A. from 2007 until his departure in April 2009. In his role as chief operating officer at Silverton, Mr. Howell’s responsibilities included regional branch administration, payment and settlement operations, information technology and human resources, and involved oversight of over 200 employees. In May 2009, subsequent to Mr. Howell’s departure, the Office of the Comptroller of the Currency appointed the Federal Deposit Insurance Corporation as receiver for Silverton Bank, N.A., and in June 2009, Silverton Financial Services, Inc., the parent holding company of Silverton Bank, N.A., filed a chapter 7 petition under the federal bankruptcy code. In May 2009, Mr. Howell founded Harlequin Consulting, a private consulting firm specializing in strategy and executive compensation. In addition to Mr. Howell’s professional experience, he served for 30 years on both active duty and reserve in the U.S. Army, attaining the rank of Colonel, Special Forces and serving with deployments ranging from Vietnam to Bosnia. Mr. Howell received his BA and his MBA from the University of North Carolina at Chapel Hill, and he is also a graduate of the U.S. Army War College.

Donald L. Bobbitt, Jr. Mr. Bobbitt is an executive vice president and our chief financial officer and served as the chief financial officer of Campus Crest Group since January 2008. From April 2006 to December 2007, Mr. Bobbitt was chief financial officer of Motorsports Authentics, LLC, a private company which marketed and distributed NASCAR motorsports licensed merchandise. Prior to this, Mr. Bobbitt had an eleven-year career with Speedway Motorsports, Inc., a NYSE listed company, where he served in a variety of positions, including vice president of business operations, assistant corporate controller and vice president of finance. Prior to Speedway Motorsports, Inc., Mr. Bobbitt was in the financial services practice at Deloitte & Touche LLP. Mr. Bobbitt received his BS from Wake Forest University and is a certified public accountant.

Shannon N. King. Ms. King is an executive vice president and our chief marketing officer and served as the chief marketing officer of Campus Crest Group since July 2009. As our chief marketing officer, Ms. King has overall responsibility for sales management, channel management, public relations, marketing communications (including advertising and promotions), pricing, market research and customer service. From September 2007 to July 2009, Ms. King served as

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president of The Grove Student Properties, our marketing, leasing and property management subsidiary, and from August 2005 to September 2007, she served as its vice president of operations. Prior to joining Campus Crest, Ms. King worked for ten years for several senior living providers and has executive experience in operations, sales and marketing and lifestyle development for service-enriched housing. Ms. King received her BA in Interdisciplinary Studies from Southwest Texas State University and her MA Ed. from the University of Houston.

Brian L. Sharpe. Mr. Sharpe is an executive vice president and division president of development, construction and facilities. Since 2006, Mr. Sharpe served as president of Campus Crest Construction and, from April 2008 until December 2009, simultaneously served as the chief operating officer of Campus Crest Group. As both division president and chief operating officer, Mr. Sharpe has overseen the development, construction and maintenance of twenty-six of our twenty-seven properties and directed our global purchasing efforts. From September 1999 until April 2006, Mr. Sharpe served as a senior program manager at BBL Construction Services, LLC, where he shared management responsibilities for the national construction program of BBL Medical Facilities. Mr. Sharpe attended Villanova University.

Howard J. Weissman. Mr. Weissman is a senior vice president and our corporate controller. Since 2009, Mr. Weissman served as corporate controller of Campus Crest Group. Prior to joining Campus Crest Group, from July 2007 through May 2009, Mr. Weissman was controller and chief accounting officer of EOP Operating Limited Partnership, LP, the private company successor to Equity Office Properties Trust, a commercial office real estate company owned by The Blackstone Group. From 2003 through 2007, Mr. Weissman served in a variety of positions with CarrAmerica Realty Corporation, a commercial office real estate and NYSE listed company, such as assistant controller, vice president of Shared Services and controller. He received a BBA from George Washington University, an MBA from the University of Maryland and is a certified public accountant.

N. Anthony Coles. Dr. Coles will be a member of our board of directors upon completion of this offering. Since March 2008, Dr. Coles has served as president and chief executive officer of Onyx Pharmaceuticals, Inc., a publicly-traded biopharmaceutical company. From November 2005 until March 2008, Dr. Coles served as president and chief executive officer of NPS Pharmaceuticals, Inc., a publicly-traded biopharmaceutical company. From May 2002 to October 2005, Dr. Coles served as senior vice president of commercial operations at Vertex Pharmaceuticals, Incorporated, a publicly-traded biotechnology company. Dr. Coles currently serves as a trustee and member of the Executive Committee for the Johns Hopkins University Board of Trustees. Dr. Coles’ public-company and business management experience makes him well-qualified to serve on our board of directors. Dr. Coles received his MD from Duke University, his MPH from Harvard University and his BS from Johns Hopkins University.

Richard S. Kahlbaugh. Mr. Kahlbaugh will be a member of our board of directors upon completion of this offering. Since April 2010, Mr. Kahlbaugh has served as the chairman, chief executive officer and president of Fortegra Financial Corporation, or “Fortegra,” an insurance services company. Since June 2007, Mr. Kahlbaugh has served as the chief executive officer and president of Fortegra and from 2004 until June 2007, he served in various roles at Fortegra, including chief operating officer from 2004 until June 2007, executive vice president from 2006 to 2007 and senior vice president from 2004 to 2006. Mr. Kahlbaugh’s senior management experience, as well as his experience in general business finance and operations, make him well-qualified to serve on our board of directors. Mr. Kahlbaugh received his BA from the University of Delaware and his JD from the Delaware Law School.

Denis L. McGlynn. Mr. McGlynn will be a member of our board of directors upon completion of this offering. Since October 1996, Mr. McGlynn has served as the president and chief executive officer of each of Dover Downs Gaming & Entertainment, Inc. and Dover Motorsports, Inc. Dover

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Downs Gaming & Entertainment, Inc. is a NYSE publicly-traded gaming and entertainment company. Dover Motorsports, Inc. is a publicly-traded holding company that markets and promotes motorsports entertainment in the U.S. Since November 1979, Mr. McGlynn has served as president of each of Dover Downs Gaming & Entertainment, Inc. and Dover Motorsports, Inc. Mr. McGlynn’s public company and business management experience makes him well-qualified to serve on our board of directors. Mr. McGlynn received his BBA from Pace College.

William G. Popeo. Mr. Popeo will be a member of our board of directors upon completion of this offering. Since June 2006, Mr. Popeo has served as the president, chief executive officer and a member of the board of directors of CSC Trust Company of Delaware, a specialty provider of corporate trust, escrow and agency services. Since December 2005, Mr. Popeo has also served as a vice president of CSC Trust Company of Delaware’s parent, Corporation Service Company, where he oversees the independent director and passive investment company businesses. From June 2004 to December 2005, Mr. Popeo was a principal with Sam Park & Company, a commercial real estate development company. Mr. Popeo’s commercial real estate experience, legal background and experience with financial accounting make him well-qualified to serve on our board of directors. Mr. Popeo received his BA, JD and MBA from Boston College and is a certified public accountant and licensed attorney.

Daniel L. Simmons. Mr. Simmons will be a member of our board of directors upon completion of this offering. In January 2002, Mr. Simmons co-founded Harbor Retirement Associates, LLC, a senior living development and management company, and Mr. Simmons has served as a principal of HRA Holdings, LLC, the holding company of Harbor Retirement Associates, LLC, since its founding. Prior to forming HRA Holdings, LLC, Mr. Simmons served as a consultant to CNL Financial Group, Inc., where he provided advice on the formation, registration and strategic direction of CNL Retirement Properties, Inc., an unlisted REIT. Mr. Simmons’ REIT, property development and management experience makes him well-qualified to serve on our board of directors. Mr. Simmons attended Florida State University and the University of South Florida.

Board Committees

Upon completion of this offering, our board of directors will form an audit committee, a compensation committee and a nominating and corporate governance committee and adopt charters for each of these committees. Each of these committees will be composed exclusively of independent directors, as defined by the listing standards of the NYSE then in effect. Moreover, our compensation committee will be composed exclusively of individuals intended to be, to the extent required by Rule 16b-3 of the Exchange Act, non-employee directors and will, at such times as we are subject to Section 162(m) of the Internal Revenue Code, qualify as outside directors for purposes of Section 162(m) of the Internal Revenue Code. Our board of directors may from time to time establish certain other committees to facilitate our management and may change the responsibilities of our existing committees.

Audit Committee

Our audit committee will consist of Richard S. Kahlbaugh, Denis L. McGlynn and William G. Popeo, each of whom will be an independent director. William G. Popeo will chair our audit committee and will serve as our audit committee financial expert, as that term is defined by the SEC. Our audit committee will assist the board in overseeing, among other things:

•   our system of internal controls;

•   our accounting and financial reporting processes;

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•   the integrity and audits of our combined financial statements;

•   our compliance with legal and regulatory requirements;

•   the qualifications and independence of our independent auditors; and

•   the performance of our independent auditors and any internal auditors.

Our audit committee also will be responsible for engaging independent certified public accountants, reviewing with the independent certified public accountants the plans and results of the audit engagement, approving professional services provided by the independent certified public accountants, reviewing the independence of the independent certified public accountants, considering the range of audit and non-audit fees and reviewing the adequacy of our internal accounting controls. The committee will also approve the audit committee report required by SEC regulations to be included in our annual proxy statement.

Compensation Committee

Our compensation committee will consist of N. Anthony Coles, Denis L. McGlynn and Daniel L. Simmons, each of whom will be an independent director. Denis L. McGlynn will chair our compensation committee. The principal functions of our compensation committee will include:

•   evaluating the performance of our officers;

•   establishing overall employee compensation policies and recommending, as appropriate or necessary, to our board of directors major compensation programs;

•   reviewing and approving the compensation payable to our officers, including salary and bonus awards and awards under our 2010 Incentive Award Plan;

•   administering our 2010 Incentive Award Plan and any other compensation plans, policies and programs of ours;

•   assisting management in complying with our proxy statement and annual report disclosure requirements; and

•   discharging the board’s responsibilities relating to compensation to our directors.

Nominating and Corporate Governance Committee

Our nominating and corporate governance committee will consist of N. Anthony Coles, Richard S. Kahlbaugh and Daniel L. Simmons, each of whom will be an independent director. Richard S. Kahlbaugh will chair our nominating and corporate governance committee. The principal functions of our nominating and corporate governance committee will include:

•   seeking, considering and recommending to our board of directors qualified candidates for election as directors, recommending a slate of nominees for election as directors at the annual meeting of stockholders and verifying the independence of directors;

•   recommending to our board of directors the appointment of each of our executive officers;

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•   periodically preparing and submitting to our board of directors for adoption the committee’s selection criteria for director nominees;

•   reviewing and making recommendations on matters involving the general operation of our board of directors and our corporate governance;

•   annually recommending to our board the nominees for each committee of the board; and

•   annually facilitating the assessment of our board of directors’ performance as a whole and of the individual directors and report thereon to our board.

Director Compensation

We will pay a $10,000 annual director’s fee to each of our independent directors in cash. Each independent director will also receive a fee of $2,500 for attendance at every in-person meeting of our board of directors and committee of our board of directors (unless a committee meeting is on the same day as a board meeting) and a fee of $1,000 for attendance at every telephonic meeting of our board of directors and committee of our board of directors (unless a committee meeting is on the same day as a board meeting), up to a maximum of $15,000 per year. We will pay an annual fee of $6,000 to the chair of each of our audit committee, our compensation committee and our nominating and corporate governance committee. In addition, we will grant 6,667 shares of restricted common stock to each of our independent directors which will vest ratably over five years on each anniversary of the date of the grant. Further, all members of our board of directors will be reimbursed for their reasonable out-of-pocket costs and expenses in attending all meetings of our board of directors and its committees.

Code of Ethics

Upon completion of this offering, our board of directors will adopt a code of ethics that applies to all of our directors, officers and employees. The code of ethics will address, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the federal securities laws, confidentiality, trading on insider information and reporting of violations of the code of ethics. Upon adoption, a copy of our code of ethics will be posted on our website.

Compensation Committee Interlocks and Insider Participation

None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers on our board of directors or compensation committee.

Executive Compensation

Compensation Discussion and Analysis

The following describes our compensation program for our named executive officers, which will include Ted W. Rollins, our co-chairman and chief executive officer, Michael S. Hartnett, our co-chairman and chief investment officer, Earl C. Howell, our president and chief operating officer, Donald L. Bobbitt, Jr., an executive vice president and our chief financial officer and Shannon N. King, an executive vice president and our chief marketing officer. This program will be effective upon completion of this offering and our formation transactions. The following discussion and analysis should be read together with the tables and related footnote disclosures detailed below.

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Executive Compensation Program Objectives

The primary objective of our executive compensation program will be to attract, motivate and retain talented, high-caliber executives necessary to lead us in achieving business success. We believe that our executive compensation program will support these objectives by providing our named executive officers with a base salary and the opportunity to earn an annual cash bonus, as well as awards under our 2010 Incentive Award Plan.

Annual Base Salary

Our named executive officers will receive an annual base salary based on position-specific responsibilities, taking into account competitive market compensation for similar positions, the skills and experience of the individual, internal equity among executive officers and individual performance. Under the terms of the employment agreements we will enter into with each of our named executive officers, we will pay each of Messrs. Rollins and Hartnett an annual base salary of $300,000, Mr. Howell an annual base salary of $260,000, Mr. Bobbitt an annual base salary of $250,000 and Ms. King an annual base salary of $200,000, subject, in the case of Messrs. Rollins, Hartnett, Howell and Bobbitt, to increase in accordance with our normal executive compensation practices and, in the case of Ms. King, to modification commensurate with her assigned duties as determined in the discretion of our chief executive officer, president and chief operating officer and our board of directors. In particular, pursuant to employment agreements with Messrs. Rollins, Hartnett and Howell, we have agreed to increase each such officer’s salary to $360,000 per year, effective on January 1, 2012, and, pursuant to an employment agreement with Mr. Bobbitt, we have agreed to increase Mr. Bobbitt’s salary to $275,000 per year, effective on January 1, 2012. Upon the expiration of these employment agreements, we anticipate that our compensation committee will analyze the base salaries paid to our named executive officers and provide our board with recommended compensation levels for these executives.

Annual Cash Bonus

Annual cash bonuses are designed to incentivize our named executive officers at a variable level of compensation based on our and such individual’s performance. In connection with our annual cash bonus program, we expect that our compensation committee will determine annual performance criteria that are flexible and that change with the needs of our business. Our annual cash bonus program will be designed to reward the achievement of specific financial and operational objectives. For 2010, each of our named executive officers are eligible for a cash bonus of between 50% and 100% of their base salary, pro rated for the period of time from the completion of this offering through December 31, 2010, with the amount of such bonus dependent on meeting certain performance-based criteria. In addition, upon completion of this offering, Messrs. Bobbitt, Howell and Weissman will each be paid a cash bonus of $300,000, $200,000 and $150,000, respectively.

Equity Awards

We will provide equity awards to our named executive officers pursuant to our 2010 Incentive Award Plan. Time-vested equity awards are designed to focus and reward our named executive officers in accordance with our long-term goals and enhance stockholder value. In determining equity awards, we anticipate that our compensation committee will take into account our overall financial performance. In addition, our 2010 Incentive Award Plan will replace a DCP which was previously used by Campus Crest Group for executive compensation and which will be terminated prior to the completion of this offering. Certain of our named executive officers will be issued shares in satisfaction of their vested interests in awards under the terminated DCP. In particular, Mr. Bobbitt and Ms. King will be issued 8,056 and 15,000 vested shares of restricted

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common stock, respectively, one year after the termination of the DCP in satisfaction of their vested interests in awards that were outstanding under the DCP.

Upon completion of this offering, Messrs. Howell and Bobbitt and Ms. King will receive an aggregate of 63,473 shares of restricted common stock (worth approximately $0.9 million based on the mid-point of the price range set forth on the cover page of this prospectus) under the 2010 Incentive Award Plan. In addition, upon completion of this offering Mr. Hartnett will receive 150,000 restricted OP units (worth approximately $2.0 million based on the mid-point of the price range set forth on the cover page of this prospectus) under the 2010 Incentive Award Plan. For further information on these grants and our 2010 Incentive Award Plan, see “—Initial Public Offering Grants of Plan-Based Awards” and “—2010 Incentive Award Plan” below.

Benefits and Perquisites

Each of our named executive officers may participate in the standard company benefits that we offer to all full-time employees. These benefits include medical, dental and vision insurance, life insurance, paid time off and a 401(k) retirement plan, to which we intend to make matching contributions. Our senior officers and management may use our leased aircraft for personal travel, provided that they reimburse us for our incremental cost associated with their actual usage. In addition, we will lease an automobile for each of our named executive officers, with a cost not to exceed $12,000 per year per officer.

Severance

Under their employment agreements, each of our named executive officers will be entitled to receive severance payments and benefits under certain circumstances in the event that his or her employment is terminated by us without “cause” or by the executive for “good reason,” or in the event of a “change of control” of us (each as defined in the applicable employment agreement). These severance payments and benefits are designed to protect and compensate our named executive officers under those circumstances. These circumstances, payments and benefits are described below under “—Employment Agreements—Potential Payments Upon Termination or Change of Control.”

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Summary of Executive Compensation Table

The following table sets forth the compensation expected to be paid in fiscal year 2010 on an annualized basis to our named executive officers following the completion of this offering. Because we were only recently organized and our named executive officers were not entitled to any compensation from us prior to the completion of this offering, compensation information for prior periods is not applicable. As discussed below under “—Employment Agreements,” we will enter into employment agreements with each of our named executive officers upon completion of this offering. Following the completion of this offering, we will assign certain of the rights and obligations under the employment agreements with the applicable named executive officers to our operating partnership, which will also employ the named executive officers and will pay their compensation.

													Change in
													Pension Value
													and
													NonQualified
								Stock/			Non-Equity		Deferred		All
								OP Unit			Incentive Plan		Compensation		Other
Name and			Salary		Bonus			Awards			Compensation		Earnings		Compensation			Total
Principal Position	Year		($)		($)			($)			($)		($)		($) (1)			($)
Ted W. Rollins		2010		300,000		(2)			—			—		—		12,000			312,000
Co-Chairman of the Board		2009		—		—			—			—		—		308,892	(3)		308,892
and Chief Executive Officer
Michael S. Hartnett		2010		300,000		(2)			2,025,000	(4)		—		—		12,000			2,337,000
Co-Chairman of the Board		2009		—		—			—			—		—		308,500	(3)		308,500
and Chief Investment Officer
Earl C. Howell		2010		260,000		200,000	(2)(7)		449,996	(5)		—		—		12,000			921,996
President and		2009		—		—			—			—		—		25,000	(6)		25,000
Chief Operating Officer
Donald L. Bobbitt, Jr.		2010		250,000		300,000	(2)(7)		305,640	(8)		—		—		12,000			867,640
Executive Vice President		2009		225,000		—			—			—		—		3,317			228,317
and Chief Financial Officer
Shannon N. King		2010		200,000		(2)			101,250	(9)		—		—		12,000			313,250
Executive Vice President		2009		200,000		—			—			—		—		10,149			210,149
and Chief Marketing Officer

(1)	We will lease an automobile for each of Messrs. Rollins, Hartnett, Howell and Bobbitt and Ms. King, with a cost not to exceed $12,000 per year per officer.
(2)	Each of our named executive officers is also entitled to an annual cash bonus ranging from 50% to 100% of his or her base salary in the event certain performance-based criteria are met, pro rated for the period of time from the completion of this offering through December 31, 2010.
(3)	Reflects distributions of $300,000 from Campus Crest Group to each of Messrs. Rollins and Hartnett, transportation allowances of $8,892 and $8,000, respectively to Messrs. Rollins and Hartnett and a $500 match for Mr. Hartnett to our 401(k) profit sharing plan.

(4) Reflects 150,000 restricted OP units granted to Mr. Hartnett upon completion of this offering pursuant to his employment agreement, which will vest ratably on each of the first, second and third anniversaries of the completion of this offering. For purposes of this table, each OP unit was valued at $13.50, the mid-point of the price range set forth on the cover page of this prospectus.

(5) Reflects 33,333 shares of restricted common stock granted to Mr. Howell upon completion of this offering that will vest ratably on each of the first, second and third anniversaries of the completion of this offering. For purposes of this table, each share was valued at $13.50, the mid-point of the price range set forth on the cover page of this prospectus.

(6)	Reflects payment for management services performed pursuant to a consulting agreement.
(7)	Reflects a cash bonus payable upon completion of this offering.

(8) Reflects 22,640 shares of restricted common stock granted to Mr. Bobbitt upon completion of this offering, which will be issued under our 2010 Incentive Award Plan and will vest ratably on each of the first, second and third anniversaries of the completion of this offering. For purposes of this table, each share was valued at $13.50, the mid-point of the price range set forth on the cover page of this prospectus.

(9) Reflects 7,500 shares of restricted common stock granted to Ms. King upon completion of this offering, which will be issued under our 2010 Incentive Award Plan and will vest ratably on each of the first, second and third anniversaries of the completion of this offering. For purposes of this table, each share was valued at $13.50, the mid-point of the price range set forth on the cover page of this prospectus.

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Pursuant to employment agreements with Messrs. Rollins, Hartnett and Howell, we have agreed to increase each such officer’s salary to $360,000 per year, effective on January 1, 2012. Pursuant to an employment agreement with Mr. Bobbitt, we have agreed to increase his salary to $275,000 per year, effective on January 1, 2012.

Initial Public Offering Grants of Plan-Based Awards

The following table and accompanying footnotes set forth the material terms regarding the grant of restricted common stock to our named executive officers and certain other members of our management team under our 2010 Incentive Award Plan upon completion of this offering.

		Share or Unit
	Grant	Awards; Number of		Grant Date
Name	Date	Shares or Units (#) (1)		Fair Value (2)
Ted W. Rollins	—		—		—
Co-Chairman of the Board and
Chief Executive Officer
Michael S. Hartnett	(3)		150,000	$	2,025,000
Co-Chairman of the Board and
Chief Investment Officer
Earl C. Howell	(3)		33,333	$	449,996
President and
Chief Operating Officer
Donald L. Bobbitt, Jr.	(3)		22,640	$	305,640
Executive Vice President and
Chief Financial Officer
Shannon N. King	(3)		7,500	$	101,250
Executive Vice President and
Chief Marketing Officer
All other employees as a group	(3)		17,500	$	236,250

(1) These grants of restricted common stock or restricted OP units, as the case may be, will vest ratably on each of the first, second and third anniversaries of the completion of this offering.

(2) The fair value of the grants of restricted common stock and restricted OP units are based on a per share/OP unit value of $13.50, the mid-point of the price range set forth on the cover page of this prospectus.

(3) Grants will be effective on the date of completion of this offering.

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Employment Agreements

Upon completion of this offering, we will enter into employment agreements with each of our named executive officers. The employment agreements will provide for Mr. Rollins to serve as our chief executive officer, for Mr. Hartnett to serve as our chief investment officer, for Mr. Howell to serve as our president and chief operating officer, for Mr. Bobbitt to serve as an executive vice president and our chief financial officer and for Ms. King to serve as an executive vice president and our chief marketing officer. These employment agreements will require each of our named executive officers to devote their full business time attention, skill and efforts to our operations. The initial term of the employment agreements shall be three years for each of Messrs. Rollins and Hartnett, two years for each of Messrs. Howell and Bobbitt and one year for Ms. King. Each employment agreement will provide for automatic one-year extensions after the expiration of its term, unless either party provides at least three months’ notice of non-renewal.

The employment agreements will provide for:

•   an annual base salary of $300,000 for each of Messrs. Rollins and Hartnett (which will increase to $360,000, effective on January 1, 2012), $260,000 for Mr. Howell (which will increase to $360,000, effective on January 1, 2012), $250,000 for Mr. Bobbitt (which will increase to $275,000, effective on January 1, 2012) and $200,000 for Ms. King, subject, in the case of Messrs. Rollins, Hartnett, Howell and Bobbitt, to increase in accordance with our normal executive compensation practices, and in the case of Ms. King, to modifications to her compensation and benefits commensurate with her assigned duties in the discretion of our chief executive officer, president and chief operating officer and our board of directors;

•   eligibility for annual cash performance bonuses determined by our board of directors, in accordance with the terms of our incentive compensation plan to be adopted by our board of directors, with potential bonuses ranging from 50% to 100% of base salary if performance targets are achieved;

•   eligibility to participate in our 2010 Incentive Award Plan;

•   a cash bonus of $300,000, $200,000 and $150,000 for Messrs. Bobbitt, Howell and Weissman, respectively, that will be paid upon completion of this offering;

•   Mr. Rollins to receive 73,333 shares of restricted common stock on January 1, 2012 and 73,333 shares of restricted common stock on January 1, 2013 (worth approximately $1.0 million and $1.0 million, respectively, based on the mid-point of the price range set forth on the cover page of this prospectus; the actual trading price of our common stock on the date of each grant may be higher or lower than the amount used to estimate these amounts, and the foregoing amounts are not necessarily indicative of the compensation expense that we will recognize in connection with such grants); these shares will vest ratably on each of the first, second and third anniversaries of the date of grant;

•   Mr. Hartnett to receive 150,000 restricted OP units upon completion of this offering, 73,333 shares of restricted common stock on January 1, 2012 and 73,333 shares of restricted common stock on January 1, 2013 (worth approximately $2.0 million, $1.0 million and $1.0 million, respectively, based on the mid-point of the price range set forth on the cover page of this prospectus; for awards scheduled to be granted in 2012 and 2013, the actual trading price of our common stock on the date of each grant may be higher or lower than the amount used to estimate these amounts, and the foregoing amounts are not necessarily indicative of the compensation expense that we will recognize in connection

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with such grants); these OP units and shares will vest ratably on each of the first, second and third anniversaries of the date of grant;

•   Mr. Howell to receive 33,333 shares of restricted common stock upon completion of this offering, 62,500 shares of restricted common stock on January 1, 2012 and 33,333 shares of restricted common stock on January 1, 2013 (worth approximately $0.4 million, $0.8 million and $0.4 million, respectively, based on the mid-point of the price range set forth on the cover page of this prospectus; for awards scheduled to be granted in 2012 and 2013, the actual trading price of our common stock on the date of each grant may be higher or lower than the amount used to estimate these amounts, and the foregoing amounts are not necessarily indicative of the compensation expense that we will recognize in connection with such grants); these shares will vest ratably on each of the first, second and third anniversaries of the date of grant;

•   Mr. Bobbitt to receive 22,640 shares of restricted common stock upon completion of this offering, 8,056 vested shares of restricted common stock one year after the termination of the DCP in satisfaction of his vested awards that were outstanding under the DCP, 22,640 shares of restricted common stock on January 1, 2012 and 20,833 shares of restricted common stock on January 1, 2013 (worth approximately $0.3 million, $0.1 million, $0.3 million and $0.3 million, respectively, based on the mid-point of the price range set forth on the cover page of this prospectus; for awards scheduled to be granted in 2012 and 2013, the actual trading price of our common stock on the date of each grant may be higher or lower than the amount used to estimate these amounts, and the foregoing amounts are not necessarily indicative of the compensation expense that we will recognize in connection with such grants); these shares, other than the 8,056 shares which will vest immediately on the date of grant, will vest ratably on each of the first, second and third anniversaries of the date of grant;

•   Ms. King to receive 7,500 shares of restricted common stock upon completion of this offering, 15,000 vested shares of restricted common stock one year after the termination of the DCP in satisfaction of her vested awards that were outstanding under the DCP and 7,500 shares of restricted common stock on January 1, 2012 (worth approximately $0.1 million, $0.2 million and $0.1 million, respectively, based on the mid-point of the price range set forth on the cover page of this prospectus; for awards scheduled to be granted in 2012, the actual trading price of our common stock on the date of each grant may be higher or lower than the amount used to estimate these amounts, and the foregoing amounts are not necessarily indicative of the compensation expense that we will recognize in connection with such grants); these shares, other than the 15,000 shares which will vest immediately on the date of grant, will vest ratably on each of the first, second and third anniversaries of the date of grant; and

•   participation in any other employee benefit plans, insurance policies or contracts maintained by us relating to retirement, health, disability, vacation, auto and other related benefits.

Potential Payments Upon Termination or Change of Control

The employment agreements will provide that if the agreement is terminated by us without “cause” or by the executive for “good reason” within 24 months following a change in control of us, (i) each of Messrs. Rollins and Hartnett will be entitled to a lump sum cash payment equal to three times the sum of his then current annual base salary plus the bonus paid to him in the prior year (or, if no bonus was paid, 50% of his target bonus for the current year), (ii) each of Messrs. Howell and Bobbitt will be entitled to a lump sum cash payment equal to two times the sum of his then current annual base salary plus the bonus paid to him in the prior year (or, if no

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bonus was paid, 50% of his target bonus for the current year) and (iii) Ms. King will be entitled to a lump sum cash payment equal to one-half times the sum of her then current base salary plus the bonus paid to her in the prior year (or, if no bonus was paid, 50% of her target bonus for the current year). In the event the agreement is terminated by us without “cause” or by the executive for “good reason” and not within 24 months following a change in control of us (i) each of Messrs. Rollins, Hartnett, Howell and Bobbitt will be entitled to a cash payment equal to two times the sum of his then current annual base salary plus the bonus paid to him in the prior year (or, if no bonus was paid, 50% of his target bonus for the current year) and (ii) Ms. King will be entitled to a cash payment equal to one-half times the sum of her then current annual base salary plus the bonus paid to her in the prior year (or, if no bonus was paid, 50% of her target bonus for the current year), payable in equal monthly installments over a period of 24 months after termination in the case of Messrs. Rollins, Hartnett, Howell and Bobbitt, and payable in equal monthly installments over a period of six months after termination in the case of Ms. King.

In addition, the employment agreements will provide that if the executive is terminated either by us without “cause” or by the executive for “good reason,” with or without a change in control of us, or if the executive retires at or after the age of 63, then any unvested equity awards granted to such named executive officer shall immediately vest.

The employment agreements will define “cause” as the (i) employee’s act of gross negligence or misconduct that has the effect of injuring the business of us and our affiliates, taken as a whole, in any material respect, (ii) employee’s conviction or plea of guilty or nolo contendere to the commission of a felony by employee, (iii) commission by the employee of an act of fraud or embezzlement against us or our affiliates or (iv) employee’s willful breach of any material provision of his or her employment agreement or related confidentiality and non-compete agreement, that will be entered into contemporaneously with the employment agreement.

The employment agreements for each of Messrs. Rollins, Hartnett, Howell and Bobbitt will define “good reason” as (i) a material involuntary reduction in employee’s duties or function, (ii) a material reduction in the employee’s compensation package other than as mutually agreed, (iii) the employee’s involuntary relocation to a principal place of work more than 30 miles from Charlotte, North Carolina or (iv) a material breach by us of our obligations under the applicable employment agreement, provided that the employee gives us notice of his belief that he has good reason to terminate the applicable employment agreement and we fail to cure the breach within 30 business days of receipt of the employee’s notice. The employment agreement for Ms. King will define “good reason” as (i) the employee’s involuntary relocation to a principal place of work more than 30 miles from Charlotte, North Carolina or (ii) a material breach by us of our obligations under the employment agreement, provided that the employee gives us notice of her belief that she has good reason to terminate the employment agreement and we fail to cure the breach within 30 business days of receipt of the employee’s notice.

Termination Payment Table

The following table indicates the cash amounts and accelerated vesting that Messrs. Rollins, Hartnett, Howell and Bobbitt and Ms. King would be entitled to receive under various termination circumstances pursuant to the terms of their employment agreements. This table assumes that termination of the named executive officer occurred on December 31, 2009, however, the

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termination payments have been determined pursuant to the terms of the employment agreements that will become effective upon completion of this offering.

			Acceleration of
			Vesting of Restricted
	Cash		Common Stock/
Name and Termination Scenario	Payment (1)		Restricted OP Units (2)		Total
Ted W. Rollins
Co-Chairman and Chief Executive Officer
By company without cause or by employee for good reason (after a change in control)	$	1,350,000	$	—	$	1,350,000
By company without cause or by employee for good reason (and without a change in control)	$	900,000	$	—	$	900,000
Michael S. Hartnett
Co-Chairman and Chief Investment Officer
By company without cause or by employee for good reason (after a change in control)	$	1,350,000	$	2,025,000	$	3,375,000
By company without cause or by employee for good reason (and without a change in control)	$	900,000	$	2,025,000	$	2,925,000
Earl C. Howell
President and Chief Operating Officer
By company without cause or by employee for good reason (after a change in control)	$	780,000	$	449,996	$	1,229,996
By company without cause or by employee for good reason (and without a change in control)	$	780,000	$	449,996	$	1,229,996
Donald L. Bobbitt, Jr.
Executive Vice President and Chief Financial Officer
By company without cause or by employee for good reason (after a change in control)	$	750,000	$	305,640	$	1,055,640
By company without cause or by employee for good reason (and without a change in control)	$	750,000	$	305,640	$	1,055,640
Shannon N. King
Executive Vice President and Chief Marketing Officer
By company without cause or by employee for good reason (after a change in control)	$	150,000	$	101,250	$	251,250
By company without cause or by employee for good reason (and without a change in control)	$	150,000	$	101,250	$	251,250

(1) Assumes a targeted annual bonus for each of our named executive officers equal to 50% of his or her base salary. As no bonus was paid in the prior year, the named executive officer will be entitled to receive 50% of this targeted bonus under the scenarios set forth below.

(2) Amounts in this column reflect accelerated vesting of shares of restricted common stock granted pursuant to our 2010 Incentive Award Plan. For purposes of this table, each share of common stock and restricted OP unit was valued at $13.50, the mid-point of the price range set forth on the cover page of this prospectus.

Confidentiality and Noncompetition Agreements

Upon completion of this offering, we will enter into confidentiality and noncompetition agreements with each of our named executive officers under which they will agree not to, directly or indirectly: (i) engage in any business activities involving the development, construction,

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acquisition, sale, marketing or management of facilities whose primary function and purpose is student housing and/or the provision of third-party student housing services to providers of student housing, whether individually or as principal, partner, officer, director, consultant, contractor, employee, stockholder or manager of any person, partnership, corporation, limited liability company or any other entity; or (ii) own interests in student housing properties that are competitive, directly or indirectly, with any business carried on by us (provided, however, each of our named executive officers may, directly or indirectly, own, solely as an investment, securities of any competing entity that is publicly traded on a national or regional stock exchange or on the over-the-counter market, provided that such executive officer is not a controlling person of, or member of a group which controls, such entity and such executive officer does not, directly or indirectly, own 2% or more of any class of securities of any such entity).

Each of Messrs. Rollins, Hartnett, Howell and Bobbitt will be bound by the foregoing non-competition covenant for so long as he is serving in his capacity as a named executive officer and for a two-year “tail” period thereafter. Ms. King will be bound by a similar noncompetition covenant, but for a 180 day “tail” period after the end of her service as an executive vice president and our chief marketing officer.

In addition, pursuant to these agreements, each of our named executive officers will agree that, without the prior written consent of our board of directors, except to the extent required by an order of a court having jurisdiction or under subpoena from an appropriate government agency, in which event, such executive will use his best efforts to consult with our board of directors prior to responding to any such order or subpoena, and except as required in the performance of his duties under his employment agreement, they shall not disclose any confidential or proprietary trade secrets, customer lists, drawings, designs, information regarding product development, marketing plans, sales plans, manufacturing plans, management organization information, operating policies or manuals, business plans, financial records, packaging design or other financial, commercial, business or technical information either relating to us or that we may receive belonging to suppliers, customers or others who do business with us. This confidentiality obligation shall not apply to any information which is (i) known publicly, (ii) in the public domain at the time of execution of the agreements or thereafter enters the public domain without the breach of the executive officer’s confidentiality obligation, (iii) known to the executive officer prior to the receipt of such information from us or (iv) disclosed to the executive officer by a third party not under an obligation of confidence to us after termination of their employment.

Indemnification Agreements

Upon completion of this offering, we will enter into indemnification agreements with each of our executive officers and directors that will indemnify them to the maximum extent permitted by Maryland law. The indemnification agreements will provide that:

If a director or executive officer is a party or is threatened to be made a party to any threatened, pending or completed proceeding, other than a derivative proceeding by or in the right of us, by reason of the director’s or executive officer’s status as a director, officer or employee of us (or, if applicable, such other enterprise at which such director or executive officer is or was serving at our request), we must indemnify the director or executive officer against all judgments, penalties, fines and amounts paid in settlement and all expenses incurred by the director or executive officer or on behalf of the director or executive officer, in connection with such proceeding, unless it is established that:

•   the act or omission of the director or executive officer was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty;

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•   the director or executive officer actually received an improper personal benefit in money, property or services; or

•   with respect to any criminal proceeding, the director or executive officer had reasonable cause to believe that his or her conduct was unlawful.

If a director or executive officer is a party or is threatened to be made a party to any threatened, pending or completed derivative proceeding by or in the right of us to procure a judgment in our favor by reason of the director’s or executive officer’s status as a director or executive officer of us (or, if applicable, such other enterprise at which such director or executive officer is or was serving at our request), we must indemnify the director or executive officer for all amounts paid in settlement and all expenses incurred by him or her, or on his or her behalf, in connection with such proceeding, unless it is established that:

•   the act or omission of the director or executive officer was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty; or

•   the director or executive officer actually received an improper personal benefit in money, property or services.

Notwithstanding, and without limiting, any other provisions of the agreements, if a director or executive officer is a party or is threatened to be made a party to any proceeding by reason of the director’s or executive officer’s status as a director, officer or employee of us, and the director or executive officer is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such proceeding, we must indemnify the director or executive officer for all expenses incurred by him or her, or on his or her behalf, in connection with each successfully resolved claim, issue or matter, allocated on a reasonable and proportionate basis, including any claim, issue or matter in such a proceeding that is terminated by dismissal, with or without prejudice.

We must pay or reimburse all indemnifiable expenses in advance of the final disposition of any proceeding if the director or executive officer furnishes us with a written affirmation of the director’s or executive officer’s good faith belief that the standard of conduct necessary for indemnification by us has been met and a written undertaking to reimburse us if a court of competent jurisdiction determines that the director or executive officer is not entitled to indemnification. We must pay all indemnifiable expenses to the director or executive officer within 20 days following the date the director or executive officer submits such affirmations and evidence of the expenses to us.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

2010 Incentive Award Plan

Immediately prior to the consummation of this offering, we intend to adopt the 2010 Incentive Award Plan.

Purpose. The purposes of the 2010 Incentive Award Plan will be to attract and retain qualified persons upon whom, in large measure, our sustained progress, growth and profitability will depend, to motivate the participants to achieve long-term company goals and to more closely

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align the participants’ interests with those of our other stockholders by providing them with a proprietary interest in our growth and performance.

Eligibility. The 2010 Incentive Award Plan permits the grant of incentive awards to our executive officers, employees, consultants and non-employee directors of us and our affiliates as determined by the compensation committee. No employee is eligible under the 2010 Incentive Award Plan for any award subject to Section 409A of the Internal Revenue Code that is a stock right (as such term is defined in 1.409A-1(c)(1)(H) of the Treasury Regulations) if the employee is eligible to receive a distribution of a stock right from the DCP subsequent to its termination until the date that is three years following the date that all necessary action was taken to irrevocably terminate and liquidate the DCP.

Aggregate Shares. Subject to adjustment as provided in the 2010 Incentive Award Plan, the aggregate number of shares of common stock reserved for issuance pursuant to awards granted under the 2010 Incentive Award Plan is 2,500,000. Upon completion of this offering, we will issue an aggregate of 114,308 restricted shares of common stock and 150,000 restricted OP units to our independent directors, certain named executive officers and certain other members of our management team, leaving 2,235,692 shares of common stock available for issuance under the plan. Additionally, we have reserved an aggregate of 512,361 shares of restricted common stock under the 2010 Incentive Award Plan for issuance (i) one year after the termination of the DCP in satisfaction of vested interests in awards that were outstanding under the DCP; and (ii) in 2012 and 2013 pursuant to employment agreements, to our named executive officers and certain other members of our management team, and, upon their issuance, we will have 1,723,331 shares of common stock available for issuance under the plan.

Committed Awards. Mr. Hartnett is to receive 150,000 restricted OP units (worth approximately $2.0 million based on the mid-point of the price range set forth on the cover page of this prospectus) upon completion of this offering. Messrs. Rollins, Hartnett, Howell and Bobbitt and Ms. King, respectively, are to receive 146,666, 146,666, 129,166, 74,169, and 30,000 shares of restricted common stock, including shares to be issued upon completion of this offering, on January 1, 2012 and January 1, 2013 (worth approximately $2.0 million, $2.0 million, $1.7 million, $1.0 million and $0.4 million, respectively, based on the mid-point of the price range set forth on the cover page of this prospectus; for awards scheduled to be granted in 2012 and 2013, the actual trading price of our common stock on the date of each grant may be higher or lower than the amount used to estimate these amounts, and the foregoing amounts are not necessarily indicative of the compensation expense that we will recognize in connection with such grants). We have also agreed to grant other members of our management team an aggregate of 66,667 shares of restricted common stock, including shares to be issued upon completion of this offering, on January 1, 2012 and in satisfaction of vested awards under the terminated DCP (worth approximately $0.9 million based on the mid-point of the price range set forth on the cover page of this prospectus). Finally, we will grant to our independent directors an aggregate of 33,335 shares of restricted common stock upon completion of this offering (worth approximately $0.5 million based on the mid-point of the price range set forth on the cover page of this prospectus; for awards scheduled to be granted in 2012 and 2013, the actual trading price of our common stock on the date of each grant may be higher or lower than the amount used to estimate these amounts, and the foregoing amounts are not necessarily indicative of the compensation expense that we will recognize in connection with such grants). For further information on the number of restricted shares of common stock granted and the vesting of these shares, see “—Executive Compensation—Initial Public Offering Grants of Plan-Based Awards” and “—Employment Agreements” above.

Administration. The 2010 Incentive Award Plan will be administered by our compensation committee, which will interpret the plan and have broad discretion to select the eligible persons

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to whom awards will be granted, as well as the type, size and terms and conditions of each award, including the exercise price of stock options, the number of shares subject to awards and the expiration date of, and the vesting schedule or other restrictions applicable to, awards. The compensation committee may establish, adopt or revise any rules and regulations as it may deem advisable to administer the 2010 Incentive Award Plan. The board of directors may at any time administer the 2010 Incentive Award Plan. If it does so, it will have all the powers of the compensation committee.

Permissible Awards. The 2010 Incentive Award Plan allows us to grant the following types of awards:

•   options to purchase shares of common stock (non-qualified and incentive stock options);

•   SARs;

•   restricted stock and restricted stock units;

•   performance shares;

•   performance units;

•   dividend equivalents;

•   restricted OP units; and

•   other stock-based awards.

Minimum Vesting Requirements. Any award of stock (other than an option) granted under the 2010 Incentive Award Plan unrelated to the DCP will either (i) be subject to a minimum vesting period of three years (which may include graduated vesting within such three-year period), or one year if the vesting is based on performance criteria other than continued service, or (ii) be granted solely in exchange for foregone cash compensation.

Stock Options. The compensation committee is authorized to grant incentive stock options or non-qualified stock options under the 2010 Incentive Award Plan. The terms of an incentive stock option must meet the requirements of Section 422 of the Internal Revenue Code. The exercise price of an option may not be less than the fair market value of the underlying stock on the date of grant and no option may have a term of more than 10 years.

Stock Appreciation Rights. The compensation committee may also grant SARs. These provide the holder the right to receive the excess, if any, of the fair market value of one share of common stock on the date of exercise, over the base price of the SAR as determined by the compensation committee, which will not be less than the fair market value of one share of common stock on the grant date. SARs may be payable in cash or shares of common stock or a combination thereof. No SAR may be exercised more than 10 years from the grant date.

Restricted Stock Awards. The compensation committee may make awards of restricted stock to participants, which will be subject to such restrictions on transferability and other restrictions as the compensation committee may impose (including, without limitation, limitations on the right to vote restricted stock or the right to receive dividends, if any, on the restricted stock).

Restricted Stock Units. The compensation committee may make awards of restricted stock units to non-employee directors, which will be subject to such restrictions on transferability and other restrictions as the compensation committee may impose. Upon lapse of such restrictions, shares of common stock or cash may be issued to the participant in settlement of the restricted stock units.

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Performance Awards. The compensation committee may grant performance awards that are designated in cash (performance units) or in shares of common stock (performance shares). The compensation committee will have the complete discretion to determine the number of performance awards granted to any participant and to set performance goals and other terms or conditions to payment of the performance awards in its discretion which, depending on the extent to which they are met, will determine the number and value of performance awards that will be paid to the participant.

Dividend Equivalents. The compensation committee is authorized to grant dividend equivalents to participants subject to such terms and conditions as may be selected by the compensation committee. Dividend equivalents entitle the participant to receive payments equal to dividends with respect to all or a portion of the shares of common stock subject to an award, as determined by the compensation committee.

Restricted OP Units. The compensation committee may grant awards of restricted units in our operating partnership to participants, which will be subject to such restrictions on transferability and other restrictions as the compensation committee may impose (including, without limitation, limitations on the right to vote restricted units or the right to receive dividends, if any, on the restricted units). Upon lapse of such restrictions, such units are convertible into shares of common stock.

Other Stock-Based Awards. The compensation committee may, subject to limitations under applicable law, grant to participants such other awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to shares of common stock as deemed by the compensation committee to be consistent with the purposes of the 2010 Incentive Award Plan, including, without limitation, shares of common stock awarded purely as a bonus and not subject to any restrictions or conditions, convertible or exchangeable debt securities, other rights convertible or exchangeable into shares of common stock, and awards valued by reference to book value of shares of common stock or the value of securities of or the performance of specified parents or subsidiaries. The compensation committee will determine the terms and conditions of any such awards, subject to the minimum vesting requirements discussed above.

Performance Goals. Options and SARs granted under the 2010 Incentive Award Plan will automatically qualify as performance-based awards that are fully deductible by us without regard to the $1 million deduction limit imposed by § 162(m) of the Internal Revenue Code. The compensation committee may designate any other award under the 2010 Incentive Award Plan (such as, for example, a cash incentive bonus or restricted stock award) as a qualified performance-based award in order to make the award fully deductible under Internal Revenue Code § 162(m). If an award is so designated, the compensation committee must establish objectively determinable performance goals for the award based on one or more performance criteria, which may be expressed in terms of company-wide objectives or in terms of objectives that relate to the performance of a division, affiliate, region, department or function within us or an affiliate. Performance criteria may be specified in absolute terms, in percentages, or in terms of growth from period to period or growth rates over time, as well as measured relative to an established or specially created index of company competitors or peers. Performance criteria for qualified performance-based awards will be limited to specified levels or increases in:

•   earnings per share or other corporate measure;

•   profit (net profit, gross profit, operating profit, economic profit or other profit measures);

•   net income;

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•   revenue;

•   stock price or performance;

•   total stockholder return;

•   return measures (return on assets, capital, equity or revenue);

•   FFO;

•   EBITDA (earnings before interest, taxes, depreciation and amortization);

•   market share;

•   expenses;

•   business expansions or consolidation;

•   internal rate of return; and

•   planning accuracy.

For a qualified performance-based award, the compensation committee must establish such goals prior to the beginning of the period for which such performance goal relates (or such later date as may be permitted under applicable tax regulations) and the compensation committee may not increase any award or, except in the case of certain qualified terminations of employment, waive the achievement of any specified goal. Any payment of an award granted with performance goals will be conditioned on the written certification of the compensation committee in each case that the performance goals and any other material conditions were satisfied.

Limitations on Transfer; Beneficiaries. No award will be assignable or transferable by a participant other than by will or the laws of descent and distribution or, except in the case of an incentive stock option, pursuant to a qualified domestic relations order; provided, however, that the compensation committee may (but need not) permit other transfers where the compensation committee concludes that such transferability does not result in accelerated taxation, does not cause any option intended to be an incentive stock option to fail to qualify as such, and is otherwise appropriate and desirable. No award may be transferred for value. A participant may, in the manner determined by the compensation committee, designate a beneficiary to exercise the rights of the participant and to receive any distribution with respect to any award upon the participant’s death.

Acceleration Upon Certain Events. Unless otherwise provided in an award agreement, if a participant is terminated without “cause” (as such terms are defined in the 2010 Incentive Award Plan) within 24 months after a change in control of us (as defined in the 2010 Incentive Award Plan), all of such participant’s outstanding options and SARs will become fully vested and exercisable and all restrictions on his or her outstanding restricted stock awards will lapse. In each of the above cases except retirement, the compensation committee also may (but need not) waive the achievement of performance goals under the participant’s Internal Revenue Code § 162(m) performance-based awards. The compensation committee may accelerate awards for any other reason. The compensation committee may discriminate among participants or among awards in exercising such discretion.

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Termination of Employment. Unless otherwise provided in an award agreement, all awards that are unvested, vested and unexercised shall automatically be forfeited if a participant’s employment is terminated for “cause” as defined in the 2010 Incentive Award Plan. An option or SAR that is not vested on the date of a participant’s termination of employment shall lapse. For options and SARs that are vested at termination of employment, the period for exercising the option or SAR shall end 90 days after termination of employment other than by reason of death, disability or retirement at or after age 65. If a participant terminates employment on account of disability, the exercise period shall end one year after termination of employment. If a participant terminates employment on account of death or dies during the applicable ninety-day or one-year period described above, the exercise period shall end one year after the date of the participant’s death. If a participant terminates employment by reason of retirement on or after age 65, the exercise period shall be the original term of the option or SAR.

In the case of restricted stock and restricted stock units as to which the restrictions have not lapsed or any performance shares or performance units that have not been fully earned, the awards will be forfeited unless the compensation committee otherwise determines upon termination of employment other than on account of death, disability or retirement on or after age 65. Such awards shall become immediately vested and earned as of a participant’s termination of employment on account of death or disability. For terminations on account of retirement at or after age 65, any such awards shall become vested and earned in proportion to the period of time from grant date to retirement to the total period in the original term of the award.

Adjustments. In the event of a stock-split, a stock dividend, or a combination or consolidation of the outstanding common stock into a lesser number of shares, the authorization limits under the 2010 Incentive Award Plan will automatically be adjusted proportionately, and the shares then subject to each award will automatically be adjusted proportionately without any change in the aggregate purchase price. In the event the common stock will be changed into or exchanged for a different number or class of shares of our stock or securities or of another corporation, the authorization limits under the 2010 Incentive Award Plan will automatically be adjusted proportionately, and there will be substituted for each such share of common stock, the number or class of shares into which each outstanding share of common stock will be so exchanged, all without any change in the aggregate purchase price.

Termination and Amendment. The board of directors or the compensation committee may, at any time and from time to time, terminate or amend the 2010 Incentive Award Plan without stockholder approval; but if an amendment to the 2010 Incentive Award Plan would, in the reasonable opinion of the board or the compensation committee, materially increase the benefits accruing to participants, materially increase the number of shares of stock issuable under the 2010 Incentive Award Plan, expand the types of awards, materially modify the requirements for eligibility, materially expand the term of the 2010 Incentive Award Plan, or otherwise constitute a material amendment requiring stockholder approval under applicable laws, policies or regulations, then such amendment will be subject to stockholder approval. In addition, the board or the compensation committee may condition any amendment on the approval of the stockholders for any other reason, including necessity or advisability under tax, securities or other applicable laws, policies or regulations. No termination or amendment of the 2010 Incentive Award Plan may adversely affect any award previously granted under the 2010 Incentive Award Plan without the written consent of the participant. The compensation committee may amend or terminate outstanding awards. However, such amendments may require the consent of the participant and, unless approved by the stockholders or otherwise permitted by the antidilution provisions of the 2010 Incentive Award Plan, the exercise price of an outstanding option may not be reduced, directly or indirectly, and the original term of an option may not be extended.

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Certain Federal Tax Effects.

Nonqualified Stock Options. There will be no federal income tax consequences to the optionee or to us upon the grant of a nonqualified stock option under the 2010 Incentive Award Plan. When the optionee exercises a nonqualified option, however, he or she will recognize ordinary income in an amount equal to the excess of the fair market value of the common stock received upon exercise of the option at the time of exercise over the exercise price, and we will be allowed a corresponding deduction. Any gain that the optionee realizes when he or she later sells or disposes of the option shares will be short-term or long-term capital gain, depending on how long the shares were held.

Incentive Stock Options. There typically will be no federal income tax consequences to the optionee or to us upon the grant or exercise of an incentive stock option. If the optionee holds the option shares for the required holding period of at least two years after the date the option was granted or one year after exercise, the difference between the exercise price and the amount realized upon sale or disposition of the option shares will be long-term capital gain or loss, and we will not be entitled to a federal income tax deduction. If the optionee disposes of the option shares in a sale, exchange, or other disqualifying disposition before the required holding period ends, he or she will recognize taxable ordinary income in an amount equal to the excess of the fair market value of the option shares at the time of exercise over the exercise price, and we will be allowed a federal income tax deduction equal to such amount. While the exercise of an incentive stock option does not result in current taxable income, the excess of the fair market value of the option shares at the time of exercise over the exercise price will be an item of adjustment for purposes of determining the optionee’s alternative minimum taxable income.

Stock Appreciation Rights. A participant receiving a SAR will not recognize income, and we will not be allowed a tax deduction, at the time the award is granted. When the participant exercises the SAR, the amount of cash and the fair market value of any shares of common stock received will be ordinary income to the participant and we will be allowed as a corresponding federal income tax deduction at that time, subject to any applicable limitations under Internal Revenue Code § 162(m).

Restricted Stock. Unless a participant makes an election to accelerate recognition of the income to the date of grant as described below, the participant will not recognize income, and we will not be allowed a tax deduction, at the time a restricted stock award is granted. When the restrictions lapse, the participant will recognize ordinary income equal to the fair market value of the common stock as of that date (less any amount he or she paid for the stock), and we will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Internal Revenue Code § 162(m). If the participant files an election under Internal Revenue Code § 83(b) within 30 days after the date of grant of the restricted stock, he or she will recognize ordinary income as of the date of grant equal to the fair market value of the stock as of that date (less any amount paid for the stock), and we will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Internal Revenue Code § 162(m). Any future appreciation in the stock will be taxable to the participant at capital gains rates. However, if the stock is later forfeited, the participant will not be able to recover the tax previously paid pursuant to the Internal Revenue Code § 83(b) election.

Restricted Stock Units. The recipient will not recognize income, and we will not be allowed a tax deduction, at the time a restricted stock unit award is granted. Upon issuance of shares of common stock in settlement of a restricted stock unit award, the recipient will recognize ordinary income equal to the fair market value of the common stock as of that date (less any amount he or she paid for the stock), and we will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Internal Revenue Code § 162(m).

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Restricted OP Units. Unless a participant makes an election to accelerate recognition of the income to the date of grant as described below, the participant will not recognize income, and we will not be allowed a tax deduction, at the time a restricted OP unit award is granted. When the restrictions lapse, the participant will recognize ordinary income equal to the fair market value of the unit (generally, the value of the common stock into which the unit could be converted into as of that date, and we will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Internal Revenue Code § 162(m). If the participant files an election under Internal Revenue Code § 83(b) within 30 days after the date of grant of the restricted OP unit, he or she will recognize ordinary income as of the date of grant equal to the fair market value of the units as of that date, and we will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Internal Revenue Code § 162(m). Any future appreciation in the value of a unit for which such an election is made will be taxable to the participant at capital gains rates. However, if the units are later forfeited, the participant will not be able to recover the tax previously paid pursuant to the Internal Revenue Code § 83(b) election.

Performance Awards. A participant generally will not recognize income, and we will not be allowed a tax deduction, at the time performance awards are granted, so long as the awards are subject to a substantial risk of forfeiture. When the participant receives or has the right to receive payment of cash or shares under the performance award, the cash amount of the fair market value of the shares of stock will be ordinary income to the participant, and we will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Internal Revenue Code § 162(m).

Pension Benefits

None of our employees, including our named executive officers, participates in or has account balances in qualified or non-qualified defined benefit plans sponsored by us.

Nonqualified Deferred Compensation

None of our employees, including our named executive officers, participates in or has account balances in non-qualified defined contribution plans or other deferred compensation plans maintained by us.

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PRINCIPAL STOCKHOLDERS

The following table sets forth the beneficial ownership of shares of our common stock and OP units for (i) each person who is expected to be the beneficial owner of 5% or more of the outstanding common stock and OP units immediately following the consummation of this offering, (ii) directors, proposed directors and the named executive officers and (iii) all directors, proposed directors and named executive officers as a group. This table assumes that this offering and our formation transactions are completed. Unless otherwise indicated, each person named in the table has sole voting and investment power with respect to all of the shares of our common stock shown as beneficially owned by such person. Furthermore, unless otherwise indicated, the address of each named person is c/o Campus Crest Communities, Inc., 2100 Rexford Road, Suite 414, Charlotte, NC 28211.

	Number of Shares and OP		Percent of All
Name of Beneficial Owner	Units Beneficially Owned		Shares and OP Units (1)
Ted W. Rollins (2)		973,333		3.3	%
Michael S. Hartnett (2)(3)		1,123,333		3.8	%
Earl C. Howell (4)		33,333			*
N. Anthony Coles (5)		6,667			*
Richard S. Kahlbaugh (5)		6,667			*
Denis L. McGlynn (5)		6,667			*
William G. Popeo (5)		6,667			*
Daniel L. Simmons (5)		6,667			*
Donald L. Bobbitt, Jr. (4)		22,640			*
Shannon N. King (4)		7,500			*
All directors, director nominees and named executive officers as a group (10 persons)		1,220,141		4.1	%

*  Represents less than one percent of the number of shares of common stock outstanding on a fully diluted basis upon completion of this offering.

(1) Assumes a total of 28,447,641 shares of common stock and 1,243,000 OP units are outstanding immediately following this offering.

(2) Includes 973,333 shares of common stock that may be issued in exchange for 973,333 OP units held by MXT Capital. MXT Capital 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.

(3) Includes 150,000 restricted OP units. See “Management—2010 Incentive Award Plan—Restricted OP Units.”

(4)	Represents shares of restricted common stock granted to certain of our executive officers. See “Management—2010 Incentive Award Plan—Restricted Stock Awards.”
(5)	We will grant 6,667 shares of restricted common stock to each independent director upon completion of this offering which will rest ratably over five years on each anniversary of the date of the grant.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Contribution Agreement with MXT Capital

We and MXT Capital have entered into a contribution agreement pursuant to which our operating partnership will pay to MXT Capital approximately $4.5 million (which will immediately be used to make capital contributions to certain entities, which will in turn immediately use such capital contributions solely to repay indebtedness) and will issue to MXT Capital 973,333 OP units in exchange for MXT Capital’s contribution to our operating partnership of the interests owned by MXT Capital in the predecessor entities and its student housing business.

Other Formation Transactions with MXT Capital

Campus Crest Group will distribute to MXT Capital its interests in two parcels of land consisting of 20.2 acres, with associated indebtedness of approximately $1.9 million, on which we have decided not to build student housing properties. MXT Capital has agreed not to build student housing properties on these parcels in the future.

In addition, Campus Crest Group will distribute to MXT Capital its interest in an entity that will own a minority interest in a 1999 Pilatus PC-12 single-engine turboprop airplane. Upon completion of this offering, we will lease this aircraft on payment terms structured to equal our pro rata carrying and operating costs of the aircraft based on our actual usage.

Contribution Agreement with the Ricker Group

We and Carl H. Ricker, Jr. have entered into a contribution agreement pursuant to which we will pay the Ricker Group approximately $26.7 million of the net proceeds from this offering and our operating partnership will issue to the Ricker Group 66,667 OP units in exchange for the Ricker Group’s contribution to our operating partnership of the interests owned by the Ricker Group in the predecessor entities and in the entities that have entered into ground leases with us relating to eight properties.

Leased Aircraft

Upon completion of this offering and our formation transactions, we will lease two aircraft from entities in which Ted W. Rollins, our co-chairman and chief executive officer, and Michael S. Hartnett, our co-chairman and chief investment officer, have indirect minority interests. A company in which Carl H. Ricker, Jr. has an interest owns a majority interest in one of the lessors. Our payments under the leases are structured to equal our pro rata carrying and operating costs of the aircraft based on our actual usage. As such, it is not expected that the lessors of the aircraft will receive any material profit from the lease payments.

Repayment of Indebtedness

Approximately $6.0 million of the net proceeds from this offering will be used to repay indebtedness owed by us to RHR, LLC, an entity owned by MXT Capital and the Ricker Group. RHR, LLC will, in turn, immediately repay an equal amount of indebtedness owed by it to an unaffiliated third party on substantially the same terms and conditions as the loan from RHR, LLC to us. In addition, approximately $4 million of the net proceeds from this offering will be used to repay our indebtedness to Capital Bank, an entity in which the Ricker Group has an ownership interest and of which Carl H. Ricker, Jr. is a director.

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Release of Personal Guarantees

Each of Ted W. Rollins, Michael S. Hartnett and Carl H. Ricker, Jr. will be released from certain personal guarantees with respect to mortgage and construction indebtedness with an aggregate principal amount of approximately $243.3 million in the case of each of Messrs. Rollins and Hartnett and approximately $205.9 million in the case of Mr. Ricker, and from personal guarantees with respect to the RHR, LLC and Capital Bank indebtedness and the MXT Capital indebtedness described above. Each of Messrs. Rollins and Hartnett will be released from certain personal guarantees with respect to the preferred membership interest in CC-Encore.

Tax Protection Agreement

MXT Capital will enter into a tax protection agreement with us. Pursuant to the tax protection agreement, we will agree not to sell, exchange or otherwise dispose of any of the following nine properties during a ten-year tax protection period in a transaction that would cause the members of MXT Capital to realize built-in gain: The Grove at Asheville; The Grove at Carrollton; The Grove at Las Cruces; The Grove at Mobile—Phase I; The Grove at Mobile—Phase II; The Grove at Nacogdoches; The Grove at Stephenville; The Grove at Troy; and The Grove at Waco. If we sell one or more of these nine properties during the ten-year tax protection period, we will be required to pay to MXT Capital an amount equal to the federal, state and local taxes imposed on the built-in gain allocated to its members, with the amount of such taxes being computed based on the highest applicable federal, state, and local marginal tax rates as well as any “grossed up” taxes imposed on such payments. The amount otherwise payable in connection with such a transaction under the tax protection agreement will be reduced by 20% commencing on the fifth anniversary date of the closing date of this offering and an additional 20% on each successive anniversary date until the amount payable is reduced to zero on the tenth anniversary of the closing date. Consequently, our ability to sell or dispose of these nine properties will be substantially restricted by this obligation to make payments to MXT Capital during the ten-year tax protection period if we sell any such property. This requirement will also restrict our ability to arrange financing for our operations as well as our ability to manage our capital structure.

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.

Registration Rights Agreement

We will enter into a registration rights agreement with MXT Capital pursuant to which we will agree, among other things, to register the resale of any common stock that may be exchanged for the OP units issued in our formation transactions. This agreement requires us to seek to register all common stock that may be exchanged for OP units effective as of that date which is 12 months following completion of this offering on a shelf registration statement under the Securities Act. We will also grant the holders of OP units the right to include such common stock in any registration statements we may file in connection with any future public offerings, subject to the terms of the lock-up agreements described herein and subject to the right of the underwriters of those offerings to reduce the total number of such shares of common stock to be sold by selling shareholders in those offerings.

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In connection with this offering, we intend to file a registration statement on Form S-8 to register the total number of shares of common stock that may be issued under our 2010 Incentive Award Plan.

Initial Public Offering Bonus Payments

Upon completion of this offering we have agreed to pay to Donald L. Bobbitt, Jr., an executive vice president and our chief financial officer, Earl C. Howell, our president and chief operating officer, and Howard J. Weissman, a senior vice president and our corporate controller, cash bonuses of $300,000, $200,000 and $150,000, respectively.

Employment Agreements

We will enter into employment agreements with our named executive officers as described in “Management—Employment Agreements” that will become effective upon completion of this offering. These agreements provide for salary, bonuses and other benefits, including, potentially, severance benefits upon a termination of employment, as well as for grants of shares of restricted stock and cash bonuses. For a full summary of these agreements, see “Management—Employment Agreements.”

Director Compensation

We will pay a $10,000 annual director’s fee to each of our independent directors in cash. Each independent director will also receive a fee of $2,500 for attendance at every in-person meeting of our board of directors and committee of our board of directors and a fee of $1,000 for attendance at every telephonic meeting of our board of directors and committee of our board of directors, up to a maximum of $15,000 per year. We will also pay additional annual fees to the chairs of our audit committee, compensation committee and nominating and corporate governance committee. In addition, we will grant 6,667 shares of restricted common stock to each of our independent directors which will vest ratably over five years on each anniversary of the date of the grant. For a full summary of the compensation payable to our directors, see “Management—Director Compensation.”

Indemnification

Our charter and our bylaws obligate us to indemnify each of our officers and directors who are made or threatened to be made a party to any proceeding by reason of his or her service in that capacity, and to pay or reimburse his or her reasonable expenses in advance of the final disposition of such a proceeding, to the maximum extent permitted by Maryland law. Our charter and bylaws also permit us to provide such indemnification and advancement of expenses to individuals who served our predecessor entities as an officer or director, as well as the right to provide indemnification and advancement of expenses to any employee or agent of such entities or us. In addition, the partnership agreement includes provisions providing for the indemnification of us as the general partner, and our directors, officers, employees and agents in connection with such proceedings. Finally, we intend to enter into agreements with our directors and executive officers providing for indemnification and advancement or reimbursement of the expenses of such directors and officers, to the maximum extent permitted by Maryland law, in connection with such proceedings.

Grants of Awards Under Our 2010 Incentive Award Plan

Under our 2010 Incentive Award Plan the aggregate number of shares of common stock reserved for issuance pursuant to equity-based awards is 2,500,000, which represents approximately 8.4% of our issued and outstanding common stock (on a fully-diluted basis and excluding shares to be sold pursuant to the exercise in full of the underwriters’ overallotment option).

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We intend to grant an aggregate of 114,308 restricted shares of common stock to our independent directors, certain of our executive officers and certain members of our management team and 150,000 restricted OP units to Mr. Hartnett, under our 2010 Incentive Award Plan, representing approximately 0.9% of our issued and outstanding common stock (on a fully-diluted basis after giving effect to the shares issued in this offering but excluding any shares to be sold pursuant to the underwriters’ exercise of their overallotment option). Additionally, we have reserved an aggregate of 512,361 shares of restricted common stock under the 2010 Incentive Award Plan for issuance (i) one year after the termination of the DCP in satisfaction of vested interests in awards that were outstanding under the DCP; and (ii) in 2012 and 2013 pursuant to employment agreements, to our named executive officers and certain other members of our management team. For information regarding these grants and their vesting terms, see “Management—Executive Compensation.” Distributions payable on these awards will accrue and be paid to the holder upon the vesting of such awards.

Review and Approval of Future Transaction with Related Persons

Upon completion of this offering and our formation transactions, we will adopt a written policy for the review and approval of related person transactions requiring disclosure under Rule 404(a) of Regulation S-K. We expect this policy to provide that the nominating and corporate governance committee will be responsible for reviewing and approving or disapproving all interested transactions, meaning any transaction, arrangement or relationship in which (i) the amount involved may be expected to exceed $120,000 in any fiscal year, (ii) we will be a participant and (iii) a related person has a direct or indirect material interest. A related person will be defined as an executive officer, director or nominee for election as director, or a greater than 5% beneficial owner of our common stock, or an immediate family member of the foregoing. The policy may deem certain interested transactions to be pre-approved.

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STRUCTURE AND FORMATION

Our Organizational Structure

We were formed as a Maryland corporation on March 1, 2010. We are a self-managed, self-administered and vertically-integrated developer, builder, owner and manager of high-quality, purpose-built student housing. 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.

The Operating Partnership

Upon completion of this offering and our formation transactions, we will own substantially all of our wholly-owned properties and conduct substantially all of our operations through our operating partnership. We will contribute the net proceeds from this offering to our operating partnership in exchange for OP units therein. Our interest in our operating partnership will entitle us to share in cash distributions from, and in the profits and losses of, our operating partnership in proportion to our percentage ownership. Because the sole general partner of our operating partnership is our wholly-owned subsidiary, we will generally have the exclusive power to manage and conduct the business of the operating partnership, subject to certain limited approval and voting rights of the other limited partners described more fully below in “Our Operating Partnership and the Partnership Agreement.” Accordingly, our board of directors will manage our affairs by directing the affairs of our operating partnership.

The Services Companies

In order to qualify as a REIT, a specified percentage of our gross income must be derived from real property sources, which would generally exclude our income from providing development, construction and management services to third parties as well as our income from certain services afforded student-tenants in our owned properties. See “Federal Income Tax Considerations—Taxation of Our Company.” Therefore, we will conduct our development, construction and management services through The Grove Student Properties, Inc., Campus Crest Construction, Inc. and Campus Crest Development, Inc., respectively, which we refer to collectively as the “Services Companies” and each individually as a “Services Company.” Each of the Services Companies will elect, together with us, to be treated as our TRS. Each of our Services Companies will be wholly-owned and controlled by our operating partnership. The income earned by each Services Company will be subject to regular federal corporate income or franchise tax and state and local income tax where applicable and will therefore be subject to an additional level of tax as compared to the income earned from our properties.

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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 formation transactions will result in the contribution by MXT Capital, the Ricker Group and certain third-party investors to our operating partnership of the limited liability company and limited partnership interests in the entities that make up the business, interests and related properties of our predecessor entities.

The amount of cash and OP units that we will pay, or issue, in exchange for the interests in our predecessor entities 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. No single factor was given greater weight than any other in valuing the properties, and the values attributed to the properties do not necessarily bear any relationship to the book value for the applicable property. We did not obtain any recent third-party property appraisals of the properties to be contributed to us in our formation transactions, or any other independent third-party valuations or fairness opinions in connection with our formation transactions. As a result, the consideration we pay for these properties and other assets in our formation transactions may exceed their fair market value.

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

•   consolidate the ownership of our properties and the student housing business of Campus Crest Group into our operating partnership and its wholly-owned subsidiaries;

•   complete the repayment of all amounts outstanding under our mortgage loan with Silverton Bank that is currently secured by six of our properties (as described in this prospectus, we will repay, in aggregate, approximately $287.1 million of indebtedness with the (i) net proceeds from this offering and (ii) $39.6 million borrowed under our revolving credit facility);

•   facilitate this offering; and

•   enable us to qualify as a REIT for federal income tax purposes commencing with our taxable year ending December 31, 2010.

Set forth below is an overview of our formation transactions:

•   Pursuant to the terms of a contribution agreement, MXT Capital will contribute to our operating partnership its entire student housing business, which is principally comprised of The Grove Student Properties, Campus Crest Development and Campus Crest Construction, and all of its ownership interests in each of our 21 wholly-owned properties and each of our six joint venture properties. In exchange, MXT Capital will receive approximately $4.5 million (which will immediately be used to make capital contributions to certain entities, which will in turn, immediately use such capital contributions solely to repay indebtedness) and 973,333 OP units, representing a 3.3% limited partnership interest in our operating partnership.

In its contribution agreement, MXT Capital provides us with certain real estate, ownership and operational representations, warranties and covenants. These representations and warranties relate to, among other things, ownership of the assets to be contributed to us,

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MXT Capital’s authority to enter into the contribution agreement, the absence of litigation relating to the interests to be contributed, the existence of required permits and consents, tax matters and real estate matters. MXT Capital has also covenanted not to sell any of the assets to be contributed pursuant to the contribution agreement, or permit entities through which it holds the assets to be contributed to engage in material transactions not in the ordinary course of business (in each case, other than pursuant to the contribution agreement) or to permit any such entity to make any distributions or pay any dividends.

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).

•   Campus Crest Group will distribute to MXT Capital its interests in two parcels of land consisting of 20.2 acres, with associated indebtedness of approximately $1.9 million, on which we have decided not to build student housing properties. MXT Capital has agreed not to build student housing properties on these parcels in the future. Campus Crest Group will not receive any consideration from this transaction other than the release of the indebtedness associated with the two parcels and MXT Capital’s agreement regarding the use of the parcels in the future.

•   Campus Crest Group will distribute to MXT Capital its interest in an entity that will own a minority interest in a 1999 Pilatus PC-12 single-engine turboprop airplane. Upon completion of this offering, we will lease this aircraft on payment terms structured to equal our pro rata carrying and operating costs of the aircraft based on our actual usage.

•   Pursuant to the terms of a contribution agreement, the Ricker Group will contribute to our operating partnership all of its ownership interests in each of our 21 wholly-owned properties, as well as all of its ownership interests in The Grove at Moscow and The Grove at San Angelo. In addition, it will contribute its entire ownership interest in the entities that own fee interests in The Grove at Murfreesboro, The Grove at Stephenville, The Grove at Cheney, The Grove at Troy, The Grove at Waco, The Grove at Jonesboro, The Grove at Wichita and The Grove at Wichita Falls, all of which were subject to ground leases with the Ricker Group prior to the completion of our formation transactions. In exchange, the Ricker Group will receive approximately $26.7 million and 66,667 OP units, representing a 0.2% limited partnership interest in our operating partnership.

In its contribution agreement, the Ricker Group provides us with certain ownership and limited real estate and operational representations, warranties and covenants. These representations and warranties relate to, among other things, ownership of the interests to be contributed to us, the Ricker Group’s authority to enter into the contribution agreement, the absence of litigation relating to the interests to be contributed, the existence of required permits and consents, tax matters and real estate matters. The Ricker Group has also covenanted not to sell any of the interests to be contributed pursuant to the contribution agreement, or permit entities through which it holds the interests to be contributed to engage in material transactions not in the ordinary course of business (in each case, other than pursuant to the contribution agreement) or to permit any such entity to make any distributions or pay any dividends. The Ricker Group will indemnify us with respect to losses resulting from breaches of its representations, warranties and covenants.

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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).

•   Pursuant to the terms of contribution agreements and purchase and sale agreements, certain third-party investors will contribute to our operating partnership all of their ownership interests in The Grove at Abilene, The Grove at Asheville, The Grove at Carrollton, The Grove at Cheney, The Grove at Ellensburg, The Grove at Greeley, The Grove at Jacksonville, The Grove at Jonesboro, The Grove at Lubbock, The Grove at Las Cruces, The Grove at Mobile-Phase I, The Grove at Mobile-Phase II, The Grove at Nacogdoches and The Grove at Wichita. In exchange, these third-party investors will receive approximately $10.7 million and 53,000 OP units, representing a 0.2% limited partnership interest in our operating partnership. Under the terms of these agreements, these third-party investors will also provide us with certain limited representations and warranties with respect to their ownership interests being contributed to our operating partnership, including the authority to enter into the agreement, the absence of claims or litigation involving the contributed interest and the obtaining of any necessary consents to the contribution of the interests. The third-party investors also provide covenants under the agreements, including not to transfer or dispose of any of the interests to be contributed, and will indemnify us for any losses resulting from breaches of their representations, warranties and covenants.

•   In exchange for approximately $29.1 million, HSRE will sell to our operating partnership: (i) all of its interests in each of The Grove at Milledgeville and The Grove at San Marcos, with the result that we will own a 100% interest in each of these properties and (ii) a 49.8% interest in a joint venture that will own 100% of each of The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Moscow, The Grove at San Angelo and The Grove at Statesboro, with the result that we will own a 49.9% interest in these properties and HSRE will own a 50.1% interest in these properties. The Grove at San Marcos, The Grove at Moscow and The Grove at San Angelo, each of which is owned by HSRE I, are pledged as collateral under our Wachovia Bank Three Property Construction Loan. In connection with our purchase of our joint venture partner’s interest in The Grove at San Marcos, the outstanding principal balance of the loan will be required to be reduced by approximately $19.7 million. This repayment will be funded, in part, with the net proceeds of preferred investments, with an aggregate amount of approximately $4.8 million, that we will make in special-purpose subsidiaries of HSRE I that own The Grove at Moscow and The Grove at San Angelo. We will be entitled to a cumulative return of 9%, compounded annually, on these preferred investments.

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

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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.

•   We will 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 secured by six of our properties. As described in this prospectus, we will repay, in aggregate, approximately $287.1 million of indebtedness with the (i) net proceeds from this offering and (ii) $39.6 million borrowed under our revolving credit facility.

•   We will purchase the preferred membership interest in our CC-Encore joint venture for $3.9 million and terminate CC-Encore.

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:

•   we will own approximately 95.8% of the outstanding OP units, MXT Capital will own approximately 3.3% of the outstanding OP units, the Ricker Group will own approximately 0.2% of the outstanding OP units and certain third-party investors will own, in the aggregate, approximately 0.2% of the outstanding OP units;

•   our operating partnership will own 100% interests in 21 of our properties;

•   our operating partnership will own an indirect 49.9% interest in The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Moscow, The Grove at San Angelo and The Grove at Statesboro;

•   our mortgage loan with Silverton Bank will be repaid in full (as described in this prospectus, we will repay, in aggregate, approximately $287.1 million of indebtedness with the (i) net proceeds from this offering and (ii) $39.6 million borrowed under our revolving credit facility); and

•   we will own each of the entities through which Campus Crest Group conducted its student housing business.

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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:

(1)	Includes an aggregate of 114,308 shares of restricted common stock to be granted to our independent directors, certain of our executive officers and certain members of our management team.
(2)	Represents a limited partnership interest in our operating partnership.
(3)	Represents 150,000 restricted OP units to be granted to Mr. Hartnett pursuant to his employment agreement upon completion of this offering. This award will vest ratably on each of the first, second and third anniversaries of the completion of this offering.

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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.”

•   Our operating partnership will issue to MXT Capital 973,333 OP units in exchange for MXT Capital’s contribution to our operating partnership of the interests owned by MXT Capital in the predecessor entities and its student housing business.

•   MXT Capital will enter into a tax protection agreement with us. Pursuant to the tax protection agreement, we will agree not to sell, exchange or otherwise dispose of nine of our properties for a period of ten years, or the tax protection period, in a transaction that would cause the members of MXT Capital to realize built-in gain, to such properties at the time of their contribution to our operating partnership. If we sell one or more of these nine properties during the ten-year tax protection period, we will be required to pay to MXT Capital an amount equal to the federal, state and local taxes imposed on the built-in gain allocated to its members, with the amount of such taxes being computed based on the highest applicable federal, state and local marginal tax rates, as well as any “grossed up” taxes imposed on such payments. The amount otherwise payable under the tax protection agreement will be reduced by 20% commencing on the fifth anniversary date of the closing date of this offering and an additional 20% on each successive anniversary date until the amount payable is reduced to zero on the tenth anniversary of the closing date. Consequently, our ability to sell or dispose of these nine properties will be substantially restricted by this obligation to make payments to MXT Capital during the ten-year tax protection period if we sell any such property. This requirement will also restrict our ability to arrange financing for our operations as well as our ability to manage our capital structure.

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.

•   We will enter into a registration rights agreement with MXT Capital pursuant to which we will agree, among other things, to register the resale of any common stock that may be exchanged for the OP units issued in our formation transactions. This agreement requires us to seek to register all common stock that may be exchanged for OP units effective as of that date which is 12 months following completion of this offering on a shelf registration statement under the Securities Act.

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•   MXT Capital will receive Campus Crest Group’s interests in two parcels of land consisting of 20.2 acres, with associated indebtedness of approximately $1.9 million, on which we have decided not to build student housing properties.

•   We will pay the Ricker Group approximately $26.7 million of the net proceeds from this offering and our operating partnership will issue to the Ricker Group 66,667 OP units in exchange for the Ricker Group’s contribution to our operating partnership of the interests owned by the Ricker Group in the predecessor entities and in the entities that have entered into ground leases with us relating to eight of our properties. As a result of our acquisition of the entities that previously had entered into ground leases with us relating to eight of our properties, we will have fee simple title to the real estate that is subject to such leases.

•   Approximately $6.0 million of the net proceeds from this offering will be used to repay indebtedness owed by us to RHR, LLC, an entity owned by MXT Capital and the Ricker Group; RHR, LLC will, in turn, immediately repay an equal amount of indebtedness owed by it to an unaffiliated third party on substantially the same terms and conditions as the loan from RHR, LLC to us.

•   Approximately $4.0 million of the net proceeds from this offering will be used to repay our indebtedness to Capital Bank, an entity in which the Ricker Group has an ownership interest and of which Carl H. Ricker, Jr. is a director.

•   Each of Ted W. Rollins, Michael S. Hartnett and Carl H. Ricker, Jr. will be released from certain personal guarantees with respect to mortgage and construction indebtedness with an aggregate principal amount of approximately $243.3 million in the case of each of Messrs. Rollins and Hartnett and approximately $205.9 million, in the case of Mr. Ricker, and from personal guarantees with respect to the RHR, LLC and Capital Bank indebtedness described above, and MXT Capital indebtedness described below. Each of Messrs. Rollins and Hartnett will be released from certain personal guarantees with respect to the preferred membership interest in CC-Encore.

•   Indebtedness incurred by two entities through which MXT Capital conducts aspects of its business will be repaid by MXT Capital. MXT Capital will receive $4.5 million of the net proceeds from this offering, which it will immediately use to make capital contributions to these entities. These entities will, in turn, immediately use the capital contributions received from MXT Capital solely to repay indebtedness.

•   Our executive officers, directors and certain members of our management team will receive material benefits, including:

•   a grant of 114,308 shares of restricted common stock pursuant to the 2010 Incentive Award Plan (including an aggregate grant of 80,973 shares of restricted common stock to certain of our executive officers and certain members of our management team and an aggregate grant of 33,335 shares of restricted common stock to our independent directors);

•   an aggregate of 512,361 shares of restricted common stock reserved under the 2010 Incentive Award Plan for issuance (i) one year after the termination of the DCP in satisfaction of vested interests in awards that were outstanding under the DCP; and (ii) in 2012 and 2013 pursuant to employment agreements to be entered into with our executive officers;

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•   employment agreements providing for salary, bonus and other benefits, including severance upon a termination of employment under certain circumstances, and, in the case of Mr. Hartnett, a grant of 150,000 restricted OP units upon completion of this offering that will vest ratably on each of the first, second and third anniversaries of the completion of this offering, as described under “Management—Employment Agreements”;

•   indemnification by us for certain liabilities and expenses incurred as a result of actions brought, or threatened to be brought, against them as officers; and

•   upon completion of this offering we have agreed to pay to Donald L. Bobbitt, Jr., an executive vice president and our chief financial officer, Earl C. Howell, our president and chief operating officer, and Howard J. Weissman, a senior vice president and our corporate controller, cash bonuses of $300,000, $200,000 and $150,000, respectively.

•   Each of our non-employee directors will receive material benefits, including:

•   annual and per-meeting fees described under “Management—Director Compensation”; and

•   indemnification by us for certain liabilities and expenses incurred as a result of actions brought, or threatened to be brought, against him as a director.

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POLICIES WITH RESPECT TO CERTAIN ACTIVITIES

The following is a discussion of certain of our investment, financing and other policies. These policies have been adopted by our board of directors and, in general, may be amended or revised from time to time by our board of directors without a vote of our stockholders.

Investment Policies

Investment in Properties or Interests in Properties

We will conduct all of our investment activities through our operating partnership and its affiliates. Our investment objective is to maximize total returns to our stockholders through quarterly cash distributions and long-term capital appreciation through increases in our value. For a discussion of our properties and our growth strategies, see “Business and Properties.”

We expect to pursue our investment objective primarily through the ownership by our operating partnership, directly or indirectly, of the properties to be acquired by us in our formation transactions and other properties we may develop or acquire in the future. We currently intend to acquire property primarily for income. We currently intend to own, develop and acquire existing student housing properties, and other properties that we believe have potential as student housing. Although we generally focus on medium-sized college and university markets, future development or investment activities will not be limited to any particular market, geographic area, or product type or to a specified percentage of our assets. We intend to engage in such future development or investment activities in a manner that is consistent with our intention to qualify for taxation as a REIT for federal income tax purposes. In addition, we may purchase or lease income-producing properties for long-term investment, expand and improve the properties we presently own or other acquired properties, or sell such properties, in whole or in part, when circumstances warrant.

We also expect to participate with third parties in property ownership through joint ventures or other types of co-ownership. We will not, however, enter into a joint venture or other partnership arrangement to make an investment that would not otherwise meet our investment policies. We may also acquire properties or interests in properties in exchange for the issuance of common stock or OP units and may grant registration rights in connection with these issuances.

Investments in properties may be subject to existing mortgage financing and other indebtedness or to new indebtedness which may be incurred in connection with acquiring or refinancing these properties. Debt service on such financing or indebtedness will have a priority over any distributions with respect to our common stock. Any investments in securities will be subject to our policy not to be treated as an “investment company” under the Investment Company Act of 1940, as amended, or the “Investment Company Act.”

Investments in Real Estate Mortgages

While our current portfolio consists of, and our business objective emphasizes, equity investments in student housing properties, we may, at the discretion of our board of directors, invest in mortgages and other types of real estate interests consistent with our intention to qualify for taxation as a REIT. We do not presently intend to invest in mortgages or deeds of trust, but may invest in participating or convertible mortgages if we conclude that we may benefit from the gross revenues or any appreciation in value of the related property. Investments in real estate mortgages run the risk that one or more borrowers may default under certain mortgages and that the collateral securing certain mortgages may not be sufficient to enable us to recoup our full investment.

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Investments in Securities of or Interests in Persons Primarily Engaged in Real Estate Activities and Other Issuers

Subject to the percentage of ownership limitations and gross income tests necessary for REIT qualification, we may invest in securities of other REITs, other entities engaged in real estate activities or securities of other issuers, including for the purpose of exercising control over such entities.

Dispositions

We do not currently intend to dispose of any of our properties, although we reserve the right to do so if, based upon management’s periodic review of our portfolio, we determine that such action would be in the best interest of our stockholders. In addition, we may elect to enter into joint ventures or other types of co-ownership with respect to properties that we already own, either in connection with acquiring interests in other properties (as discussed above in “—Investment Policies—Investment in Properties or Interests in Properties”) or raising equity capital from investors. Certain of our executive officers who directly or indirectly hold OP units may have their decision as to the desirability of a proposed disposition influenced by the tax consequences to them resulting from the disposition of a certain property. Any decision to dispose of a property would require the approval of our board of directors.

MXT Capital will enter into a tax protection agreement with us. Pursuant to the tax protection agreement, we will agree not to sell, exchange or otherwise dispose of nine of our properties during a ten-year tax protection period in a transaction that would cause the members of MXT Capital to realize built-in gain. If we sell one or more of these nine properties during the ten-year tax protection period, we will be required to pay to MXT Capital an amount equal to the federal, state and local taxes imposed on the built-in gain allocated to its members, with the amount of such taxes being computed based on the highest applicable federal, state and local marginal tax rates, as well as any “grossed up” taxes imposed on such payments. The amount otherwise payable in connection with such a transaction under the tax protection agreement will be reduced by 20% commencing on the fifth anniversary date of the closing date of this offering and an additional 20% on each successive anniversary date until the amount payable is reduced to zero on the tenth anniversary of the closing date. Consequently, our ability to sell or dispose of these nine properties will be substantially restricted by this obligation to make payments to MXT Capital during the ten-year tax protection period if we sell any such property.

Financing Policies

We 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. Our total market capitalization is defined as the sum of the market value of our outstanding common stock and preferred stock (which may decrease, thereby increasing our debt to total market capitalization ratio), including shares of restricted stock or restricted stock units that we may issue to our officers and directors under our 2010 Incentive Award Plan, plus the aggregate value of OP units, plus the book value of our total consolidated indebtedness (excluding indebtedness encumbering our current and future unconsolidated joint venture properties). Since this ratio is based, in part, upon market values of equity, it will fluctuate with changes in the price of our common stock. We believe, however, that this ratio provides an appropriate indication of leverage for a company whose assets are primarily real estate. Upon completion of this offering, application of the net proceeds therefrom and our formation transactions, we will have a debt to total market capitalization ratio of approximately 20.0% (18.0% if the underwriters’ overallotment option is exercised in full).

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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. In addition to our three joint ventures properties opened in August 2010, We may also seek to finance development projects through 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.

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, which will become effective immediately upon completion of this offering and satisfaction of customary loan closing conditions. 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 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. 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 anticipate that this revolving credit facility will be used for general corporate purposes and to finance, among other things, identified future growth opportunities including the four wholly-owned and three joint venture properties that we expect to commence building upon completion of this offering, with completion targeted for the 2011-2012 academic year. In addition, we may fund distributions to our stockholders with borrowings under our revolving credit facility.

Our charter and bylaws do not limit the amount or percentage of indebtedness that we may incur. Our board of directors may from time to time modify our debt policy in light of then-current economic conditions, relative costs of debt and equity capital, market values of our properties, general conditions in the market for debt and equity securities, fluctuations in the market price of our common stock, growth and acquisition opportunities and other factors. Accordingly, our board of directors may increase or decrease our ratio of debt to total market capitalization beyond the limits described above. If these policies were changed, we could become more highly leveraged, resulting in an increased risk of default on our obligations and a related increase in debt service requirements that could adversely affect our financial condition and results of operations and our ability to pay distributions to our stockholders. See “Risk Factors—Risks Related to Our Business and Properties.” Our indebtedness exposes us to the risk of default and will reduce our free cash flow, which could materially and adversely affect us. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” Finally, the tax protection agreement will 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 above. This requirement will also restrict our ability to arrange financing for our operations as well as our ability to manage our capital structure.

Conflict of Interest Policies

Generally

Certain of our directors and executive officers may be subject to certain conflicts of interest in fulfilling their responsibilities to us. We intend to adopt certain policies that are designed to

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eliminate or minimize certain potential conflicts of interest. In addition, our board of directors is subject to certain provisions of Maryland law, which are also designed to eliminate or minimize conflicts. However, there can be no assurance that these policies or provisions of our charter and law will always be successful in eliminating the influence of such conflicts, and if they are not successful, decisions could be made that might fail to reflect fully the interests of all stockholders.

Sale or Refinancing of Properties

Upon the sale or refinancing of certain of the properties to be acquired by us in our formation transactions, some holders of OP units, including certain of our executive officers, may suffer different and more adverse tax consequences than our common stockholders. Consequently, holders of OP units may have differing objectives regarding the appropriate pricing and timing of any such sale or repayment of indebtedness. In addition, our ability to sell nine of our properties will be subject to the limitations imposed by the tax protection agreement. Through our wholly-owned subsidiary, Campus Crest Communities GP, LLC, the sole general partner of our operating partnership, we will have the exclusive authority under the partnership agreement to determine whether, when, and on what terms to sell a property or when to refinance or repay indebtedness, and any such decision would require the approval of our board of directors. See “Our Operating Partnership and the Partnership Agreement.”

Interested Director and Officer Transactions

Under the MGCL, a contract or other transaction between us and a director or between us and any other corporation or other entity in which any of our directors is a director or has a material financial interest is not void or voidable solely on the grounds of the common directorship or interest. The common directorship or interest, the presence of such director at the meeting at which the contract or transaction is authorized, approved or ratified or the counting of the director’s vote in favor thereof will not render the transaction void or voidable if:

•   the material facts relating to the common directorship or interest and as to the transaction are disclosed to, or known by, our board of directors or a committee of our board, and our board of directors or committee authorizes, approves or ratifies the transaction or contract by the affirmative vote of a majority of disinterested directors, even if the disinterested directors constitute less than a quorum;

•   the material facts relating to the common directorship or interest and as to the transaction are disclosed to, or known by, our stockholders entitled to vote thereon, and the transaction is authorized, approved or ratified by a majority of the votes cast by the stockholders entitled to vote other than the votes of stock owned of record or beneficially by the interested director, corporation or other entity; or

•   the transaction or contract is fair and reasonable to us at the time it is authorized, approved or ratified.

Furthermore, under Delaware law (where our operating partnership is formed), as the sole general partner we have a fiduciary duty to our operating partnership and, consequently, such transactions also are subject to the duties of care and loyalty that the sole general partner of our operating partnership owes to limited partners in our operating partnership (to the extent such duties have not been eliminated pursuant to the terms of the partnership agreement). We intend to adopt a policy which requires that all contracts and transactions between us, our operating partnership or any of our subsidiaries, on the one hand, and any of our directors or executive officers or any entity in which such director or executive officer is a director or has a material

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financial interest, on the other hand, must be approved by the affirmative vote of a majority of the disinterested directors even if less than a quorum. Where appropriate in the judgment of the disinterested directors, our board of directors may obtain a fairness opinion or engage independent counsel to represent the interests of nonaffiliated security holders, although our board of directors will have no obligation to do so.

Business Opportunities

Pursuant to Maryland law, each director is obligated to offer to us any business opportunity (with certain limited exceptions) that comes to him or her in his or her capacity as a director and that we reasonably could be expected to have an interest in pursuing.

Policies with Respect to Other Activities

We have authority to offer common stock, OP units, preferred stock or options to purchase stock in exchange for property and to repurchase or otherwise acquire our common stock or other securities in the open market or otherwise, and we may engage in such activities in the future. As described in “Our Operating Partnership and the Partnership Agreement,” we expect, but are not obligated to issue shares of common stock to holders of OP units upon exercise of their redemption rights. Except in connection with our initial capitalization, we have not issued common stock, OP units or any other securities in exchange for property or any other purpose. However, as discussed above in “—Investment Policies—Investment in Properties or Interests in Properties” we may elect to do so. Our board of directors has no present intention of causing us to repurchase any common stock although we may do so in the future. We may issue preferred stock from time to time, in one or more series, as authorized by our board of directors without the need for stockholder approval. See “Description of Capital Stock.” We have not engaged in trading, underwriting or agency distribution or sale of securities of other issuers other than our operating partnership and do not intend to do so. At all times, we intend to make investments in such a manner as to qualify as a REIT, unless because of circumstances or changes in the Internal Revenue Code, or the Treasury Regulations, our board of directors determines that it is no longer in our best interest to qualify as a REIT. We have not made any loans to third parties, although we may in the future make loans to third parties, including, without limitation, to joint ventures in which we participate. We intend to make investments in such a way that we will not be treated as an investment company under the Investment Company Act.

Reporting Policies

After this offering, we will become subject to the information reporting requirements of the Exchange Act. Pursuant to those requirements, we will be required to file periodic reports, proxy statements and other information, including audited financial statements, with the SEC. See “Where You Can Find More Information.”

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DESCRIPTION OF CAPITAL STOCK

We are a Maryland corporation. Your rights as a stockholder are governed by Maryland law, including the MGCL, and our charter and bylaws. The following is a summary of the material terms of our capital stock. You should read our charter and bylaws, copies of which are exhibits to the registration statement of which this prospectus is a part, for complete information. See “Where You Can Find More Information.”

General

Authorized Shares. Our charter provides that we may issue up to 90,000,000 shares of our common stock, $0.01 par value per share, and 10,000,000 shares of preferred stock, $0.01 par value per share. Upon completion of this offering, 28,447,641 shares of our common stock (or 32,697,641 shares if the underwriters exercise their overallotment option in full) and no shares of preferred stock will be issued and outstanding.

Authority of Our Board of Directors Relating to Authorized Shares. Our charter authorizes our board of directors to amend our charter to increase or decrease the total number of our authorized shares, or the number of shares of any class or series of capital stock that we have authority to issue, without stockholder approval. Our board of directors also has the authority, under our charter and without stockholder approval, to classify any unissued shares of common or preferred stock into one or more classes or series of stock and to reclassify any previously classified but unissued shares of any series of our common or preferred stock. If, however, there are any laws or stock exchange rules that require us to obtain stockholder approval in order for us to take these actions, we will contact our stockholders to solicit that approval.

We believe that the power to issue additional shares of common stock or preferred stock and to classify or reclassify unissued shares of common or preferred stock and then issue the classified or reclassified shares provides us with increased flexibility in structuring possible future financings and acquisitions and in meeting other needs that may arise in the future. The additional classes or series, as well as the additional shares of stock, will be available for issuance without further action by our stockholders, unless stockholder approval is required by applicable law or the rules of any stock exchange or automated quotation system on which our securities may be listed or traded.

Terms and Conditions of Authorized Shares. Prior to issuance of shares of each class or series, our board of directors is required by Maryland law and our charter to set, subject to the provisions of our charter regarding restrictions on transfer of stock, the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. As a result, our board of directors could authorize the issuance of shares of common stock or preferred stock with terms and conditions that could have the effect of delaying, deferring or preventing a transaction or a change of control that would involve a premium price for holders of our common stock or otherwise be favorable to them.

Stockholder Liability. Applicable Maryland law provides that our stockholders will not be personally liable for our acts and obligations and that our funds and property will be the only recourse for our acts and obligations.

Common Stock

All shares of our common stock offered hereby will be, in the opinion of our counsel, Saul Ewing LLP, duly authorized, fully paid and nonassessable. Subject to the preferential rights of

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any other class or series of stock and to the provisions of our charter regarding restrictions on transfer of stock, holders of shares of our common stock are entitled to receive distributions on such stock if, as and when authorized by our board of directors out of assets legally available for the payment of distributions, and declared by us, and to share ratably in our assets legally available for distribution to our stockholders in the event of our liquidation, dissolution or winding up, after payment of or adequate provision for all of our known debts and liabilities.

Subject to the provisions of our charter regarding restrictions on ownership and transfer of stock and except as may otherwise be specified in the terms of any class or series of common stock, each outstanding share of our common stock entitles the holder to one vote on all matters submitted to a vote of stockholders, including the election of directors and, except as provided with respect to any other class or series of stock, the holders of our common stock will possess the exclusive voting power. There is no cumulative voting in the election of our directors, which means that the holders of a majority of the outstanding shares of our common stock can elect all of the directors then standing for election and the holders of the remaining shares will not be able to elect any directors. Under Maryland law, the holders of a plurality of the votes cast at a meeting at which directors are to be elected is sufficient to elect a director unless a corporation’s charter or bylaws provide otherwise. Our bylaws provide for such plurality voting in the election of directors.

Holders of shares of our common stock have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and have no preemptive or other rights to subscribe for any of our securities. Subject to the provisions of our charter regarding the restrictions on ownership and transfer of stock, shares of our common stock will have equal dividend, liquidation and other rights.

Our charter authorizes our board of directors to reclassify any unissued shares of our common stock into other classes or series of classes of stock and to establish the number of shares in each class or series and to set the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption for each such class or series.

Preferred Stock

Under our charter, our board of directors may from time to time establish and issue one or more series of preferred stock without stockholder approval. Prior to issuance of shares of each series, our board of directors is required by Maryland law and our charter to set, subject to the provisions of our charter regarding restrictions on transfer of stock, the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each series. Thus, our board of directors could authorize the issuance of shares of preferred stock that have priority over our common stock with respect to dividends or rights upon liquidation or with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or a change of control of us that might involve a premium price for holders of our common stock or otherwise be in their best interests. As of the date hereof, no shares of preferred stock are outstanding and we have no present plans to issue any preferred stock.

Restrictions on Ownership and Transfer

In order for us to qualify as a REIT under the Internal Revenue Code, our stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other than the first year for which an election to be a REIT has been made) or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of the outstanding shares of stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities such as qualified pension plans)

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during the last half of a taxable year (other than the first year for which an election to be a REIT has been made). To qualify as a REIT, we must satisfy other requirements as well. See “Federal Income Tax Considerations—Requirements for Qualification.”

Our charter contains restrictions on the ownership and transfer of our stock which are intended to assist us in complying with these requirements and continuing to qualify as a REIT. The relevant sections of our charter provide that, subject to the exceptions described below, no person or entity may beneficially own, or be deemed to own by virtue of the applicable constructive ownership provisions of the Internal Revenue Code, 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. We refer to these restrictions, collectively, as the “ownership limit.” A person or entity that becomes subject to the ownership limit by virtue of a violative transfer that results in a transfer to a trust, as set forth below, is referred to as a “purported beneficial transferee” if, had the violative transfer been effective, the person or entity would have been a record owner and beneficial owner or solely a beneficial owner of our stock, or is referred to as a “purported record transferee” if, had the violative transfer been effective, the person or entity would have been solely a record owner of our stock.

The constructive ownership rules under the Internal Revenue Code are complex and may cause stock owned actually or constructively by a group of related individuals and/or entities to be owned constructively by one individual or entity. As a result, the acquisition of less 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 (or the acquisition of an interest in an entity that owns, actually or constructively, our stock) by an individual or entity, could, nevertheless cause that individual or entity, or another individual or entity, to own constructively in excess of 9.8% by vote or value, whichever is more restrictive, of either our outstanding common stock or our outstanding capital stock in the aggregate and thereby violate the applicable ownership limit.

Our board of directors must waive the ownership limit with respect to a particular stockholder if it:

•   determines that such ownership will not cause any individual’s beneficial ownership of shares of our stock to violate the ownership limit and that any exemption from the ownership limit will not jeopardize our status as a REIT; and

•   determines that such stockholder does not and will not own, actually or constructively, an interest in a tenant of ours (or a tenant of any entity whose operations are attributed in whole or in part to us) that would cause us to own, actually or constructively, more than a 9.8% interest (as set forth in Section 856(d)(2)(B) of the Internal Revenue Code) in such tenant or that any such ownership would not cause us to fail to qualify as a REIT under the Internal Revenue Code.

As a condition of our waiver, our board of directors may require the applicant to submit such information as the board of directors may reasonably need to make the determinations regarding our REIT status and additionally may require an opinion of counsel or IRS ruling satisfactory to our board of directors, and/or representations or undertakings from the applicant with respect to preserving our REIT status.

In connection with the waiver of the ownership limit or at any other time, our board of directors may increase the ownership limitation for some persons and decrease the ownership limit for all other persons and entities; provided, however, that the decreased ownership limit will not be effective for any person or entity whose percentage ownership in our stock is in excess of such decreased ownership limit until such time as such person or entity’s percentage of

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our stock equals or falls below the decreased ownership limit, but any further acquisition of our stock in excess of such percentage ownership of our common stock will be in violation of the ownership limit. Additionally, the new ownership limit may not allow five or fewer stockholders to beneficially or constructively own more than 49.9% in value of our outstanding stock.

Our charter provisions further prohibit:

•   any person from beneficially or constructively owning shares of our stock that would result in our being “closely held” under Section 856(h) of the Internal Revenue Code (without regard to whether the stockholder’s interest is held during the last half of a taxable year) or otherwise cause us to fail to qualify as a REIT; and

•   any person from transferring shares of our stock if such transfer would result in shares of our stock being beneficially owned by fewer than 100 persons (determined without reference to any rules of attribution).

Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our stock that will or may violate any of the foregoing restrictions on transferability and ownership will be required to give notice immediately to us and provide us with such other information as we may request in order to determine the effect of such transfer on our status as a REIT. The foregoing provisions on transferability and ownership will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT.

Pursuant to our charter, any attempted transfer of our stock which, if effective, would result in our stock being beneficially owned by fewer than 100 persons will be void ab initio. Any attempted transfer of our stock or any other event which, if effective, would result in any person violating the ownership limits or such other limit as permitted by our board of directors, will be void and of no force or effect as to that number of shares in excess of the ownership limit (rounded up to the nearest whole share). That number of shares in excess of the ownership limit will be automatically transferred to, and held by, a trust for the exclusive benefit of one or more charitable organizations selected by us. The automatic transfer will be effective as of the close of business on the business day prior to the date of the purported transfer or other event that results in a transfer to the trust. Any dividend or other distribution paid to the purported record transferee, prior to our discovery that the shares had been automatically transferred to a trust as described above, must be repaid to the trustee upon demand for distribution to the beneficiary of the trust. If the transfer to the trust as described above is not automatically effective, for any reason, to prevent violation of the applicable ownership limit or as otherwise permitted by our board of directors, then our charter provides that the transfer of the excess shares will be void ab initio.

Shares of our stock transferred to the trustee are deemed offered for sale to us, or our designee, at a price per share equal to the lesser of: (i) the price paid by the purported record transferee for the shares (or, if the event which resulted in the transfer to the trust did not involve a purchase of such shares of our stock at market price, the last reported sales price reported on the NYSE on the trading day immediately preceding the day of the event which resulted in the transfer of such shares of our stock to the trust); and (ii) the market price on the date we, or our designee, accepts such offer. We have the right to accept such offer until the trustee has sold the shares of our stock held in the trust pursuant to the clauses discussed below. Upon a sale to us, the interest of the charitable beneficiary in the shares sold terminates and the trustee must distribute the net proceeds of the sale to the purported record transferee and any dividends or other distributions held by the trustee with respect to such stock will be paid to the charitable beneficiary.

If we do not buy the shares, the trustee must, within 20 days of receiving notice from us of the transfer of shares to the trust, sell the shares to a person or entity designated by the trustee

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who could own the shares without violating the ownership limits and the other restrictions on ownership and transfer of our stock contained in our charter. After that, the trustee must distribute to the purported record transferee an amount equal to the lesser of: (i) the price paid by the purported record transferee or owner for the shares (or, if the event which resulted in the transfer to the trust did not involve a purchase of such shares at market price, the last reported sales price reported on the NYSE on the trading day immediately preceding the relevant date); and (ii) the sales proceeds (net of commissions and other expenses of sale) received by the trust for the shares. The purported beneficial transferee or purported record transferee has no rights in the shares held by the trustee.

The trustee shall be designated by us and shall be unaffiliated with us and with any purported record transferee or purported beneficial transferee. Prior to the sale of any excess shares by the trust, the trustee will receive, in trust for the beneficiary, all dividends and other distributions paid by us with respect to the excess shares, and may also exercise all voting rights with respect to the excess shares.

Subject to Maryland law, effective as of the date that the shares have been transferred to the trust, the trustee shall have the authority, at the trustee’s sole discretion:

•   to rescind as void any vote cast by a purported record transferee prior to our discovery that the shares have been transferred to the trust; and

•   to recast the vote in accordance with the desires of the trustee acting for the benefit of the beneficiary of the trust.

However, if we have already taken irreversible corporate action, then the trustee may not rescind and recast the vote.

Every owner of 5% or more (or such lower percentage as required by the Internal Revenue Code or regulations promulgated thereunder) of our stock, within 30 days after the end of each taxable year, must give us written notice, stating the person’s name and address, the number of shares of each class and series of our stock that the person beneficially owns and a description of the manner in which the shares are held. Each such owner also must provide us with any additional information we may request in order to determine the effect, if any, of the person’s beneficial ownership on our status as a REIT and to ensure compliance with the ownership limit. In addition, any person or entity that is a beneficial owner or constructive owner of shares of our stock and any person or entity (including the stockholder of record) who is holding shares of our stock for a beneficial owner or constructive owner must, on request, disclose to us in writing such information as we may request in order to determine the effect, if any, of such stockholder’s actual and constructive ownership of shares of our stock on our status as a REIT and to comply, or determine our compliance with, the requirements of any governmental or taxing authority.

All certificates representing shares of our stock will bear a legend referring to the restrictions described above.

These restrictions on ownership and transfer could delay, defer or prevent a transaction or a change of control of us that might involve a premium price for our stock or otherwise be in the best interest of our stockholders.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC.

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CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS

The following description summarizes the material terms of certain provisions of Maryland law, including the MGCL, and our charter and bylaws. You should review the MGCL, our charter and our bylaws for complete information. We have filed our charter and bylaws as exhibits to the registration statement of which this prospectus is a part. See “Where You Can Find More Information.”

Our Board of Directors, Vacancies on Our Board of Directors and Removal of Directors

Number and Election of Directors. Our bylaws provide that the number of our directors will be fixed by a majority of our entire board of directors, but may not be fewer than the minimum number permitted under Maryland law or more than fifteen. In establishing the number of directors, the board of directors may not alter the term of office of any director in office at that time.

Pursuant to our charter, each of our directors is elected to serve until the next annual meeting of our stockholders and until their successors are duly elected and qualified. Holders of shares of our common stock will have no right to cumulative voting in the election of directors. Our bylaws provide that at each annual meeting of stockholders, a plurality of votes cast will be able to elect the directors standing for election.

Vacancies on Our Board of Directors. In our charter, we have elected to be subject to Section 3-804(c) of the MGCL, and subject to the rights of holders of one or more classes or series of preferred stock, any vacancy may be filled only by an affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy will serve for the full term of the directorship in which such vacancy occurred and until a successor is elected and qualifies.

Removal of Directors. Our charter provides that, except for any directors elected by holders of a class or series of shares other than common stock, a director may be removed by the stockholders only with the affirmative vote of at least two-thirds of the votes entitled to be cast generally in the election of directors and only for “cause.” In our charter, “cause” means, with respect to any particular director, conviction of a felony or a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to us through bad faith or active and deliberate dishonesty. This provision, when coupled with the exclusive power of our board of directors to fill vacant directorships, may preclude stockholders from removing incumbent directors and filling the vacancies created by such removal with their own nominees.

Amendment of Our Charter

Our charter generally provides that charter amendments requiring stockholder approval must be declared advisable by our board of directors and approved by the affirmative vote of stockholders entitled to cast a majority of all the votes entitled to be cast on the matter. However, our charter’s provisions regarding removal of directors, restrictions on ownership and transfer of our stock and the number of votes required to amend either of these sections may be amended only if such amendment is declared advisable by our board of directors and approved by the affirmative vote of stockholders entitled to cast not less than two-thirds of all the votes entitled to be cast on the matter.

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Bylaw Amendments

Our board of directors has the exclusive power to adopt, alter or repeal any provision of our bylaws and to make new bylaws.

Transactions Outside the Ordinary Course of Business

Under Maryland law, a Maryland corporation may not merge with or into another entity, sell all or substantially all of its assets, engage in a share exchange or engage in similar transactions outside the ordinary course of its business unless the transaction or transactions are recommended by a majority of the entire board of directors and approved by the affirmative vote of the holders of not less than two-thirds of all of the votes entitled to be cast on the matter. However, a Maryland corporation may provide in its charter for approval of these matters by a lesser percentage of the shares entitled to vote on the matter, but not less than a majority of all of the votes entitled to be cast on the matter. Our charter provides for approval of these matters by at least a majority of the votes entitled to be cast. However, because operating assets may be held by a corporation’s subsidiaries, as in our situation, this may mean that one of our subsidiaries could transfer all of its assets without any vote of our stockholders.

Dissolution

A proposal that we dissolve must be recommended by a majority of the entire board of directors and approved by the affirmative vote of the holders of at least a majority of all of the votes entitled to be cast on the matter.

Advance Notice of Director Nominations and New Business

Our bylaws provide for advance notice by a stockholder or stockholders wishing to have certain matters considered and voted upon at a meeting of stockholders.

With respect to an annual meeting of stockholders, nominations of persons for election to our board of directors and the proposal of business to be considered by stockholders may be made only:

•   pursuant to our notice of the meeting;

•   by or at the direction of our board of directors; or

•   by a stockholder who is entitled to vote at the meeting and has complied with the advance notice procedures set forth in our bylaws.

These procedures generally require the stockholder to deliver notice to our secretary not earlier than the 150th day nor later than the close of business on the 120th day prior to the first anniversary of the date of mailing of the notice for the preceding year’s annual meeting. If the date of the annual meeting is advanced by more than 30 days from the date of the preceding year’s meeting or if we did not hold an annual meeting the preceding year, notice must be delivered not earlier than the 150th day prior to the date of such annual meeting and not later than the close of business on the later of the 120th day prior to the date of such annual meeting, as originally convened, or the 10th day following the day on which disclosure of the date of the meeting is made.

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With respect to special meetings of stockholders, only the business specified in our notice of meeting may be brought before the meeting of stockholders. Nominations of persons for election to our board of directors may be made only:

•   pursuant to our notice of the meeting;

•   by or at the direction of our board of directors; or

•   provided that our board of directors has determined that directors shall be elected at such meeting, by a stockholder who is entitled to vote at the meeting and has complied with the advance notice provisions set forth in our bylaws.

Notice must be delivered not earlier than the 120th day prior to the date of the special meeting and not later than the close of business on the later of the 90th day prior to the date of the special meeting or the 10th day following the day on which disclosure of the date of the special meeting is made.

The postponement or adjournment of an annual or special meeting to a later date or time will not commence any new time periods for the giving of the notice described above. Our bylaws contain detailed requirements for the contents of stockholder notices of director nominations and new business proposals.

Ownership Limit

Our charter provides that no person or entity may beneficially own, or be deemed to own by virtue of the applicable constructive ownership provisions of the Internal Revenue Code, 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. We refer to this restriction as the “ownership limit.” Our charter, however, permits exceptions to be made to this limitation if our board of directors determines that such exceptions will not jeopardize our tax status as a REIT. See “Description of Capital Stock—Restrictions on Ownership and Transfer.”

Business Combinations

The Maryland Business Combination Act establishes special requirements for “business combinations” (including a merger, consolidation, share exchange or, in certain circumstances, an asset transfer or issuance or reclassification of equity securities) between a Maryland corporation and any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation’s shares or an affiliate of the corporation who, at any time within the two-year period prior to the date in question and after the date on which the corporation had 100 or more beneficial owners of its stock, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then outstanding voting stock of the corporation or an “Interested Stockholder.” A corporation may not engage in any business combinations with an Interested Stockholder, or an affiliate of such an Interested Stockholder for a period of five years after the most recent date on which the Interested Stockholder becomes an Interested Stockholder. Thereafter, any such business combination must be recommended by the board of directors of such corporation and approved by the affirmative vote of at least (i) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation and (ii) two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the Interested Stockholder with whom (or with whose affiliate) the business combination is to be effected, unless, among other conditions, the corporation’s common stockholders receive a minimum price (as defined in Maryland law) for their shares and the consideration is received in cash or in the same form as previously paid by the Interested Stockholder for its shares. Under

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the MGCL, a person is not considered an Interested Stockholder under the statute if our board of directors approved in advance the transaction by which the person otherwise would have become an Interested Stockholder.

These provisions of Maryland law do not apply, however, to business combinations that are approved or exempted by resolution of our board of directors provided that the exemption would not apply to a business combination with a particular Interested Stockholder unless the resolution is adopted prior to the time that the Interested Stockholder becomes an Interested Stockholder. Pursuant to the MGCL, our board of directors has by resolution exempted business combinations between us and any person, provided that such business combination is first approved by our board of directors (including a majority of our directors who are not affiliates or associates of such person). Consequently, the five year prohibition and the supermajority vote requirements will not apply to business combinations between us and any person described above. As a result, any person described above may be able to enter into business combinations with us that may not be in the best interests of our stockholders without compliance by us with the supermajority vote requirements and other provisions of the statute. Should our board of directors opt back into the statute or otherwise fail to approve a business combination, the business combination statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.

Our charter provides that any business combinations must be approved by the affirmative vote of at least a majority of the votes entitled to be cast by holders of our voting stock.

Control Share Acquisitions

The Maryland Control Share Acquisition Act provides that “control shares” of a Maryland corporation acquired in a “control share acquisition” have no voting rights except to the extent approved at a special meeting by the affirmative vote of two-thirds of the votes entitled to be cast on the matter, excluding shares of stock in a corporation in respect of which any of the following persons is entitled to exercise or direct the exercise of the voting power of shares of stock of the corporation in the election of directors: (i) a person who makes or proposes to make a control share acquisition; (ii) an officer of the corporation; or (iii) an employee of the corporation who is also a director of the corporation. “Control shares” are voting shares of stock which, if aggregated with all other such shares of stock previously acquired by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting power: (i) one-tenth or more but less than one-third; (ii) one-third or more but less than a majority; or (iii) a majority or more of all voting power. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A “control share acquisition” means the acquisition, directly or indirectly, of ownership of, or the power to direct the exercise of voting power with respect to, control shares, subject to certain exceptions.

A person who has made or proposes to make a control share acquisition, upon satisfaction of certain conditions (including an undertaking to pay expenses), may compel our board of directors to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. If no request for a meeting is made, the corporation may itself present the question at any stockholders’ meeting.

If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then, subject to certain conditions and limitations, the corporation may redeem any or all of the control shares (except those for which voting rights have previously been approved) for fair value determined, without regard to the

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absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquirer or of any meeting of stockholders at which the voting rights of such shares are considered and not approved. If voting rights for control shares are approved at a stockholders’ meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of such appraisal rights may not be less than the highest price per share paid by the acquirer in the control share acquisition.

The control share acquisition statute does not apply (i) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (ii) to acquisitions approved or exempted by the charter or bylaws of the corporation and adopted at any time before the acquisition of the shares.

Our bylaws contain a provision exempting from the Maryland Control Share Acquisition Act any and all acquisitions by any person of our common stock. There can be no assurance that our board of directors will not amend or eliminate this provision of our bylaws in the future.

Maryland Unsolicited Takeovers Act

The Maryland Unsolicited Takeover Act permits Maryland corporations that have classes of equity securities registered under the Exchange Act and have at least three independent directors to elect by resolution of the board of directors or by provision in their charter or bylaws to be subject to certain corporate governance provisions, even if such provisions may be inconsistent with the corporation’s charter and bylaws. Under the Maryland Unsolicited Takeover Act, a board of directors may create classes of directors without the vote of stockholders. Further, the board of directors may, by electing into applicable statutory provisions and notwithstanding any contrary provisions in the charter or bylaws:

•   provide that a special meeting of the stockholders will be called at the request of stockholders only if requested by stockholders entitled to cast at least a majority of the votes entitled to be cast at the meeting;

•   reserve for itself the right to fix the number of directors;

•   provide that a director may be removed only by the vote of the holders of two-thirds of the stock entitled to vote; and

•   provide that any vacancies on the board of directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, for the remainder of the full term of the class of directors in which the vacancy occurred and until a successor is elected and qualified.

A board of directors may implement all or any of these provisions without amending the charter or bylaws and without stockholder approval. Our charter provides that pursuant to an election under Section 3-804(c) of the Maryland Unsolicited Takeover Act, vacancies on our board of directors may be filled only by the affirmative vote of a majority of the remaining directors then in office for the full term of the class of directors in which the vacancy occurred. Through provisions in our charter and bylaws unrelated to the Maryland Unsolicited Takeover Act, we already (i) allow the removal of any director from our board of directors but only for cause and then only with the affirmative vote of the holders of at least two-thirds of our outstanding common stock, (ii) vest in our board the exclusive power to fix the number of directorships and (iii) require, unless called by one of our co-chairmen, our president, our chief executive officer or

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our board of directors, the request of holders of a majority of outstanding shares to call a special meeting.

Anti-Takeover Effect of Certain Provisions of Maryland Law and of Our Charter and Bylaws

The provisions of our charter on removal of directors, provisions that vacancies on our board of directors may be filled only by the remaining directors for the full term of the class of directors in which the vacancy occurred, and the advance notice provisions of our bylaws could delay, defer or prevent a transaction or a change of control of us that might involve a premium price for holders of our common stock or otherwise be in their best interest. Likewise, if our board of directors were to repeal the applicable resolution opting out of the business combination provisions of Maryland law or if the provision in our bylaws opting out of the control share acquisition provisions of Maryland law were rescinded, these provisions of Maryland law could have similar anti-takeover effects.

Indemnification and Limitation of Directors’ and Officers’ Liability

Our charter and bylaws provide for indemnification of our officers and directors against liabilities to the fullest extent permitted by Maryland law.

Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from (i) actual receipt of an improper benefit or profit in money, property or services or (ii) active and deliberate dishonesty that is established by a final judgment as being material to the cause of action. Our charter contains such a provision that limits such liability to the maximum extent permitted by Maryland law.

The MGCL requires a Maryland corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he or she is made or threatened to be made a party by reason of his or her service in that capacity. The MGCL permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or threatened to be made a party by reason of their service in those or other capacities unless it is established that: (1) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (A) was committed in bad faith or (B) was the result of active and deliberate dishonesty; (2) the director or officer actually received an improper personal benefit in money, property or services; or (3) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

However, under the MGCL, a Maryland corporation may not indemnify a director or officer in a suit by or in the right of the corporation in which the director or officer was adjudged liable to the corporation or for a judgment of liability on the basis that a personal benefit was improperly received. A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct, was adjudged liable to the corporation or was adjudged liable on the basis that personal benefit was improperly received. However, indemnification for an adverse judgment in a suit by us or in our right, or for a judgment of liability on the basis that personal benefit was improperly received, is limited to expenses.

In addition, the MGCL permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of: (1) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for

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indemnification by the corporation; and (2) a written undertaking by the director or officer or on the director’s or officer’s behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the director or officer did not meet the standard of conduct.

Our charter authorizes us to obligate ourselves and our bylaws obligate us, to the maximum extent permitted by Maryland law in effect from time to time, to indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to: (1) any present or former director or officer who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity; or (2) any individual who, while a director or officer of us and at our request, serves or has served as a director, officer, partner, member, manager or trustee of another corporation, REIT, partnership, limited liability company, joint venture, trust, employee benefit plan or any other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity.

Our charter and bylaws also permit us to, with approval of our board of directors, indemnify and advance expenses to any person who served a predecessor of ours in any of the capacities described above and to any employee or agent of us or a predecessor of us.

The partnership agreement provides that we, our officers and our directors are indemnified to the fullest extent permitted by law. See “Our Operating Partnership and the Partnership Agreement—Indemnification and Limitation of Liability.”

Insofar as the foregoing provisions permit indemnification of directors, officers or persons controlling us for liability arising under the Securities Act, we have been informed that, in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Indemnification Agreements

Upon completion of this offering, we will enter into an indemnification agreement with each of our executive officers and directors as described in “Management—Indemnification Agreements.”

REIT Qualification

Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without approval of our stockholders, if it determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT.

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SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, we will have 29,690,641 shares of common stock outstanding on a fully-diluted basis, including 28,333,333 shares of common stock sold in this offering, 1,093,000 OP units issued in our formation transactions and an aggregate of 264,308 shares of restricted common stock and 150,000 restricted OP units granted to certain of our executive officers, certain members of our management team and our directors under our 2010 Incentive Award Plan, or 33,940,641 shares of common stock outstanding on a fully-diluted basis if the underwriters’ overallotment option is exercised in full. No assurance can be given as to the likelihood that an active trading market for our common stock will develop or be maintained, that any such market will be liquid, that stockholders will be able to sell the common stock when desired, or at all, or at the price they seek. No prediction can be made as to the effect, if any, that future issuances of common stock, or the perception that such issuances could occur, will have on the market price of our common stock prevailing from time to time, although they may adversely affect the prevailing market price of our common stock. See “Risk Factors—Risks Related to this Offering.”

Our 2010 Incentive Award Plan provides that the aggregate number of shares of common stock that may be issued is 2,500,000 shares, subject to adjustment as provided in the plan. After giving effect to the awards to certain of our executive officers and certain members of our management team upon completion of this offering, 2,235,692 shares will be available for future issuance under the plan. Additionally, we have reserved an aggregate of 512,361 shares of restricted common stock under the 2010 Incentive Award Plan for issuance (i) one year after the termination of the DCP in satisfaction of vested interests in awards that were outstanding under the DCP; and (ii) in 2012 and 2013 pursuant to employment agreements, to our named executive officers and certain other members of our management team, and, upon their issuance, we will have 1,723,331 shares of common stock available for issuance under the plan.

The common stock sold in this offering will be freely transferable without restriction or further registration under the Securities Act, subject to the limitations on ownership set forth in our charter, except for those shares held by our “affiliates,” as that term is defined by Rule 144 under the Securities Act. As defined in Rule 144, an “affiliate” of an issuer is a person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the issuer. All the shares of our common stock held by our affiliates are restricted securities as that term is defined in Rule 144. Restricted securities may be sold in the public market only if registered under the securities laws or if they qualify for an exemption from registration under Rule 144, as described below.

Rule 144

In general, Rule 144 provides that if (i) one year has elapsed since the date of acquisition of the shares of common stock from us or any of our affiliates and (ii) the holder is not an affiliate of ours and has not been an affiliate of ours at any time during the three months preceding the proposed sale, such holder may sell such shares of common stock in the public market under Rule 144(b)(1) without regard to the volume limitations, manner of sale provisions, current public information requirement or notice requirements under such rule. In general, Rule 144 also provides that if (i) six months have elapsed since the date of acquisition of the shares of common stock from us or any of our affiliates, (ii) we have been a reporting company under the Exchange Act for at least 90 days and (iii) the holder is not an affiliate of ours and has not been an affiliate of ours at any time during the three months preceding the proposed sale, such holder may sell such shares of common stock in the public market under Rule 144(b)(1) subject to satisfaction of Rule 144’s current public information requirement but without regard to the volume limitations, manner of sale provisions or notice requirements under such rule.

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In addition, under Rule 144, if (i) one year (or, subject to us being a reporting company under the Exchange Act for at least the preceding 90 days, six months) has elapsed since the date of acquisition of the shares common stock from us or any of our affiliates and (ii) the holder is an affiliate of ours or has been an affiliate of ours at any time during the three months preceding the proposed sale, such holder may sell such shares of common stock in the public market under Rule 144(b)(1) subject to satisfaction of Rule 144’s volume limitations, manner of sale provisions, current public information requirement and notice requirements.

Rule 144 does not supersede the contractual obligations of the parties to the lock-up agreements described below.

Registration Rights

We will enter into a registration rights agreement with MXT Capital pursuant to which we will agree, among other things, to register the resale of any common stock that may be exchanged for the OP units issued in our formation transactions. This agreement requires us to seek to register all common stock that may be exchanged for OP units effective as of that date which is 12 months following the completion of this offering on a shelf registration statement under the Securities Act. We will also grant the holders of OP units the right to include such common stock in any registration statements we may file in connection with any future public offerings, subject to the terms of the lock-up agreements described herein and subject to the right of the underwriters of those offerings to reduce the total number of such shares of common stock to be sold by selling stockholders in those offerings.

In connection with this offering, we intend to file a registration statement on Form S-8 to register the total number of shares of common stock that may be issued under our 2010 Incentive Award Plan.

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. See “Underwriting—No Sales of Similar Securities.”

In the event that either (i) during the last 17 days of the lock-up period referred to above, we issue an earnings release or material news or a material event relating to us occurs or (ii) prior to the expiration of the lock-up period, we announce that we will release earnings results or become aware that material news or a material event will occur during the 16-day period beginning on the last day of the lock-up period, the restrictions described above shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

Raymond James & Associates, Inc., Citigroup Global Markets Inc., Goldman, Sachs & Co., Barclays Capital Inc. and RBC Capital Markets Corporation have informed us that they do not have a present intent or arrangement to release any of the securities subject to the lock-up provisions agreed to with the underwriters. The release of any lock-ups will be considered on a case-by-case basis. The underwriters named above in their sole discretion and at any time without notice, may release some or all of the common stock subject to lock-up agreements before the expiration of the particular lock-up period. When determining whether or not to release the common stock from the lock-up agreements, the underwriters named above will consider, among other factors, the reasons for requesting the release, the number of shares of common stock for which the release is being requested and market conditions at such time.

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OUR OPERATING PARTNERSHIP AND THE PARTNERSHIP AGREEMENT

We have summarized the material terms and provisions of the Amended and Restated Limited Partnership Agreement of Campus Crest Communities Operating Partnership, LP, which we refer to as the “partnership agreement.” For more detail, you should refer to the partnership agreement itself, a copy of which is filed as an exhibit to the registration statement of which this prospectus is a part. For purposes of this section, references to “we,” “our,” “us” and “our company” refer to Campus Crest Communities, Inc.

Management of Our Operating Partnership

Our operating partnership is a Delaware limited partnership that was formed 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 conduct substantially all of our business in or through the operating partnership. As sole general partner of our operating partnership, we exercise exclusive and complete responsibility and discretion in its day-to-day management and control. We have the power to cause our operating partnership to enter into certain major transactions, including acquisitions, dispositions and refinancing, subject to certain limited exceptions. The limited partners of our operating partnership may not transact business for, or participate in the management activities or decisions of, our operating partnership, except as provided in the partnership agreement and as required by applicable law. Certain restrictions under the partnership agreement restrict our ability to engage in a business combination, as more fully described in “—Termination Transactions” below.

Under the terms of the partnership agreement, the limited partners of our operating partnership expressly acknowledge that we, as general partner of our operating partnership, are acting for the benefit of the operating partnership, the limited partners and our stockholders collectively. We are under no obligation to give priority to the separate interests of the limited partners or our stockholders in deciding whether to cause our operating partnership to take or decline to take any actions. If there is a conflict between the interests of our stockholders on one hand and the limited partners on the other, we will endeavor in good faith to resolve the conflict in a manner not adverse to either our stockholders or the limited partners; provided, however, that for so long as we own a controlling interest in our operating partnership, any conflict that cannot be resolved in a manner not adverse to either our stockholders or the limited partners shall be resolved in favor of our stockholders. We are not liable under the partnership agreement to our operating partnership or to any partner for monetary damages for losses sustained, liabilities incurred, or benefits not derived by limited partners in connection with such decisions, provided that we have acted in good faith.

All of our business activities, including all activities pertaining to the acquisition and operation of properties, must be conducted through our operating partnership, and our operating partnership must be operated in a manner that will enable us to satisfy the requirements for being classified as a REIT.

Transferability of Interests

Except in connection with a transaction described in “—Termination Transactions” below, we, as general partner, may not voluntarily withdraw from our operating partnership, or transfer or assign all or any portion of our interest in our operating partnership, without the consent of the holders of a majority of the limited partnership interests, including our 95.8% interest therein.

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Amendments to the Partnership Agreement

Amendments to the partnership agreement may be proposed by us, as general partner, or by limited partners owning at least 25% of the OP units held by limited partners.

Generally, the partnership agreement may be amended, modified or terminated with the approval of partners holding two-thirds of all outstanding OP units (including the OP units held by us). As general partner, we will have the power to unilaterally make certain amendments to the partnership agreement without obtaining the consent of the limited partners as may be required to:

•   add to our obligations as general partner or surrender any right or power granted to us as general partner for the benefit of the limited partners;

•   reflect the issuance of additional OP units or the admission, substitution, termination or withdrawal of partners in accordance with the terms of the partnership agreement;

•   reflect a change of an inconsequential nature that does not adversely affect the limited partners in any material respect, or cure any ambiguity, correct or supplement any provisions of the partnership agreement not inconsistent with law or with other provisions of the partnership agreement, or make other changes concerning matters under the partnership agreement that will not otherwise be inconsistent with the partnership agreement or law;

•   satisfy any requirements, conditions or guidelines contained in any order, directive, opinion, ruling or regulation of a federal or state agency or contained in federal or state law;

•   reflect changes that are reasonably necessary for us to maintain our status as a REIT; or

•   modify the manner in which capital accounts are computed.

Amendments that would, among other things, convert a limited partner’s interest into a general partner’s interest, modify the limited liability of a limited partner, alter a partner’s right to receive any distributions or allocations of profits or losses, or materially alter or modify the redemption rights described below must be approved by each limited partner that would be adversely affected by such amendment.

In addition, without the written consent of the holders of a majority of the limited partnership interests, we, as general partner, may not do any of the following:

•   take any action in contravention of an express prohibition or limitation contained in the partnership agreement;

•   enter into or conduct any business other than in connection with our role as general partner of the operating partnership and our operation as a REIT;

•   withdraw from the operating partnership or transfer any portion of our general partnership interest; or

•   be relieved of our obligations under the partnership agreement following any permitted transfer of our general partnership interest.

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Distributions to Holders of OP Units

The partnership agreement provides that holders of OP units are entitled to receive quarterly distributions of available cash on a pro rata basis in accordance with their respective percentage interests.

Redemption/Exchange Rights

On or after the date which is 12 months after the closing of this offering with respect to OP units acquired on or contemporaneously with the closing date for this offering or such later date as is expressly set forth in any separate agreement between the operating partnership and a limited partner, limited partners who acquire OP units will have the right to require our operating partnership to redeem part or all of their OP units for cash based upon the fair market value of an equivalent number of shares of our company’s common stock at the time of the redemption. Alternatively, we may elect to acquire those OP units in exchange for shares of our common stock. Our acquisition will be on a one-for-one basis, subject to adjustment in the event of stock splits, stock dividends, issuance of stock rights, specified extraordinary distributions and similar events. Limited partners who hold OP units may exercise this redemption right from time to time, in whole or in part, except when, as a consequence of shares of our common stock being issued, any person’s actual or constructive stock ownership would exceed our ownership limits, or any other limit as provided in our charter or as otherwise determined by our board of directors as described under the section entitled “Description of Capital Stock—Restrictions on Ownership and Transfer.”

Issuance of Additional Units, Common Stock or Convertible Securities

As sole general partner, we have the ability, without the consent of the other limited partners, to cause the operating partnership to issue additional OP units representing general and limited partnership interests. These additional OP units may include profits interests units and preferred limited partnership units. In addition, we may issue additional shares of our common stock or convertible securities, but only if we cause our operating partnership to issue to us partnership interests or rights, options, warrants or convertible or exchangeable securities of our operating partnership having designations, preferences and other rights, so that the economic interests of our operating partnership interests issued are substantially similar to the securities that we have issued and we contribute the net proceeds from the issuance of such shares to our operating partnership as a capital contribution.

Tax Matters

As sole general partner, we have authority to make tax elections under the Internal Revenue Code on behalf of our operating partnership. In addition, we are the tax matters partner of our operating partnership.

Allocations of Net Income and Net Losses to Partners

The net income or net loss of our operating partnership will generally be allocated to us, as general partner, and the limited partners in accordance with our respective percentage interests in our operating partnership. However, in some cases losses may be disproportionately allocated to partners who have guaranteed debt of our operating partnership. The allocations described above are subject to special allocations relating to depreciation deductions and to compliance with the provisions of Sections 704(b) and 704(c) of the Internal Revenue Code and the associated Treasury Regulations.

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Operations

The partnership agreement requires that our operating partnership be operated in a manner that enables us to satisfy the requirements for being classified as a REIT for federal tax purposes.

The partnership agreement provides that we, as general partner, will determine and distribute all “available cash,” which includes, without limitation, the net operating cash revenues of our operating partnership, as well as the net sales and refinancing proceeds, quarterly, pro rata in accordance with the partners’ percentage interests.

The partnership agreement provides that our operating partnership will assume and pay when due, or reimburse us for payment of, all costs and expenses relating to the operations of, or for the benefit of, our operating partnership.

Termination Transactions

The partnership agreement provides that we may not engage in any merger, consolidation or other combination with or into another person, any sale of all or substantially all of our assets, or a “termination transaction,” unless in connection with a termination transaction either:

(a) all limited partners will receive, or have the right to elect to receive, for each OP unit an amount of cash, securities, or other property equal to the product of:

(i) the number of shares of our common stock into which each OP unit is then exchangeable; and

(ii) the greatest amount of cash, securities or other property paid to the holder of one share of our common stock in consideration of one share of our common stock pursuant to the termination transaction; or

(b) the following conditions are met:

(i) substantially all of the assets of the surviving entity are held directly or indirectly by our operating partnership or another limited partnership or limited liability company which is the survivor of a merger, consolidation or combination of assets with our operating partnership;

(ii) the holders of OP units own a percentage interest of the surviving entity based on the relative fair market value of the net assets of our operating partnership and the other net assets of the surviving entity immediately prior to the consummation of the termination transaction;

(iii) the rights, preferences and privileges of such OP unit holders in the surviving entity are at least as favorable to those in effect immediately prior to the consummation of the transaction and as those applicable to any other limited partners or non-managing members of the surviving entity; and

(iv) the limited partners may exchange their interests in the surviving entity for cash on terms equivalent to those in effect with respect to the OP units immediately prior to the consummation of such transaction.

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Term

Our operating partnership will continue in full force and effect until it is dissolved in accordance with the terms of the partnership agreement or as otherwise provided by law.

Indemnification and Limitation of Liability

To the extent permitted by applicable law, the partnership agreement indemnifies us, as general partner, and our officers, directors, employees, agents and any other persons we may designate from and against any and all claims that relate to operations of our operating partnership in which any indemnitee may be involved, or is threatened to be involved, as a party or otherwise, unless it is established that:

•   the act or omission of the indemnitee was material to the matter giving rise to the proceeding and either was committed in bad faith or fraud or was the result of active and deliberate dishonesty;

•   the indemnitee actually received an improper personal benefit in money, property or services; or

•   in the case of any criminal proceeding, the indemnitee had reasonable cause to believe that the act or omission was unlawful.

In any event, we, as general partner of our operating partnership, and our officers, directors, agents or employees, are not liable or accountable to our operating partnership for losses sustained, liabilities incurred or benefits not derived as a result of errors in judgment or mistakes of fact or law or any act or omission so long as we acted in good faith.

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FEDERAL INCOME TAX CONSIDERATIONS

The following discussion summarizes our taxation and the material federal income tax consequences to stockholders of their ownership of common stock. The tax treatment of stockholders will vary depending upon the stockholder’s particular situation, and this discussion addresses only stockholders that hold common stock as a capital asset and does not deal with all aspects of taxation that may be relevant to particular stockholders in light of their personal investment or tax circumstances. This section also does not deal with all aspects of taxation that may be relevant to certain types of stockholders to which special provisions of the federal income tax laws apply, including:

•   dealers in securities or currencies;

•   traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

•   banks and other financial institutions;

•   regulated investment companies or real estate investment trusts;

•   tax-exempt organizations (except to the limited extent discussed in “—Taxation of Tax-Exempt Stockholders”);

•   certain insurance companies;

•   persons liable for the alternative minimum tax;

•   holders who received stock through the exercise of employee stock options or otherwise as compensation;

•   persons that hold common stock as a hedge against interest rate or currency risks or as part of a straddle or conversion transaction;

•   persons that hold stock as nominees on behalf of other persons;

•   persons that hold stock indirectly through other vehicles, such as partnerships, trusts or other entities;

•   non-U.S. individuals and foreign corporations (except to the limited extent discussed in “—Taxation of Non-U.S. Stockholders”); and

•   stockholders whose functional currency is not the U.S. dollar.

This summary assumes that you will hold our stock as a capital asset. The statements in this section are based on the Internal Revenue Code, its legislative history, current and proposed regulations under the Internal Revenue Code, published rulings and court decisions. This summary describes the provisions of these sources of law only as they are currently in effect. All of these sources of law may change at any time, and any change in the law may apply retroactively. We cannot assure you that new laws, interpretations of law or court decisions, any of which may take effect retroactively, will not cause any statement in this section to be inaccurate.

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This section is not a substitute for careful tax planning. We urge you to consult your tax advisor regarding the specific tax consequences to you of ownership of our common stock and of our election to be taxed as a REIT. Specifically, you should consult your tax advisor regarding the federal, state, local, foreign, and other tax consequences to you regarding the purchase, ownership and sale of common stock. You should also consult with your tax advisor regarding the impact of potential changes in the applicable tax laws.

Taxation of Our Company

We intend to elect to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code, commencing with our taxable year ending December 31, 2010.

Bradley Arant Boult Cummings LLP has provided us an opinion that commencing with our taxable year ending December 31, 2010, we will have been organized in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code, and our proposed method of operation will enable us to continue to meet the requirements for qualification and taxation as a REIT under the Internal Revenue Code. You should be aware, however, that opinions of counsel are not binding upon the IRS or any court. In providing its opinion, Bradley Arant Boult Cummings LLP is relying, as to certain factual matters, upon the statements and representations contained in certificates provided to Bradley Arant Boult Cummings LLP by us.

Our qualification as a REIT will depend upon our continuing satisfaction of the requirements of the Internal Revenue Code relating to qualification for REIT status. Some of these requirements depend upon actual operating results, distribution levels, diversity of stock ownership, asset composition, source of income and record keeping. Accordingly, while we intend to continue to qualify to be taxed as a REIT, the actual results of our operations for any particular year might not satisfy these requirements. Bradley Arant Boult Cummings LLP will not monitor our compliance with the requirements for REIT qualification on an ongoing basis. Accordingly, no assurance can be given that the actual results of our operation for any particular taxable year will satisfy such requirements. For a discussion of the tax consequences of our failure to qualify as a REIT, see “—Failure to Qualify as a REIT” below.

The sections of the Internal Revenue Code relating to qualification and operation as a REIT, and the federal income taxation of a REIT and its stockholders, are highly technical and complex. The following discussion sets forth only the material aspects of those sections. This summary is qualified in its entirety by the applicable Internal Revenue Code provisions and the related rules and regulations.

As a REIT, we generally will be entitled to a federal income tax deduction for dividends that we pay and therefore will not be subject to federal income tax on the taxable income that we distribute to our stockholders. The benefit of this tax treatment is that it avoids the “double taxation,” or taxation at both the corporate and stockholder levels, that generally results from owning shares in a corporation. Our distributions, however, will generally not be eligible for (i) the lower rates of tax applicable under current law to dividends received by individuals or (ii) the corporate dividends received deduction. Further, we will be subject to federal tax in the following circumstances:

•   First, we will have to pay tax at regular corporate rates on any undistributed real estate investment trust taxable income, including undistributed net capital gains.

•   Second, under certain circumstances, we may have to pay the alternative minimum tax on items of tax preference.

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•   Third, if we have (a) net income from the sale or other disposition of “foreclosure property,” as defined in the Internal Revenue Code, which is held primarily for sale to customers in the ordinary course of business or (b) other non-qualifying income from foreclosure property, we will have to pay tax at the highest corporate rate on that income.

•   Fourth, if we have net income from “prohibited transactions,” as defined in the Internal Revenue Code, we will have to pay a 100% tax on that income. Prohibited transactions are, in general, certain sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. We do not currently intend to dispose of any of our properties and do not intend to engage in prohibited transactions. We cannot assure you, however, that we will only make sales that satisfy the requirements of the safe harbors or that the IRS will not successfully assert that one or more of such sales are prohibited transactions.

•   Fifth, if we should fail to satisfy the 75% gross income test or the 95% gross income test, as discussed below under “—Requirements for Qualification,” but we have nonetheless maintained our qualification as a REIT because we have satisfied other requirements necessary to maintain REIT qualification, we will have to pay a 100% tax on an amount equal to the greater of the amount of gross income by which we fail either the 75% gross income test or the 95% gross income test, multiplied by a fraction which is our taxable income over our gross income determined with certain modifications.

•   Sixth, if we should fail to satisfy any of the asset tests other than a de minimis failure of the 5% and 10% asset tests, as discussed below under “—Requirements for Qualification,” but we have nonetheless maintained our qualification as a REIT because we have satisfied other requirements necessary to maintain REIT qualification and our failure to satisfy a test or tests is due to reasonable cause and not due to willful neglect, we will be subject to an excise tax equal to the greater of (i) $50,000 for each taxable year in which we fail to satisfy any of the asset tests or (ii) the amount of net income generated by the assets that caused the failure (for the period from the start of such failure until the failure is resolved or the assets that caused the failure are disposed of), multiplied by the highest corporate tax rate.

•   Seventh, if we should fail to distribute during each calendar year at least the sum of (i) 85% of our real estate investment trust ordinary income for that year, (ii) 95% of our real estate investment trust capital gain net income for that year and (iii) any undistributed taxable income from prior periods, we would have to pay a 4% excise tax on the excess of that required dividend over the amounts actually distributed.

•   Eighth, if we fail to satisfy one or more requirements for REIT qualification, other than the gross income tests and asset tests, we will be required to pay a penalty of $50,000 for each such failure.

•   Ninth, if we acquire any appreciated asset from a C corporation in certain transactions in which we must adopt the basis of the asset or any other property in the hands of the C corporation as our basis of the asset in our hands, and we recognize gain on the disposition of that asset during the 10-year period beginning on the date on which we acquired that asset, then we will have to pay tax on the built-in gain at the highest regular corporate rate. In general, a C corporation means a corporation that has to pay full corporate-level tax.

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•   Tenth, if we receive non-arm’s length income from one of our TRSs (as defined under “—Requirements for Qualification”), we will be subject to a 100% tax on the amount of our non-arm’s length income.

Requirements for Qualification

To qualify as a REIT, we must elect to be treated as a REIT, and we must meet various (i) organizational requirements, (ii) gross income tests, (iii) asset tests and (iv) annual dividend requirements.

Organizational Requirements

The Internal Revenue Code defines a REIT as a corporation, trust or association:

•   that is managed by one or more trustees or directors;

•   the beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest;

•   that would be taxable as a domestic corporation, but for the special Internal Revenue Code provisions applicable to REITs;

•   that is neither a financial institution nor an insurance company to which certain provisions of the Internal Revenue Code apply;

•   the beneficial ownership of which is held by 100 or more persons;

•   during the last half of each taxable year, not more than 50% in value of the outstanding stock of which is owned, directly or constructively, by five or fewer “individuals” (as defined in the Internal Revenue Code to also include certain entities); and

•   that meets certain other tests, described below, regarding the nature of its income and assets.

The Internal Revenue Code provides that the conditions described in the first through fourth bullet points above must be met during the entire taxable year and that the condition described in the fifth bullet point above must be met during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months. The conditions described in the fifth and sixth bullet points do not apply until after the first taxable year for which a REIT election is made.

We expect that we will satisfy the conditions described in the first through fifth bullet points of the preceding paragraph within the appropriate time periods and believe that we will also satisfy the condition described in the sixth bullet point of the preceding paragraph. In addition, our charter provides for restrictions regarding the ownership and transfer of our common stock. These restrictions are intended to assist us in continuing to satisfy the share ownership requirements described in the fifth and sixth bullet points of the preceding paragraph. The ownership and transfer restrictions pertaining to the common stock are described earlier in this prospectus under the heading “Description of Capital Stock—Restrictions on Ownership and Transfer.”

For purposes of determining share ownership under the sixth bullet point, an “individual” generally includes a supplemental unemployment compensation benefits plan, a private foundation, or a portion of a trust permanently set aside or used exclusively for charitable purposes. An

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“individual,” however, generally does not include a trust that is a qualified employee pension or profit sharing trust under the federal income tax laws, and beneficiaries of such a trust will be treated as holding our shares in proportion to their actuarial interests in the trust for purposes of the sixth bullet point.

A corporation that is a “qualified REIT subsidiary,” or “QRS,” is not treated as a corporation separate from its parent REIT. All assets, liabilities, and items of income, deduction, and credit of a “qualified REIT subsidiary” are treated as assets, liabilities, and items of income, deduction, and credit of the REIT. A “qualified REIT subsidiary” is a corporation, all of the capital stock of which is owned by the REIT. Thus, in applying the requirements described herein, any “qualified REIT subsidiary” that we own will be ignored, and all assets, liabilities, and items of income, deduction, and credit of such subsidiary will be treated as our assets, liabilities, and items of income, deduction, and credit.

An unincorporated domestic entity, such as a limited liability company, that has a single owner, generally is not treated as an entity separate from its owner for federal income tax purposes. An unincorporated domestic entity with two or more owners is generally treated as a partnership for federal income tax purposes. In the case of a REIT that is a partner in a partnership, the REIT is treated as owning its proportionate share of the assets of the partnership and as earning its allocable share of the gross income of the partnership for purposes of the applicable REIT qualification tests.

If, as in our case, a REIT is a partner in a partnership, Treasury Regulations provide that the REIT will be deemed to own its proportionate capital share of the assets of the partnership and will be deemed to be entitled to the income of the partnership attributable to that capital share. In addition, the character of the assets and gross income of the partnership will retain the same character in the hands of the REIT for purposes of Section 856 of the Internal Revenue Code, including satisfying the gross income tests and the asset tests. Thus, our proportionate share of the assets, liabilities and items of income of our operating partnership, which will be our principal asset, will be treated as our assets, liabilities and items of income for purposes of applying the requirements described in this section. In addition, actions taken by our operating partnership or any other entity that is either a disregarded entity (including a qualified REIT subsidiary) or partnership in which we own an interest, either directly or through one or more tiers of disregarded entities (including qualified REIT subsidiaries) or partnerships such as our operating partnership, can affect our ability to satisfy the REIT income and assets tests and the determination of whether we have net income from prohibited transactions. Accordingly, for purposes of this discussion, when we discuss our actions, income or assets we intend that to include the actions, income or assets of our operating partnership or any entity that is either a disregarded entity (including a qualified REIT subsidiary) or partnership for U.S. federal income tax purposes in which we maintain an interest through multiple tiers of disregarded entities (including qualified REIT subsidiaries) or partnerships. It is our intention to exercise our authority as the sole general partner of our operating partnership, and to cause our operating partnership to exercise its authority as general partner of those partnerships in which it owns an interest, so that all such partnerships operate in a manner that will allow us to maintain our status as a REIT.

Gross Income Tests

We must satisfy two gross income tests annually to maintain our qualification as a REIT.

First, at least 75% of our gross income for each taxable year must consist of defined types of income that we derive, directly or indirectly, from investments relating to real property or

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mortgages on real property or qualified temporary investment income. Qualifying income for purposes of the 75% gross income test generally includes:

•   rents from real property;

•   interest on debt secured by mortgages on real property, or on interests in real property;

•   dividends or other distributions on, and gain from the sale of, shares in other REITs;

•   gain from the sale of real estate assets; and

•   income derived from the temporary investment of new capital that is attributable to the issuance of our shares of beneficial interest or a public offering of our debt with a maturity date of at least five years and that we receive during the one year period beginning on the date on which we received such new capital.

Second, in general, at least 95% of our gross income for each taxable year must consist of income that is qualifying income for purposes of the 75% gross income test, other types of interest and dividends, gain from the sale or disposition of stock or securities, or any combination of these.

We may directly or indirectly receive distributions from TRSs or other corporations that are not REITs or qualified REIT subsidiaries. These distributions will be classified as dividend income to the extent of the earnings and profits of the distributing corporation. Such distributions will generally constitute qualifying income for purposes of the 95% gross income test, but not under the 75% gross income test. Any dividends received by us from a REIT, however, will be qualifying income for purposes of both the 95% and 75% income tests.

Gross income from our sale of property that we hold primarily for sale to customers in the ordinary course of business is excluded from both the numerator and the denominator in both income tests. The following paragraphs discuss in greater detail the manner in which the gross income tests will apply to us.

Rents from Real Property. Rent that we receive from our real property will qualify as “rents from real property,” which is qualifying income for purposes of the 75% and 95% gross income tests, only if the following conditions are met:

•   First, the rent must not be based in whole or in part on the income or profits of any person. Participating rent, however, will qualify as “rents from real property” if it is based on percentages of receipts or sales and the percentages: (i) are fixed at the time the leases are entered into; (ii) are not renegotiated during the term of the leases in a manner that has the effect of basing rent on income or profits; and (iii) conform with normal business practice.

More generally, rent will not qualify as “rents from real property” if, considering the relevant lease and all of the surrounding circumstances, the arrangement does not conform with normal business practice, but in reality is used as a means of basing the rent on income or profits. We intend to set and accept rents which are fixed dollar amounts, and not to any extent by reference to any person’s income or profits, in compliance with the rules described above.

•   Second, we must not own, actually or constructively, 10% or more of the stock or the assets or net profits of any lessee, referred to as a related party tenant, other than a TRS. The constructive ownership rules generally provide that, if 10% or more in value of our

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shares is owned, directly or indirectly, by or for any person, we are considered as owning the stock owned, directly or indirectly, by or for such person.

We do not own any stock or any assets or net profits of any lessee directly, except that we may lease office or other space to our Services Company or another TRS. We believe that each of the leases will conform with normal business practice, contain arm’s length terms and that the rent payable under those leases will be treated as rents from real property for purposes of the 75% and 95% gross income tests. However, there can be no assurance that the IRS will not successfully assert a contrary position or that a change in circumstances will not cause a portion of the rent payable under the leases to fail to qualify as “rents from real property.” If such failures were in sufficient amounts, we might not be able to satisfy either of the 75% or 95% gross income tests and could lose our REIT status. In addition, if the IRS successfully reapportions or reallocates items of income, deduction, and credit among and between us and a TRS in which we directly or indirectly own an interest with respect to a lease or any intercompany transaction because it determines that doing so is necessary to prevent the evasion of taxes or to clearly reflect income, we could be subject to a 100% excise tax on those amounts. As described above, we may own one or more TRSs. Under an exception to the related-party tenant rule described in the preceding paragraph, rent that we receive from a TRS will qualify as “rents from real property” as long as (i) at least 90% of the leased space in the property is leased to persons other than TRSs and related party tenants and (ii) the amount paid by the TRS to rent space at the property is substantially comparable to rents paid by other tenants of the property for comparable space. If we receive rent from a TRS, we will seek to comply with this exception.

•   Third, rent attributable to personal property leased in connection with a lease of real property must not be greater than 15% of the total rent received under the lease.

The rent attributable to personal property under a lease is the amount that bears the same ratio to total rent under the lease for the taxable year as the average of the fair market values of the leased personal property at the beginning and at the end of the taxable year bears to the average of the aggregate fair market values of both the real and personal property covered by the lease at the beginning and at the end of such taxable year, or the “personal property ratio.” With respect to each of our leases, we believe that the personal property ratio generally is less than 15%. Where that is not, or may in the future not be, the case, we believe that any income attributable to personal property will not jeopardize our ability to qualify as a REIT.

•   Fourth, we cannot furnish or render noncustomary services to the tenants of our properties, or manage or operate our properties, other than through an independent contractor who is adequately compensated and from whom we do not derive or receive any income. However, we need not provide services through an “independent contractor,” but instead may provide services directly to our tenants, if the services are “usually or customarily rendered” in connection with the rental of space for occupancy only and are not considered to be provided for the tenants’ convenience. In addition, we may provide a minimal amount of “noncustomary” services to the tenants of a property, other than through an independent contractor, as long as our income from the services does not exceed 1% of our income from the related property. Finally, we may own up to 100% of the stock of one or more TRSs, which may provide noncustomary services to our tenants without tainting our rents from the related properties.

We do not intend to perform any services other than customary ones for our lessees, other than services provided through independent contractors or TRSs.

If a portion of the rent we receive from a property does not qualify as “rents from real property” because the rent attributable to personal property exceeds 15% of the total rent for a

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taxable year, the portion of the rent attributable to personal property will not be qualifying income for purposes of either the 75% or 95% gross income test. If rent attributable to personal property, plus any other income that is nonqualifying income for purposes of the 95% gross income test, during a taxable year exceeds 5% of our gross income during the year, we would lose our REIT status.

By contrast, in the following circumstances, none of the rent from a lease of property would qualify as “rents from real property”: (i) the rent is considered based on the income or profits of the lessee; (ii) the lessee is a related party tenant or fails to qualify for the exception to the related-party tenant rule for qualifying TRSs; or (iii) we furnish noncustomary services to the tenants of the property, or manage or operate the property, other than through a qualifying independent contractor or a TRS, and our income from the services exceeds 1% of our gross income from the related property (for purposes of this test, the income received from such noncustomary services is deemed to be at least 150% of the direct cost of providing the services).

Tenants may be required to pay, in addition to base rent, reimbursements for certain amounts we are obligated to pay to third parties (such as utility and telephone companies), penalties for nonpayment or late payment of rent, lease application or administrative fees. These and other similar payments should qualify as “rents from real property.”

Interest. The term “interest” generally does not include any amount received or accrued, directly or indirectly, if the determination of the amount depends in whole or in part on the income or profits of any person. However, an amount received or accrued generally will not be excluded from the term “interest” solely because it is based on a fixed percentage or percentages of receipts or sales. Furthermore, in the case of a shared appreciation mortgage, any additional interest received on a sale of the secured property will be treated as gain from the sale of the secured property.

Prohibited Transactions. A REIT will incur a 100% tax on the net income derived from any sale or other disposition of property, other than foreclosure property, that the REIT holds primarily for sale to customers in the ordinary course of a trade or business. We do not have any current intention to sell any of our properties, and our ability to do so will be substantially limited by the tax protection agreement. Even if we do sell any of our properties, we believe that none of our assets will be held primarily for sale to customers and that a sale of any of our assets will not be in the ordinary course of our business. Whether a REIT holds an asset “primarily for sale to customers in the ordinary course of a trade or business” depends, however, on the facts and circumstances in effect from time to time, including those related to a particular asset. Nevertheless, we will attempt to comply with the terms of safe- harbor provisions in the federal income tax laws prescribing when an asset sale will not be characterized as a prohibited transaction.

Foreclosure Property. We will be subject to tax at the maximum corporate rate on certain income from foreclosure property. We do not own any foreclosure properties and do not expect to own any foreclosure properties in the future. This situation could only change in the future if we were to make loans to third parties secured by real property.

Hedging Transactions. From time to time, we may enter into hedging transactions with respect to one or more of our assets or liabilities. Our hedging activities may include entering into interest rate swaps, caps, and floors, options to enter into any such arrangements, and futures and forward contracts. Any periodic income or gain from the disposition of any financial instrument for these or similar transactions to hedge indebtedness we incur to acquire or carry “real estate assets” should not count as gross income for purposes of the 75% gross income test or the 95% gross income test, provided that certain requirements are met, including that the instrument is

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properly identified within specified time periods as a hedge along with the risk that it hedges. Otherwise, the income and gain from hedging transactions will generally constitute non-qualifying income both for purposes of the 75% gross income test and the 95% gross income test. Since the financial markets continually introduce new and innovative instruments related to risk-sharing or trading, it is not entirely clear which such instruments will generate income which will be considered qualifying income for purposes of the gross income tests. We intend to structure any hedging or similar transactions so as to avoid jeopardizing our status as a REIT.

Failure to Satisfy Gross Income Tests

If we fail to satisfy one or both of the gross income tests for any taxable year, we nevertheless may qualify as a REIT for that year if we qualify for relief under certain provisions of the federal income tax laws. Those relief provisions generally will be available if:

•   our failure to meet the income tests was due to reasonable cause and not due to willful neglect;

•   we attach a schedule of the sources of our income to our tax return; and

•   any incorrect information on the schedule is not due to fraud with intent to evade tax.

We cannot with certainty predict whether any failure to meet these tests will qualify for relief. As discussed above in “—Taxation of Our Company,” even if the relief provisions apply, we would incur a 100% tax on the gross income attributable to the greater of the amounts by which we fail the 75% and 95% gross income tests, multiplied by a fraction intended to reflect our profitability.

Asset Tests

To maintain our qualification as a REIT, we also must satisfy the following asset tests at the end of each quarter of each taxable year:

•   first, at least 75% of the value of our total assets must consist of: (i) cash or cash items, including certain receivables; (ii) government securities; (iii) interests in real property, including leaseholds and options to acquire real property and leaseholds; (iv) interests in mortgages on real property; (v) stock in other REITs and (vi) investments in stock or debt instruments during the one year period following our receipt of new capital;

•   second, of our investments not included in the 75% asset class other than TRSs, the value of our interest in any one issuer’s securities may not exceed 5% of the value of our total assets;

•   third, of our investments not included in the 75% asset class other than TRSs, we may not own more than 10% of the voting power of any one issuer’s outstanding securities;

•   fourth, of our investments not included in the 75% asset class other than TRSs, we may not own more than 10% of the value of any one issuer’s outstanding securities;

•   fifth, no more than 25% of the value of our total assets may consist of the securities of one or more TRSs; and

•   sixth, no more than 25% of the value of our total assets may consist of the securities of TRSs and other non-TRS taxable subsidiaries and other assets that are not qualifying assets for purposes of the 75% asset test.

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For purposes of the fourth asset test above, the term “securities” does not include any of the following: (i) equity interests in a partnership; (ii) any loan made to an individual or an estate; (iii) certain rental agreements in which one or more payments are to be made in subsequent years (other than agreements between a REIT and certain persons related to the REIT); (iv) any obligation to pay rents from real property; (v) securities issued by governmental entities that are not dependent in whole or in part on the profits of (or payments made by) a non-governmental entity; (vi) any security issued by another REIT; (vii) any debt instrument issued by a partnership if the partnership’s income is of a nature that it would satisfy the 75% gross income test described above; and (viii) “straight debt securities.” Straight debt generally is defined as a promise to pay a sum certain with interest that is not contingent on profits and which is not convertible. A security will not qualify as “straight debt” where a REIT (or a controlled TRS of the REIT) owns other securities of the issuer of that security that do not qualify as straight debt, unless the value of those other securities constitute, in the aggregate, 1% or less of the total value of that issuer’s outstanding securities. In applying the 10% value test described above, a debt security issued by a partnership to a REIT is not taken into account to the extent, if any, of the REIT’s proportionate equity interest in the partnership.

Certain relief provisions are available to a REIT that does not satisfy the asset requirements. One such provision allows a REIT which fails one or more of the asset requirements for a particular quarter (other than de minimis violations of the 5% and 10% asset tests as described below) to nevertheless maintain its REIT qualifications if (i) it provides the IRS with a description of each asset causing the failure for such quarter, (ii) the failure is due to reasonable cause and not willful neglect, (iii) the REIT pays a tax equal to the greater of (a) $50,000 per failure, and (b) the product of the net income generated by the assets that caused the failure multiplied by the highest applicable corporate tax rate (currently 35%), and (iv) the REIT either disposes of the assets causing the failure within 6 months after the last day of the quarter in which it identifies the failure, or otherwise satisfies the relevant asset tests within that time frame.

In the case of the de minimis violations of the 10% and 5% asset tests, a REIT may maintain its qualifications if (i) the value of the assets causing the violation does not exceed the lesser of 1% of the REIT’s total assets or $10 million and (ii) the REIT either disposes of the assets causing the failure within 6 months after the last day of the quarter in which it identifies the failure, or the relevant tests are otherwise satisfied within that time frame.

We will monitor the status of our assets for purposes of the various asset tests and will manage our portfolio in order to comply at all times with such tests. If we fail to satisfy the asset tests at the end of a calendar quarter, we will not lose our REIT status if:

•   we satisfied the asset tests at the end of the preceding calendar quarter; and

•   the discrepancy between the value of our assets and the asset test requirements arose from changes in the market values of our assets and was not wholly or partly caused by the acquisition of one or more non-qualifying assets.

If we did not satisfy the condition described in the second item, above, we still could avoid disqualification by eliminating any discrepancy within 30 days after the close of the calendar quarter in which it arose.

Distribution Requirements

Each taxable year, we must distribute dividends, other than capital gain dividends and deemed distributions of retained capital gains, to our stockholders in an aggregate amount not less than the sum of: (i) 90% of our “REIT taxable income,” computed without regard to the

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dividends-paid deduction or our net capital gain or loss; and (ii) 90% of our after-tax net income, if any, from foreclosure property, minus the sum of certain items of non-cash income.

We must pay such dividends in the taxable year to which they relate, or can pay such dividends in the year subsequent to the year to which they relate in the following two situations: (i) we declare the dividend before we timely file our federal income tax return for the year and pay the dividend on or before the first regular dividend payment date after such declaration; or (ii) we declare the dividend during, and set the record date in, the last three months of a calendar year while paying the dividend in January of the following year.

To the extent that we do not distribute all of our net capital gains or distribute at least 90%, but less than 100%, of our real estate investment trust taxable income, as adjusted, we will have to pay tax on those amounts at regular ordinary and capital gains corporate tax rates. Furthermore, if we fail to distribute during each calendar year at least the sum of (i) 85% of our ordinary income for that year, (ii) 95% of our capital gain net income for that year and (iii) any undistributed taxable income from prior periods, we would have to pay a 4% nondeductible excise tax on the excess of the required dividend over the amounts actually distributed.

We may elect to retain and pay income tax on the net long-term capital gains we receive in a taxable year. See “—Taxation of Taxable U.S. Stockholders.” If we so elect, we will be treated as having distributed any such retained amount for purposes of the 4% excise tax described above. We intend to make timely dividends sufficient to satisfy the annual dividend requirements and to avoid corporate income tax and the 4% excise tax.

It is possible that, from time to time, we may experience timing differences between the actual receipt of income and actual payment of deductible expenses and the inclusion of that income and deduction of such expenses in arriving at our REIT taxable income. As a result of the foregoing, we may have less cash than is necessary to distribute all of our taxable income and thereby avoid corporate income tax and the excise tax imposed on certain undistributed income. In such a situation, we may need to borrow funds or issue additional common or preferred shares or pay dividends in the form of taxable stock dividends.

Under certain circumstances, we may be able to correct a failure to meet the distribution requirements for a year by paying “deficiency dividends” to our stockholders in a later year. We may include such deficiency dividends in our deduction for dividends paid for the earlier year. Although we may be able to avoid income tax on amounts distributed as deficiency dividends, we will be required to pay interest and a penalty based upon the amount of any deduction we take for deficiency dividends.

Recordkeeping Requirements

We must maintain certain records in order to qualify as a REIT. In addition, to avoid paying a penalty, we must request on an annual basis information from our stockholders designed to disclose the actual ownership of the outstanding common stock. We have complied and intend to continue to comply with these requirements.

Accounting Period

In order to elect to be taxed as a REIT, we must use a calendar year accounting period. We intend to and will use the calendar year as our accounting period for federal income tax purposes for each and every year we intend to operate as a REIT.

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Failure to Qualify as a REIT

If we failed to qualify as a REIT in any taxable year and no relief provision applied, we would have the following consequences. We would be subject to federal income tax and any applicable alternative minimum tax at rates applicable to regular C corporations on our taxable income, determined without reduction for amounts distributed to stockholders. We would not be required to make any distributions to stockholders, and any dividends to stockholders would be taxable as ordinary income to the extent of our current and accumulated earnings and profits (which may be subject to tax at preferential rates to individual stockholders). Corporate stockholders could be eligible for a dividends-received deduction if certain conditions are satisfied. Unless we qualified for relief under specific statutory provisions, we would not be permitted to elect taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT.

Taxable REIT Subsidiaries

A TRS is any corporation in which a REIT directly or indirectly owns stock, provided that the REIT and that corporation make a joint election to treat that corporation as a TRS. The election can be revoked at any time as long as the REIT and the TRS revoke such election jointly. In addition, if a TRS holds directly or indirectly, more than 35% of the securities of any other corporation (by vote or by value), then that other corporation is also treated as a TRS. A corporation can be a TRS with respect to more than one REIT. We intend to make a TRS election for our Services Companies. We will conduct our development, construction and management services for third parties through our Services Companies. We also will conduct certain management services for own properties through our Services Companies as necessary to satisfy the gross income tests described below. The income earned by each Services Company will be subject to regular federal corporate income or franchise tax and state and local income tax where applicable and will therefore be subject to an additional level of tax as compared to the rental income earned from our properties. The taxes imposed on our Services Companies may be material in amount.

A TRS is subject to federal income tax at regular corporate rates (maximum rate of 35%), and may also be subject to state and local taxation. Any dividends paid by any one of our TRSs or deemed received by us from any one of our TRSs will also be subject to tax, either (i) to us if we do not pay the dividends received to our stockholders as dividends, or (ii) to our stockholders if we do pay out the dividends received to our stockholders. Further, the rules impose a 100% excise tax on transactions between a TRS and its parent REIT or the REIT’s tenants that are not conducted on an arm’s length basis. We may hold more than 10% of the stock of a TRS without jeopardizing our qualification as a REIT notwithstanding the rule described above under “—Requirements for Qualification—Asset Tests” that generally precludes ownership of more than 10% (by vote or value) of any issuer’s securities. However, as noted below, in order for us to qualify as a REIT, the securities of all of the TRSs in which we have invested either directly or indirectly may not represent more than 25% of the total value of our assets. We expect that the aggregate value of all of our interests in TRSs will represent less than 25% of the total value of our assets, and will, to the extent necessary, limit the activities of the Services Companies or take other actions necessary to satisfy the 25% value limit. We cannot, however, assure that we will always satisfy the 25% value limit or that the IRS will agree with the value we assign to the Services Companies and any other TRS in which we own an interest.

A TRS is not permitted to directly or indirectly operate or manage a “lodging facility.” A “lodging facility” is defined as a “hotel, motel or other establishment more than one-half of the dwelling units in which are used on a transient basis.” We have been advised by counsel that our Services Company will not be considered to operate or manage a lodging facility. Although the Services Company is expected to lease certain of our student housing properties on a short term

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basis during the summer months and occasionally during other times of the year, we have been advised that such limited short term leasing will not cause the Services Company to be considered to directly or indirectly operate or manage a lodging facility. Counsel’s opinion is based in part on Treasury Regulations interpreting similar language applicable to other provisions of the Internal Revenue Code. Treasury Regulations or other guidance specifically adopted for purposes of the TRS provisions might take a different approach, and, even absent such guidance, the IRS might take a view contrary to that of counsel. In such an event, we might be forced to change our method of operating the Services Company, which could adversely affect us, or could cause the Services Company to fail to qualify as a TRS, in which event we could fail to qualify as a REIT.

We may engage in activities indirectly though a TRS as necessary or convenient to avoid receiving the benefit of income or services that would jeopardize our REIT status if we engaged in the activities directly. In particular, we would likely engage in activities through a TRS for providing services that are non-customary and services to unrelated parties (such as our third-party construction, development and management services) that might produce income that does not qualify under the gross income tests described below. We might also hold certain properties in the Services Company, such as our interest in certain of the leasehold properties if we determine that the ownership structure of such properties may produce income that would not qualify for purposes of the REIT income tests described below.

Taxation of Taxable U.S. Stockholders

As used in this section, the term “U.S. stockholder” means a holder of common stock who, for U.S. federal income tax purposes, is:

•   a citizen or resident of the U.S.;

•   a domestic corporation;

•   an estate whose income is subject to U.S. federal income taxation regardless of its source; or

•   a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons have authority to control all substantial decisions of the trust.

As long as we qualify as a REIT, distributions made by us out of our current or accumulated earnings and profits, and not designated as capital gain dividends, will constitute dividends taxable to our taxable U.S. stockholders as ordinary income. Under current law, individuals receiving “qualified dividends,” dividends from domestic and certain qualifying foreign subchapter C corporations, may be entitled to the new lower rates on dividends (at rates applicable to long-term capital gains, currently at a maximum rate of 15%) provided certain holding period requirements are met. However, individuals receiving dividend distributions from us, a REIT, will generally not be eligible for the lower rates on dividends except with respect to the portion of any distribution which (i) represents dividends being passed through to us from a corporation in which we own shares (but only if such dividends would be eligible for the lower rates on dividends if paid by the corporation to its individual stockholders), including dividends from our TRS, (ii) which is equal to our REIT taxable income (taking into account the dividends paid deduction available to us) less any taxes paid by us on these items during our previous taxable year or (iii) are attributable to built-in gains realized and recognized by us from disposition of properties acquired by us in non-recognition transaction, less any taxes paid by us on these items during our previous taxable year. Dividends of this kind will not be eligible for the dividends received deduction in the case of taxable U.S. stockholders that are corporations.

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Dividends made by us that we properly designate as capital gain dividends will be taxable to taxable U.S. stockholders as gain from the sale of a capital asset held for more than one year, to the extent that they do not exceed our actual net capital gain for the taxable year, without regard to the period for which a taxable U.S. stockholder has held his common stock. Thus, with certain limitations, capital gain dividends received by an individual taxable U.S. stockholder may be eligible for preferential rates of taxation. Taxable U.S. stockholders that are corporations may, however, be required to treat up to 20% of certain capital gain dividends as ordinary income.

To the extent that we make distributions in excess of our current and accumulated earnings and profits, these distributions will be treated first as a non-taxable return of capital to each taxable U.S. stockholder. Thus, these distributions will reduce the basis which the taxable U.S. stockholder has in our common stock for tax purposes by the amount of the distribution, but not below zero. Such distributions in excess of a taxable U.S. stockholder’s basis in his or her common stock will be taxable as capital gains, provided that the common stock has been held as a capital asset.

Dividends authorized by us in October, November, or December of any year and payable to a stockholder of record on a specified date in any of these months will be treated as both paid by us and received by the stockholder on December 31 of that year, provided that we actually pay the dividend in January of the following calendar year. Stockholders may not include in their own income tax returns any of our net operating losses or capital losses.

We may elect to retain, rather than distribute, all or a portion of our net long-term capital gains and pay the tax on such gains. If we make such an election, we will designate amounts as undistributed capital gains in respect of your shares or beneficial interests by written notice to you which we will mail out to you with our annual report or at any time within 60 days after December 31 of any year. When we make such an election, taxable U.S. stockholders holding common stock at the close of our taxable year will be required to include, in computing their long-term capital gains for the taxable year in which the last day of our taxable year falls, the amount that we designate in a written notice mailed to our stockholders. We may not designate amounts in excess of our undistributed net capital gain for the taxable year. Each taxable U.S. stockholder required to include the designated amount in determining the stockholder’s long-term capital gains will be deemed to have paid, in the taxable year of the inclusion, the tax paid by us in respect of the undistributed net capital gains. Taxable U.S. stockholders to whom these rules apply will be allowed a credit or a refund, as the case may be, for the tax they are deemed to have paid. Taxable U.S. stockholders will increase their basis in their common stock by the difference between the amount of the includible gains and the tax deemed paid by the stockholder in respect of these gains.

Dividends made by us and gain arising from a taxable U.S. stockholder’s sale or exchange of our common stock will not be treated as passive activity income. As a result, taxable U.S. stockholders generally will not be able to apply any passive losses against that income or gain.

When a taxable U.S. stockholder sells or otherwise disposes of our common stock, the stockholder will recognize gain or loss for federal income tax purposes in an amount equal to the difference between (i) the amount of cash and the fair market value of any property received on the sale or other disposition and (ii) the holder’s adjusted basis in the common stock for tax purposes. This gain or loss will be capital gain or loss if the U.S. stockholder has held the common stock as a capital asset. The gain or loss will be long-term gain or loss if the U.S. stockholder has held the common stock for more than one year. Long-term capital gains of an individual taxable U.S. stockholder is generally taxed at preferential rates. The highest marginal individual income tax rate is currently 35%. The current maximum tax rate on long-term

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capital gains applicable to individuals is 15% for sales and exchanges of assets held for more than one year. The maximum tax rate on long-term capital gains from the sale or exchange of “section 1250 property” (i.e., generally, depreciable real property) is 25% to the extent the gain would have been treated as ordinary income if the property were “section 1245 property” (i.e., generally, depreciable personal property). We generally may designate whether a distribution we designate as capital gain dividends (and any retained capital gain that we are deemed to distribute) is taxable to non-corporate stockholders at a 15% or 25% rate. The characterization of income as capital gain or ordinary income may affect the deductibility of a stockholders capital losses. A non-corporate taxpayer may deduct capital losses not offset by capital gains against its ordinary income only up to a maximum of $3,000 annually and may carry unused capital losses forward indefinitely. A corporate taxpayer must pay tax on its net capital gains at corporate ordinary-income rates. A corporate taxpayer may deduct capital losses only to the extent of capital gains, with unused losses carried back three years and forward five years. In general, any loss recognized by a taxable U.S. stockholder when the stockholder sells or otherwise disposes of our common stock that the stockholder has held for six months or less, after applying certain holding period rules, will be treated as a long-term capital loss, to the extent of dividends received by the stockholder from us which were required to be treated as long-term capital gains.

Information Reporting Requirements and Backup Withholding

We will report to our stockholders and to the IRS the amount of dividends we pay during each calendar year and the amount of tax we withhold, if any. A stockholder may be subject to backup withholding at a rate of 28% with respect to dividends unless the holder:

•   is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact; or

•   provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules.

A stockholder who does not provide us with its correct taxpayer identification number also may be subject to penalties imposed by the IRS. Any amount paid as backup withholding will be creditable against the stockholder’s U.S. federal income tax liability. In addition, we may be required to withhold a portion of capital gain dividends to any stockholders who fail to certify their non-foreign status to us. For a discussion of the backup withholding rules as applied to non-U.S. stockholders, see “—Taxation of Non-U.S. Stockholders.”

Taxation of Tax-Exempt Stockholders

Amounts distributed as dividends by a REIT generally do not constitute unrelated business taxable income when received by a tax-exempt entity. Provided that a tax-exempt stockholder is not one of the types of entity described in the next paragraph and has not held its common stock as “debt financed property” within the meaning of the Internal Revenue Code, and the common stock is not otherwise used in a trade or business, the dividend income from the common stock will not be unrelated business taxable income to a tax-exempt stockholder. Similarly, income from the sale of common stock will not constitute unrelated business taxable income unless the tax-exempt stockholder has held the common stock as “debt financed property” within the meaning of the Internal Revenue Code or has used the common stock in a trade or business.

Income from an investment in our common stock will constitute unrelated business taxable income for tax-exempt stockholders that are social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans exempt from

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federal income taxation under the applicable subsections of Section 501(c) of the Internal Revenue Code, unless the organization is able to properly deduct amounts set aside or placed in reserve for certain purposes so as to offset the income generated by its common stock. Prospective investors of the types described in the preceding sentence should consult their own tax advisors concerning these “set aside” and reserve requirements.

Notwithstanding the foregoing, however, a portion of the dividends paid by a “pension-held REIT” will be treated as unrelated business taxable income to any trust which:

•   is described in Section 401(a) of the Internal Revenue Code;

•   is tax-exempt under Section 501(a) of the Internal Revenue Code; and

•   holds more than 10% (by value) of the equity interests in the REIT.

Tax-exempt pension, profit-sharing and stock bonus funds that are described in Section 401(a) of the Internal Revenue Code are referred to below as “qualified trusts.” A REIT is a “pension-held REIT” if:

•   it would not have qualified as a REIT but for the fact that Section 856(h)(3) of the Internal Revenue Code provides that stock owned by qualified trusts will be treated, for purposes of the “not closely held” requirement, as owned by the beneficiaries of the trust (rather than by the trust itself); and

•   either (a) at least one qualified trust holds more than 25% by value of the interests in the REIT or (b) one or more qualified trusts, each of which owns more than 10% by value of the interests in the REIT, hold in the aggregate more than 50% by value of the interests in the REIT.

The percentage of any REIT dividend treated as unrelated business taxable income to a qualifying trust is equal to the ratio of (i) the gross income of the REIT from unrelated trades or businesses, determined as though the REIT were a qualified trust, less direct expenses related to this gross income, to (ii) the total gross income of the REIT, less direct expenses related to the total gross income. An exception applies for years in which the percentage is less than 5%. We do not expect to be classified as a pension-held REIT, but this cannot be guaranteed.

The rules described above in “—Taxation of Taxable U.S. Stockholders” concerning the inclusion of our designated undistributed net capital gains in the income of our stockholders will apply to tax-exempt entities. Thus, tax-exempt entities will be allowed a credit or refund of the tax deemed paid by these entities in respect of the includible gains.

Taxation of Non-U.S. Stockholders

The rules governing U.S. federal income taxation of nonresident alien individuals, foreign corporations, foreign partnerships, and other foreign stockholders are complex. This section is only a summary of such rules. We urge non-U.S. stockholders to consult their own tax advisors to determine the impact of federal, state, and local income tax laws on ownership of common stock, including any reporting requirements.

Ordinary Dividends. Dividends paid to non-U.S. stockholders, other than dividends that are distributions treated as attributable to gain from sales or exchanges by us of U.S. real property interests, or “USRPI,” as discussed below, generally will be, to the extent that they are made out of our current or accumulated earnings and profits, subject to a withholding tax equal to 30% of

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the gross amount of the dividend, unless an applicable tax treaty reduces that tax. However, if income from the investment in the common stock is treated as effectively connected with the non-U.S. stockholder’s conduct of a U.S. trade or business or is attributable to a permanent establishment that the non-U.S. stockholder maintains in the United States, if that is required by an applicable income tax treaty as a condition for subjecting the non-U.S. stockholder to U.S. taxation on a net income basis, tax at graduated rates will generally apply to the non-U.S. stockholder in the same manner as U.S. stockholders are taxed with respect to dividends, and the 30% (or lower treaty rate) branch profits tax may also apply if the stockholder is a foreign corporation. We expect to withhold U.S. tax at the rate of 30% on the gross amount of any dividends, other than dividends treated as attributable to gain from sales or exchanges of USRPIs, paid to a non-U.S. stockholder, unless (i) a lower treaty rate applies and the required form evidencing eligibility for that reduced rate (ordinarily, IRS Form W-8 BEN) is filed with us or the appropriate withholding agent (ii) the recipient is a foreign sovereign, or an agency or instrumentality of a foreign sovereign and the requested form (IRS Form W-8BEN) is filed with us to claim exemption from withholding, or (iii) the non-U.S. stockholder files an IRS Form W-8 ECI or a successor form with us or the appropriate withholding agent claiming that the dividends are effectively connected with the non-U.S. stockholder’s conduct of a U.S. trade or business. Dividends to a non-U.S. stockholder that are designated by us at the time of dividend as capital gain dividends which are not attributable to or treated as attributable to the disposition by us of a USRPI interest generally will not be subject to U.S. federal income taxation, except as described below.

Non-Dividend Distributions. If, as we anticipate, our common stock does not constitute a USRPI (as described under “—Sale of Common Stock”), distributions by us which are not dividends out of our earnings and profits will not be subject to U.S. income tax. If it cannot be determined at the time at which a distribution is made whether or not the distribution will exceed current and accumulated earnings and profits, the distribution will be subject to withholding at the rate applicable to dividends. A non-U.S. stockholder may apply to the IRS for a refund of the amounts withheld if it is subsequently determined that the distribution was in excess of our current and accumulated earnings and profits.

If our stock constitutes a USRPI, as described below under “—Sale of Common Stock” distributions in excess of our earnings and profits, to the extent they exceed a non-U.S. stockholder’s basis in common stock, will be treated as gain from the sale or exchange of such stock and be taxed under the Foreign Investment in Real Property Tax Act of 1980, as amended, or “FIRPTA,” as a gain from the sale of the common stock.

Distributions Attributable to Gains from Sales of USRPIs. For any year in which we qualify as a REIT, dividends that are attributable to gain from sales or exchanges by us of USRPIs will be taxed to a non-U.S. stockholder under FIRPTA. These dividends are taxed to a non-U.S. stockholder as if the gain were effectively connected with a U.S. business, thereby taxing non-U.S. stockholders on these dividends at the normal capital gain rates applicable to U.S. stockholders, subject to the alternative minimum tax rates applicable to non-U.S. stockholders that are individuals (20% of the lesser of the gains or alternative minimum taxable income not in excess of $175,000 and 28% of such amount in excess of $175,000). We are required to withhold at the maximum tax rate applicable to corporations (currently 35%) of any such distribution attributable to gains from sales or exchanges of USRPIs. The non-U.S. stockholder may credit the amount withheld against its U.S. tax liability and apply for a refund to the extent the amount withheld exceeds the non-U.S. stockholder’s U.S. tax liability.

A distribution that otherwise would have been subject to withholding under the rules described in the preceding paragraph, is not treated as gain from the sale of a U.S. real property interest taxed at normal capital gain rates applicable to U.S. stockholders, and will instead by

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treated the same as an ordinary dividend, provided that (i) the capital gain dividend is received with respect to a class of stock that is regularly traded on an established securities market located in the United States, and (ii) the recipient non-U.S. stockholder does not own more than 5% of that class of stock at any time during the one-year period ending on the date on which the capital gain dividend is received.

Sale of Common Stock. Gain recognized by a non-U.S. stockholder on the sale of stock in a U.S. corporation may be subject to tax under FIRPTA if the stock constitutes a USRPI. Stock in a U.S. corporation generally constitutes a USRPI if 50% or more of the corporation’s assets consists of interests in real property. Gain recognized by a non-U.S. stockholder upon a sale or exchange of our common stock generally will not be taxed under the FIRPTA if we are a “domestically controlled REIT,” defined generally as a REIT, less than 50% in value of whose stock is and was held directly or indirectly by foreign persons at all times during a specified testing period. We believe that we will be a domestically controlled REIT, and, therefore, the sale of stock by a non-U.S. stockholder will not be subject to U.S. tax. Because our stock is publicly traded, however, no assurance can be given that we will qualify as a domestically controlled REIT at any time in the future.

Even if we were not a domestically controlled REIT, FIRPTA would not apply to a non-U.S. stockholder’s sale of common stock if the selling non-U.S. stockholder owned 5% or less of the class of common stock sold at any time during a specified period. This period is generally the shorter of the period that the non-U.S. stockholder owned the common stock sold or the five-year period ending on the date when the non-U.S. stockholder disposed of the common stock. If FIRPTA applies to a non-U.S. stockholders sale of our common stock, the non-U.S. stockholder would be subject to the same treatment as applicable to U.S. stockholders with respect to the gain, subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals.

Gain resulting from the sale of our common stock by a non-U.S. person that is not subject to FIRPTA is not taxable to a non-U.S. stockholder unless its investment in the common stock is treated as effectively connected with the non-U.S. stockholder’s U.S. trade or business or is attributable to a permanent establishment that the non-U.S. stockholder maintains in the United States, if that is required by an applicable income tax treaty as a condition for subjecting the non-U.S. stockholder to U.S. taxation on a net income basis, in which cases, the same treatment will apply to the non-U.S. stockholder as to U.S. stockholders with respect to the gain. In addition, gain to which the FIRPTA does not apply will be taxable to a non-U.S. stockholder if the non-U.S. stockholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year to which the gain is attributable.

Backup Withholding and Information Reporting

The sale of our common stock by a non-U.S. stockholder through a non-U.S. office of a broker generally will not be subject to information reporting or backup withholding. The sale generally is subject to the same information reporting applicable to sales through a U.S. office of a U.S. or foreign broker if the sale of common stock is effected at a foreign office of a broker that is:

•   a U.S. person;

•   a controlled foreign corporation for U.S. tax purposes;

•   a foreign person 50% or more of whose gross income is effectively connected with the conduct of a U.S. trade or business for a specified three-year period; or

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•   a foreign partnership, if at any time during its tax year: (i) one or more of its partners are “U.S. persons,” as defined in U.S. Treasury Regulations, who in the aggregate hold more than 50% of the income or capital interest in the partnership; or (ii) such foreign partnership is engaged in the conduct of a U.S. trade or business,

Backup withholding generally does not apply if the broker does not have actual knowledge or reason to know that you are a United States person and the applicable documentation requirements are satisfied. Generally, a non-U.S. stockholder satisfies the information reporting requirements by providing IRS form W-8BEN or an acceptable substitute. The application of information reporting and backup withholding varies depending on the stockholders particular circumstances, and therefore a non-U.S. stockholder is advised to consult its tax advisor regarding the applicable information reporting and backup withholding.

Tax Aspects of Our Investments in Our Operating Partnership

The following discussion summarizes certain federal income tax considerations applicable to our direct or indirect investment in our operating partnership and any subsidiary partnerships or limited liability companies we form or acquire, each individually referred to as a partnership and, collectively, as partnerships. The following discussion does not address state or local tax laws or any federal tax laws other than income tax laws.

Classification as Partnerships

We are entitled to include in our income our distributive share of each partnership’s income and to deduct our distributive share of each partnership’s losses only if such partnership is classified for federal income tax purposes as a partnership, rather than as a corporation or an association taxable as a corporation. An organization with at least two owners or partners will be classified as a partnership, rather than as a corporation, for federal income tax purposes if it:

•   is treated as a partnership under the Treasury Regulations relating to entity classification, or the “check-the-box regulations”; and

•   is not a “publicly traded” partnership.

Under the check-the-box regulations, an unincorporated entity with at least two owners or partners may elect to be classified either as an association taxable as a corporation or as a partnership. If such an entity does not make an election, it generally will be treated as a partnership for federal income tax purposes.

We intend that each partnership in which we own an interest will be classified as a partnership for federal income tax purposes (or as a disregarded entity where there are not at least two separate beneficial owners).

A publicly traded partnership is a partnership whose interests are traded on an established securities market or are readily tradable on a secondary market (or a substantial equivalent). A publicly traded partnership is generally treated as a corporation for federal income tax purposes, but will not be so treated for any taxable year for which at least 90% of the partnership’s gross income consists of specified passive income, including real property rents, gains from the sale or other disposition of real property, interest, and dividends, or the “90% passive income exception.” Treasury regulations provide limited safe harbors from treatment as a publicly traded partnership. Pursuant to one of those safe harbors, or private placement exclusion, interests in a partnership will not be treated as readily tradable on a secondary market or the substantial equivalent thereof if (i) all interests in the partnership were issued in a transaction or transactions

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that were not required to be registered under the Securities Act, and (ii) the partnership does not have more than 100 partners at any time during the partnership’s taxable year. We expect that each partnership we own an interest in will qualify for the private placement exclusion, one of the other safe harbors from treatment as a publicly traded partnership, and/or will satisfy the 90% passive income exception.

Income Taxation of the Partnerships and their Partners

We own interests in our operating partnership and certain subsidiary partnerships. Entities in which we own 100% of the interests (directly or through other disregarded entities) will be disregarded for federal income tax purposes and will be treated as a division of our business. In addition we may hold interests in partnerships or limited liability companies that are not disregarded entities, or “partnership” or “partnerships.”

Partners, Not the Partnerships, Subject to Tax. A partnership is not a taxable entity for federal income tax purposes. We will therefore take into account our allocable share of each partnership’s income, gains, losses, deductions, and credits for each taxable year of the partnership ending with or within our taxable year, even if we receive no distribution from the partnership for that year or a distribution less than our share of taxable income. Similarly, even if we receive a distribution, it may not be taxable if the distribution does not exceed our adjusted tax basis in our interest in the partnership.

Partnership Allocations. Although a partnership agreement generally will determine the allocation of income and losses among partners, allocations will be disregarded for tax purposes if they do not comply with the provisions of the federal income tax laws governing partnership allocations. If an allocation is not recognized for federal income tax purposes, the item subject to the allocation will be reallocated in accordance with the partners’ interests in the partnership, which will be determined by taking into account all of the facts and circumstances relating to the economic arrangement of the partners with respect to such item. Each partnership’s allocations of taxable income, gain, and loss are intended to comply with the requirements of the federal income tax laws governing partnership allocations.

The partnership’s basis for federal income tax purposes in property contributed to the partnership pursuant to the contribution agreements with MXT Capital and the third-party investors will be determined in whole or in part by reference to the basis of the property prior to the contributions, rather than the fair market value of the property on the date of the contributions. However, the partnership’s basis in property contributed to the partnership pursuant to the contribution agreement will be increased by $4.5 million that MXT Capital receives from the net proceeds of this offering (which will be used entirely to repay indebtedness), allocated among the various assets contributed by MXT Capital in accordance with their fair market values at the time of contribution. The partnership’s depreciation deductions with respect to the property will be the applicable percentage of its federal income tax basis in the property. The partnership is required to account for the difference between its basis in property and the fair market value on the date of contribution under one of the methods prescribed by Treasury Regulations promulgated under Section 704(c) of the Internal Revenue Code. The tax protection agreement will require the partnership to use the traditional method as defined in the applicable Treasury Regulations with respect to the student housing properties that have built-in gain as of the closing date of this offering. Under the traditional method, the depreciation deductions allocable to us will be limited to the depreciation deductions allowable to the partnership for federal income tax purposes and might cause the depreciation for federal income tax purposes allocated to us to be less than the depreciation that would have been allocated to us had the partnership used one of the other methods allowed under the Treasury Regulations, thereby increasing our taxable income.

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Sale of a Partnership’s Property. Generally, any gain realized by a partnership on the sale of property held for more than one year will be long-term capital gain, except for any portion of the gain treated as depreciation or cost recovery recapture. Conversely, our share of any partnership gain from the sale of inventory or other property held primarily for sale to customers in the ordinary course of the partnership’s trade or business will be treated as income from a prohibited transaction subject to a 100% tax. Income from a prohibited transaction may have an adverse effect on our ability to satisfy the gross income tests for REIT status. See “—Requirements for Qualification.” We do not presently intend to acquire or hold, or to allow any partnership to acquire or hold, any property that is likely to be treated as inventory or property held primarily for sale to customers in the ordinary course of our, or the Partnership’s, trade or business.

State and Local Taxes

We and/or our stockholders may be subject to taxation by various states and localities, including those in which we or a stockholder transacts business, owns property or resides. The state and local tax treatment may differ from the federal income tax treatment described above. Consequently, stockholders should consult their own tax advisors regarding the effect of state and local tax laws upon an investment in our common stock.

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ERISA CONSIDERATIONS

A fiduciary of a pension, profit sharing, retirement or other employee benefit plan, or plan, subject to the Employee Retirement Income Security Act of 1974, as amended, or “ERISA,” should consider the fiduciary standards under ERISA in the context of the plan’s particular circumstances before authorizing an investment of a portion of such plan’s assets in our common stock.

Accordingly, such fiduciary should consider (i) whether the investment satisfies the diversification requirements of Section 404(a)(1)(C) of ERISA, (ii) whether the investment is in accordance with the documents and instruments governing the plan as required by Section 404(a)(1)(D) of ERISA and (iii) whether the investment is prudent under ERISA. In addition to the imposition of general fiduciary standards of investment prudence and diversification, ERISA, and the corresponding provisions of the Internal Revenue Code, prohibit a wide range of transactions involving the assets of the plan and persons who have certain specified relationships to the plan (“parties in interest” within the meaning of ERISA, “disqualified persons” within the meaning of the Internal Revenue Code). Thus, a plan fiduciary considering an investment in our common stock also should consider whether the acquisition or the continued holding of the shares might constitute or give rise to a direct or indirect prohibited transaction that is not subject to an exemption issued by the Department of Labor, or the “DOL.” Similar restrictions apply to many governmental and foreign plans which are not subject to ERISA. Thus, those considering investing in the shares on behalf of such a plan should consider whether the acquisition or the continued holding of the shares might violate any such similar restrictions.

The DOL has issued final regulations, or the “DOL Regulations,” as to what constitutes assets of an employee benefit plan under ERISA. Under the DOL Regulations, if a plan acquires an equity interest in an entity, which interest is neither a “publicly offered security” nor a security issued by an investment company registered under the Investment Company Act, the plan’s assets would include, for purposes of the fiduciary responsibility provision of ERISA, both the equity interest and an undivided interest in each of the entity’s underlying assets unless certain specified exceptions apply. The DOL Regulations define a publicly offered security as a security that is “widely held,” “freely transferable,” and either part of a class of securities registered under the Exchange Act, or sold pursuant to an effective registration statement under the Securities Act (provided the securities are registered under the Exchange Act within 120 days after the end of the fiscal year of the issuer during which the public offering occurred). The shares are being sold in an offering registered under the Securities Act and will be registered under the Exchange Act.

The DOL Regulations provide that a security is “widely held” only if it is part of a class of securities that is owned by 100 or more investors independent of the issuer and of one another. A security will not fail to be “widely held” because the number of independent investors tails below 100 subsequent to the initial public offering as a result of events beyond the issuer’s control. We expect our common stock to be “widely held” upon completion of this offering.

The DOL Regulations provide that whether a security is “freely transferable” is a factual question to be determined on the basis of all relevant facts and circumstances, the DOL Regulations further provide that when a security is part of an offering in which the minimum investment is $10,000 or less, as is the case with this offering, certain restrictions ordinarily will not, alone or in combination, affect the finding that such securities are “freely transferable.” We believe that the restrictions imposed under our declaration of trust on the transfer of our shares are limited to the restrictions on transfer generally permitted under the DOL Regulations and are not likely to result in the failure of the common stock to be “freely transferable.” The DOL

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Regulations only establish a presumption in favor of the finding of free transferability, and, therefore, no assurance can be given that the DOL will not reach a contrary conclusion.

Assuming that the common stock will be “widely held” and “freely transferable,” we believe that our common stock will be publicly offered securities for purposes of the DOL Regulations and that our assets will not be deemed to be “plan assets” of any plan that invests in our common stock.

Each holder of our common stock will be deemed to have represented and agreed that its purchase and holding of such common stock (or any interest therein) will not constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code.

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UNDERWRITING

Raymond James & Associates, Inc., Citigroup Global Markets Inc., Goldman, Sachs & Co., Barclays Capital Inc. and RBC Capital Markets Corporation are acting as the underwriters of this offering. Subject to the terms and conditions set forth in an underwriting agreement among us, our operating partnership and the underwriters, we have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not jointly, to purchase from us, the number of shares of common stock set forth opposite its name below.

	Number
Underwriter	of Shares
Raymond James & Associates, Inc.
Citigroup Global Markets Inc.
Goldman, Sachs & Co.
Barclays Capital Inc.
RBC Capital Markets Corporation
Robert W. Baird & Co. Incorporated
Total		28,333,333

Subject to the terms and conditions set forth in the underwriting agreement, the underwriters have agreed, severally and not jointly, to purchase all of the shares of our common stock sold under the underwriting agreement if any of these shares of our common stock are purchased. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the nondefaulting underwriters may be increased or the underwriting agreement may be terminated.

We have agreed to indemnify the several underwriters against certain liabilities including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of those liabilities.

The underwriters are offering the shares of our common stock, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the shares of our common stock, and other conditions contained in the underwriting agreement, such as the receipt by the underwriters of officer’s certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

Commissions and Discounts

The underwriters have advised us that they propose initially to offer the shares of our common stock to the public at the public offering price set forth on the cover page of this prospectus and to dealers at that price less a concession not in excess of $      per share. The underwriters may allow, and the dealers may reallow, a discount not in excess of $      per share to other dealers. After this initial public offering, the public offering price, concession or any other term of this offering may be changed.

The following table shows the public offering price, underwriting discount (excluding the fees described in the footnote to the table below) and proceeds, before expenses, to us. The

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information assumes either no exercise or full exercise by the underwriters of their overallotment option.

	Per Share	Without Option	With Option
Public offering price	$	$	$
Underwriting discount (1)	$	$	$
Proceeds, before expenses, to us	$	$	$

(1) Excludes a structuring fee payable to Raymond James & Associates, Inc. of 0.60% of the total public offering price of our common stock sold in this offering. Contingent upon completion of this offering, we will also pay Raymond James & Associates, Inc. a fee of $1,465,000 for services rendered in connection with various financing and purchase and sale arrangements.

The estimated offering expenses payable by us, exclusive of the underwriting discount and the fees payable to Raymond James & Associates, Inc. that are described below, are approximately $6.5 million. In addition to the underwriting discount, we will also pay a structuring fee to Raymond James & Associates, Inc. of 0.60% of the total public offering price of our common stock sold in this offering in connection with certain financial analysis conducted by it in connection with this offering. This structuring fee will be approximately $2.3 million ($2.6 million if the underwriters exercise their over-allotment option in full), based on the mid-point of the price range set forth on the cover page of this prospectus. We will also pay Raymond James & Associates, Inc. a fee of $1,465,000 for services rendered in connection with various financing and purchase and sale arrangements.

Overallotment Option

We have granted an option to the underwriters to purchase up to 4,250,000 additional shares of our common stock at the public offering price, less the underwriting discount. The underwriters may exercise this option for 30 days from the date of this prospectus solely to cover any overallotments. If the underwriters exercise this option, each will be obligated, subject to conditions contained in the underwriting agreement, to purchase a number of additional shares of our common stock proportionate to that underwriter’s initial amount reflected in the above table.

Purchases by Directors, Officers and Employees

At our request, the underwriters have reserved up to five percent (5%) of the shares of our common stock offered by this prospectus for sale to our directors, officers, employees and certain other persons associated with us at the public offering price set forth on the cover page of this prospectus. These persons must commit to purchase from an underwriter or selected dealer at the same time as the general public. The number of shares of our common stock available for sale to the general public will be reduced to the extent these persons purchase the reserved shares of our common stock. Any reserved shares of our common stock purchased by our directors or executive officers in this offering will be subject to the lock-up agreements described below. We are not making loans to any of our directors, employees or other persons to purchase such shares of our common stock.

No Sales of Similar Securities

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 first obtaining the written consent of Raymond James & Associates, Inc., Citigroup Global Markets Inc., Goldman, Sachs & Co., Barclays Capital Inc. and RBC Capital Markets Corporation.

251

Specifically, we and these other persons have agreed, with certain limited exceptions, not to directly or indirectly:

•   offer, pledge, sell or contract to sell any common stock;

•   sell any option or contract to purchase any common stock;

•   purchase any option or contract to sell any common stock;

•   grant any option, right or warrant for the sale of any common stock;

•   lend or otherwise dispose of or transfer any common stock;

•   request or demand that we file a registration statement related to the common stock; or

•   enter into any swap or other agreement that transfers, in whole or in part, the economic consequence of ownership of any common stock whether any such swap or transaction is to be settled by delivery of shares of our common stock or other securities, in cash or otherwise.

This lock-up provision applies to common stock and to securities convertible into or exchangeable or exercisable for or repayable with common stock. It also applies to common stock owned now or acquired later by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition.

In the event that either (i) during the last 17 days of the lock-up period referred to above, we issue an earnings release or material news or a material event relating to us occurs or (ii) prior to the expiration of the lock-up period, we announce that we will release earnings results or become aware that material news or a material event will occur during the 16-day period beginning on the last day of the lock-up period, the restrictions described above shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

New York Stock Exchange Listing

Our common stock has been approved for listing on the NYSE under the symbol ‘‘CCG,” subject to official notice of issuance. In order to meet the requirements for listing on that exchange, the underwriters have undertaken to sell a minimum number of shares of our common stock to a minimum number of beneficial owners as required by that exchange.

Determination of Offering Price

Before this offering, there has been no public market for our common stock. The initial public offering price will be determined through negotiations between us and the underwriters. In addition to prevailing market conditions, the factors to be considered in determining the initial public offering price are:

•   the valuation multiples of publicly traded companies that the underwriters believe to be comparable to us;

•   our financial information;

•   the history of, and the prospects for, us and the industry in which we compete;

252

•   an assessment of our management, its past and present operations, and the prospects for, and timing of, our future revenues;

•   the present state of our development; and

•   the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours.

An active trading market for our common stock may not develop. It is also possible that after this offering our common stock will not trade in the public market at or above the initial public offering price.

The underwriters do not expect to sell more than 5% of the shares in the aggregate to accounts over which they exercise discretionary authority.

Price Stabilization, Short Positions and Penalty Bids

Until the distribution of our shares of common stock is completed, SEC rules may limit underwriters and selling group members from bidding for and purchasing our common stock. However, the underwriters may engage in transactions that stabilize the price of the common stock, such as bids or purchases to peg, fix or maintain that price.

In connection with this offering, the underwriters may purchase and sell our common stock in the open market. These transactions may include short sales, purchases on the open market to cover positions created by short sales and stabilizing transactions. Short sales involve the sale by the underwriters of a greater number of shares of our common stock than they are required to purchase in this offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ overallotment option described above. The underwriters may close out any covered short position by either exercising their overallotment option or purchasing shares of our common stock in the open market. In determining the source of shares of our common stock to close out the covered short position, the underwriters will consider, among other things, the price of shares of our common stock available for purchase in the open market as compared to the price at which they may purchase shares of our common stock through the overallotment option. “Naked” short sales are sales in excess of the overallotment option. The underwriters must close out any naked short position by purchasing shares of our common stock in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common stock in the open market after pricing that could adversely affect investors who purchase in this offering. Stabilizing transactions consist of various bids for or purchases of shares of our common stock made by the underwriters in the open market prior to the completion of this offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the underwriters have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Similar to other purchase transactions, the underwriters’ purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. The underwriters may conduct these transactions on the NYSE, in the over-the-counter market or otherwise.

253

Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common stock. In addition, neither we nor any of the underwriters make any representation that the underwriters will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

Electronic Offer, Sale and Distribution of Shares

In connection with this offering, certain of the underwriters or securities dealers may distribute prospectuses by electronic means, such as e-mail. In addition, the underwriters may facilitate Internet distribution for this offering to certain of its Internet subscription customers. The underwriters may allocate a limited number of shares of our common stock for sale to their online brokerage customers. An electronic prospectus may be available on websites maintained by the underwriters. Other than the prospectus in electronic format, the information on the underwriters’ websites is not part of this prospectus.

Other Relationships

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Some of the underwriters and their respective affiliates have in the past and may in the future engage in investment banking and other commercial dealings in the ordinary course of business with us or our affiliates and may in the future receive customary fees and commissions for these transactions. In particular, contingent upon completion of this offering, we will pay a structuring fee to Raymond James & Associates, Inc. of 0.60% of the total public offering price of our common stock sold in this offering in connection with certain financial analysis conducted by it in connection with this offering. We will also pay Raymond James & Associates, Inc. a fee of $1,465,000 for services rendered in connection with various financing and purchase and sale arrangements.

In addition to the underwriting discount to be received by our underwriters in connection with this offering, we expect that affiliates of Raymond James & Associates, Inc., Citigroup Global Markets Inc., Goldman, Sachs & Co., Barclays Capital Inc. and RBC Capital Markets Corporation will be lenders under the senior secured revolving credit facility that will become effective immediately upon completion of this offering and satisfaction of customary loan closing conditions.

In addition, on August 4, 2010, the preferred membership interest issued by CC-Encore was assigned by Encore to RJRC, LLC for consideration of $2.35 million. RJRC, LLC is a limited liability company established to make investments in real estate and related financial instruments, and is owned by certain associated persons of Raymond James & Associates, Inc., Encore and other third party investors. We will purchase the preferred membership interest for $3.9 million out of the net proceeds from this offering.

In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of ours. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

254

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each, a “Relevant Member State,” each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State, or the “Relevant Implementation Date,” it has not made and will not make an offer of shares of common stock to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:

(i) to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;

(ii) to any legal entity which has two or more of (a) an average of at least 250 employees during the last financial year, (b) a total balance sheet of more than €43,000,000 and (c) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

(iii) to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the underwriters for any such offer; or

(iv) in any other circumstances which do not require the publication by the issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of shares to the public” in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

Each underwriter has represented and agreed that:

(i) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000, or the “FSMA”) received by it in connection with the issue or sale of the shares of common stock in circumstances in which Section 21(1) of the FSMA does not apply to the issuer; and

(ii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

Hong Kong

The shares of common stock may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or

255

elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares of common stock may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the “SFA,” (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares of common stock are subscribed or purchased under Section 275 by a relevant person which is: (i) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (ii) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (a) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (b) where no consideration is given for the transfer; or (c) by operation of law.

Japan

The shares of common stock have not been and will not be registered under the Financial Instruments and Exchange Law of Japan, or the “Financial Instruments and Exchange Law,” and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

256

LEGAL MATTERS

The validity of the common stock and certain matters of Maryland law will be passed upon for us by Saul Ewing LLP. The summary of legal matters contained in the section of this prospectus under “Federal Income Tax Considerations” is based on the legal opinion of Bradley Arant Boult Cummings LLP. Sidley Austin llp, New York, New York, has acted as counsel to the underwriters.

EXPERTS

The balance sheet of Campus Crest Communities, Inc. as of March 1, 2010, included herein, has been audited and reported upon by KPMG LLP, an independent registered public accounting firm. The combined financial statements and financial statement schedule III of Campus Crest Communities Predecessor as of December 31, 2009 and 2008, and for each of the years in the three-year period ended December 31, 2009, included herein, has been audited and reported upon by KPMG LLP, an independent registered public accounting firm. The financial information as of December 31, 2009 and 2008 and for each of the years in the three-year period ended December 31, 2009, in the table under “Selected Historical and Pro Forma Financial Information,” included herein, has been derived from financial statements audited by and reported upon by KPMG LLP. The combined statement of revenue and certain expenses of HSRE Properties for the year ended December 31, 2009, included herein, has been audited and reported upon by KPMG LLP, an independent registered public accounting firm. Such financial statements, schedule and financial data have been included herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The information set forth herein under “Industry Outlook” is included in reliance upon MGA’s authority as an expert on such matters.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-11, including exhibits, schedules and amendments filed with this registration statement, under the Securities Act with respect to the shares of our common stock to be sold in this offering. This prospectus does not contain all of the information set forth in the registration statement and exhibits and schedules to the registration statement. For further information with respect to us and the shares of our common stock to be sold in this offering, reference is made to the registration statement, including the exhibits and schedules to the registration statement. Statements contained in this prospectus as to the contents of any contract or other document referred to in this prospectus are not necessarily complete and, where that contract or document is an exhibit to the registration statement, each statement is qualified in all respects by reference to the exhibit to which the reference relates. Copies of the registration statement, including the exhibits and schedules to the registration statement, may be examined without charge at the public reference room of the SEC, 100 F Street, N.E. Room 1580, Washington, DC 20549. Information about the operation of the public reference room may be obtained by calling the SEC at 1-800-SEC-0300. Copies of all or a portion of the registration statement can be obtained from the public reference room of the SEC upon payment of prescribed fees. Our SEC filings, including our registration statement, are also available to you on the SEC’s website, www.sec.gov.

As a result of this offering, we will become subject to the information and reporting requirements of the Exchange Act and will file annual, quarterly and other periodic reports and proxy statements and will make available to our stockholders annual reports containing audited financial information for each year and quarterly reports for the first three quarters of each fiscal year containing unaudited interim financial information.

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INDEX TO FINANCIAL STATEMENTS

	Page
Campus Crest Communities, Inc. Unaudited Pro Forma Condensed Consolidated Financial Statements:
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2010		F-3
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the six months ended June 30, 2010		F-4
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2009		F-5
Notes and Management’s Assumptions to Unaudited Pro Forma Condensed Consolidated Financial Statements		F-6
Historical Financial Statements:
Report of Independent Registered Public Accounting Firm		F-13
Balance Sheets as of June 30, 2010 (unaudited) and March 1, 2010		F-14
Notes to Balance Sheets		F-15
Campus Crest Communities Predecessor Combined Financial Statements:
Report of Independent Registered Public Accounting Firm		F-16
Combined Balance Sheets as of June 30, 2010 (unaudited) and December 31, 2009 and 2008		F-17
Combined Statements of Operations for the six months ended June 30, 2010 and 2009 (unaudited) and for the years ended December 31, 2009, 2008 and 2007		F-18
Combined Statements of Changes in Equity (Deficit) for the six months ended June 30, 2010 (unaudited) and for the years ended December 31, 2009, 2008 and 2007		F-19
Combined Statements of Cash Flows for the six months ended June 30, 2010 and 2009 (unaudited) and for the years ended December 31, 2009, 2008 and 2007		F-20
Notes to Combined Financial Statements		F-21
Schedule III—Real Estate and Accumulated Depreciation		F-51
Notes to Schedule III		F-52
HSRE Properties Combined Statement of Revenue and Certain Expenses:
Report of Independent Registered Public Accounting Firm		F-53
Combined Statements of Revenue and Certain Expenses for the six months ended June 30, 2010 (unaudited) and for the year ended December 31, 2009		F-54
Notes to Combined Statements of Revenue and Certain Expenses		F-55

F-1

CAMPUS CREST COMMUNITIES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The unaudited pro forma condensed consolidated financial statements as of and for the six months ended June 30, 2010 and for the year ended December 31, 2009 are presented as if this offering by Campus Crest Communities, Inc. (the “Company”) of approximately 28,333,333 million shares of its common stock, $0.01 par value per share (this “offering”), our formation transactions and the debt repayment transactions all had occurred on June 30, 2010 for the purposes of the unaudited pro forma condensed consolidated balance sheet and on the first day of the periods presented for the purposes of the unaudited pro forma condensed consolidated statements of operations.

The unaudited pro forma condensed consolidated financial statements have been adjusted to give effect to:

•   the historical financial results of Campus Crest Communities Predecessor (as defined below), including Campus Crest Communities, Inc. for the six months ended June 30, 2010 (unaudited) and for the year ended December 31, 2009;

•   our formation transactions;

•   the repayment of indebtedness and other use of proceeds from this offering;

•   borrowings under the Company’s line of credit;

•   the acquisition of certain noncontrolling interests of the Predecessor;

•   the incremental general and administrative expenses to be incurred to operate as a public company;

•   the probable 2010 acquisition by the Company of certain entities owned by one or more real estate ventures in which the Predecessor is a member;

•   the probable 2010 acquisition by the Company of certain land under contract; and

•   the election by certain of the Company’s subsidiaries to be treated as taxable real estate investment trust (“REIT”) subsidiaries.

The unaudited pro forma condensed consolidated financial statements include adjustments relating to acquisitions only when it is probable that the Company will acquire the properties.

You should read the information below along with all other financial information and analysis presented in this prospectus, including the sections captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Predecessor combined financial statements and related notes included elsewhere in this prospectus. The unaudited pro forma condensed consolidated financial statements are not necessarily indicative of the actual financial position of the Company as of June 30, 2010 or what the actual results of operations of the Company would have been assuming this offering and our formation transactions had been completed on the first day of the periods presented, nor are they indicative of the results of operations of future periods. The unaudited pro forma adjustments and eliminations are based on available information and upon assumptions the Company believes are reasonable.

Campus Crest Communities Predecessor (the “Predecessor,” “we,” “us” or “our”) is engaged in the business of developing, constructing, owning and managing high-quality, purpose-built student housing properties in the United States. The Predecessor is not a legal entity, but rather a combination of certain vertically integrated operating companies under common ownership.

F-2

CAMPUS CREST COMMUNITIES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of June 30, 2010
(in thousands)

												Acquisition
			Campus			Repayment						of Third-						Acquisition			Impact of
	Campus Crest		Crest			of debt			Acquisition			Party			Acquisition			of land			TRS for
	Communities,		Communities			and associated			of Ricker			Investor			of HSRE			under			third-party			This			Pro
	Inc.		Predecessor			costs			interest			interest			Properties			contract			contracts			offering			forma
						(A)			(B)			(C)			(D)			(E)			(F)			(G)
Assets
Investment in real estate, net:
Student housing properties	$	—	$	348,466		$	—		$	—		$	—		$	21,934		$	—		$	—		$	—		$	370,400
Accumulated depreciation		—		(48,403	)		—			—			—			—			—			—			—			(48,403	)
Development in process		—		3,641			—			—			—			—			3,449			—			—			7,090
Investment in real estate, net		—		303,704			—			—			—			21,934			3,449			—			—			329,087
Investment in uncombined entities		—		3,257			—			—			—			18,215			—			—			—			21,472
Cash and cash equivalents		—		3,054			(267,385	)		(26,731	)		(10,711	)		(31,969	)		(3,449	)		—			344,435			7,244
Restricted cash and investments		—		3,770			—			—			—			—			—			—			—			3,770
Student receivables, net		—		333			—			—			—			7			—			—			—			340
Cost in excess of construction billings		—		2,781			—			—			—			—			—			—			—			2,781
Other assets		—		11,474			650			(1,629	)		—			70			—			—			—			10,565
Total assets	$	—	$	328,373		$	(266,735	)	$	(28,360	)	$	(10,711	)	$	8,257		$	—		$	—		$	344,435		$	375,259
Liabilities and equity (deficit)
Liabilities:
Mortgage and construction loans	$	—	$	329,374		$	(283,472	)	$	—		$	—		$	14,938		$	—		$	—		$	—		$	60,840
Lines of credit and other debt		—		10,018			29,582			—			—			—			—			—			—			39,600
Related party loan		—		7,671			—			—			—			(7,671	)		—			—			—			—
Accounts payable and accrued expenses		—		25,954			(9,581	)		(217	)		—			501			—			—			(1,963	)		14,694
Construction billings in excess of cost		—		267			—			—			—			—			—			—			—			267
Other liabilities		—		8,535			(2,351	)		—			—			377			—			128			—			6,689
Total liabilities		—		381,819			(265,822	)		(217	)		—			8,145			—			128			(1,963	)		122,090
Equity (deficit):
Common stock		—		—			—			—			—			—			—			—			284			284
Additional paid-in capital		—		—			—			(25,123	)		(14,727	)		—			—			—			350,839			310,989
Accumulated earnings (losses)		—		(54,245	)		(913	)		—			—			112			—			(128	)		54,245			(929	)
Noncontrolling interest		—		799			—			(3,020	)		4,016			—			—			—			(58,970	)		(57,175	)
Total equity (deficit)		—		(53,446	)		(913	)		(28,143	)		(10,711	)		112			—			(128	)		346,398			253,169
Total liabilities and equity (deficit)	$	—	$	328,373		$	(266,735	)	$	(28,360	)	$	(10,711	)	$	8,257		$	—		$	—		$	344,435		$	375,259

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

F-3

CAMPUS CREST COMMUNITIES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2010
(in thousands, except per share data)

											Acquisition
			Campus			Repayment					of Third-						Impact of
	Campus Crest		Crest			of debt and		Acquisition			Party			Acquisition			TRS for
	Communities,		Communities			associated		of Ricker			Investor			of HSRE			third-party			This			Pro
	Inc.		Predecessor			costs		interest			interest			Properties			contracts			offering			forma
						(AA)		(BB)			(CC)			(DD)			(FF)			(GG)
Revenues:
Student housing leasing	$	—	$	24,443		$	—	$	—		$	—		$	1,543		$	—		$	—		$	25,986
Student housing services		—		1,426			—		—			—			60			—			—			1,486
Development, construction and management services		—		30,738			—		—			—			(13,427	)		—			—			17,311
Total revenues		—		56,607			—		—			—			(11,824	)		—			—			44,783
Operating expenses:
Student housing operations		—		13,455			—		—			—			774			—			(307	)		13,922
Development, construction and management services		—		28,644			—		—			—			(12,504	)		—			—			16,140
General and administrative		—		2,618			—		—			—			—			—			882			3,500
Ground leases		—		94			—		—			—			—			—			—			94
Depreciation and amortization		—		9,429			—		—			—			363			—			—			9,792
Total operating expenses		—		54,240			—		—			—			(11,367	)		—			575			43,448
Equity in loss of uncombined entities		—		(194	)		—		—			—			(847	)		—			—			(1,041	)
Operating loss		—		2,173			—		—			—			(1,304	)		—			(575	)		294
Nonoperating income (expense):
Interest expense		—		(10,686	)		5,379		—			—			1,252			—			1,281			(2,774	)
Change in fair value of interest rate derivatives		—		178			101		—			—			—			—			—			279
Other income (expense)		—		45			—		—			—			108			—			—			153
Income taxes		—		—			—		—			—			—			(128	)		—			(128	)
Total nonoperating income (expense)		—		(10,463	)		5,480		—			—			1,360			(128	)		1,281			(2,470	)
Net income (loss)		—		(8,290	)		5,480		—			—			56			(128	)		706			(2,176	)
Net income (loss) attributable to noncontrolling interest		—		(5,025	)		—		4,231			794			—			—			(91	)		(91	)
Net income (loss) attributable to Campus Crest Communities, Inc.	$	—	$	(3,265	)	$	5,480	$	(4,231	)	$	(794	)	$	56		$	(128	)	$	797		$	(2,085	)
Pro forma earnings per share—basic and diluted																							$	(0.07	)
Pro forma weighted average shares outstanding—basic and diluted																								28,333

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

F-4

CAMPUS CREST COMMUNITIES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2009
(in thousands, except per share data)

												Acquisition
			Campus			Repayment						of Third-						Impact of
	Campus Crest		Crest			of debt and			Acquisition			Party			Acquisition			TRS for
	Communities,		Communities			associated			of Ricker			Investor			of HSRE			third-party			This			Pro
	Inc.		Predecessor			costs			interest			interest			Properties			contracts			offering			forma
						(AA)			(BB)			(CC)			(DD)			(FF)			(GG)
Revenues:
Student housing leasing	$	—	$	43,708		$	—		$	—		$	—		$	1,313		$	—		$	—		$	45,021
Student housing services		—		2,265			—			—			—			24			—			—			2,289
Development, construction and management services		—		60,711			—			—			—			(36,171	)		—			—			24,540
Total revenues		—		106,684			—			—			—			(34,834	)		—			—			71,850
Operating expenses:
Student housing operations		—		23,155			—			—			—			552			—			(652	)		23,055
Development, construction and management services		—		60,200			—			—			—			(35,353	)		—			—			24,847
General and administrative		—		5,617			—			—			—			—			—			955			6,572
Ground leases		—		264			—			—			—			—			—			—			264
Write-off of pre-development costs		—		1,211			—			—			—			—			—			—			1,211
Depreciation and amortization		—		18,371			—			—			—			227			—			—			18,598
Total operating expenses		—		108,818			—			—			—			(34,574	)		—			303			74,547
Equity in loss of uncombined entities		—		(59	)		—			—			—			(447	)		—			—			(506	)
Operating loss		—		(2,193	)		—			—			—			(707	)		—			(303	)		(3,203	)
Nonoperating income (expense):
Interest expense		—		(15,871	)		10,296			—			—			45			—			—			(5,530	)
Change in fair value of interest rate derivatives		—		797			(707	)		—			—			—			—			—			90
Other income (expense)		—		44			—			—			—			90			—			—			134
Income taxes		—		—			—			—			—			—			(73	)		—			(73	)
Total nonoperating income (expense)		—		(15,030	)		9,589			—			—			135			(73	)		—			(5,379	)
Net income (loss)		—		(17,223	)		9,589			—			—			(572	)		(73	)		(303	)		(8,582	)
Net income (loss) attributable to noncontrolling interest		—		(10,486	)		—			8,502			1,984			—			—			(360	)		(360	)
Net income (loss) attributable to Campus Crest Communities, Inc.	$	—	$	(6,737	)	$	9,589		$	(8,502	)	$	(1,984	)	$	(572	)	$	(73	)	$	57		$	(8,222	)
Pro forma earnings per share—basic and diluted																								$	(0.29	)
Pro forma weighted average shares outstanding—basic and diluted																									28,333

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

F-5

CAMPUS CREST COMMUNITIES, INC.

NOTES AND MANAGEMENT’S ASSUMPTIONS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

1.   Adjustments to the Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2010

(A)  Reflects the repayment of mortgage and construction loans of approximately $283.4 million, existing lines of credit and other debt of approximately $10.0 million, early termination and settlement of interest rate swaps which, at June 30, 2010, were a liability of approximately $2.4 million. Reflects borrowings under line of credit of approximately $39.6 million. Additionally, reflects payment of accrued loan extension fees of approximately $1.3 million. Deferred loan costs, totaling approximately $0.9 million, associated with the debt facilities being repaid, are written-off. Deferred loan costs, totaling approximately $1.6 million, associated with new line of credit are deferred and amortized to expense over the life of the facility.

(B)  Reflects the acquisition of the Ricker Group’s (as defined below) noncontrolling interest in the Predecessor, and the issuance of limited partnership units (the “OP Units”) to the Ricker Group which will occur simultaneous with the completion of this offering. References herein to the “Ricker Group” shall mean Carl H. Ricker, Jr. and the vehicles through which Mr. Ricker or an affiliated party held interests in the Predecessor. The acquisition of this noncontrolling interest will be recorded as an equity transaction in accordance with Financial Accounting Standards Board, or “FASB,” ASC 810-10 (prior authoritative literature Statement of Financial Accounting Standards No. 141(R), Business Combinations). Additionally, reflects the settlement of receivables due from Ricker Group of approximately $1.6 million and payables due to Ricker Group of approximately $0.2 million.

(C)  Reflects the acquisition of the noncontrolling interest in the Predecessor held by certain third-party investors and the issuance of OP Units to certain third-party investors, which will occur simultaneous with the completion of this offering. The acquisition of this noncontrolling interest will be recorded as an equity transaction in accordance with FASB ASC 810-10.

(D)  Reflects the acquisition of an increased ownership percentage in the Company’s real estate venture with HSRE (as defined below) and the acquisition of all of HSRE’s interest in The Grove at Milledgeville and The Grove at San Marcos. Reference herein to “HSRE” refers to Harrison Street Real Estate Capital and its affiliates that held an interest in our uncombined real estate venture. Through this acquisition, the Company expects to increase its ownership in The Grove at Milledgeville and The Grove at San Marcos to 100% and The Grove at San Angelo, The Grove at Lawrence, The Grove at Moscow, The Grove at Huntsville, The Grove at Statesboro and The Grove at Conway to 49.9% each. The following table represents the changes in net property ownership expected to occur as a result of this transaction:

	Net ownership			Net ownership
	interest			interest
Property	pre-acquisition			post-acquisition
The Grove at Milledgeville(1)		5	%		100.0	%
The Grove at San Marcos(2)		0.1	%		100.0	%
The Grove at San Angelo(2)		0.1	%		49.9	%
The Grove at Moscow(2)		0.1	%		49.9	%
The Grove at Lawrence(2)		0.1	%		49.9	%
The Grove at Huntsville(2)		0.1	%		49.9	%
The Grove at Conway(2)		0.1	%		49.9	%
The Grove at Statesboro(2)		0.1	%		49.9	%

(1) The Grove at Milledgeville is combined in the Predecessor’s June 30, 2010 (unaudited) historical combined balance sheet and historical combined statement of operations. In November 2009, the Predecessor sold 90% of its interest in Campus Crest at Milledgeville, LLC. The transaction did not qualify as a sale under U.S. generally accepted accounting principles, or “U.S. GAAP,” and Campus Crest at Milledgeville, LLC remained a combined entity as of June 30, 2010 and December 31, 2009.

F-6

CAMPUS CREST COMMUNITIES, INC.

NOTES AND MANAGEMENT’S ASSUMPTIONS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(2) Properties are accounted for using the equity method of accounting in the Predecessor’s June 30, 2010 (unaudited) historical combined balance sheet. In March 2010, the Predecessor sold 99% of its ownership interest in the uncombined real estate venture that owns these properties. The transaction did not qualify as a sale of an interest under U.S. GAAP, and these properties are accounted for at their pre-sale ownership interests as of June 30, 2010.

Additionally, reflects $4.8 million of preferred investments in special purpose subsidiaries of our real estate venture with HSRE that own The Grove at San Marcos and The Grove at San Angelo, with the net proceeds of such investments used to reduce the outstanding principal balance of a construction loan that is secured, in part, by The Grove at San Marcos, in connection with our purchase of The Grove at San Marcos and its removal from the collateral pool securing such loan.

Consideration for the acquisition of the interests in these properties, the repayment of related party debt and other closing costs are expected to total approximately $33.9 million in cash and will be paid from proceeds of this offering. In accordance with FASB ASC 805-10, the assets and liabilities acquired will be recorded at their fair values on the acquisition date. The purchase price will be allocated to assets and liabilities as follows:

Investment in unconsolidated entities	$	18,215
Investment in real estate, net		21,934
Other assets acquired		77
Indebtedness assumed		(14,938	)
Other liabilities assumed		(878	)
Acquisition of interests		24,410
Repayment of related party debt at contracted amount		9,445
		33,855
Cash acquired — San Marcos		(1,886	)
Cash paid to acquire interests and retire debt, net of cash acquired	$	31,969

(E)  Reflects the acquisition of interests in land at four projects currently under contract. Adjustment does not reflect construction activity; however, it is expected that each of these four projects would be completed for the 2011-2012 academic year.

(F)  Certain of the Company’s subsidiaries will elect to be treated as taxable REIT subsidiaries. A taxable REIT subsidiary is a corporation other than a REIT in which we directly or indirectly hold stock, and that has made a joint election with us to be treated as a taxable REIT subsidiary. Adjustment reflects the recognition of the estimated federal and state income tax liability that would have been incurred at June 30, 2010 related to the pro forma operations of the taxable REIT subsidiaries.

(G)  The Company’s sole stockholder is MXT Capital, LLC (“MXT Capital”). The Company was capitalized on March 1, 2010 for one share at par and has had no operations since its formation. Upon completion of this offering and the related formation transactions, the Company will own 28,447,641 OP Units in Campus Crest Communities Operating Partnership, LP (the “Operating Partnership”). The Operating Partnership will own interests in 27 student housing properties. If this offering is successfully concluded, the Company will become a publicly owned corporation that intends to elect and qualify to be taxed as a REIT for U.S. federal income tax purposes commencing with its taxable year ending December 31, 2010.

This offering is expected to include the issuance of 28,333,333 shares at $13.50 per share, the mid-point of the price range set forth on the cover page of this prospectus.

F-7

CAMPUS CREST COMMUNITIES, INC.

NOTES AND MANAGEMENT’S ASSUMPTIONS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Proceeds from this offering	$	382,500
Less offering related costs		(33,601	)
Net cash proceeds from this offering	$	348,899

Approximately $4.5 million will be paid to MXT Capital, which will immediately use such amount to make capital contributions to certain noncombined entities that will, in turn, immediately use the capital contributions solely to repay indebtedness.

In connection with this offering, MXT Capital, certain third-party investors and the Ricker Group will be granted OP units in exchange for their contribution of their respective ownership interests in the Predecessor. In addition, Michael S. Hartnett will receive 150,000 restricted OP units in connection with his employment agreement with the Company. In the aggregate, these OP units are expected to equal 4.2% of the value of issued OP units at the closing of this offering.

2.   Adjustments to the Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Six Months Ended June 30, 2010

(AA)  Reflects the reduction in interest expense on repaid debt and the mark to market adjustment on terminated interest rate swaps, respectively, at the completion of this offering. These instruments were assumed to be repaid on the first day of the period presented. Repaid debt is expected to consist of the following:

					Amount to be
					Repaid
			Principal		from		Stated	Interest
	Face		Outstanding		Offering		Interest	Rate at			Maturity
	Amount		at 6/30/10		Proceeds		Rate	6/30/10			Date		Amortization
Construction loans
The Grove at Mobile-Phase II	$	15,875	$	15,648	$	15,648	Greater of LIBOR + 3.00% or 5.50%		5.50	%		10/31/2010	Amortizing- $1.0 million due (1)
Construction Loan (nine properties) (2)		157,550		148,886		148,886	LIBOR + 1.80%		2.15	%		1/31/2011	Interest only
The Grove at San Marcos (3)		15,131		14,938		14,938	LIBOR + 2.50%		5.94	%		5/15/2011	Interest only
Mortgage loans
Mortgage (six properties)		104,000		104,000		104,000	6.40%		6.40	%		2/28/2013	30 years
Total			$	283,472	$	283,472

(1)	On the earliest to occur of the completion of this offering, the completion of a private placement of the equity interests in MXT Capital or Campus Crest Group, or October 31, 2010.
(2)	At June 30, 2010, approximately $136.4 million of the loan balance is hedged with a floating to fixed interest rate swap which, when taken together with the loan interest, fixes this portion of the loan’s interest rate at 6.0%. We intend to terminate and settle this interest rate swap at the completion of the offering.
(3)	Construction loan secured by The Grove at San Marcos will become a consolidated obligation of the Company upon our acquisition of the 95% ownership interest discussed in notes D and DD. This loan is expected to be repaid from offering proceeds.

  Additionally, reflects increase in interest expense on borrowings under our revolving credit facility of approximately $39.6 million. This amount 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. For the purpose of this adjustment, LIBOR was assumed to be 0.26%.

F-8

CAMPUS CREST COMMUNITIES, INC.

NOTES AND MANAGEMENT’S ASSUMPTIONS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(BB)  Reflects the acquisition of the Ricker Group’s noncontrolling interest in the Predecessor, which will be acquired simultaneously with the completion of this offering. The acquisition of this noncontrolling interest will be recorded as an equity transaction in accordance with FASB ASC 810-10.

(CC)  Reflects the acquisition of the noncontrolling interest in the Predecessor held by certain third-party investors which will be acquired simultaneously with the completion of this offering. The acquisition of this noncontrolling interest will be recorded as an equity transaction in accordance with FASB ASC 810-10.

(DD)  Reflects certain revenues and expenses for the six months ended June 30, 2010 related to the acquisition of an increased ownership percentage in the Company’s real estate venture with HSRE and the acquisition of all of HSRE’s interest in The Grove at Milledgeville and The Grove at San Marcos, as discussed in note 1, adjustment D. Additionally, reflects the impact of preferred investments as discussed in note 1, adjustment D. The unaudited combined statement of revenue and certain expenses of HSRE Properties for the six months ended June 30, 2010 is included elsewhere in this prospectus. The combined statement of revenue and certain expenses is not intended to be a complete presentation of the actual operations as expenses such as depreciation, amortization and certain corporate expenses not directly related to future operations have been excluded.

The pro forma adjustments to the historical results for the six months ended June 30, 2010 of these properties and the effect of the change in ownership is as follows:

	Six Months Ended
	June 30, 2010			Adjustments (1)(3)			Pro forma
Revenues-student housing revenues	$	4,111		$	(2,508	)	$	1,603
Operating expenses:
Student housing operations		2,672			(1,898	)		774
Depreciation and amortization		—			363			363
Total operating expenses		2,672			(1,535	)		1,137
Interest expense (2)		(1,446	)		2,698			1,252
Other income		—			108			108
Equity in loss of unconsolidated entities (3)		—			(847	)		(847	)
Net loss	$	(7	)	$	986		$	979

(1)	Does not include impact to third-party development, construction and management services income and expenses, which is a reduction of operating income of approximately $0.9 million.
(2)	Pro forma amount does not include interest expense related to funds provided by HSRE in conjunction with the sale of The Grove at Milledgeville. Such amount is included in the historical combined financial statements of the Predecessor.
(3)	Reflects accounting for investments in The Grove at San Angelo, The Grove at Moscow and The Grove at Lawrence using the equity method of accounting.

(EE)  Not used.

(FF)  Certain of the Company’s subsidiaries will elect to be treated as taxable REIT subsidiaries. Pro forma adjustment reflects the recognition of the estimated federal and state tax liability that would have been incurred during the six months ended June 30, 2010 related to the pro forma operations of the taxable REIT subsidiaries.

F-9

CAMPUS CREST COMMUNITIES, INC.

NOTES AND MANAGEMENT’S ASSUMPTIONS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(GG)  Reflects expected increase to general and administrative expenses as a result of becoming a public company. Expenses include incremental salaries, share-based compensation, board of directors fees, directors’ and officers’ insurance and other compliance costs. Additionally, reflects reduction of loan extension fee cost included in interest expense.

Additionally, in connection with this offering, MXT Capital, certain third-party investors and the Ricker Group will be granted OP units in exchange for their contribution of their respective ownership interests in the Predecessor. In addition, Michael S. Hartnett will receive 150,000 restricted OP units in connection with his employment agreement with the Company. In the aggregate, these OP units are expected to equal 4.2% of the value of issued OP units at the closing of this offering. Therefore, an adjustment has been made to reflect the 4.2% noncontrolling interest in the loss for the six months ended June 30, 2010.

3.   Adjustments to the Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2009

(AA)  Reflects the reduction in interest expense on repaid debt and the mark to market adjustment on terminated interest rate swaps, respectively, at the completion of this offering. These instruments were assumed to be repaid on the first day of the period presented. Repaid debt is expected to consist of the following:

					Amount to be
					Repaid
			Principal		from		Stated	Interest
	Face		Outstanding		Offering		Interest	Rate at			Maturity
	Amount		at 12/31/09		Proceeds		Rate	12/31/09			Date		Amortization
Construction loans
The Grove at Mobile-Phase II	$	15,875	$	15,874	$	15,874	Greater of LIBOR + 3.00% or 5.50%		5.50	%		10/31/2010	Amortizing- $1.0 million due (1)
Construction Loan (nine properties) (2)		157,550		148,388		148,388	LIBOR + 1.80%		2.03	%		1/31/2011	Interest only
The Grove at San Marcos (3)		15,131		14,123		14,004	LIBOR + 2.50%		5.94	%		5/15/2011	Interest only
Mortgage loans
Mortgage (six properties)		104,000		104,000		104,000	6.40%		6.40	%		2/28/2013	30 years
Total			$	282,385	$	282,266

(1)	On the earliest to occur of the completion of this offering, the completion of a private placement of the equity interests in MXT Capital or Campus Crest Group, LLC, or October 31, 2010.
(2)	At December 31, 2009, approximately $136.4 million of the loan balance is hedged with a floating to fixed interest rate swap which, when taken together with the loan interest, fixes this portion of the loan’s interest rate at 6.0%. We intend to terminate and settle this interest rate swap at the completion of the offering.
(3)	Construction loan secured by The Grove at San Marcos will become a consolidated obligation of the Company upon our acquisition of the 95% ownership interest discussed in notes D and DD. This loan is expected to be repaid from offering proceeds.

  Additionally, reflects increase in interest expense on borrowings under our revolving credit facility of approximately $39.6 million. This amount 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. For the purpose of this adjustment, LIBOR was assumed to be 0.26%.

F-10

CAMPUS CREST COMMUNITIES, INC.

NOTES AND MANAGEMENT’S ASSUMPTIONS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(BB)  Reflects the acquisition of the Ricker Group’s noncontrolling interest in the Predecessor, which will be acquired simultaneously with the completion of this offering. The acquisition of this noncontrolling interest will be recorded as an equity transaction in accordance with FASB ASC 810-10.

(CC)  Reflects the acquisition of the noncontrolling interest in the Predecessor held by certain third-party investors which will be acquired simultaneously with the completion of this offering. The acquisition of this noncontrolling interest will be recorded as an equity transaction in accordance with FASB ASC 810-10.

(DD)  Reflects certain revenues and expenses for the year ended December 31, 2009 related to the acquisition of an increased ownership percentage in the Company’s real estate venture with HSRE and the acquisition of all of HSRE’s interest in The Grove at Milledgeville and The Grove at San Marcos, as discussed in note 1, adjustment D. Additionally, reflects the impact of preferred investments as discussed in note 1, adjustment D. The audited combined statement of revenue and certain expenses of HSRE Properties for the year ended December 31, 2009 is included elsewhere in this prospectus. The combined statement of revenue and certain expenses is not intended to be a complete presentation of the actual operations as expenses such as depreciation, amortization and certain corporate expenses not directly related to future operations have been excluded.

The pro forma adjustments to the 2009 historical results of these properties and the effect of the change in ownership is as follows:

	Year Ended
	December 31, 2009			Adjustments (1)(3)			Pro forma
Revenues-student housing revenues	$	3,131		$	(1,794	)	$	1,337
Operating expenses:
Student housing operations		1,698			(1,146	)		552
Depreciation and amortization		—			227			227
Total operating expenses		1,698			(919	)		779
Interest expense (2)		(1,009	)		1,054			45
Other income		—			90			90
Equity in loss of unconsolidated entities (3)		—			(447	)		(447	)
Net loss	$	424		$	(178	)	$	246

(1)	Does not include impact to third-party development, construction and management services income and expenses, which is a reduction of operating income of approximately $0.8 million.
(2)	Pro forma amount does not include interest expense related to funds provided by HSRE in conjunction with the sale of The Grove at Milledgeville. Such amount is included in the historical combined financial statements of the Predecessor.
(3)	Reflects accounting for investments in The Grove at San Angelo, The Grove at Moscow and The Grove at Lawrence using the equity method of accounting.

(EE)  Not used.

(FF)  Certain of the Company’s subsidiaries will elect to be treated as taxable REIT subsidiaries. Pro forma adjustment reflects the recognition of the estimated federal and state tax liability that would have been incurred during the year ended December 31, 2009 related to the pro forma operations of the taxable REIT subsidiaries.

F-11

CAMPUS CREST COMMUNITIES, INC.

NOTES AND MANAGEMENT’S ASSUMPTIONS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(GG)  Reflects expected increase to general and administrative expenses as a result of becoming a public company. Expenses include incremental salaries, share-based compensation, board of directors fees, directors’ and officers’ insurance and other compliance costs.

Additionally, in connection with this offering, MXT Capital, certain third-party investors and the Ricker Group will be granted OP units in exchange for their contribution of their respective ownership interests in the Predecessor. In addition, Michael S. Hartnett will receive 150,000 restricted OP units in connection with his employment agreement with the Company. In the aggregate, these OP units are expected to equal 4.2% of the value of issued OP units at the closing of this offering. Therefore, an adjustment has been made to reflect the 4.2% noncontrolling interest in the loss for the year ended December 31, 2009.

F-12

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Campus Crest Communities, Inc.:

We have audited the accompanying balance sheet of Campus Crest Communities, Inc. (the “Company”) as of March 1, 2010. This financial statement is the responsibility of the Company’s management. Our responsibility is to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit of a balance sheet includes examining, on a test basis, evidence supporting the amounts and disclosures in that balance sheet, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit of the balance sheet provides a reasonable basis for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of Campus Crest Communities, Inc. as of March 1, 2010, in conformity with U.S. generally accepted accounting principles.

/s/  KPMG LLP

Atlanta, Georgia

May 14, 2010

F-13

CAMPUS CREST COMMUNITIES, INC.

BALANCE SHEETS
(in thousands, except shares and par value)

	As of		As of
	June 30,		March 1,
	2010		2010
	(unaudited)
Assets
Cash and total assets	$	—	$	—
Liabilities and Stockholder’s Equity
Liabilities	$	—	$	—
Stockholder’s equity:
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized; 0 shares issued and outstanding		—		—
Common stock, $0.01 par value per share; 90,000,000 shares authorized; 1 share issued and outstanding		—		—
Retained earnings		—		—
Total stockholder’s equity		—		—
Total liabilities and stockholder’s equity	$	—	$	—

See accompanying notes to balance sheets.

F-14

CAMPUS CREST COMMUNITIES, INC.

NOTES TO BALANCE SHEETS

1.   Organization

The Company was incorporated in the State of Maryland and capitalized with the issuance of one share at par on March 1, 2010. The Company intends to file a registration statement on Form S-11 with the Securities and Exchange Commission in connection with this offering. The Company will own, through both general partner and limited partner interests, Campus Crest Communities Operating Partnership, LP (the “Operating Partnership”).

The Company has had no operations since its formation. Our formation transactions are designed to:

•   consolidate the ownership of our properties and the student housing business of the Predecessor into the Operating Partnership and its wholly-owned subsidiaries; and

•   facilitate this offering.

The Operating Partnership will own interests in 27 student housing properties. If this offering is successfully concluded, the Company will become a publicly owned corporation that intends to elect and qualify to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes commencing with its taxable year ending December 31, 2010.

2.   Federal Income Tax

In connection with this offering, the Company intends to elect to be treated as a REIT under Sections 856 through 859 of the Internal Revenue Code commencing with the Company’s taxable year ending on December 31, 2010. The Company’s qualification as a REIT depends upon its 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 the Company’s gross income, the composition and values of its assets, its distribution levels and the diversity of ownership of its stock. The Company believes that it will be organized in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code and that the Company’s intended manner of operation will enable it to meet the requirements for qualification and taxation as a REIT.

As a REIT, the Company generally will not be subject to U.S. federal income tax on taxable income that it distributes currently to its stockholders. If the Company fails to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company 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 it lost its REIT qualification. Accordingly, the Company’s failure to qualify as a REIT could materially and adversely affect it, including its ability to make distributions to its stockholders in the future. Even if the Company qualifies as a REIT, it may be subject to some U.S. federal, state and local taxes on its income or property and the income of its taxable REIT subsidiaries will be subject to taxation at normal corporate rates.

F-15

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholder

Campus Crest Communities Predecessor:

We have audited the accompanying combined balance sheets of Campus Crest Communities Predecessor as of December 31, 2009 and 2008, and the related combined statements of operations, changes in equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2009. In connection with our audits of the combined financial statements, we also have audited financial statement Schedule III. These combined financial statements and financial statement Schedule III are the responsibility of the Company’s management. Our responsibility is to express an opinion on these combined financial statements and financial statement Schedule III based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Campus Crest Communities Predecessor as of December 31, 2009 and 2008, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2009, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement Schedule III, when considered in relation to the basic combined financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/  KPMG LLP

Atlanta, Georgia

May 14, 2010

F-16

CAMPUS CREST COMMUNITIES PREDECESSOR

COMBINED BALANCE SHEETS

	June 30,			December 31,
	2010			2009			2008
	(unaudited)
	(in thousands)
Assets
Investment in real estate, net:
Student housing properties	$	348,466		$	347,157		$	326,217
Accumulated depreciation		(48,403	)		(38,999	)		(20,794	)
Development in process		3,641			3,300			15,742
Investment in real estate, net		303,704			311,458			321,165
Investment in uncombined entity		3,257			2,980			776
Cash and cash equivalents		3,054			2,902			11,041
Restricted cash and investments		3,770			3,377			4,134
Student receivables, net of allowance for doubtful accounts of $133, $653 and $401, respectively		333			577			498
Cost in excess of construction billings		2,781			3,938			—
Other assets		11,474			6,564			4,541
Total assets	$	328,373		$	331,796		$	342,155
Liabilities and equity (deficit)
Liabilities:
Mortgage and construction loans	$	329,374		$	329,102		$	322,426
Lines of credit and other debt		10,018			9,978			9,237
Related party loan		7,671			4,092			—
Accounts payable and accrued expenses		25,954			20,029			17,311
Construction billings in excess of cost		267			—			2,049
Other liabilities		8,535			11,311			13,246
Total liabilities		381,819			374,512			364,269
Equity (deficit):
Owner’s deficit		(54,245	)		(50,090	)		(42,502	)
Noncontrolling interest		799			7,374			20,388
Total deficit		(53,446	)		(42,716	)		(22,114	)
Commitments and contingencies
Total liabilities and equity (deficit)	$	328,373		$	331,796		$	342,155

See accompanying notes to combined financial statements.

F-17

CAMPUS CREST COMMUNITIES PREDECESSOR

COMBINED STATEMENTS OF OPERATIONS

	Six Months Ended
	June 30,						Year Ended December 31,
	2010			2009			2009			2008			2007
	(unaudited)
	(in thousands)
Revenues:
Student housing leasing	$	24,443		$	21,219		$	43,708		$	30,813		$	15,598
Student housing services		1,426			1,011			2,265			798			110
Development, construction and management services		30,738			37,258			60,711			2,505			—
Total revenues		56,607			59,488			106,684			34,116			15,708
Operating expenses:
Student housing operations		13,455			11,416			23,155			14,890			7,470
Development, construction and management services		28,644			35,693			60,200			2,147			—
General and administrative		2,618			2,454			5,617			5,422			3,467
Ground leases		94			96			264			224			40
Write-off of pre-development costs		—			—			1,211			203			—
Depreciation and amortization		9,429			9,115			18,371			13,573			5,765
Total operating expenses		54,240			58,774			108,818			36,459			16,742
Equity in loss of uncombined entities		(194	)		—			(59	)		—			—
Operating income (loss)		2,173			714			(2,193	)		(2,343	)		(1,034	)
Nonoperating income (expense):
Interest expense		(10,686	)		(7,369	)		(15,871	)		(14,946	)		(6,583	)
Change in fair value of interest rate derivatives		178			2,680			797			(8,758	)		(2,115	)
Other income (expense)		45			(19	)		44			(50	)		100
Total nonoperating expenses		(10,463	)		(4,708	)		(15,030	)		(23,754	)		(8,598	)
Net loss		(8,290	)		(3,994	)		(17,223	)		(26,097	)		(9,632	)
Net loss attributable to noncontrolling interest		(5,025	)		(2,060	)		(10,486	)		(870	)		(2,083	)
Net loss attributable to Predecessor	$	(3,265	)	$	(1,934	)	$	(6,737	)	$	(25,227	)	$	(7,549	)

See accompanying notes to combined financial statements.

F-18

CAMPUS CREST COMMUNITIES PREDECESSOR

COMBINED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)

				Noncontrolling
	Owner’s deficit			interest			Total
	(in thousands)
Equity (deficit), December 31, 2006	$	(4,974	)	$	9,918		$	4,944
Contributions		—			22,823			22,823
Distributions		(2,066	)		(1,182	)		(3,248	)
Net loss		(7,549	)		(2,083	)		(9,632	)
Equity (deficit), December 31, 2007		(14,589	)		29,476			14,887
Contributions		1,402			6,567			7,969
Distributions		(4,088	)		(14,785	)		(18,873	)
Net loss		(25,227	)		(870	)		(26,097	)
Equity (deficit), December 31, 2008		(42,502	)		20,388			(22,114	)
Contributions		—			924			924
Distributions		(851	)		(3,452	)		(4,303	)
Net loss		(6,737	)		(10,486	)		(17,223	)
Equity (deficit), December 31, 2009		(50,090	)		7,374			(42,716	)
Contributions		241			405			646
Distributions		(1,131	)		(1,955	)		(3,086	)
Net loss		(3,265	)		(5,025	)		(8,290	)
Equity (deficit), June 30, 2010 (unaudited)	$	(54,245	)	$	799		$	(53,446	)

See accompanying notes to combined financial statements.

F-19

CAMPUS CREST COMMUNITIES PREDECESSOR

COMBINED STATEMENTS OF CASH FLOWS

	Six Months Ended
	June 30,						Year Ended December 31,
	2010			2009			2009			2008			2007
	(unaudited)
							(in thousands)
Operating activities:
Net loss	$	(8,290	)	$	(3,994	)	$	(17,223	)	$	(26,097	)	$	(9,632	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		9,429			9,115			18,371			13,573			5,765
Amortization of deferred financing costs		318			317			828			798			305
Loss on disposal of property		—			—			—			—			674
Accretion of interest expense		1,376			—			220			—			—
Bad debt expense		304			560			1,639			1,047			292
Write-off of pre-development costs		—			—			1,211			203			—
Unrealized (gain) loss on interest rate derivatives		(2,893	)		(2,990	)		(3,480	)		7,414			2,115
Equity in loss of uncombined entities		194			—			59			—			—
Changes in operating assets and liabilities:
Restricted cash and investments		(393	)		1,131			757			(1,346	)		(2,309	)
Student receivables, net		(60	)		(400	)		(1,718	)		(1,314	)		(409	)
Change in construction billings		527			210			(5,987	)		2,049			—
Accounts payable and accrued expenses		6,586			6,953			11,026			1,537			783
Other		(4,359	)		(8,834	)		(1,350	)		3,400			1,207
Net cash provided by (used in) operating activities		2,739			2,068			4,353			1,264			(1,209	)
Investing activities:
Investments in development in process		(694	)		(11,373	)		(19,655	)		(145,344	)		(111,235	)
Investments in student housing properties		(1,766	)		(82	)		(1,387	)		(1,676	)		(1,382	)
Investments in uncombined entities		(202	)		(1,297	)		(2,388	)		(776	)		—
Purchase of corporate fixed assets		—			(78	)		(122	)		(589	)		(426	)
Net cash used in investing activities		(2,662	)		(12,830	)		(23,552	)		(148,385	)		(113,043	)
Financing activities:
Proceeds from construction loans		497			9,330			9,826			140,921			86,317
Proceeds from mortgage loans		—			—			—			104,600			27,310
Proceeds from lines of credit and related party loans		2,290			4,395			13,703			8,967			12,027
Principal payments on construction loans		(225	)		—			—			(90,000	)		(12,282	)
Payments on lines of credit and related party loans		(47	)		(5,816	)		(9,090	)		(6,308	)		(6,220	)
Debt issuance costs		—			—			—			(2,495	)		(666	)
Contributions from owner		241			795			—			1,402			—
Contributions from noncontrolling interest		405			—			924			6,567			22,823
Distributions to owner		(1,131	)		(1,241	)		(851	)		(4,088	)		(2,066	)
Distributions to noncontrolling interest		(1,955	)		(1,940	)		(3,452	)		(14,785	)		(1,182	)
Net cash provided by financing activities		75			5,523			11,060			144,781			126,061
Net change in cash and cash equivalents		152			(5,239	)		(8,139	)		(2,340	)		11,809
Cash and cash equivalents at beginning of period		2,902			11,041			11,041			13,381			1,572
Cash and cash equivalents at end of period	$	3,054		$	5,802		$	2,902		$	11,041		$	13,381
Supplemental disclosure of cash flow information:
Interest paid	$	7,604		$	6,948		$	16,491		$	16,330		$	7,804
Non-cash investing and financing activity:
Conversion of note payable to equity interest	$	—		$	600		$	600		$	—		$	—
Change in payables related to capital expenditures	$	(661	)	$	(4,011	)	$	(8,308	)	$	(6,575	)	$	15,367
Accrued costs related to investments in uncombined entities	$	(225	)	$	—		$	—		$	—		$	—
Contribution to real estate venture:
Land	$	—		$	3,025		$	3,025		$	—		$	—
Construction loan	$	—		$	2,550		$	2,550		$	—		$	—

See accompanying notes to combined financial statements.

F-20

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS

1.   Organization and Description of Business

Campus Crest Communities Predecessor (the “Predecessor”) is engaged in the business of developing, constructing, owning and managing high-quality, purpose-built student housing properties in the United States. The Predecessor is not a legal entity, but rather a combination of certain vertically integrated operating companies under common ownership. The Predecessor reflects the historical combination of all facets of business operations of the student housing related entities of Campus Crest Group, LLC (“CCG”) including the development, construction, ownership and management of student housing properties. CCG controls, through its subsidiaries, the operations of each of these entities included in these combined financial statements:

•   Campus Crest Development, LLC;

•   Campus Crest Construction, LLC;

•   The Grove Student Properties, LLC (d/b/a Campus Crest Real Estate Management); and

•   Campus Crest Properties, LLC and its subsidiaries, including certain limited liability companies and limited partnerships that have varying ownership interests in 27 student housing properties located on or near 26 colleges and universities in 11 states.

The following table illustrates the number of properties, both operating and under construction, at June 30, 2010 (unaudited) and at December 31, 2009, 2008 and 2007:

	June 30, 2010 (unaudited)
	Properties		Properties		Effective ownership
	in operation		under construction		percentage
Combined entities (1)		20		—		5-52	%
Uncombined entities (2)		4		3		0.1-10	%
Total		24		3

	December 31, 2009
	Properties		Properties		Effective ownership
	in operation		under construction		percentage
Combined entities (1)		20		—		5-52	%
Uncombined entities		4		3		5-10	%
Total		24		3

	December 31, 2008
	Properties		Properties		Effective ownership
	in operation		under construction		percentage
Combined entities		19		1		30-52	%
Uncombined entities		—		3		10	%
Total		19		4

F-21

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

	December 31, 2007
	Properties		Properties		Effective ownership
	in operation		under construction		percentage
Combined entities		10		10		30-52	%

(1)	In November 2009, we sold 90% of our ownership interest in Campus Crest at Milledgeville, LLC. The transaction did not qualify as a sale under U.S. GAAP and Campus Crest at Milledgeville, LLC remained a combined entity as of June 30, 2010 (unaudited) and December 31, 2009. See note 7.
(2)	In March 2010, we sold 99% of our ownership interest in the uncombined real estate venture that owns these entities. The transaction did not qualify as a sale of an interest under U.S. GAAP and the affected entities are accounted for at their pre-sale net ownership interests as of June 30, 2010. See notes 14 and 15.

Campus Crest Communities, Inc. (the “Company”) was incorporated in the State of Maryland on March 1, 2010. The Company intends to file a registration statement on Form S-11 with the Securities and Exchange Commission in connection with this offering. The Company will own, through both general partner and limited partner interests, Campus Crest Communities Operating Partnership, LP (the “Operating Partnership”).

The Company has had no operations since its formation. Our formation transactions are designed to:

•   consolidate the ownership of our properties and the student housing business of the Predecessor into the Operating Partnership and its wholly-owned subsidiaries; and

•   facilitate this offering.

The Operating Partnership will own interests in 27 student housing properties. If this offering is successfully concluded, the Company will become a publicly owned corporation that intends to elect and qualify to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes commencing with its taxable year ending December 31, 2010.

2.   Summary of Significant Accounting Policies

Basis of Presentation

The Predecessor reflects a combination of certain student housing related activities that are commonly controlled by CCG. Due to their common control, the financial statements of the separate entities which own the properties are presented on a combined basis. The accompanying combined financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and include the accounts of the Predecessor and its subsidiaries, including ventures in which we have a controlling interest. Interests in the consolidated entities which are not wholly owned by the Predecessor are reflected as noncontrolling interests in the combined financial statements. We also have an interest in an uncombined entity which has ownership in several property owning entities which is accounted for under the equity method. All significant intercompany balances and transactions have been eliminated.

F-22

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant assumptions and estimates are used by management in recognizing construction and development revenue under the percentage of completion method, useful lives of student housing properties, valuation of investment in real estate, fair value of financial assets and liabilities, including derivatives, and allowance for doubtful accounts. It is at least reasonably possible that these estimates could change in the near term.

Investment in Real Estate

Investment in real estate is recorded at historical cost. Major improvements that extend the life of an asset are capitalized and depreciated over a period equal to the shorter of the life of the improvement or the remaining useful life of the asset. The cost of ordinary repairs and maintenance are charged to expense when incurred. Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives of the assets as follows:

Buildings	40 years
Improvements	20 years
Furniture, fixtures and equipment	3-10 years

The cost of buildings and improvements includes all pre-development, entitlement and project costs directly associated with the development and construction of a real estate project, which include interest, property taxes, and deferred financing costs recognized while the project is under construction. Additionally, the Predecessor capitalizes certain internal costs related to the development and construction of its student housing properties. All costs are capitalized as development in process until the asset is ready for its intended use, which is typically at the completion of the project. Upon completion, costs are transferred into the applicable asset category and depreciation commences. Interest totaling approximately $0.4 million, $1.8 million and $1.9 million was capitalized during the years ended December 31, 2009, 2008 and 2007, respectively.

Pre-development costs are capitalized until such time that management believes it is no longer probable that a contract will be executed and/or construction will commence. Because we frequently incur these pre-development expenditures before a financing commitment and/or required permits and authorizations have been obtained, we bear the risk of loss of these pre-development expenditures if financing cannot ultimately be arranged on acceptable terms or we are unable to successfully obtain the required permits and authorizations. As such, management evaluates the status of projects where we have not yet acquired the target property or where we have not yet commenced construction on a periodic basis and writes off any pre-development costs related to projects whose current status indicates the acquisition or commencement of construction is not probable. Such write-offs are included within operating expenses in the accompanying combined statements of operations. As of June 30, 2010 (unaudited) and December 31, 2009 and 2008, we have deferred approximately $3.6 million, $3.3 million and $2.9 million, respectively, in pre-development costs related to development projects that have not yet been acquired or for which construction has not commenced. Such costs are included in development in process on the accompanying combined balance sheets.

F-23

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

Management assesses whether there has been impairment in the value of our investment in real estate whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of investment in real estate is measured by a comparison of the carrying amount of a student housing property to the estimated future undiscounted cash flows expected to be generated by the property. Impairment is recognized when estimated future undiscounted cash flows are less than the carrying value of the property. The estimation of future undiscounted cash flows is inherently uncertain and relies on assumptions regarding current and future economics and market conditions. If such conditions change, then an adjustment to the carrying value of our long-lived assets could occur in the future period in which conditions change. To the extent that a property is impaired, the excess of the carrying amount of the property over its estimated fair value is charged to operating earnings. Fair value is determined based upon the discounted cash flows of the property, quoted market prices or independent appraisals, as considered necessary.

Ground Leases

Ground lease expense is recognized on a straight-line basis over the term of the related lease.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. We maintain cash balances in various banks. At times our balances may exceed the amount insured by the Federal Deposit Insurance Corporation (“FDIC”). As of June 30, 2010 (unaudited), December 31, 2009 and 2008, our deposits were covered under FDIC insurance. We do not believe cash and cash equivalents expose us to any significant credit risk.

Restricted Cash and Investments

Restricted cash includes escrow accounts held by lenders and resident security deposits as required by law in certain states. In certain instances, restricted cash consists of funds, required by a counter-party to our derivative contracts, to serve as collateral for future settlements of those derivative contracts. These funds are held in an interest bearing account covered under FDIC insurance. Restricted investments include certificates of deposit that do not qualify as cash equivalents and are required to be maintained by our lenders.

Deferred Financing Costs

We defer costs incurred in obtaining financing and amortize the costs over the terms of the related loans using the effective interest method. Upon repayment of or in conjunction with a material change in the terms of the underlying debt agreement, any unamortized costs are charged to earnings. Deferred financing costs, net of amortization, are included in other assets on the accompanying combined balance sheets.

Noncontrolling Interest

Noncontrolling interest is the portion of equity in the Predecessor’s combined subsidiaries which is not attributable to the owner. Accordingly, noncontrolling interests are reported as a component of equity in the accompanying combined balance sheets but separate from owner’s deficit. On the combined statements of operations, operating results are reported at the combined amount, including both the amount attributable to us and to noncontrolling interests.

F-24

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

Real Estate Ventures

We hold interests in all properties, both under development and in operation, through interests in both combined and uncombined real estate ventures. The Predecessor assesses its investments in real estate ventures in accordance with applicable guidance under U.S. GAAP to determine if a venture is a Variable Interest Entity (“VIE”). We consolidate entities that are defined as VIEs and for which we are determined to be the primary beneficiary. In instances where we are not the primary beneficiary, we do not consolidate the entity for financial reporting purposes. For entities that are not defined as VIEs, management first considers whether we are the general partner or a limited partner (or the equivalent in such investments which are not structured as partnerships). We consolidate entities where we are the general partner (or the equivalent) and the limited partners (or the equivalent) in such investments do not have rights which would preclude control and, therefore, consolidation for financial reporting purposes.

For entities where we are the general partner (or the equivalent) but do not control the real estate venture, as the other partners (or the equivalent) hold substantive participating rights, we use the equity method of accounting. For entities where we are a limited partner (or the equivalent), management considers factors such as ownership interest, voting control, authority to make decisions, and contractual and substantive participating rights of the partners (or the equivalent) to determine if the presumption that the general partner controls the entity is overcome. In instances where these factors indicate we control the entity, we consolidate the entity; otherwise we record our investment using the equity method of accounting.

Under the equity method, investments are initially recognized in the balance sheet at cost and are subsequently adjusted to reflect our proportionate share of net earnings or losses of the entity, distributions received, contributions, and certain other adjustments, as appropriate. When circumstances indicate there may have been a loss in value of an equity method investment, we evaluate the investment for impairment by estimating our ability to recover the investment from future expected discounted cash flows. If we determine the loss in value is other than temporary, we recognize an impairment charge to reflect the investment at fair value.

F-25

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

The following is a list of combined and uncombined entities which are not wholly-owned, both operating and under construction, as of June 30, 2010 (unaudited) and December 31, 2009. Each of these entities owns a property called “The Grove” that of which is located in the city or town referred to in the entity name:

			Effective Ownership
			Percentage at			Effective Ownership
			June 30, 2010			Percentage at
Entities	Year Opened		(unaudited)			December 31, 2009
Combined Entities
Campus Crest at Asheville, LLC		2005		40	%		40	%
Campus Crest at Carrollton, LLC		2006		38	%		38	%
Campus Crest at Las Cruces, LLC		2006		30	%		30	%
Campus Crest at Milledgeville, LLC (1)(2)		2006		5	%		5	%
Campus Crest at Abilene, LP		2007		38	%		38	%
Campus Crest at Ellensburg, LLC		2007		36	%		36	%
Campus Crest at Greeley, LLC		2007		30	%		30	%
Campus Crest at Jacksonville AL, LLC		2007		37	%		37	%
Campus Crest at Mobile, LLC		2007		37	%		37	%
Campus Crest at Nacogdoches, LP		2007		38	%		38	%
Campus Crest at Cheney, LLC		2008		52	%		52	%
Campus Crest at Jonesboro, LLC		2008		42	%		42	%
Campus Crest at Lubbock, LP		2008		40	%		40	%
Campus Crest at Mobile—Phase II, LLC		2008		37	%		37	%
Campus Crest at Stephenville, LP		2008		52	%		52	%
Campus Crest at Troy, LLC		2008		52	%		52	%
Campus Crest at Waco, LP		2008		52	%		52	%
Campus Crest at Wichita, LLC		2008		42	%		42	%
Campus Crest at Wichita Falls, LP		2008		52	%		52	%
Campus Crest at Murfreesboro, LLC (3)		2009		52	%		52	%
Uncombined Entities
Campus Crest at Lawrence, LLC (2)(5)		2009		0.1	%		10	%
Campus Crest at Moscow, LLC (2)(3)(5)		2009		0.1	%		5	%
Campus Crest at San Angelo, LP (2)(3)(5)		2009		0.1	%		5	%
Campus Crest at San Marcos, LP (2)(3)(5)		2009		0.1	%		5	%
Campus Crest at Huntsville, LP (2)(4)(5)		2010		0.1	%		10	%
Campus Crest at Conway, LLC (2)(4)(5)		2010		0.1	%		10	%
Campus Crest at Statesboro, LLC (2)(4)(5)		2010		0.1	%		10	%

(1)	In November 2009, we sold 90% of our ownership interest in Campus Crest at Milledgeville, LLC. The transaction did not qualify as a sale under U.S. GAAP and Campus Crest at Milledgeville, LLC remained a combined entity as of June 30, 2010 (unaudited) and December 31, 2009. See note 7.
(2)	Entity is wholly-owned by a real estate venture in which the Predecessor is a member.
(3)	Asset under construction at December 31, 2008.
(4)	Asset under construction at June 30, 2010 (unaudited) and December 31, 2009. Completion and occupancy are expected for the 2010-2011 academic year.
(5)	In March 2010, we sold 99% of our ownership interest in the uncombined real estate venture that owns these entities. The transaction did not qualify as a sale of an interest under U.S. GAAP and the affected entities are accounted for at their pre-sale net ownership interests as of June 30, 2010. See notes 14 and 15.

F-26

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

Student Housing Revenue

Students are required to execute lease contracts with payment schedules that vary from annual to monthly payments. We recognize revenues and related lease incentives on a straight-line basis over the term of the lease contracts. Generally, each executed contract is required to be accompanied by a signed parental guaranty. Amounts received in advance of the occupancy period are recorded as deferred revenues and included in other liabilities on the accompanying combined balance sheets. Service revenue is recognized when earned.

Segments

We have identified two reportable business segments: student housing operations and development, construction and management services. We evaluate the performance of our operating segments based on operating income (loss). All inter-segment sales pricing is based on current market conditions. Operating segments that do not individually meet the aggregation criteria described in the accounting guidance may be combined with other operating segments that do not individually meet the aggregation criteria to form a separate reportable segment. We have combined all of our operating segments that do not individually meet the aggregation criteria established in the accounting guidance to form the “unallocated corporate amounts” segment for our segment reporting. Unallocated corporate amounts include general expenses associated with managing our two reportable operating segments.

Development, Construction and Management Services

Development and construction service revenue is recognized using the percentage of completion method, as determined by construction costs incurred relative to total estimated construction costs. Any changes in significant judgments and/or estimates used in determining construction and development revenue could significantly change the timing or amount of construction and development revenue recognized. Costs in excess of construction billings are expected to be collected within one year.

Development and construction service revenue is recognized for contracts with entities we do not combine. For projects where the revenue is based on a fixed price, any cost overruns incurred during construction, as compared to the original budget, will reduce the net profit ultimately recognized on those projects. Profit derived from these projects is eliminated to the extent of the Predecessor’s ownership interest in the uncombined entity. Any incentive fees, net of the impact of our ownership interest if the entity is an uncombined entity, are recognized when the project is complete and performance has been agreed upon by all parties, or when performance has been verified by an independent third party. When total development or construction costs at completion exceed the fixed price set forth within the related contract, such cost overruns are recorded as additional investment in the uncombined entity.

Management fees, net of elimination to the extent of our ownership in uncombined entities, are recognized when earned in accordance with each management contract for entities we do not combine. Incentive management fees are recognized when the incentive criteria are met.

F-27

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

Allowance for Doubtful Accounts

Allowances for student receivables are established when management determines that collections of such receivables are doubtful. Balances are considered past due when payment is not received on the contractual due date. When management has determined that receivables are uncollectible, they are written off against the allowance for doubtful accounts.

The allowance for doubtful accounts is summarized as follows (amounts in thousands):

	Balance at
	Beginning			Charged to					Balance at
Year Ended December 31:	of Period			Expense			Write-Offs		End of Period
2007	$	(77	)	$	(292	)	$	81	$	(288	)
2008	$	(288	)	$	(1,047	)	$	934	$	(401	)
2009	$	(401	)	$	(1,639	)	$	1,387	$	(653	)
Six Months Ended June 30:
2010 (unaudited)	$	(653	)	$	(304	)	$	824	$	(133	)

Marketing and Advertising Costs

Marketing and advertising costs are expensed during the period incurred. Marketing and advertising expenses approximated $1.6 million, $1.4 million and $1.5 million for the years ended December 31, 2009, 2008, and 2007, respectively.

Derivative Instruments and Hedging Activities

In certain instances, interest rate swap agreements used to manage floating interest rate exposure are executed with respect to amounts borrowed, or forecasted to be borrowed, under credit facilities. These contracts effectively exchange existing or forecasted obligations to pay interest based on floating rates for obligations to pay interest based on fixed rates. All derivative instruments are recognized as either assets or liabilities on the combined balance sheet at their respective fair values. Our derivatives have not met the requirements for hedge accounting treatment; therefore, all gains and losses related to derivative instruments are recorded in the combined statements of operations as a component of change in fair value of interest rate derivatives. Also included within this line item are any required monthly settlements on the swaps as well as all cash settlements paid.

Fair Value of Financial Instruments

Financial instruments consist primarily of cash, cash equivalents, investments, student receivables, interest rate swaps, accounts payable, mortgages, construction notes payable and lines of credit. The carrying value of cash, cash equivalents, investments, student receivables, accounts payable and lines of credit and other debt are representative of their respective fair values due to the short-term nature of these instruments. The estimated fair values of mortgages, construction loans and lines of credit are determined by comparing current borrowing rates and risk spreads offered in the market to the stated interest rates and spreads on our current mortgages, construction loans and lines of credit. The fair value of mortgage and construction loans as well as lines of credit are disclosed in note 9.

F-28

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

The fair value of the interest rate swaps is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves, implied volatilities and the creditworthiness of the swap counterparties.

On January 1, 2008, the Predecessor adopted guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the combined financial statements on a recurring basis. On January 1, 2009, the Predecessor adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the combined financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1—Observable inputs, such as quoted prices in active markets at the measurement date for identical, unrestricted assets or liabilities.

Level 2—Other inputs that are observable directly or indirectly, such as quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3—Unobservable inputs for which there is little or no market data and which the Predecessor makes its own assumptions about how market participants would price the asset or liability.

Fair value is defined as the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). In instances where inputs used to measure fair value fall into different levels of the fair value hierarchy, the level in the fair value hierarchy within which the fair value measurement in its entirety has been determined is based on the lowest level input significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Interest rate swaps measured at fair value are as follows (amounts in thousands):

	Quoted Prices in
	Active Markets for		Significant Other			Significant		Balance at
	Identical Assets and		Observable Inputs			Unobservable		June 30, 2010
	Liabilities (Level 1)		(Level 2)			Inputs (Level 3)		(unaudited)
Other liabilities:
Interest rate swaps	$	—	$	(3,156	)	$	—	$	(3,156	)

F-29

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

	Quoted Prices in
	Active Markets for		Significant Other			Significant
	Identical Assets and		Observable Inputs			Unobservable		Balance at
	Liabilities (Level 1)		(Level 2)			Inputs (Level 3)		December 31,
Other liabilities:
2009-Interest rate swaps	$	—	$	(6,049	)	$	—	$	(6,049	)
2008-Interest rate swaps	$	—	$	(9,529	)	$	—	$	(9,529	)

Commitments and Contingencies

Liabilities for loss contingencies, arising from claims, assessments, litigation, fines, penalties and other sources, are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

Income Taxes

The combined entities of the Predecessor are all limited liability companies or limited partnerships and have elected to be taxed as partnerships for Federal income tax purposes. Therefore, no provision for income taxes has been recorded since all income and losses of the Predecessor are allocated to the owners for inclusion in their respective tax returns.

Other Comprehensive Income

We have no elements of other comprehensive income. As a result, there is no difference between net loss as shown in the combined statements of operations and comprehensive loss.

Recent Accounting Pronouncements

In December 2007, the FASB issued new accounting guidance which establishes accounting and reporting standards for the noncontrolling interest in a subsidiary (previously referred to as minority interest). It also requires that a retained noncontrolling interest upon the deconsolidation of a subsidiary be initially measured at its fair value. We are required to report any noncontrolling interests as a separate component of equity and present any net income allocable to noncontrolling interests and net income attributable to the Predecessor separately in the combined statements of operations. As required, we adopted this new guidance beginning January 1, 2009. As a result of adoption, the former minority interest classification was eliminated and related amounts are now reflected as a component of equity. Additionally, during 2009, noncontrolling interests were attributed the full amount of their portion of any net losses. Previously, they were only allocated losses up to their remaining investment balances. It requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. All other requirements are applied prospectively.

In March 2008, the FASB issued new accounting guidance requiring enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for, and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The Predecessor adopted the new guidance beginning January 1, 2009. The adoption did not have a significant effect on our combined financial statements.

F-30

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

In April 2009, the FASB issued new accounting guidance requiring disclosure of the fair value of all financial instruments (recognized or unrecognized) when practicable to do so. These fair value disclosures must be presented together with the related carrying amount of the financial instruments in a manner that clearly distinguishes between assets and liabilities and indicates how the carrying amounts relate to the amounts reported on the balance sheet. The new guidance is effective for interim reporting periods ending after June 15, 2009. The adoption did not have a material impact on our combined financial statements.

In May 2009, the FASB issued new accounting guidance regarding subsequent events. The new guidance sets forth the period after the balance sheet date during which management should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The Predecessor adopted this guidance during 2009, and the adoption did not have a material impact on our combined financial statements.

In June 2009, the FASB issued new accounting guidance changing the consolidation analysis for VIEs and requiring a qualitative analysis to determine the primary beneficiary. The determination of the primary beneficiary of a VIE is based on whether the entity has the power to direct matters which most significantly impact the activities of the VIE and has the obligation to absorb losses, or the right to receive benefits, of the VIE which could potentially be significant to the VIE. It requires additional disclosures for VIEs, including disclosures about a reporting entity’s involvement with VIEs, how a reporting entity’s involvement with a VIE affects the reporting entity’s financial statements, and significant judgments and assumptions made by the reporting entity to determine whether it must combine the VIE. It is effective for us beginning on January 1, 2010. We are currently evaluating what impact, if any, its adoption will have on our combined financial statements.

Unaudited Interim Financial Information

The combined financial statements as of June 30, 2010 and for the six months ended June 30, 2010 and 2009 are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included. The results of operations and cash flows for any interim period are not necessarily indicative of results for other interim periods or the full year.

F-31

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

3.   Student Housing Properties

Student housing properties, net, consisted of the following as of (amounts in thousands):

	June 30,			December 31,
	2010			2009			2008
	(unaudited)
Land	$	24,578		$	24,578		$	26,186
Buildings and improvements		287,063			286,120			262,643
Furniture, fixtures and equipment		36,825			36,459			37,388
		348,466			347,157			326,217
Accumulated depreciation		(48,403	)		(38,999	)		(20,794	)
	$	300,063		$	308,158		$	305,423

Other assets includes approximately $0.2 million and $0.4 million, net of accumulated depreciation, related to corporate furniture, fixtures and equipment at December 31, 2009 and 2008, respectively.

4.   Variable Interest Entities

Each ground lessor shown below has been determined to be a VIE, of which the Predecessor is the primary beneficiary (dollar amounts in thousands):

				Original/
				Remaining		Current
		Rent Start		Term		Annual Lease
Tenant/Ground Lessee(1)	Landlord/Ground Lessor	Date		(in years)		Payment
Campus Crest at Jonesboro, LLC	Jonesboro - CHR Campus Crest LLC		10/1/07		25/23	$	187
Campus Crest at Cheney, LLC	Cheney - CHR Campus Crest LLC		10/1/07		25/23	$	115
Campus Crest at Wichita, LLC	Wichita - CHR Campus Crest LLC		11/1/07		25/23	$	76
Campus Crest at Wichita Falls, LP	Wichita Falls - CHR Campus Crest LLC		8/1/07		25/23	$	178
Campus Crest at Waco, LP	Waco - CHR Campus Crest LLC		7/1/07		25/23	$	92
Campus Crest at Troy, LLC	Troy - CHR Campus Crest LLC		7/1/07		25/23	$	123
Campus Crest at Stephenville, LP	Stephenville - CHR Campus Crest LLC		7/1/07		25/23	$	107
Campus Crest at Murfreesboro, LLC	Murfreesboro - CHR Campus Crest LLC		8/1/07		25/23	$	215

(1) Each entity is included in the combined financial statements of the Predecessor.

Each of these leases allows us the option to purchase the property, subject to certain conditions, at any time after the fifth anniversary of the lease effective date for fair market value. Consolidation of these VIEs resulted in recording land related to student housing properties of $13.0 million as of June 30, 2010 (unaudited), December 31, 2009, 2008 and 2007.

5.   Ground Leases

In addition to ground leases discussed in note 4, we entered into two ground lease agreements, both on the campus of the University of South Alabama, for the purpose of developing, constructing and operating student housing facilities. Initial lease terms are 38 and 40 years. Our future commitments are included in note 13. We have the right to encumber our leasehold interests with specific property mortgages for the purposes of constructing, remodeling or making improvements on or to the properties. Title to all improvements paid for and

F-32

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

constructed on the land remains with us until the earlier of termination or expiration of the lease at which time the title of any buildings constructed on the land will revert to the landlord. Should we decide to sell our leasehold interests during the initial or any renewal terms, the landlord has the right of first refusal to purchase the interests for the same purchase price under the same terms and conditions as contained in our offer to sell our leasehold interests. Below is a summary of these ground-leased properties as of June 30, 2010 (unaudited) and December 31, 2009 (dollar amounts in thousands):

				Original /
		Rent		Remaining
		Start		Term		Current Annual
Property	Landlord	Date		(in years)		Lease Payment
Mobile Phase I	USA Research and Technology Corporation		10/31/06		40/36	$	84
Mobile Phase II	USA Research and Technology Corporation		3/1/08		38/36	$	125

(1) Lease contains options to renew for one additional 20-year term, followed by an additional term of 15 years if the first renewal is exercised.

6.   Noncontrolling Interest

We combine the following 20 entities. Each of these entities owns a property called “The Grove” that is located in the city or town referred to in the entity name:

	Effective Ownership
Entities	Percentage
Campus Crest at Asheville, LLC		40	%
Campus Crest at Carrollton, LLC		38	%
Campus Crest at Las Cruces, LLC		30	%
Campus Crest at Milledgeville, LLC		5	%
Campus Crest at Abilene, LP		38	%
Campus Crest at Ellensburg, LLC		36	%
Campus Crest at Greeley, LLC		30	%
Campus Crest at Jacksonville, AL, LLC		37	%
Campus Crest at Mobile, LLC		37	%
Campus Crest at Nacogdoches, LP		38	%
Campus Crest at Cheney, LLC		52	%
Campus Crest at Jonesboro, LLC		42	%
Campus Crest at Lubbock, LP		40	%
Campus Crest at Mobile—Phase II, LLC		37	%
Campus Crest at Stephenville, LP		52	%
Campus Crest at Troy, LLC		52	%
Campus Crest at Waco, LP		52	%
Campus Crest at Wichita, LLC		42	%
Campus Crest at Wichita Falls, LP		52	%
Campus Crest at Murfreesboro, LLC		52	%

F-33

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

The portion of ownership interests attributable to the third-party owners in these entities is classified as noncontrolling interest within equity on the accompanying combined balance sheets. Accordingly, the third-party owners’ share of the income or loss of the entities is reported on the combined statements of operations as net loss attributable to noncontrolling interest.

Prior to January 1, 2009, losses and distributions were allocated to third-party owners up to, but not in excess of the third-party owners’ investments. Losses and distributions in excess of third-party owners’ investments were recognized entirely by the Predecessor. Beginning on January 1, 2009, in accordance with new accounting guidance, third-party owners were allocated losses in excess of their investment. The attribution of these losses to noncontrolling interest resulted, in certain instances, the third-party owner having a deficit or negative noncontrolling interest balance, even in situations when it was not required to fund this balance. The following table presents the pro forma effect on net income if the prior method of allocating losses to noncontrolling interest had been applied in 2009 (amounts in thousands):

	As Reported			Pro forma
Net loss attributable to Predecessor	$	(6,737	)		(13,362	)
Net loss attributable to noncontrolling interest	$	(10,486	)		(3,861	)
Net loss	$	(17,223	)	$	(17,223	)

7.   Sale of Student Housing Property

In November 2009, we sold 90% of our interest in The Grove at Milledgeville to an affiliate of Harrison Street Real Estate (“HSRE”). In addition, we executed an agreement with HSRE which provides us the ability to repurchase our interest in The Grove at Milledgeville. Upon completion of this offering, the Predecessor does intend to repurchase this interest. Because of our continuing involvement in this asset and because this transaction has financing elements, we did not record this transaction as a sale for financial reporting purposes. The proceeds were recorded as a related party loan and we continue to combine the balance sheet and operations of Campus Crest at Milledgeville, LLC, the entity which owns the property. The difference between the sale proceeds and contracted repurchase price is recorded as a discount to the related party loan. This discount is being amortized and recorded as interest expense on the accompanying combined statement of operations. For the six-month period ended June 30, 2010 (unaudited), interest expense related to this transaction totaled approximately $1.0 million. For the year-ended December 31, 2009, interest expense related to this transaction totaled approximately $0.3 million. We received proceeds from the sale of our interest in this property of approximately $3.9 million.

8.   Investment in Uncombined Entity

We have an investment in an uncombined entity with HSRE. At December 31, 2009, this entity had an investment in seven student housing properties. Four of these properties, The Grove at Lawrence, The Grove at Moscow, The Grove at San Angelo, and The Grove at San Marcos, opened in 2009. The remaining three properties were under construction at December 31, 2009. We held a 10% noncontrolling interest in this uncombined entity at December 31, 2009 and 2008. Our effective ownership of these seven student housing properties ranges from 5% to 10%.

Our investment of approximately $3.3 million, $3.0 million and $0.8 million in these entities at June 30, 2010 (unaudited) and December 31, 2009 and December 31, 2008, respectively, is included in investment in uncombined entities in the accompanying combined balance sheets.

F-34

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

We recorded equity in loss from uncombined entities for the six months ended June 30, 2010 (unaudited) and for the year ended December 31, 2009 of $(0.2) million and $(0.1) million, respectively. We had no equity on earnings (loss) from uncombined entities for the year ended December 31, 2008, as all assets owned by the entity at that date were under construction.

Condensed combined financial information for our uncombined entity as of and for the six months ended June 30, 2010 (unaudited) and for the years ended December 31, 2009 and 2008 is as follows (amounts in thousands):

Balance Sheets

	June 30,		December 31,
	2010		2009		2008
	(unaudited)
Assets:
Student housing properties, net	$	70,899	$	72,488	$	—
Development in process		53,837		15,528		10,042
Other assets		5,090		4,377		53
Total assets	$	129,826	$	92,393	$	10,095
Liabilities and owners’ equity
Construction debt	$	92,427	$	59,562	$	—
Other liabilities		6,610		3,210		1,916
Owners’ equity		30,789		29,621		8,179
Total liabilities and owners’ equity	$	129,826	$	92,393	$	10,095
Predecessor’s share of historical owners’ equity	$	3,079	$	2,962	$	818
Net difference in investment basis over net book value of underlying net assets (1)		178		18		(42	)
Predecessor’s carrying value of investment in uncombined entity	$	3,257	$	2,980	$	776

(1) This amount represents the aggregate difference between our historical cost basis and the basis reflected at the entity level, which is typically amortized over the life of the related asset. The basis differential occurs primarily due to the capitalization of additional investment in the uncombined entity offset by the elimination of service related revenue to the extent of our percentage ownership.

F-35

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

Statements of Operations

	Six Months Ended			Year Ended
	June 30, 2010			December 31, 2009
	(unaudited)
Revenues	$	4,111		$	3,131
Expenses:
Operating expenses		2,672			1,698
Interest expense		1,893			1,341
Depreciation and amortization		1,589			792
Total expenses		6,154			3,831
Net loss	$	(2,043	)	$	(700	)
Predecessor’s share of net loss	$	(194	)	$	(59	)

9.   Debt

A detail of our construction and mortgage loans, lines of credit, other debt and related party loans is presented below (amounts in thousands):

	June 30,		December 31,
	2010		2009		2008
	(unaudited)
Fixed-rate mortgage loans	$	164,840	$	164,840	$	164,840
Construction loans		164,534		164,262		157,586
Lines of credit and other debt		10,018		9,978		9,237
Related party loan		7,671		4,092		—
	$	347,063	$	343,172	$	331,663

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CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

During the six months ended June 30, 2010 (unaudited) and the years ended December 31, 2009 and 2008, the following transactions occurred (amounts in thousands):

	June 30,			December 31,
	2010			2009			2008
	(unaudited)
Balance at beginning of period	$	343,172		$	331,663		$	173,483
Additions:
Draws on lines of credit		40			9,831			8,967
Draws under construction loans		497			9,826			140,921
Proceeds from mortgage loans		—			—			104,600
Proceeds from related party loan (1)		2,250			3,872			—
Accretion of interest expense (1)		1,376			220			—
Deductions:
Conversion of note to equity interest		—			(600	)		—
Payments on lines of credit		—			(9,090	)		(6,308	)
Payments on construction loans		(225	)		—			(90,000	)
Payments on related party loan		(47	)		—			—
Contribution of construction loan to real estate venture					(2,550	)		—
Balance at end of period	$	347,063		$	343,172		$	331,663

(1) Relates to sale of 90% of our interest in Campus Crest at Milledgeville, LLC, sale of 99% of our interest in HSRE I and prepaid management fees. See notes 7 and 15.

The estimated fair value of our construction and fixed rate mortgage loans at June 30, 2010 (unaudited), December 31, 2009 and 2008 was approximately $331.0 million, $325.9 million and $315.8 million, respectively. These estimated fair values were determined by comparing current borrowing rates and risk spreads to the stated interest rates and risk spreads.

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CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

Construction and mortgage loans are collateralized by properties and their related revenue streams. Construction and mortgage loans at June 30, 2010 (unaudited), December 31, 2009 and 2008 consisted of the following (dollar amounts in thousands):

			Principal		Principal		Principal		Stated			Interest			Interest
	Face		Outstanding at		Outstanding at		Outstanding at		Interest			Rate at			Rate at			Maturity
	Amount		6/30/10		12/31/09		12/31/08		Rate			6/30/10			12/31/09			Date			Amortization
			(unaudited)									(unaudited)
Construction loans
The Grove at Mobile-Phase II	$	15,875	$	15,648	$	15,874	$	15,643		Greater of LIBOR + 3.00	% or 5.50%		5.50	%		5.50	%		10/31/2010		Amortizing- $1.0 million due 6/30/10 (note 15)
Construction Loan (nine properties) (1)		157,550		148,886		148,388		139,393		LIBOR + 1.80	%		2.15	%		2.03	%		10/31/2010 (4	)	Interest only
The Grove at Huntsville (2)		2,550		—		—		2,550		8.00	%		—			—			7/6/2009		Interest only
Mortgage loans
The Grove at Asheville		14,800		14,800		14,800		14,800		5.77	%		5.77	%		5.77	%		4/11/2017		30 years
The Grove at Carrollton		14,650		14,650		14,650		14,650		6.13	%		6.13	%		6.13	%		10/11/2016		30 years
The Grove at Las Cruces		15,140		15,140		15,140		15,140		6.13	%		6.13	%		6.13	%		10/11/2016		30 years
Mortgage (six properties) (3)		104,000		104,000		104,000		104,000		6.40	%		6.40	%		6.40	%		2/28/2013		30 years
The Grove at Milledgeville		16,250		16,250		16,250		16,250		6.12	%		6.12	%		6.12	%		10/1/2016		30 years
Total			$	329,374	$	329,102	$	322,426

(1)	Secured by The Grove at Cheney, The Grove at Jonesboro, The Grove at Lubbock, The Grove at Murfreesboro, The Grove at Stephenville, The Grove at Troy, The Grove at Waco, The Grove at Wichita and The Grove at Wichita Falls. At June 30, 2010 (unaudited) and December 31, 2009, approximately $136.4 million of the loan balance is hedged with a floating to fixed interest rate swap which, when taken together with the loan interest, fixes this portion of the loan’s interest rate at 6.0%.
(2)	Debt was repaid in full when construction loan closed.
(3)	Secured by The Grove at Abilene, The Grove at Ellensburg, The Grove at Greeley, The Grove at Jacksonville, The Grove at Mobile—Phase I and The Grove at Nacogdoches.
(4)	We have a commitment from the lender to extend the maturity date of the loan to January 31, 2011 (note 15).

Mortgage Loans

In 2009 and in 2008, we had in place secured permanent financing of approximately $164.8 million for 10 combined properties.

The loans for The Grove at Asheville, The Grove at Carrollton, The Grove at Milledgeville and The Grove at Las Cruces generally require interest only payments, plus certain reserves and escrows, are payable monthly for a period of five years. Monthly payments of principal and interest, plus certain reserve and escrow amounts, are due thereafter until maturity when all principal is due. Each of these loans has a 30-year amortization and is a non-recourse obligation subject to customary or immaterial exceptions. None of these loans are cross-defaulted or cross-collateralized with any other indebtedness. The loans generally may not be prepaid prior to maturity; in certain cases, prepayment is allowed, subject to prepayment penalties.

The other mortgage loan is secured by six properties and has interest only payments with a balloon maturity date of February 28, 2013. This mortgage loan does not cross collateralize, nor is it cross defaulted to, any of the other debt facilities.

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CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

Construction Loans

In June 2007, we closed a construction loan in a principal amount of $145.0 million of which $10.0 million is included to be available for the issuance of letters of credit. The construction loan has a maturity date of October 31, 2010, has a weighted average interest rate of 2.47% and 2.37% as of June 30, 2010 (unaudited) and December 31, 2009 and requires interest only payments until loan maturity. At December 31, 2009, approximately $136.4 million of the $148.3 million outstanding loan balance is hedged with a floating to fixed interest rate swap. We have a commitment from the lender to extend the maturity date of this loan to January 31, 2011 and the parties have agreed to amend the loan documents to effect this extension of the maturity date not later than May 31, 2010 (note 15).

In 2007, we entered into agreements for debt totaling approximately $12.5 million, which is included in the construction loan amount outstanding above, with a related party who holds a portion of the noncontrolling interests and is party to certain of our ground leases with VIEs as described in note 4. The loans accrue interest at LIBOR plus 1.80% and are paid monthly with all principal and accrued interest due on October 31, 2010. We have a commitment from the lender to extend the maturity date of this loan to January 31, 2011 and the parties have agreed to amend the loan amounts to effect this extension of the maturity date not later than May 31, 2010 (note 15).

In December 2009, we modified and extended the property construction loan for The Grove at Mobile-Phase II. Modifications to the loan included: (i) the face/commitment amount was reduced to $15.9 million from $16.4 million, (ii) the interest rate was changed from LIBOR plus 1.80% to the greater of LIBOR plus 3.00% or a floor rate of 5.50% and (iii) the maturity date was extended to October 31, 2010. Payment terms include monthly principal payments of $37,500 and interest prior to a reduction of principal in the amount of $1.0 million on or before June 30, 2010, and monthly principal payments of $25,000 and interest subsequent to the payment of the $1.0 million reduction of principal (note 15). The loan is a full recourse loan secured by The Grove at Mobile-Phase II. For management’s plan to address maturity of this facility, see “Liquidity and Capital Resources” below.

Lines of Credit and Other Debt

In March 2007, we entered into a line of credit of $2.0 million that was due in October 2008. This line of credit was subsequently increased to $4.0 million in May 2008. In October 2008, we converted the balance of this line of credit (approximately $2.7 million) to a term loan with an interest rate of one month LIBOR plus 3.00%. Interest only payments were required commencing in November 2008 with principal payments required to be paid on a quarterly basis beginning on January 31, 2009. All principal and accrued interest was due and paid in October 2009.

The Predecessor obtained a $6.0 million line of credit in May 2007 with an interest rate of 10.50% per annum. Ownership of the lender includes the Predecessor’s owner and a third-party investor in all of our combined property owning entities. Interest only payments were due August 1, 2007 and continuing quarterly thereafter with the entire principal balance, including accrued interest, due and payable in full April 30, 2009. In April 2009, the terms of the line of credit were amended. The new terms extended the maturity date to April 30, 2011 and increased the interest rate to 12.00% per annum. At June 30, 2010 (unaudited), December 31, 2009 and 2008, $6.0 million was outstanding on this line of credit.

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CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

In July 2009, the Predecessor obtained a $4.0 million line of credit with an interest rate of the prime rate plus 1.00% with an interest rate floor of 5.00%. Interest only is payable monthly; all outstanding principal is due on the line’s maturity date, August 5, 2010 (note 15). The interest rate and outstanding principal balance on this line of credit at December 31, 2009 were 5.00% and $4.0 million, respectively. No amounts were outstanding under this line of credit at December 31, 2008. For management’s plan to address maturity of this facility, see “Liquidity and Capital Resources” below.

Related Party Loans

See note 7 for information related to our obligation to HSRE as a result of the transaction involving The Grove at Milledgeville. See note 15 for information regarding transactions with HSRE during the six months ended June 30, 2010.

Guarantee of Loans

Ted W. Rollins and Michael S. Hartnett have each entered into personal guarantees to secure the loans set forth in this note 9.

Schedule of Debt Maturities

Scheduled debt maturities for each of the five years subsequent to December 31, 2009 and thereafter, are as follows (dollars in thousands):

2010	$	172,315	(1)
2011		6,103
2012		641
2013		104,750
2014		797
Thereafter		58,566
	$	343,172

(1) We have a commitment from a lender to extend the maturity date of approximately $148.4 million of these obligations in January 31, 2011 (note 15).

Amortization of deferred financing costs approximated $0.8 million, $0.8 million and $0.3 million for the years ended December 31, 2009, 2008 and 2007, respectively.

Liquidity and Capital Resources

At December 31, 2009 and March 31, 2010, we were not in compliance with certain covenants under our $148.4 construction loan with Wachovia Bank secured by nine properties. On May 7, 2010, we received an executed commitment from the existing lender under this facility (i) allowing us until August 31, 2010 to bond over and/or cause to be released from all remaining unresolved liens, (ii) waiving our non-compliance with the debt service coverage covenant as of December 31, 2009 and June 30, 2010 and substituting a debt yield covenant in lieu of the debt service covenant and (iii) committing to extend the maturity of the construction loan to

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CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

January 31, 2011. We have agreed with the lender to execute the extension as described in the commitment on or before June 1, 2010 (note 15).

At December 31, 2009, we were not in compliance with the covenant relating to unresolved liens or claims for materials or labor under our construction loan with Wachovia Bank secured by The Grove at Moscow, The Grove at San Angelo and The Grove at San Marcos. On May 12, 2010, the lender under this construction loan acknowledged and consented to our proposal for the payment and satisfaction of the liens out of the net proceeds from the Company’s offering and waived our non-compliance with the covenant (note 15).

At December 31, 2009, we were not in compliance with covenants under our $104.0 million mortgage loan with Silverton Bank, secured by six of our properties, for the quarters ended October 31, 2009, January 31, 2010 and April 30, 2010 as a result of failing to meet the specified debt service coverage and debt yield percentage covenants set forth in the loan documents. Additionally, based on current operating projections, the Predecessor does not expect to satisfy either covenant through the end of 2010. On April 9, 2010, we received a waiver of non-compliance with the covenants from the lender under this mortgage loan for the periods ended October 31, 2009 and January 31, 2010. On May 13, 2010, we received a waiver of non-compliance with the covenants from the lender under this mortgage loan for the period ended April 30, 2010. We have also obtained a forward waiver of non-compliance for the periods ending July 31, 2010, October 31, 2010 and January 31, 2011.

We have three credit facilities maturing in fiscal 2010, consisting of the $148.4 million construction loan facility secured by nine properties, a $4.0 million line of credit and a $15.9 million construction loan. We received an executed commitment from our current lender on May 7, 2010 to extend the maturity of the $148.4 million construction loan facility to January 31, 2011. Additionally, we anticipate retiring the $4.0 million line of credit out of cash flows from operations. We expect to refinance the principal amount of the $15.9 million construction loan, less the fiscal 2010 principal amortization of $1.0 million, based on current refinancing underwriting standards. The current challenging economic climate may also lead to our need to sell one or more of our operating properties in order to provide the needed liquidity to service our debt and operating obligations during 2010 (note 15).

We believe that our existing capital resources, which include cash flow from operations and the potential sale of operating properties, will be adequate to satisfy our anticipated liquidity requirements throughout 2010. If available liquidity is not sufficient to meet our operating and debt service obligations as they come due, we expect to pursue alternative financing arrangements, reduce expenditures, or sell additional operating properties, as necessary, in order to meet our cash requirements throughout 2010.

Additionally, we generate construction, development and management fee revenue from real estate ventures and will attempt to enter into new real estate ventures during fiscal 2010, although our ability to secure venture partners or other equity sources, as well as necessary construction financing, is not assured. Additional new real estate ventures would provide fee revenue that helps to provide necessary liquidity.

Our operations have historically generated net losses primarily due to significant amounts of interest expense, depreciation and amortization expense. We expect that our operations will continue to generate net losses due to the amounts of interest expense, depreciation and amortization expense that are projected.

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CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

There is no assurance that if required, we would be able to raise additional capital, refinance maturing credit facilities, sell one or more operating properties or reduce discretionary spending sufficient to provide the required liquidity. Failure to achieve sufficient liquidity or otherwise address further compliance issues under our credit facilities within the timeframe permitted may have a material adverse affect on our business, results of operations and financial position, and may materially affect our ability to continue as a going concern.

10.   Derivative Instruments and Hedging Activities

We use significant variable rate debt to finance our construction of student housing properties. These debt obligations expose us to variability in cash flows due to fluctuations in interest rates. From time to time, management enters into derivative contracts to limit variability for a portion of our interest payments and to manage exposure to interest rate risk. We use derivative financial instruments, specifically interest rate swaps, for non-trading purposes.

As of June 30, 2010, December 31, 2009 and 2008, the fair value of derivative contracts is recorded within other liabilities in the accompanying combined balance sheets with changes in the fair value of derivatives recorded within the combined statements of operations. The fair value of interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. We incorporate credit valuation adjustments to appropriately reflect our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of derivative contracts for the effect of nonperformance risk, we consider the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds and guarantees.

The following table is a summary of the terms and the estimated fair value of the derivative contracts we were a party to at June 30, 2010 (unaudited) and December 31, 2009 (dollar amounts in thousands):

				Weighted								Estimated Fair
				Average Fixed					Estimated Fair			Value at
		Notional		Interest					Value at			December 31,
Instrument	Hedged Item	Amount		Rate			Maturity Date		June 30, 2010			2009
									(unaudited)
Interest rate swap	30-day LIBOR variable interest rate	$	136,409		6.00	%		October 2010	$	(1,949	)	$	(4,424	)
Interest rate swap	30-day LIBOR variable interest rate	$	45,000		3.44	%		May 2011		(1,207	)		(1,625	)
									$	(3,156	)	$	(6,049	)

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CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

The following table is a summary of the terms and the estimated fair values of the derivative contracts we were a party to at December 31, 2008 (dollar amounts in thousands):

				Weighted
				Average					Estimated Fair
				Fixed					Value at
		Notional		Interest					December 31,
Instrument	Hedged Item	Amount		Rate			Maturity Date		2008
Interest rate swap	30-day LIBOR variable interest rate	$	14,464		4.59	%		September 2009	$	(1,764)
Interest rate swap	90-day LIBOR variable interest rate	$	50,000		5.48	%		November 2019		(6,280)
Interest rate swap	90-day LIBOR variable interest rate	$	15,000		4.96	%		November 2019		(1,485)
									$	(9,529)

The table below reflects the effect of interest rate derivative instruments on the combined statements of operations for the six months ended June 30, 2010 and 2009 (unaudited) and for the years ended December 31, 2009, 2008 and 2007 (amounts in thousands):

		Six Months			Six Months
	Location of Gain (Loss)	Ended			Ended			Year Ended
Derivatives not Designated	Recognized on the Combined	June 30,			June 30,			December 31,
as Hedging Instruments	Statements of Operations	2010			2009			2009			2008		2007
		(unaudited)			(unaudited)
Interest rate swaps (receive float/pay fixed):
Monthly net settlements-cash settled	Change in fair value of interest rate derivatives	$	(2,715	)	$	(310	)	$	(2,373	)	$	(244)	$	—
Mark to market adjustments-cash settled	Change in fair value of interest rate derivatives		—			—			(310	)		(1,100)		—
Mark to market adjustments-non-cash	Change in fair value of interest rate derivatives		2,893			2,990			3,480			(7,414)		(2,115	)
Total effect of derivative instruments on the combined statements of operations		$	178		$	2,680		$	797		$	(8,758)	$	(2,115	)

In October 2008, the counterparty to our swap agreements required us to deposit cash collateral into escrow for future settlements in the amount of approximately $1.4 million. This amount is included in the restricted cash line item in the accompanying December 31, 2008 combined balance sheet. No amounts were required to be escrowed for future settlements at June 30, 2010 (unaudited) and December 31, 2009. Periodic swap settlements of $0.1 million, $0.7 million and $0 were capitalized to student housing properties for the years ended December 31, 2009, 2008 and 2007, respectively.

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CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

11.   Related Party Transactions

The Predecessor wholly owns three entities that provide extensive services for property constructing and owning entities that are both combined and not combined. Campus Crest Development, LLC (“Development”) serves as the developer and project manager for the same entities prior to and through the properties’ substantial completion. Campus Crest Construction, LLC (“Construction”) serves as the general contractor for entities we have an ownership interest in, including uncombined entities. The Grove Student Properties, LLC (d/b/a Campus Crest Real Estate Management) (“Management”) serves as the property manager for the same entities once the assets are placed into service and begin their real estate operations. Currently, neither, Development, Construction nor Management performs services for entities in which we do not have an ownership interest.

Development, construction and management services revenue recognized in the accompanying combined statements of operations are from uncombined entities, net of eliminations due to our share of ownership. The following table illustrates revenue recognized and corresponding amounts eliminated in combination (amounts in thousands):

	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,			Year Ended December 31,
	2010			2009			2009			2008			2007
	(unaudited)
Total Construction revenue	$	32,136		$	48,497		$	71,798		$	120,338		$	88,296
Eliminated Construction revenue		(3,231	)		(13,383	)		(14,901	)		(118,104	)		(88,296	)
Construction revenue recognized from transactions with uncombined entities	$	28,905		$	35,114		$	56,897		$	2,234		$	—
Total Development revenue	$	1,471		$	2,318		$	3,934		$	3,854		$	3,226
Eliminated Development revenue		(147	)		(752	)		(1,390	)		(3,751	)		(3,226	)
Development revenue recognized from transactions with uncombined entities	$	1,324		$	1,566		$	2,544		$	103		$	—
Total Management revenue	$	1,778		$	1,671		$	3,516		$	1,577		$	873
Eliminated Management revenue		(1,269	)		(1,093	)		(2,246	)		(1,409	)		(873	)
Management revenue recognized from transactions with uncombined entities	$	509		$	578		$	1,270		$	168		$	—

From time to time, we advance amounts to and receive amounts from entities that have common ownership with the Predecessor. At June 30, 2010 (unaudited) and December 31, 2009 and 2008, we were owed approximately $1.7 million, $1.4 million and $0.3 million, respectively, from related entities and had accounts payable due to related entities of $0.7 million, $0.6 million

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CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

and $0, respectively. These amounts are included in other assets and other liabilities in the accompanying combined balance sheets.

12.   Segments

The operating segments in which management assesses performance and allocates resources are student housing operations and development, construction and management services. Our segments reflect management’s resource allocation and performance assessment in making decisions regarding the Predecessor. Our student housing leasing and student housing service revenue is aggregated within the student housing operations segment and our third-party services of development, construction and management are aggregated within the development, construction and management services segment.

The following tables set forth our segment information as of and for the six months ended June 30, 2010 and 2009 (unaudited) and as of and for the years ended December 31, 2009, 2008 and 2007 (amounts in thousands):

	Six Months Ended
	June 30,						Year Ended December 31,
	2010			2009			2009			2008			2007
	(unaudited)
Student Housing Operations:
Revenues from external customers	$	25,869		$	22,230		$	45,973		$	31,611		$	15,708
Operating expenses		23,892			21,247			42,997			29,481			13,788
Operating income		1,977			983			2,976			2,130			1,920
Nonoperating expenses		(7,718	)		(4,795	)		(14,747	)		(23,492	)		(8,005	)
Net loss		(5,741	)		(3,812	)		(11,771	)		(21,362	)		(6,085	)
Net loss attributable to noncontrolling interest		(4,385	)		(2,060	)		(10,486	)		(870	)		(2,083	)
Net loss attributable to Predecessor	$	(1,356	)	$	(1,752	)	$	(1,285	)	$	(20,492	)	$	(4,002	)
Total segment assets at end of period	$	304,352					$	310,075		$	319,052		$	205,151
Development, Construction and Management Services:
Revenues from external customers	$	30,738		$	37,258		$	60,711		$	2,505		$	—
Intersegment revenues		4,647			15,228			18,537			123,264			92,395
Total revenues		35,385			52,486			79,248			125,769			92,395
Operating expenses		32,090			47,553			76,305			122,535			96,835
Operating income (loss)		3,295			4,933			2,943			3,234			(4,440	)
Nonoperating expenses		(31	)		(330	)		(108	)		(520	)		(18	)
Net income (loss)		3,264			4,603			2,835			2,714			(4,458	)
Net income (loss) attributable to Predecessor	$	3,264		$	4,603		$	2,835		$	2,714		$	(4,458	)
Total segment assets at end of period	$	25,785					$	28,926		$	30,048		$	28,152
Reconciliations:
Total segment revenues	$	61,254		$	74,716		$	125,221		$	157,380		$	108,103
Elimination of intersegment revenues		(4,647	)		(15,228	)		(18,537	)		(123,264	)		(92,395	)
Total combined revenues	$	56,607		$	59,488		$	106,684		$	34,116		$	15,708

F-45

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

	Six Months Ended
	June 30,						Year Ended December 31,
	2010			2009			2009			2008			2007
	(unaudited)
Segment operating income	$	5,272		$	5,916		$	5,919		$	5,364		$	(2,520	)
Interest expense		(10,686	)		(7,369	)		(15,871	)		(14,946	)		(6,583	)
Change in fair value of interest rate derivatives		178			2,680			797			(8,758	)		(2,115	)
Net unallocated income (expenses) and eliminations		(2,905	)		(5,202	)		(8,053	)		(7,707	)		1,486
Equity in loss of uncombined entities		(194	)		—			(59	)		—			—
Other income (expense)		45			(19	)		44			(50	)		100
Loss from continuing operations	$	(8,290	)	$	(3,994	)	$	(17,223	)	$	(26,097	)	$	(9,632	)
Total segment assets	$	330,137					$	339,001		$	349,100		$	233,303
Unallocated corporate assets and eliminations		(1,764	)					(7,205	)		(6,945	)		(19,399	)
Total assets	$	328,373					$	331,796		$	342,155		$	213,904

13.   Commitments and Contingencies

Commitments

In the normal course of business, we enter into various development and construction related purchase commitments with parties that provide development and construction related goods and services. In the event we were to terminate development or construction services prior to the completion of projects, we could potentially be committed to satisfy outstanding or uncompleted purchase orders with such parties. At December 31, 2009, management does not anticipate any material deviations from schedule or budget related to development projects currently in progress.

In the ordinary course of business, certain liens related to the construction of the student housing real estate property may be attached to the assets of the Company by contractors or suppliers. Campus Crest Construction, LLC is responsible as the general contractor for resolving these liens. At June 30, 2010 and December 31, 2009, there were unresolved liens or claims for materials or labor for The Grove at Cheney, The Grove at Jonesboro, The Grove at Lubbock, The Grove at Murfreesboro, The Grove at Stephenville, The Grove at Troy, The Grove at Waco, The Grove at Wichita and The Grove at Wichita Falls. The liens and claims relate to the role of Campus Crest Construction, LLC as general contractor in connection with the construction of these nine properties. As of June 30, 2010 (unaudited) and December 31, 2009, we have recorded a liability of approximately $2.0 million and $2.2 million relating to these liens and claims, however, there can be no assurances that we will not be required to pay amounts greater than our currently recorded liabilities in order to obtain the release of the liens or settle these claims.

At June 30, 2010 and December 31, 2009, there were unresolved liens or claims for materials or labor for The Grove at Moscow, The Grove at San Angelo and The Grove at San Marcos. The liens and claims relate to the role of Campus Crest Construction, LLC as general contractor in connection with the construction of these three properties. As of June 30, 2010 (unaudited) and December 31, 2009, we have recorded a liability of approximately $303,000 and $430,000 relating to these liens and claims, however, there can be no assurances that we will not be required to pay amounts greater than our currently recorded liabilities in order to obtain the release of the liens or settle these claims.

F-46

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

Ted W. Rollins and Michael S. Hartnett have each entered into personal guarantees to secure the loans as set forth in note 9.

We lease space for our corporate headquarters office. Rent expense is recognized on a straight-line basis and included in general and administrative expense. Future minimum payments over the life of our corporate office lease and the two ground leases described in note 5 subsequent to December 31, 2009 are as follows (amounts in thousands):

2010	$	457
2011		464
2012		542
2013		551
2014		577
Thereafter		8,688
Total future minimum lease payments	$	11,279

Rent expense totaled $0.5 million, $0.5 million and $0.3 million for the years ended December 31, 2009, 2008 and 2007, respectively.

Contingencies

In the normal course of business, we are subject to claims, lawsuits and legal proceedings. While it is not possible to ascertain the ultimate outcome of all such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on the combined financial position or combined results of operations of the Predecessor. We are not involved in any material litigation nor, to management’s knowledge, is any material litigation currently threatened against us or our properties or subsidiaries, other than routine litigation arising in the ordinary course of business.

We are not aware of any environmental liability with respect to the properties that could have a material adverse effect on our business, assets or results of operations. However, there can be no assurance that such a material environmental liability does not exist. The existence of any such material environmental liability could have an adverse effect on our results of operations and cash flows.

14.   Subsequent Events

HSRE Real Estate Ventures

As of December 31, 2009, we have two real estate venture arrangements with HSRE. On March 26, 2010, we entered into an agreement with HSRE for the formation of a third real estate venture arrangement that is contingent upon the receipt of certain lender consents described below. Upon completion of the Company’s offering and the transactions described below, however, we will be party only to one real estate venture arrangement relating to six properties, in which we will own a 49.9% interest and which will be accounted for as an investment in an unconsolidated real estate venture.

F-47

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

HSRE I. Our first real estate venture with HSRE, HSRE-Campus Crest I, LLC, which we refer to as HSRE I, indirectly owns 100% interests in the following seven properties: The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Moscow, The Grove at San Angelo, The Grove at San Marcos and The Grove at Statesboro. As of March 26, 2010, we own a 0.1% interest in HSRE I and HSRE owns the remaining 99.9% (prior to the March 2010 transactions described below, we owned a 10% interest in HSRE I and HSRE owned the remaining 90%).

In general, we are responsible for the day-to-day management of HSRE I’s business and affairs, provided that major decisions must be approved by us and HSRE. In addition to distributions to which we are entitled as an investor in HSRE I, we receive or have in the past received fees for providing services to the properties held by HSRE I pursuant to development and construction agreements and property management agreements. We have granted to an entity related to HSRE I a right of first opportunity with respect to certain development or acquisition opportunities identified by us. This right of first opportunity will terminate at such time as HSRE shall have funded at least $40 million of equity to HSRE I and/or certain related ventures. As of July 30, 2010, HSRE has funded approximately $35 million of the $40 million right of first opportunity. HSRE I will dissolve upon the disposition of substantially all of its assets or the occurrence of certain events specified in the agreement between us and HSRE.

HSRE II. Our second real estate venture with HSRE, HSRE-Campus Crest II, LLC, which we refer to as HSRE II, indirectly owns a 100% interest in The Grove at Milledgeville. In November 2009, an entity in which we hold a 50% interest sold a 100% interest in The Grove at Milledgeville to HSRE II, and retained an ownership interest in HSRE II of 10%. Upon completion of the Company’s offering and the formation transactions, HSRE II will be dissolved, and the Company will own 100% of The Grove at Milledgeville.

HSRE III. On March 26, 2010, we entered into an agreement with HSRE to form a third real estate venture, HSRE-Campus Crest III, LLC, which we refer to as HSRE III, predicated upon the receipt of certain lender consents described below. HSRE III currently does not own any assets and will indirectly acquire a 100% interest in The Grove at Carrollton, subject to receiving certain lender consents relating to indebtedness secured by The Grove at Carrollton. If these consents are obtained, upon HSRE III’s acquisition of The Grove at Carrollton, we will own a 0.1% interest in HSRE III and HSRE will own the remaining 99.9%. Upon completion of the Company’s offering and the formation transactions, HSRE III will be dissolved, and the Company will own 100% of The Grove at Carrollton.

HSRE Transactions

March 2010 Transactions. In March 2010, we consummated the following transactions with HSRE, for which we received proceeds of approximately $2.25 million:

•   the sale of a 9.9% interest in HSRE I to HSRE; and

•   the pre-payment by HSRE to us of management fees relating to the following properties: The Grove at Carrollton, The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Milledgeville, The Grove at Moscow, The Grove at San Angelo, The Grove at San Marcos and The Grove at Statesboro.

F-48

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

In addition, we agreed to sell a 9.9% interest in HSRE II to HSRE and a 100% interest in The Grove at Carrollton to HSRE III, which will result in aggregate cash proceeds to us of approximately $1.7 million; although neither of the foregoing transactions has been consummated and both are subject to receiving certain lender consents relating to indebtedness secured by the respective properties.

Post-Offering Transactions.  Upon completion of the Company’s offering, we have agreed to consummate the following transactions:

•   Purchase a 49.8% interest in HSRE I from HSRE;

•   Purchase a 50.1% interest in The Grove at San Marcos from HSRE I, with the result that we will own 100% of The Grove at San Marcos;

•   Purchase HSRE’s entire interest in HSRE II, with the result that we will own 100% of The Grove at Milledgeville;

•   Purchase a 99.9% interest in HSRE III from HSRE, with the result that we will own 100% of The Grove at Carrollton; and

•   Repay to HSRE the pre-paid management fees relating to the following properties: The Grove at Carrollton, The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Milledgeville, The Grove at Moscow, The Grove at San Angelo, The Grove at San Marcos and The Grove at Statesboro.

15.   Unaudited Interim Transactions

As discussed in Note 14, in March 2010, we sold 99% of our interest in HSRE I, which represents a 9.9% interest in the HSRE I venture, to HSRE, and HSRE prepaid to us management fees related to certain properties. The total proceeds received from these transactions were $2.25 million. We also executed an agreement with HSRE whereby we have agreed to repurchase the sold interest in HSRE I. Upon completion of this offering, the Predecessor will repurchase this interest in HSRE I and will repay the prepaid management fees at a stipulated repayment amount. Due to these facts and because these transactions have financing elements, the transactions were accounted for as a related party loan. The difference between the total proceeds received and the total contracted repurchase and repayment amounts is accreted and recorded as interest expense on the accompanying combined statements of operations. For the six months ended June 30, 2010 (unaudited), interest expense related to these transactions totaled approximately $384,000.

Since June 1, 2010, we executed a series of agreements with the lender on our Wachovia Bank construction loan described in note 9, which further extended the May 7, 2010 commitment. On August 16, 2010, we entered into an agreement, the execution of which memorializes the terms and conditions of the May 7, 2010 commitment, as extended from time to time, including a waiver of non-compliance with the debt service coverage covenant as of June 30, 2010. On August 31, 2010, we executed an agreement with the lender on our Wachovia Bank construction loan described in Note 9, allowing us until October 31, 2010 to bond over and/or cause all remaining unresolved liens to be released.

On August 2, 2010, we entered into an agreement with Encore Interests, Inc., a Delaware corporation (“Encore”) for the formation of CC-Encore, LLC, a Delaware limited liability company (“CC-Encore”), and we contributed to CC-Encore and pledged to Encore interests in certain of our

F-49

CAMPUS CREST COMMUNITIES PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)

properties and subsidiaries. Carl H. Ricker, Jr. also is a party to this agreement, and Mr. Ricker and his affiliated entities contributed to CC-Encore and pledged to Encore interests that they owned in certain of our properties. Encore contributed $2.5 million to CC-Encore in exchange for a preferred membership interest. CC-Encore loaned the net proceeds from Encore’s contribution of $2.35 million, after transaction expenses, to one of our subsidiaries to be used for working capital purposes. The loan has an interest rate of 0.7% per annum and all principal and interest is payable on January 1, 2014 if CC-Encore does not exercise a payment demand prior to such date.

We are obligated to purchase the preferred membership interest upon completion of this offering for $3.9 million, at which time the joint venture with Encore will be terminated and we will own 100% of the interests contributed to CC-Encore and pledged to Encore. The $3.9 million purchase price for the preferred membership interest to be paid by us was the result of an arm’s length negotiation between Encore, an unaffiliated third party, and us at the time of Encore’s purchase of the preferred membership interest. Prior to the completion of this offering and while the preferred membership interest remains outstanding, we are subject to financial and other covenants under the terms of the agreement pursuant to which Encore purchased the preferred membership interest, and we have the right to repurchase the preferred membership interest under certain circumstances. In addition, while the preferred membership interest remains outstanding, Encore has agreed to purchase up to an additional $2.5 million preferred membership interest in CC-Encore if the properties related to the interests contributed to CC-Encore meet certain financial and operating performance targets. If this offering is completed, it is not expected that Encore will purchase any additional interests in CC-Encore beyond its initial $2.5 million interest.

On August 5, 2010, we executed an agreement with the lender on our $4.0 million line of credit that was set to mature on that date. The agreement extended the line’s maturity date to October 5, 2010. Additionally, the interest rate floor changed from 5.0% to 5.5%.

On August 16, 2010, we executed a modification of the terms of the property construction loan for The Grove at Mobile—Phase II. The modification provides for an extension of the $1.0 million principal reduction payment (discussed in the Construction Loans section of note 9) to the earliest to occur of the completion of this offering, the completion of a private placement of the equity interests in MXT Capital, LLC or CCG, or October 31, 2010.

On August 31, 2010, we executed an agreement with the lender on our joint venture construction loan with Wachovia Bank secured by The Grove at Moscow, The Grove at San Angelo and The Grove at San Marcos described in Note 9, allowing us until October 31, 2010 to satisfy the liens and claims with a portion of the net proceeds from this offering.

F-50

Schedule III-Real Estate and Accumulated Depreciation as of December 31, 2009

			Costs		Total Costs
			Capitalized				Student
	Initial		Subsequent to				Housing										Year		Depreciable
Student Housing Properties	Cost		Development		Land		Properties		Total		Accum. Depr.			Encumbrances			Built		Lives (1)
	(dollar amounts in thousands)
The Grove at Asheville	$	12,631	$	276	$	51	$	12,856	$	12,907	$	(3,091	)	$	(14,800	)		2005		40
The Grove at Carrollton		13,339		230		1,104		12,465		13,569		(2,615	)		(14,650	)		2006		40
The Grove at Las Cruces		16,038		47		1,098		14,987		16,085		(2,897	)		(15,140	)		2006		40
The Grove at Milledgeville		14,672		98		942		13,828		14,770		(2,681	)		(16,250	)		2006		40
The Grove at Abilene		17,077		74		1,361		15,790		17,151		(2,253	)		(16,120	)		2007		40
The Grove at Ellensburg		20,985		53		1,483		19,555		21,038		(2,535	)		(18,757	)		2007		40
The Grove at Greeley		20,144		124		1,454		18,814		20,268		(2,387	)		(19,128	)		2007		40
The Grove at Jacksonville		17,741		134		892		16,983		17,875		(2,451	)		(16,417	)		2007		40
The Grove at Mobile—Phase I		15,986		67		98		15,955		16,053		(2,318	)		(15,972	)		2007		40
The Grove at Nacogdoches		19,144		68		1,589		17,623		19,212		(2,340	)		(17,606	)		2007		40
The Grove at Cheney		18,679		169		1,347		17,501		18,848		(1,467	)		(16,080	)		2008		40
The Grove at Jonesboro		17,646		21		2,156		15,511		17,667		(1,423	)		(17,076	)		2008		40
The Grove at Lubbock		18,121		26		1,520		16,627		18,147		(1,447	)		(16,440	)		2008		40
The Grove at Mobile—Phase II		16,654		68		52		16,670		16,722		(1,366	)		(15,874	)		2008		40
The Grove at Stephenville		16,989		16		1,250		15,755		17,005		(1,481	)		(16,080	)		2008		40
The Grove at Troy		18,178		17		1,433		16,762		18,195		(1,501	)		(17,440	)		2008		40
The Grove at Waco		17,479		16		1,094		16,401		17,495		(1,508	)		(16,742	)		2008		40
The Grove at Wichita		16,842		15		911		15,946		16,857		(1,467	)		(16,062	)		2008		40
The Grove at Wichita Falls		17,682		15		2,065		15,632		17,697		(1,431	)		(16,280	)		2008		40
The Grove at Murfreesboro		19,577		19		2,678		16,918		19,596		(340	)		(16,188	)		2009		40
Total-student housing properties	$	345,604	$	1,553	$	24,578	$	322,579	$	347,157	$	(38,999	)	$	(329,102	)

(1) The life to compute depreciation on buildings is 40 years. Furniture, fixtures, equipment and building improvements are depreciated over periods of up to 20 years.

F-51

NOTES TO SCHEDULE III

Schedule III—Real Estate and Accumulated Depreciation as of December 31, 2009

The changes in our investment in real estate and related accumulated depreciation for each of the years ended December 31, 2009, 2008, and 2007 are as follows (amounts in thousands):

	For the Year Ended December 31,
	2009			2008		2007
Investment in real estate:
Balance, beginning of year	$	326,217		$	182,788	$	48,775
Improvements and development expenditures		23,965			143,429		134,722
Disposition of properties		(3,025	)		—		(709	)
Balance, end of year	$	347,157		$	326,217	$	182,788
Accumulated depreciation:
Balance, beginning of year	$	20,794		$	7,752	$	2,066
Depreciation for the year		18,205			13,042		5,721
Disposition of properties		—			—		(35	)
Balance, end of year	$	38,999		$	20,794	$	7,752
Development in process		3,300			15,742		18,929
Investment in real estate, net	$	311,458		$	321,165	$	193,965

F-52

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Campus Crest Communities, Inc.:

We have audited the accompanying combined statement of revenue and certain expenses of HSRE Properties for the year ended December 31, 2009. This combined financial statement is the responsibility of the management of Campus Crest Communities, Inc. Our responsibility is to express an opinion on the combined financial statement based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

The accompanying combined statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and for inclusion in the registration statement on Form S-11 of Campus Crest Communities, Inc., as described in note 2 to the combined financial statement. It is not intended to be a complete presentation of HSRE Properties’ revenue and expenses.

In our opinion, the combined statement of revenue and certain expenses referred to above presents fairly, in all material respects, the revenue and expenses as described in note 2 of HSRE Properties for the year ended December 31, 2009, in conformity with U.S. generally accepted accounting principles.

/s/  KPMG LLP

Atlanta, Georgia

May 14, 2010

F-53

HSRE PROPERTIES

COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES

(in thousands)

	Six Months Ended			Year Ended
	June 30, 2010			December 31, 2009
	(unaudited)
Revenue:
Student housing leasing	$	3,906		$	3,021
Student housing services		205			110
Total revenue		4,111			3,131
Certain expenses:
Student housing operations		2,504			1,561
Management fees		168			137
Interest expense		1,446			1,009
Total certain expenses		4,118			2,707
Revenue in excess of certain expenses (certain expenses in excess of revenue)	$	(7	)	$	424

See accompanying notes to financial statements.

F-54

HSRE PROPERTIES

NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES

1.   Organization and Description of Business

HSRE-Campus Crest I, LLC (the “Venture”) was formed on November 7, 2008 between HSRE-Campus Crest IA, LLC (“HSRE”) and Campus Crest Ventures III, LLC (“CCV III”) for the principal purpose of owning, developing, constructing and operating student housing rental properties. At June 30, 2010 (unaudited) and December 31, 2009, HSRE holds a 90% member interest in the Venture and CCV III holds a 10% member interest.

At June 30, 2010 and December 31, 2009, the Venture owned the following properties (the “HSRE Properties”):

Property	University	Year Opened
The Grove at San Angelo	Angelo State University	2009 (1)
The Grove at San Marcos	Texas State University	2009 (1)
The Grove at Moscow	University of Idaho	2009 (1)
The Grove at Lawrence	University of Kansas	2009 (1)
The Grove at Huntsville	Sam Houston State University	2010 (2)
The Grove at Statesboro	Georgia Southern University	2010 (2)
The Grove at Conway	University of Central Arkansas	2010 (2)

(1)	Property opened and began operations in Fall 2009. The statement of revenue and certain expenses for the year ended December 31, 2009 includes approximately five months of rental income and related expenses.
(2)	Property under construction at June 30, 2010 and December 31, 2009. Property had no operating results for 2009. Completion and occupancy are expected for the 2010-2011 academic year.

Upon completion of the Campus Crest Communities, Inc. (the “Company”) offering transaction, the Company has agreed to acquire:

•   a 49.9% interest in the Venture, which will own 100% interests in the following six properties: The Grove at Conway, The Grove at Huntsville, The Grove at Lawrence, The Grove at Moscow, The Grove at San Angelo and The Grove at Statesboro; we will continue to recognize our interest in the Venture under the equity method of accounting; and

•   100% interest in The Grove at San Marcos, which will be consolidated.

2.   Summary of Significant Accounting Policies

Basis of Presentation

The accompanying combined statement of revenue and certain expenses includes the rental and property operations of the HSRE Properties for the year ended December 31, 2009. Only one year of operations has been presented herein as HSRE Properties did not commence operations until 2009.

The accompanying combined statements of revenue and certain expenses for the six months ended June 30, 2010 (unaudited) and for the year ended December 31, 2009 were prepared for the purpose of inclusion in an initial public offering prospectus and to comply with the rules and regulations of the United States Securities and Exchange Commission for the acquisition of real estate properties. The combined statement of revenue and certain expenses is not intended to be

F-55

HSRE PROPERTIES

NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES—(Continued)

a complete presentation of the actual operations of the properties for the six months ended June 30, 2010 (unaudited) and for the year ended December 31, 2009, as certain expenses which may not be comparable to the expenses to be incurred in the proposed future operations of the properties have been excluded. Expenses excluded consist of interest expense on certain loans that will not be assumed by the Company, depreciation, amortization and other expenses not directly related to the proposed future operations of the properties.

Use of Estimates

The preparation of the combined statement of revenue and certain expenses in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and certain expenses. Actual results may differ from those estimates.

Revenue Recognition

Students are required to execute lease contracts with payment schedules that vary from annual to monthly payments. Revenue and related lease incentives are recognized on a straight-line basis over the term of the leases. Generally, each executed contract is required to be accompanied by a signed parental guaranty. Service revenue is recognized when earned.

Student Housing Operating Expenses

Student housing operating expenses represent the direct expenses of operating the properties and consist primarily of payroll, utilities, repairs and maintenance, insurance, property taxes and other operating expenses that are expected to continue in the proposed future operations of the properties.

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources, are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. HSRE Properties is not subject to any material litigation nor to management’s knowledge is any material litigation currently threatened against HSRE Properties other than routine litigation, claims and administrative proceedings arising in the ordinary course of business.

Unaudited Interim Financial Information

The combined statement of revenue and certain expenses for the six months ended June 30, 2010 is unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial information for this interim period have been included. The revenues and certain expenses for any interim period are not necessarily indicative of results for other interim periods or the full year.

F-56

HSRE PROPERTIES

NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES—(Continued)

3.   Ground Lease

Campus Crest at Moscow, LLC, is party to a ground lease for land near the University of Idaho located in Moscow, ID. The lease has an initial term of 99 years with an exclusive option to renew for an additional 25 years when the initial term terminates. The tenant has the option to purchase the property, subject to certain conditions, at any time after September 1, 2009 for $1.0 million.

Annual base rent is fixed at $78,000 per annum for the first two years of the initial term. Commencing on the second anniversary of the rent commencement date and continuing until the end of the lease term, the annual base rent will be $144,000 per annum.

4.   Debt

At June 30, 2010 (unaudited) and December 31, 2009, the construction loan obligations of HSRE Properties were as follows (amounts in thousands):

			Principal		Principal
	Face		Outstanding at		Outstanding at		Stated	Interest Rate at			Interest Rate at			Maturity
	Amount		6/30/10		12/31/09		Interest Rate	6/30/10			12/31/09			Date		Amortization
			(unaudited)					(unaudited)
Variable rate construction loans
The Grove at San Angelo (1)	$	14,668	$	14,458	$	14,356	LIBOR + 2.50%		5.94	%		5.94	%		May 2011	Interest only
The Grove at Moscow (1)		17,268		16,083		15,026	LIBOR + 2.50%		5.94	%		5.94	%		May 2011	Interest only
The Grove at Lawrence		16,000		15,640		14,679	Prime + 1.50% (6.25% Floor)		6.25	%		6.25	%		February 2012	Interest only
The Grove at Huntsville		13,355		9,760		—	LIBOR + 4.00% (6.00% Floor)		6.00	%		6.00	%		January 2012	Interest only
The Grove at Statesboro		16,130		9,624		—	LIBOR + 3.50% (5.00% Floor)		5.00	%		5.00	%		February 2012	Interest only
Fixed rate construction loans
The Grove at Conway		16,000		11,927		1,377	7.50%		7.50	%		7.50	%		July 2012	Interest only
Total			$	77,492	$	45,438

(1) At June 30, 2010 (unaudited) and December 31, 2009, The Grove at San Angelo, The Grove at San Marcos and The Grove at Moscow are aggregated under one construction loan facility and are cross-collateralized.

5.   Related Party Transactions

HSRE Properties pay property management fees to an affiliate of CCV III for customary property management services. Management fees for the period that properties were in operation during the six months ended June 30, 2010 (unaudited) and the year ended December 31, 2009 totaled approximately $168,000 and $137,000, respectively.

F-57

Until October   , 2010 (25 days after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

28,333,333 Shares

Common Stock

PROSPECTUS

Raymond James

Citi

Goldman, Sachs & Co.

Barclays Capital

RBC Capital Markets

Baird

September   , 2010

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 31.   Other Expenses of Issuance and Distribution.

The following table sets forth the estimated fees and expenses, other than the underwriting discount and the structuring fee, payable by us in connection with the sale of the securities being registered hereby. All amounts shown are estimates except the SEC registration fee and the Financial Industry Regulatory Authority filing fee.

SEC registration fee	$	34,848
Financial Industry Regulatory Authority filing fee	$	49,375
NYSE listing fee	$	154,000
Printing and engraving expenses	$	800,000
Legal fees and expenses	$	2,400,000
Accounting fees and expenses	$	1,850,000
Transfer agent and registrar fees	$	20,000
Blue sky fees and expenses (including fees of counsel)	$	25,000
Miscellaneous	$	2,640,000
Total	$	7,973,223

Item 32.   Sales to Special Parties.

On March 1, 2010, we issued one share to MXT Capital for aggregate consideration of $0.01. MXT Capital is currently our sole stockholder. The one share was purchased by MXT Capital for investment. We will repurchase this share at cost upon completion of this offering.

Item 33.   Recent Sales of Unregistered Securities.

On March 1, 2010, we issued one share to MXT Capital for aggregate consideration of $0.01. MXT Capital is currently our sole stockholder. The one share was purchased by MXT Capital for investment. We will repurchase this share at cost upon completion of this offering. The issuance of such share was deemed and the repurchase of such share will be deemed to be exempt from registration pursuant to Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering. We did not engage underwriters to assist us with the foregoing sale.

Upon completion of this offering, our operating partnership will acquire MXT Capital’s student housing business and interests in our predecessor entities in exchange for approximately 973,333 OP units. In addition, 119,667 OP units will be issued to certain persons and entities in exchange for their interests in our predecessor entities. Each of MXT Capital and such persons and entities made an irrevocable election to receive these OP units in our formation transactions prior to the filing of this registration statement and has represented to us that it is an “accredited investor” as defined under Regulation D of the Securities Act. The issuance of these OP units will be effected in reliance upon an exemption from registration provided by Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder.

Item 34.   Indemnification of Directors and Officers

Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages

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except for liability resulting from (i) actual receipt of an improper benefit or profit in money, property or services or (ii) active and deliberate dishonesty that is established by a final judgment as being material to the cause of action. Our charter contains such a provision that limits such liability to the maximum extent permitted by Maryland law.

The MGCL requires a Maryland corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he or she is made or threatened to be made a party by reason of his or her service in that capacity. The MGCL permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or threatened to be made a party by reason of their service in those or other capacities unless it is established that: (1) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (A) was committed in bad faith or (B) was the result of active and deliberate dishonesty; (2) the director or officer actually received an improper personal benefit in money, property or services; or (3) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

However, under the MGCL, a Maryland corporation may not indemnify a director or officer in a suit by or in the right of the corporation in which the director or officer was adjudged liable to the corporation or for a judgment of liability on the basis that a personal benefit was improperly received. A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct, was adjudged liable to the corporation or was adjudged liable on the basis that personal benefit was improperly received. However, indemnification for an adverse judgment in a suit by us or in our right, or for a judgment of liability on the basis that personal benefit was improperly received, is limited to expenses.

In addition, the MGCL permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of: (1) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation; and (2) a written undertaking by the director or officer or on the director’s or officer’s behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the director or officer did not meet the standard of conduct.

Our charter authorizes us to obligate ourselves and our bylaws obligate us, to the maximum extent permitted by Maryland law in effect from time to time, to indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to: (1) any present or former director or officer who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity; or (2) any individual who, while a director or officer of us and at our request, serves or has served as a director, officer, partner, member, manager or trustee of another corporation, REIT, partnership, limited liability company, joint venture, trust, employee benefit plan or any other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity.

Our charter and bylaws also permit us to, with approval of our board of directors, indemnify and advance expenses to any person who served a predecessor of ours in any of the capacities described above and to any employee or agent of us or a predecessor of us.

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Upon completion of this offering, we will enter into indemnification agreements with each of our executive officers and directors that will indemnify them to the maximum extent permitted by Maryland law. The indemnification agreements will provide that:

If a director or executive officer is a party or is threatened to be made a party to any threatened, pending or completed proceeding, other than a derivative proceeding by or in the right of us, by reason of the director’s or executive officer’s status as a director, officer or employee of us (or, if applicable, such other enterprise at which such director or executive officer is or was serving at our request), we must indemnify the director or executive officer against all judgments, penalties, fines and amounts paid in settlement and all expenses incurred by the director or executive officer or on behalf of the director or executive officer, in connection with such proceeding, unless it is established that:

•   the act or omission of the director or executive officer was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty;

•   the director or executive officer actually received an improper personal benefit in money, property or services; or

•   with respect to any criminal proceeding, the director or executive officer had reasonable cause to believe that his or her conduct was unlawful.

If a director or executive officer is a party or is threatened to be made a party to any threatened, pending or completed derivative proceeding by or in the right of us to procure a judgment in our favor by reason of the director’s or executive officer’s status as a director or executive officer of us (or, if applicable, such other enterprise at which such director or executive officer is or was serving at our request), we must indemnify the director or executive officer for all amounts paid in settlement and all expenses incurred by him or her, or on his or her behalf, in connection with such proceeding, unless it is established that:

•   the act or omission of the director or executive officer was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty; or

•   the director or executive officer actually received an improper personal benefit in money, property or services.

Notwithstanding, and without limiting, any other provisions of the agreements, if a director or executive officer is a party or is threatened to be made a party to any proceeding by reason of the director’s or executive officer’s status as a director, officer or employee of us, and the director or executive officer is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such proceeding, we must indemnify the director or executive officer for all expenses incurred by him or her, or on his or her behalf, in connection with each successfully resolved claim, issue or matter, allocated on a reasonable and proportionate basis, including any claim, issue or matter in such a proceeding that is terminated by dismissal, with or without prejudice.

We must pay or reimburse all indemnifiable expenses in advance of the final disposition of any proceeding if the director or executive officer furnishes us with a written affirmation of the director’s or executive officer’s good faith belief that the standard of conduct necessary for indemnification by us has been met and a written undertaking to reimburse us if a court of competent jurisdiction determines that the director or executive officer is not entitled to indemnification. We must pay all indemnifiable expenses to the director or executive officer within 20

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days following the date the director or executive officer submits such affirmations and evidence of the expenses to us.

Following the completion of this offering, we intend to purchase and maintain insurance on behalf of all of our directors and executive officers against liability asserted against or incurred by them in their official capacities, whether or not we are required or have the power to indemnify them against the same liability.

Insofar as the foregoing provisions permit indemnification of directors, officers or persons controlling us for liability arising under the Securities Act, we have been informed that, in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Item 35.   Treatment of Proceeds from Stock Being Registered.

The consideration to be received by us for the shares registered hereby will be credited to the appropriate capital stock account.

Item 36.   Financial Statements and Exhibits.

(a) See Page F-1 for an index of the financial statements that are being filed as part of this registration statement on Form S-11.

(b) The following is a list of exhibits being filed as part of, or incorporated by reference into, this registration statement on Form S-11:

Exhibit
Number			Description of Document
	1	.1**	Form of Underwriting Agreement among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP and the underwriters named therein.
	3	.1**	Articles of Incorporation of Campus Crest Communities, Inc.
	3	.2**	Bylaws of Campus Crest Communities, Inc.
	4	.1**	Form of Certificate for Common Stock of Campus Crest Communities, Inc.
	5	.1**	Opinion of Saul Ewing LLP with respect to Maryland law.
	8	.1**	Opinion of Bradley Arant Boult Cummings LLP with respect to tax matters.
	10	.1**	Amended and Restated Partnership Agreement of Campus Crest Communities Operating Partnership, LP.
	10	.2***	Campus Crest Communities, Inc. Equity Incentive Compensation Plan.
	10	.3***	Form of Indemnification Agreement.
	10	.4***	Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Ted W. Rollins.
	10	.5***	Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Michael S. Hartnett.
	10	.6***	Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Earl C. Howell.
	10	.7***	Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Donald L. Bobbitt, Jr.
	10	.8***	Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Shannon N. King.
	10	.9***	Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Ted W. Rollins.

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Exhibit
Number			Description of Document
	10	.10***	Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Michael S. Hartnett.
	10	.11***	Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Earl C. Howell.
	10	.12***	Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Donald L. Bobbitt, Jr.
	10	.13***	Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Shannon N. King.
	10	.14**	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC, dated May 13, 2010.
	10	.15**	Amendment No. 1 to Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC, dated September 15, 2010.
	10	.16**	Tax Protection Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC.
	10	.17***	Registration Rights Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, MXT Capital, LLC and certain other parties thereto.
	10	.18**	Form of Credit Agreement for Senior Secured Revolving Credit Facility by and among Campus Crest Communities Operating Partnership, LP, Citibank, N.A. and certain other parties thereto.
	10	.19***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Carl H. Ricker, Jr., dated May 13, 2010.
	10	.20***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Flynn Development, LLC, dated April 22, 2010.
	10	.21***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Mansion Ridge Investment Company, LLC, dated May 6, 2010.
	10	.22***	Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Highland Park, LLC, dated May 13, 2010.
	10	.23***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Marc Rollins, dated May 1, 2010.
	10	.24***	Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and P. Andrew Walker, dated May 13, 2010.
	10	.25***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Joe C. Brumit, II, dated April 19, 2010.
	10	.26***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and BGY, LLC, dated April 15, 2010.
	10	.27***	Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Jerry V. Sternberg, dated May 13, 2010.
	10	.28***	Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Marlene Breger Joyce, dated May 13, 2010.

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Exhibit
Number			Description of Document
	10	.29***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Steve Emtman, dated May 10, 2010.
	10	.30***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and O.A. Keller, III, dated April 29, 2010.
	10	.31***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and NLR-Cotton Valley Investments, LLC, dated April 19, 2010.
	10	.32***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Horatio Alger Association Endowment Fund, dated May 4, 2010.
	10	.33***	Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Keith M. Maxwell, dated May 9, 2010.
	10	.34***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Harrison-Zahn Investments, LLC, dated April 19, 2010.
	10	.35***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Matthew S. O’Reilly, dated May 6, 2010.
	10	.36***	Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP and certain other parties thereto, dated March 26, 2010.
	10	.37***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP and Thomas A. Odai dated May 13, 2010.
	10	.38***	Ground Lease by and between USA Research and Technology Corporation and Campus Crest at Mobile, LLC, dated August 8, 2006.
	10	.39***	Ground Lease by and between USA Research and Technology Corporation and Campus Crest at Mobile Phase II, LLC, dated March 14, 2008.
	10	.40***	Ground Lease Agreement by and between Indian Hills Trading Company, LLC and Campus Crest Development, LLC, dated March 20, 2008.
	10	.41***	First Amendment to Ground Lease Agreement by and between Indian Hills Trading Company, LLC and Campus Crest Development, LLC, dated July 28, 2008.
	10	.42***	Assignment of Ground Lease Agreement and Purchase Option Agreement by Campus Crest Development, LLC and Campus Crest at Moscow, LLC, dated July 28, 2008.
	10	.43***	Loan Agreement between General Electric Capital Corporation and Campus Crest at Milledgeville, LLC, dated September 7, 2006.
	10	.44***	Deed to Secure Debt, Security Agreement and Fixture Filing by Campus Crest at Carrollton, LLC to Wachovia Bank, National Association, dated September 18, 2006.
	10	.45***	Deed of Trust, Security Agreement and Fixture Filing by Campus Crest at Las Cruces, LLC for the benefit of Wachovia Bank, National Association, dated September 22, 2006.
	10	.46***	Deed of Trust, Security Agreement and Fixture Filing by Campus Crest at Asheville, LLC for the benefit of Wachovia Bank, National Association, dated March 13, 2007.
	10	.47***	Loan Agreement by and among Campus Crest at Mobile, LLC, Campus Crest at Jacksonville, AL, LLC, Campus Crest at Nacogdoches, LP, Campus Crest at Abilene, LP, Campus Crest at Greeley, LLC, and Campus Crest at Ellensburg, LLC, and Silverton Bank, N.A., dated February 29, 2008.

II-6

Exhibit
Number			Description of Document
	10	.48***	Transfer, Assignment and Assumption Agreement by and among the Federal Deposit Insurance Corporation as receiver and successor-in-interest to Silverton Bank, N.A. and Campus Crest Loan Servicing, LLC, dated March 31, 2010.
	10	.49***	Construction Loan Agreement by and among Wachovia Bank, National Association, Campus Crest Group, LLC, Campus Crest at Moscow, LLC, Campus Crest at San Angelo, LP and Campus Crest at San Marcos, LP, dated November 18, 2008.
	10	.50***	First Amendment to Construction Loan Agreement by and among Wachovia Bank, National Association, Campus Crest Group, LLC, Campus Crest at Moscow, LLC, Campus Crest at San Angelo, LP and Campus Crest at San Marcos, LP, dated June 2009.
	10	.51***	Construction Loan Agreement by and between Campus Crest at Lawrence, LLC and Mutual of Omaha Bank, dated February 13, 2009.
	10	.52***	First Amendment to Construction Loan Agreement by and between Campus Crest at Lawrence, LLC and Mutual of Omaha Bank, dated March 19, 2009.
	10	.53***	Construction Loan Agreement by and between Amegy Mortgage Company, L.L.C. d/b/a Q-10 Amegy Mortgage Capital and Campus Crest at Huntsville, LP, dated June 12, 2009.
	10	.54***	Secured Construction Loan Agreement by and between Centennial Bank, F/K/A First State Bank and Campus Crest at Conway, LLC, dated July 2, 2009.
	10	.55***	Construction Loan Agreement by and between Campus Crest at Statesboro, LLC and The PrivateBank and Trust Company, dated November 12, 2009.
	10	.56***	Operating Agreement of HSRE-Campus Crest I, LLC, dated as of November 7, 2008.
	10	.57***	First Amendment to the Operating Agreement of HSRE-Campus Crest I, LLC, dated as of November 12, 2009.
	10	.58***	Second Amendment to the Operating Agreement of HSRE-Campus Crest I, LLC, dated March 26, 2010.
	10	.59**	Third Amendment to the Operating Agreement of HSRE-Campus Crest I, LLC, dated September 12, 2010.
	10	.60**	Form of Aircraft Lease.
	10	.61**	Amendment No. 1 to Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP and Carl H. Ricker, Jr., dated September 14, 2010.
	21	.1**	List of Subsidiaries of the Registrant.
	23	.1**	Consent of Bradley Arant Boult Cummings LLP (included in Exhibit 8.1).
	23	.2**	Consent of KPMG LLP.
	23	.3**	Consent of Saul Ewing LLP (included in Exhibit 5.1).
	23	.4**	Consent of Michael Gallis and Associates.
	24	.1***	Power of Attorney (included on the Signature Page).
	99	.1***	Consent of N. Anthony Coles to be named as a proposed director.
	99	.2***	Consent of Richard S. Kahlbaugh to be named as a proposed director.
	99	.3***	Consent of Denis L. McGlynn to be named as a proposed director.
	99	.4***	Consent of William G. Popeo to be named as a proposed director.
	99	.5***	Consent of Daniel L. Simmons to be named as a proposed director.
	99	.6**	Certified Resolutions of the Board of Directors of Campus Crest Communities, Inc., dated May 13, 2010.

** Filed herewith

*** Previously filed.

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Item 37.   Undertakings.

(a) The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

(b) Insofar as indemnification of liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission that such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

(c) The undersigned registrant hereby undertakes that for the purpose of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance under Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(d) The undersigned registrant hereby undertakes that for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-11 and has duly caused this Amendment No. 6 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Charlotte, State of North Carolina, on September 20, 2010.

CAMPUS CREST COMMUNITIES, INC.

By:  *

Ted W. Rollins

Co-Chairman of the Board and

Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 6 to Form S-11 has been signed below by the following persons in the capacities and on the dates indicated.

Signature		Title	Date
* Ted W. Rollins		Co-Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer)	September 20, 2010
* Michael S. Hartnett		Co-Chairman of the Board, Chief Investment Officer and Director	September 20, 2010
/s/  Donald L. Bobbitt, Jr. Donald L. Bobbitt, Jr.		Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	September 20, 2010
*By:	/s/  Donald L. Bobbitt, Jr. Donald L. Bobbitt, Jr. As Attorney-in-Fact

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EXHIBIT INDEX

Exhibit
Number			Description of Document
	1	.1**	Form of Underwriting Agreement among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP and the underwriters named therein.
	3	.1**	Articles of Incorporation of Campus Crest Communities, Inc.
	3	.2**	Bylaws of Campus Crest Communities, Inc.
	4	.1**	Form of Certificate for Common Stock of Campus Crest Communities, Inc.
	5	.1**	Opinion of Saul Ewing LLP with respect to Maryland law.
	8	.1**	Opinion of Bradley Arant Boult Cummings LLP with respect to tax matters.
	10	.1**	Amended and Restated Partnership Agreement of Campus Crest Communities Operating Partnership, LP.
	10	.2***	Campus Crest Communities, Inc. Equity Incentive Compensation Plan.
	10	.3***	Form of Indemnification Agreement.
	10	.4***	Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Ted W. Rollins.
	10	.5***	Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Michael S. Hartnett.
	10	.6***	Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Earl C. Howell.
	10	.7***	Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Donald L. Bobbitt, Jr.
	10	.8***	Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Shannon N. King.
	10	.9***	Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Ted W. Rollins.
	10	.10***	Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Michael S. Hartnett.
	10	.11***	Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Earl C. Howell.
	10	.12***	Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Donald L. Bobbitt, Jr.
	10	.13***	Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Shannon N. King.
	10	.14**	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC, dated May 13, 2010.
	10	.15**	Amendment No. 1 to Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC, dated September 15, 2010.
	10	.16**	Tax Protection Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC.
	10	.17***	Registration Rights Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, MXT Capital, LLC and certain other parties thereto.
	10	.18**	Form of Credit Agreement for Senior Secured Revolving Credit Facility by and among Campus Crest Communities Operating Partnership, LP, Citibank, N.A. and certain other parties thereto.

Exhibit
Number			Description of Document
	10	.19***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Carl H. Ricker, Jr., dated May 13, 2010.
	10	.20***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Flynn Development, LLC, dated April 22, 2010.
	10	.21***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Mansion Ridge Investment Company, LLC, dated May 6, 2010.
	10	.22***	Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Highland Park, LLC, dated May 13, 2010.
	10	.23***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Marc Rollins, dated May 1, 2010.
	10	.24***	Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and P. Andrew Walker, dated May 13, 2010.
	10	.25***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Joe C. Brumit, II, dated April 19, 2010.
	10	.26***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and BGY, LLC, dated April 15, 2010.
	10	.27***	Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Jerry V. Sternberg, dated May 13, 2010.
	10	.28***	Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Marlene Breger Joyce, dated May 13, 2010.
	10	.29***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Steve Emtman, dated May 10, 2010.
	10	.30***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and O.A. Keller, III, dated April 29, 2010.
	10	.31***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and NLR-Cotton Valley Investments, LLC, dated April 19, 2010.
	10	.32***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Horatio Alger Association Endowment Fund, dated May 4, 2010.
	10	.33***	Purchase and Sale by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Keith M. Maxwell, dated May 9, 2010.
	10	.34***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Harrison-Zahn Investments, LLC, dated April 19, 2010.
	10	.35***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Matthew S. O’Reilly, dated May 6, 2010.

Exhibit
Number			Description of Document
	10	.36***	Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP and certain other parties thereto, dated March 26, 2010.
	10	.37***	Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP and Thomas A. Odai dated May 13, 2010.
	10	.38***	Ground Lease by and between USA Research and Technology Corporation and Campus Crest at Mobile, LLC, dated August 8, 2006.
	10	.39***	Ground Lease by and between USA Research and Technology Corporation and Campus Crest at Mobile Phase II, LLC, dated March 14, 2008.
	10	.40***	Ground Lease Agreement by and between Indian Hills Trading Company, LLC and Campus Crest Development, LLC, dated March 20, 2008.
	10	.41***	First Amendment to Ground Lease Agreement by and between Indian Hills Trading Company, LLC and Campus Crest Development, LLC, dated July 28, 2008.
	10	.42***	Assignment of Ground Lease Agreement and Purchase Option Agreement by Campus Crest Development, LLC and Campus Crest at Moscow, LLC, dated July 28, 2008.
	10	.43***	Loan Agreement between General Electric Capital Corporation and Campus Crest at Milledgeville, LLC, dated September 7, 2006.
	10	.44***	Deed to Secure Debt, Security Agreement and Fixture Filing by Campus Crest at Carrollton, LLC to Wachovia Bank, National Association, dated September 18, 2006.
	10	.45***	Deed of Trust, Security Agreement and Fixture Filing by Campus Crest at Las Cruces, LLC for the benefit of Wachovia Bank, National Association, dated September 22, 2006.
	10	.46***	Deed of Trust, Security Agreement and Fixture Filing by Campus Crest at Asheville, LLC for the benefit of Wachovia Bank, National Association, dated March 13, 2007.
	10	.47***	Loan Agreement by and among Campus Crest at Mobile, LLC, Campus Crest at Jacksonville, AL, LLC, Campus Crest at Nacogdoches, LP, Campus Crest at Abilene, LP, Campus Crest at Greeley, LLC, and Campus Crest at Ellensburg, LLC, and Silverton Bank, N.A., dated February 29, 2008.
	10	.48***	Transfer, Assignment and Assumption Agreement by and among the Federal Deposit Insurance Corporation as receiver and successor-in-interest to Silverton Bank, N.A. and Campus Crest Loan Servicing, LLC, dated March 31, 2010.
	10	.49***	Construction Loan Agreement by and among Wachovia Bank, National Association, Campus Crest Group, LLC, Campus Crest at Moscow, LLC, Campus Crest at San Angelo, LP and Campus Crest at San Marcos, LP, dated November 18, 2008.
	10	.50***	First Amendment to Construction Loan Agreement by and among Wachovia Bank, National Association, Campus Crest Group, LLC, Campus Crest at Moscow, LLC, Campus Crest at San Angelo, LP and Campus Crest at San Marcos, LP, dated June 2009.
	10	.51***	Construction Loan Agreement by and between Campus Crest at Lawrence, LLC and Mutual of Omaha Bank, dated February 13, 2009.
	10	.52***	First Amendment to Construction Loan Agreement by and between Campus Crest at Lawrence, LLC and Mutual of Omaha Bank, dated March 19, 2009.
	10	.53***	Construction Loan Agreement by and between Amegy Mortgage Company, L.L.C. d/b/a Q-10 Amegy Mortgage Capital and Campus Crest at Huntsville, LP, dated June 12, 2009.

Exhibit
Number			Description of Document
	10	.54***	Secured Construction Loan Agreement by and between Centennial Bank, F/K/A First State Bank and Campus Crest at Conway, LLC, dated July 2, 2009.
	10	.55***	Construction Loan Agreement by and between Campus Crest at Statesboro, LLC and The PrivateBank and Trust Company, dated November 12, 2009.
	10	.56***	Operating Agreement of HSRE-Campus Crest I, LLC, dated as of November 7, 2008.
	10	.57***	First Amendment to the Operating Agreement of HSRE-Campus Crest I, LLC, dated as of November 12, 2009.
	10	.58***	Second Amendment to the Operating Agreement of HSRE-Campus Crest I, LLC, dated March 26, 2010.
	10	.59**	Third Amendment to the Operating Agreement of HSRE-Campus Crest I, LLC, dated September 12, 2010.
	10	.60**	Form of Aircraft Lease.
	10	.61**	Amendment No. 1 to Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP and Carl H. Ricker, Jr., dated September 14, 2010.
	21	.1**	List of Subsidiaries of the Registrant.
	23	.1**	Consent of Bradley Arant Boult Cummings LLP (included in Exhibit 8.1).
	23	.2**	Consent of KPMG LLP.
	23	.3**	Consent of Saul Ewing LLP (included in Exhibit 5.1).
	23	.4**	Consent of Michael Gallis and Associates.
	24	.1***	Power of Attorney (included on the Signature Page).
	99	.1***	Consent of N. Anthony Coles to be named as a proposed director.
	99	.2***	Consent of Richard S. Kahlbaugh to be named as a proposed director.
	99	.3***	Consent of Denis L. McGlynn to be named as a proposed director.
	99	.4***	Consent of William G. Popeo to be named as a proposed director.
	99	.5***	Consent of Daniel L. Simmons to be named as a proposed director.
	99	.6**	Certified Resolutions of the Board of Directors of Campus Crest Communities, Inc., dated May 13, 2010.

** Filed herewith

*** Previously filed

EX-1.1

Exhibit 1.1

CAMPUS CREST COMMUNITIES, INC.

Shares of Common Stock

Underwriting Agreement

, 2010

Raymond James & Associates, Inc.
880 Carillon Parkway
St. Petersburg, Florida 33716

Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013

Goldman, Sachs & Co.
200 West Street
New York, New York 10282

Barclays Capital Inc.
745 Seventh Avenue
New York, New York 10019

RBC Capital Markets Corporation
Three World Financial Center, 8^th Floor
200 Vesey Street
New York, New York 10281

As Representatives of the
   several Underwriters listed
   in Schedule 1 hereto

Ladies and Gentlemen:

     Campus Crest Communities, Inc., a Maryland corporation (the “Company”), proposes to issue and sell to the several Underwriters listed in Schedule 1 hereto (the “Underwriters”), for whom you are acting as representatives (the “Representatives”), an aggregate of            shares of common stock, $0.01 par value per share, of the Company (the “Underwritten Shares”) and, at the option of the Underwriters, up to an additional            shares of common stock of the Company (the “Option Shares”). The Underwritten Shares and the Option Shares are herein referred to as the “Shares.” The shares of common stock of the Company to be outstanding after giving effect to the sale of the Shares are referred to herein as the “Stock.”

     As part of the offering contemplated by this Agreement, and subject to the terms of this Agreement, the applicable rules, regulations and interpretations of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and all other applicable laws, rules and regulations, the Underwriters have agreed at our request to reserve out of the Shares set forth opposite their names on Schedule 1 to this Agreement, up to            Shares, for sale to certain of the Company’s directors, officers, employees and certain other persons associated with the Company (collectively, “Participants”). The Shares to be sold by or on behalf of the Underwriters to the Participants (the “Directed Shares”) will be sold pursuant to this Agreement at

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the public offering price (the “Directed Share Program”). Any Directed Shares not orally confirmed for purchase by any Participant by 9:00 A.M., New York City time, on the business day immediately following the date on which this Agreement is executed will be offered to the public with the remaining Shares.

     At the Closing Date (as defined below), the Company, through its subsidiary, Campus Crest Communities Operating Partnership, LP, a Delaware limited partnership and the operating partnership of the Company (in such capacity, the “Operating Partnership”), will acquire direct or indirect ownership interests in the 27 properties (the “Initial Properties”) identified on Annex C hereto and in furtherance of acquiring such ownership interests and the transactions described in the Registration Statement, Pricing Disclosure Package and Prospectus (each as defined below), the Company and the Operating Partnership has entered into, or will enter into, as of the Closing Date, as the case may be, the agreements indentified on Annex D hereto. Those agreements are hereinafter collectively referred to as the “Transaction Documents” and singly as a “Transaction Document.”

     The Company and the Operating Partnership each hereby confirms its agreement with the several Underwriters concerning the purchase and sale of the Shares, as follows:

     1. Registration Statement. The Company has prepared and filed with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Securities Act”), a registration statement on Form S-11 (File No. 333-166834), including a prospectus, relating to the Shares. Such registration statement, as amended at the time it became effective, including the information, if any, deemed pursuant to Rule 430A, 430B or 430C under the Securities Act to be part of the registration statement at the time of its effectiveness (“Rule 430 Information”), is referred to herein as the “Registration Statement”; and as used herein, the term “Preliminary Prospectus” means each prospectus included in such registration statement (and any amendments thereto) before it becomes effective that is furnished by the Company to the Underwriters for distribution in connection with the offering of the Shares, any prospectus filed with the Commission pursuant to Rule 424(a) under the Securities Act and the prospectus included in the Registration Statement at the time of such Registration Statement’s effectiveness that omits Rule 430 Information; and the term “Prospectus” means the prospectus in the form first used (or made available upon request of purchasers pursuant to Rule 173 under the Securities Act) in connection with confirmation of sales of the Shares. If the Company has filed an abbreviated registration statement pursuant to Rule 462(b) under the Securities Act (the “Rule 462 Registration Statement”), then any reference herein to the term “Registration Statement” shall be deemed to include such Rule 462 Registration Statement. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Registration Statement and the Prospectus.

     At or prior to the Applicable Time (as defined below), the Company had prepared the following information (collectively with the pricing information set forth on Annex B, the “Pricing Disclosure Package”): a Preliminary Prospectus dated      , 2010 and each “free-writing prospectus” (as defined pursuant to Rule 405 under the Securities Act) listed on Annex B hereto.

     “Applicable Time” means      , New York City time, on      , 2010.

     2. Purchase of the Shares by the Underwriters.

     (a) The Company agrees to issue and sell the Underwritten Shares to the several Underwriters as provided in this Agreement, and each Underwriter, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions set forth herein, agrees, severally and not jointly, to purchase from the Company the respective number of

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Underwritten Shares set forth opposite such Underwriter’s name in Schedule 1 hereto at a price per share (the “Purchase Price”) of $.

     In addition, the Company agrees to issue and sell the Option Shares to the several Underwriters as provided in this Agreement, and the Underwriters, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions set forth herein, shall have the option to purchase, severally and not jointly, from the Company the Option Shares at the Purchase Price less an amount per share equal to any dividends or distributions declared by the Company after the date hereof and prior to the issuance of the Option Shares and payable on the Underwritten Shares but not payable on the Option Shares.

     If any Option Shares are to be purchased, the number of Option Shares to be purchased by each Underwriter shall be the number of Option Shares which bears the same ratio to the aggregate number of Option Shares being purchased as the number of Underwritten Shares set forth opposite the name of such Underwriter in Schedule 1 hereto (or such number increased as set forth in Section 10 hereof) bears to the aggregate number of Underwritten Shares being purchased from the Company by the several Underwriters, subject, however, to such adjustments to eliminate any fractional Shares as the Representatives in their sole discretion shall make.

     The Underwriters may exercise the option to purchase Option Shares at any time in whole, or from time to time in part, on or before the thirtieth day following the date of the Prospectus, by written notice from the Representatives to the Company. Such notice shall set forth the aggregate number of Option Shares as to which the option is being exercised and the date and time when the Option Shares are to be delivered and paid for, which may be the same date and time as the Closing Date (as hereinafter defined) but shall not be earlier than the Closing Date or later than the tenth full business day (as hereinafter defined) after the date of such notice (unless such time and date are postponed in accordance with the provisions of Section 10 hereof). Any such notice shall be given at least two business days prior to the date and time of delivery specified therein.

     (b) The Company understands that the Underwriters intend to make a public offering of the Shares as soon after the effectiveness of this Agreement as in the judgment of the Representatives is advisable, and initially to offer the Shares on the terms set forth in the Prospectus. The Company acknowledges and agrees that the Underwriters may offer and sell Shares to or through any affiliate of an Underwriter.

     (c) Payment for the Shares shall be made by wire transfer in immediately available funds to the account specified by the Company to the Representatives in the case of the Underwritten Shares, at the offices of Sidley Austin llp, 787 Seventh Avenue, New York, NY 10019 at 10:00 A.M., New York City time, on      , 2010, or at such other time or place on the same or such other date, not later than the fifth business day thereafter, as the Representatives and the Company may agree upon in writing or, in the case of the Option Shares, on the date and at the time and place specified by the Representatives in the written notice of the Underwriters’ election to purchase such Option Shares. The time and date of such payment for the Underwritten Shares is referred to herein as the “Closing Date,” and the time and date for such payment for the Option Shares, if other than the Closing Date, is herein referred to as the “Additional Closing Date.”

     Payment for the Shares to be purchased on the Closing Date or the Additional Closing Date, as the case may be, shall be made against delivery to the Representatives for the respective accounts of the several Underwriters of the Shares to be purchased on such date, with any transfer

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taxes payable in connection with the sale of such Shares duly paid by the Company. Delivery of the Shares shall be made through the facilities of The Depository Trust Company (“DTC”) unless the Representatives shall otherwise instruct. The certificates for the Shares, if any, will be made available for inspection and packaging by the Representatives at the office of DTC or its designated custodian not later than 1:00 P.M., New York City time, on the business day prior to the Closing Date or the Additional Closing Date, as the case may be.

     (d) Each of the Company and the Operating Partnership acknowledge and agree that the Underwriters are acting solely in the capacity of an arm’s-length contractual counterparty to the Company and the Operating Partnership with respect to the offering of Shares contemplated hereby (including in connection with determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an agent of, the Company, the Operating Partnership or any other person. Additionally, neither the Representatives nor any other Underwriter is advising the Company, the Operating Partnership or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Company and the Operating Partnership shall consult with their own advisors concerning such matters and shall be responsible for making their own independent investigation and appraisal of the transactions contemplated hereby, and the Underwriters shall have no responsibility or liability to the Company or the Operating Partnership with respect thereto. Any review by the Underwriters of the Company, the Operating Partnership, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Company or the Operating Partnership.

     3. Representations and Warranties of the Company and the Operating Partnership. Each of the Company and the Operating Partnership, jointly and severally, represents and warrants to each Underwriter that:

     (a) Preliminary Prospectus. No order preventing or suspending the use of any Preliminary Prospectus has been issued by the Commission, and each Preliminary Prospectus included in the Pricing Disclosure Package, at the time of filing thereof, complied in all material respects with the Securities Act, and no Preliminary Prospectus, at the time of filing thereof, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that neither the Company nor the Operating Partnership makes any representation and warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in any Preliminary Prospectus, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 7(b) hereof.

     (b) Pricing Disclosure Package. The Pricing Disclosure Package as of the Applicable Time did not, and as of the Closing Date and as of the Additional Closing Date, as the case may be, will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that neither the Company nor the Operating Partnership makes any representation and warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in such Pricing Disclosure Package, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 7(b) hereof.

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     (c) Issuer Free Writing Prospectus. Other than the Registration Statement, the Preliminary Prospectus and the Prospectus, the Company (including its agents and representatives, other than the Underwriters in their capacity as such) has not prepared, used, authorized, approved or referred to and will not prepare, use, authorize, approve or refer to any “written communication” (as defined in Rule 405 under the Securities Act) that constitutes an offer to sell or solicitation of an offer to buy the Shares (each such communication by the Company or its agents and representatives (other than a communication referred to in clause (i) below) an “Issuer Free Writing Prospectus”) other than (i) any document not constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134 under the Securities Act or (ii) the documents listed on Annex B hereto, each electronic road show and any other written communications approved in writing in advance by the Representatives. Each such Issuer Free Writing Prospectus complied in all material respects with the Securities Act, has been or will be (within the time period specified in Rule 433 under the Securities Act) filed in accordance with the Securities Act (to the extent required thereby) and, when taken together with the Preliminary Prospectus accompanying, or delivered prior to delivery of, such Issuer Free Writing Prospectus, did not, and as of the Closing Date and as of the Additional Closing Date, as the case may be, will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that neither the Company nor the Operating Partnership makes any representation and warranty with respect to any statements or omissions made in each such Issuer Free Writing Prospectus or Preliminary Prospectus in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in such Issuer Free Writing Prospectus or Preliminary Prospectus, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 7(b) hereof.

     (d) Registration Statement and Prospectus. The Registration Statement has been declared effective by the Commission. No order suspending the effectiveness of the Registration Statement has been issued by the Commission, and no proceeding for that purpose or pursuant to Section 8A of the Securities Act against the Company or related to the offering of the Shares has been initiated or threatened by the Commission; as of the applicable effective date of the Registration Statement and any post-effective amendment thereto, the Registration Statement and any such post-effective amendment complied and will comply in all material respects with the Securities Act, and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading; and as of the date of the Prospectus and any amendment or supplement thereto and as of the Closing Date and as of the Additional Closing Date, as the case may be, the Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that neither the Company nor the Operating Partnership makes any representation and warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in the Registration Statement and the Prospectus and any amendment or supplement thereto, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 7(b) hereof. The information in the Registration Statement, the Pricing Disclosure Package and the Prospectus regarding the Company’s expected 2011 development properties is accurate and complete in all material respects and the assumptions underlying such information, including the information regarding targeted completion and estimated cost, are reasonable.

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     (e) Financial Statements. The financial statements (including the related notes thereto) of Campus Crest Communities Predecessor (the “Predecessor”) and its consolidated subsidiaries included in the Registration Statement, the Pricing Disclosure Package and the Prospectus comply in all material respects with the applicable requirements of the Securities Act and present fairly (i) the financial position of the Initial Properties (and certain related assets and liabilities) and (ii) the financial position of the Predecessor and its consolidated subsidiaries as of the dates indicated and the results of their operations and the changes in their cash flows for the periods specified; such financial statements have been prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis throughout the periods covered thereby, and any supporting schedules included in the Registration Statement present fairly the information required to be stated therein; the other financial and statistical information included in the Registration Statement, the Pricing Disclosure Package and the Prospectus has been derived from the accounting records of the Predecessor and its consolidated subsidiaries and presents fairly the information shown thereby; and the pro forma financial information and the related notes thereto included in the Registration Statement, the Pricing Disclosure Package and the Prospectus have been prepared in accordance with the applicable requirements of the Securities Act and the assumptions underlying such pro forma financial information are reasonable and are set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus. No financial statements are required to be included in the Registration Statement, the Pricing Disclosure Package or the Prospectus other than those included therein.

     (f) No Material Adverse Change. Since the date of the most recent financial statements of the Company included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, (i) there has not been any change in the capital stock (other than the issuance of restricted shares of Common Stock under the Company’s 2010 Incentive Award Plan described in the Registration Statement, the Pricing Disclosure Package and the Prospectus (the “Equity Incentive Plan”)), short-term debt or long-term debt of the Company, the Operating Partnership or any of their subsidiaries, or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Company on any class of capital stock, or any material adverse change, or any development involving a prospective material adverse change, in or affecting the business, properties, management, financial position, stockholders’ equity, results of operations or prospects of the Company, the Operating Partnership and their subsidiaries taken as a whole; (ii) none of the Company, the Operating Partnership nor any of their subsidiaries has entered into any transaction or agreement (whether or not in the ordinary course of business) that is material to the Company, the Operating Partnership and their subsidiaries taken as a whole nor incurred any liability or obligation, direct or contingent, that is material to the Company, the Operating Partnership and their subsidiaries taken as a whole; and (iii) none of the Company, the Operating Partnership nor any of their subsidiaries has sustained any loss or interference with its business that is material to the Company, the Operating Partnership and their subsidiaries taken as a whole and that is either from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or regulatory authority, except in each case as otherwise disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

     (g) Organization and Good Standing. The Company, the Operating Partnership and each of their subsidiaries have been duly organized and are validly existing and in good standing under the laws of their respective jurisdictions of organization, are duly qualified to do business and are in good standing in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification, and have all power and authority necessary to own, lease, develop and operate their respective properties

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(including, without limitation, the Initial Properties) and to conduct the businesses in which they are engaged, except where the failure to be so qualified or in good standing or have such power or authority would not, individually or in the aggregate, have a material adverse effect on the business, properties, management, financial position, stockholders’ equity, results of operations or prospects of the Company, the Operating Partnership and their subsidiaries taken as a whole, or on the performance by the Company or the Operating Partnership of their respective obligations under this Agreement or the Transaction Documents (a “Material Adverse Effect”). The Company does not own or control, directly or indirectly, any corporation or association or other entity other than the subsidiaries listed in Exhibit 21 to the Registration Statement (each a “Significant Subsidiary” and collectively, the “Significant Subsidiaries”).

     (h) Capitalization. The Company has an authorized capitalization as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus under the heading “Capitalization”; all the outstanding shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable and are not subject to any pre-emptive or similar rights; except as described in or expressly contemplated in the Registration Statement, the Pricing Disclosure Package and the Prospectus, there are no outstanding rights (including, without limitation, pre-emptive rights), warrants or options to acquire, or instruments convertible into or exchangeable for, any shares of capital stock or other equity interest in the Company, the Operating Partnership or any of their subsidiaries, or any contract, commitment, agreement, understanding or arrangement of any kind relating to the issuance of any capital stock of the Company, the Operating Partnership or any such subsidiary, any such convertible or exchangeable securities or any such rights, warrants or options; the capital stock of the Company conforms in all material respects to the description thereof contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus; and all the outstanding shares of capital stock or other equity interests of each subsidiary owned, directly or indirectly, by the Company or the Operating Partnership have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company or the Operating Partnership, free and clear of any lien, charge, encumbrance, security interest, restriction on voting or transfer or any other claim of any third party. All the outstanding units of partnership interests in the Operating Partnership (“OP Units”) have been duly and validly authorized and issued and are fully paid and non-assessable and are not subject to any pre-emptive or similar rights. The terms of the OP Units conform in all material respects to the descriptions thereto contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

     (i) Underwriting Agreement. This Agreement has been duly authorized, executed and delivered by each of the Company and the Operating Partnership.

     (j) The Shares. The Shares to be issued and sold by the Company hereunder have been duly authorized and, when issued and delivered and paid for as provided herein, will be duly and validly issued, will be fully paid and nonassessable and will conform to the descriptions thereof in the Registration Statement, the Pricing Disclosure Package and the Prospectus; and the issuance of the Shares is not subject to any preemptive or similar rights.

     (k) OP Units. The OP Units to be issued by the Operating Partnership in connection with the Company’s contribution of the net proceeds from the sale of the Shares to the Operating Partnership or in connection with the contribution of certain ownership interests in the Initial Properties to the Operating Partnership have been duly authorized and, when issued and delivered, will be duly and validly issued, will be fully paid and nonassessable and will conform to the descriptions thereof in the Registration Statement, the Pricing Disclosure Package and the

7

Prospectus; and the issuance of the OP Units is not subject to any preemptive or similar rights. In addition, the issuance and sale by the Operating Partnership of the OP Units in connection with the contribution of the ownership interests in the Initial Properties to the Operating Partnership are exempt from the registration requirements of the Securities Act and applicable state securities, real estate syndication and blue sky laws.

     (l) Transaction Documents. The Transaction Documents have been, or as of the Closing Date will be, duly authorized, executed and delivered by each of the Company and the Operating Partnership and, when duly executed and delivered in accordance with their terms by the other parties thereto, will constitute valid and legally binding agreements of each of the Company and the Operating Partnership, enforceable against each of them in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors’ rights generally or by equitable principles relating to enforceability.

     (m) Descriptions of the Transaction Documents. Each Transaction Document conforms in all material respects to the description thereof contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

     (n) No Violation or Default. None of the Company, the Operating Partnership nor any of their subsidiaries is (i) in violation of its charter or by-laws or similar organizational documents; (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company, the Operating Partnership or any of their subsidiaries is a party or by which the Company, the Operating Partnership or any of their subsidiaries is bound or to which any of the property or assets of the Company, the Operating Partnership or any of their subsidiaries is subject; or (iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (ii) and (iii) above, for any such default or violation that is disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus and for which a valid waiver has been obtained or that would not, individually or in the aggregate, have a Material Adverse Effect.

     (o) No Conflicts. The execution, delivery and performance by the Company and the Operating Partnership of this Agreement, of each of the Transaction Documents, the issuance and sale of the Shares and the consummation of the transactions contemplated by this Agreement and the Transaction Documents will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company, the Operating Partnership or any of their subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company, the Operating Partnership or any of their subsidiaries is a party or by which the Company, the Operating Partnership or any of their subsidiaries is bound or to which any of the property or assets of the Company, the Operating Partnership or any of their subsidiaries is subject, (ii) result in any violation of the provisions of the charter or by-laws or similar organizational documents of the Company, the Operating Partnership or any of their subsidiaries or (iii) result in the violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (i) and (iii) above, for any such conflict, breach, violation or default that would not, individually or in the aggregate, have a Material Adverse Effect.

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     (p) No Consents Required. No consent, approval, authorization, order, license, registration or qualification of or with any court or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by the Company and the Operating Partnership of this Agreement, of each of the Transaction Documents, the issuance and sale of the Shares and the consummation of the transactions contemplated by this Agreement and the Transaction Documents, except for the registration of the Shares under the Securities Act and such consents, approvals, authorizations, orders and registrations or qualifications as may be required by FINRA, the NYSE and under applicable state securities laws in connection with the purchase and distribution of the Shares by the Underwriters.

     (q) Legal Proceedings. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, there are no legal, governmental or regulatory investigations, actions (excluding pending rulemaking), suits or proceedings pending to which the Company, the Operating Partnership or any of their subsidiaries is or may be a party or to which any property of the Company, the Operating Partnership or any of their subsidiaries (including, without limitation, the Initial Properties) is or may be the subject that, individually or in the aggregate, if determined adversely to the Company, the Operating Partnership or any of their subsidiaries, could reasonably be expected to have a Material Adverse Effect; no such investigations, actions, suits or proceedings are, to the knowledge of the Company or the Operating Partnership, threatened or contemplated by any governmental or regulatory authority or threatened by others; and (i) there are no current or pending legal, governmental or regulatory actions, suits or proceedings that are required under the Securities Act to be described in the Registration Statement, the Pricing Disclosure Package or the Prospectus that are not so described in the Registration Statement, the Pricing Disclosure Package and the Prospectus and (ii) there are no statutes, regulations or contracts or other documents that are required under the Securities Act to be filed as exhibits to the Registration Statement or described in the Registration Statement, the Pricing Disclosure Package or the Prospectus that are not so filed as exhibits to the Registration Statement or described in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

     (r) Independent Accountants. KPMG LLP, who have certified certain financial statements of the Company and its subsidiaries, is an independent registered public accounting firm with respect to the Company and its subsidiaries within the applicable rules and regulations adopted by the Commission and the Public Company Accounting Oversight Board (United States) and as required by the Securities Act.

     (s) Title to Real and Personal Property. The Company, the Operating Partnership, any of their subsidiaries or any joint ventures in which any such entity owns an interest, as the case may be, has good and insurable fee title or leasehold title to the Initial Properties and have good title to all other properties owned by them, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind, except (a) such as are described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, (b) those that do not materially interfere with the use made and proposed to be made of such property by the Company, the Operating Partnership, their subsidiaries or any joint venture or (c) those that could not be reasonably expected, individually or in the aggregate, to have a Material Adverse Effect. The Initial Properties are not subject to any third party ownership interests other than the lease agreements with student-tenants entered into in the normal course of business as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus and the ground lease agreements and joint venture arrangements described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, and no Person has any possessory interest in any Initial Property or right to occupy the same except under and pursuant to (i) the

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provisions of such leases, (ii) the provisions of such ground leases and joint venture arrangements, (iii) licenses entered into by the Company, the Operating Partnership or any of their subsidiaries in the ordinary course of their business or (iv) liens, claims, encumbrances and restrictions described above.

     (t) Title to Intellectual Property. The Company, the Operating Partnership and their subsidiaries own or possess adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) necessary for the conduct of their respective businesses as currently conducted and as proposed to be conducted, and the conduct of their respective businesses will not conflict in any material respect with any such rights of others. None of the Company, the Operating Partnership nor any of their subsidiaries have received any notice of any claim of infringement, misappropriation or conflict with any such rights of others in connection with its patents, patent rights, licenses, inventions, trademarks, service marks, trade names, copyrights and know-how, which could reasonably be expected to result in a Material Adverse Effect.

     (u) No Undisclosed Relationships. No relationship, direct or indirect, exists between or among the Company, the Operating Partnership or any of their subsidiaries, on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company, the Operating Partnership or any of their subsidiaries, on the other, that is required by the Securities Act or the rules and regulations of FINRA to be described in the Registration Statement and the Prospectus and that is not so described in such documents and in the Pricing Disclosure Package.

     (v) Investment Company Act. Neither the Company nor the Operating Partnership is, and after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus neither the Company nor the Operating Partnership will be, required to register as an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Investment Company Act”).

     (w) Taxes. The Company, the Operating Partnership and their subsidiaries have paid all federal, state, local and foreign taxes and filed all tax returns required to be paid or filed through the date hereof; and except as otherwise disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, there is no tax deficiency that has been, or could reasonably be expected to be, asserted against the Company, the Operating Partnership or any of their subsidiaries or any of their respective properties or assets, except those that would not, individually or in the aggregate, have a Material Adverse Effect.

     (x) Licenses and Permits. The Company, the Operating Partnership and their subsidiaries possess all licenses, certificates, permits and other authorizations issued by, and have made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities that are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, except where the failure to possess or make the same would not, individually or in the aggregate, have a Material Adverse Effect; and except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, none of the Company, the Operating Partnership nor any of their subsidiaries has received notice of any revocation or modification of any such license, certificate, permit or

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authorization or has any reason to believe that any such license, certificate, permit or authorization will not be renewed in the ordinary course, except where the failure to renew would not, individually or in the aggregate, have a Material Adverse Effect.

     (y) No Labor Disputes. No labor disturbance by or dispute with employees of the Company, the Operating Partnership or any of their subsidiaries exists or, to the knowledge of the Company or the Operating Partnership, is contemplated or threatened, and neither the Company nor the Operating Partnership is aware of any existing or imminent labor disturbance by, or dispute with, the employees of any of their or their subsidiaries’ principal suppliers, contractors or customers, except as would not have a Material Adverse Effect.

     (z) Compliance with and Liability under Environmental Laws. The Company, the Operating Partnership and/or their subsidiaries has received and reviewed environmental reports on each Initial Property. Except as otherwise set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus: (i) the Company is in compliance with, and none of the Company, the Operating Partnership nor any of their subsidiaries has any liability with respect to the Initial Properties under, applicable Environmental Laws (as defined below) except for such non-compliance or liability which would not result in a Material Adverse Effect; (ii) none of the Company, the Operating Partnership nor any of their subsidiaries has at any time released (as such term is defined in Section 101 (22) of CERCLA (as defined below)) or otherwise disposed of or handled, Hazardous Materials (as defined below) on, to or from any Initial Property, except for such releases, disposals and handlings as would not be reasonably likely to result in a Material Adverse Effect; (iii) none of the Company, the Operating Partnership nor any of their subsidiaries knows of any seepage, leak, discharge, release, emission, spill, or dumping of Hazardous Materials into waters (including, but not limited to, groundwater and surface water) on, beneath or adjacent to any Initial Property, other than such matters as would not be reasonably likely to result in a Material Adverse Effect; (iv) none of the Company, the Operating Partnership nor any of their subsidiaries has received any written notice of, or has any knowledge of any occurrence or circumstance which, with notice or passage of time or both, would give rise to a claim under or pursuant to any Environmental Law by any governmental or quasi-governmental body or any third party with respect to any Initial Property or arising out of the conduct of the business of the Company, the Operating Partnership or any of their subsidiaries at the Initial Properties, except for such claims that would not be reasonably likely to result in a Material Adverse Effect or that would not be required to be disclosed in the Registration Statement, the Pricing Disclosure Package or the Prospectus; (v) none of the Initial Properties is included or, to the knowledge of the Company, proposed for inclusion on the National Priorities List issued pursuant to CERCLA by the United States Environmental Protection Agency (the “EPA”) or on any similar list or inventory issued by any other federal, state or local governmental authority having or claiming jurisdiction over such properties pursuant to any other Environmental Law, other than such inclusions or proposed inclusions as would not be reasonably likely to result in a Material Adverse Effect; and (vi) there are no pending administrative, regulatory or judicial actions, suits, demands, claims, notices of noncompliance or violation, investigations or proceedings relating to any applicable Environmental Law against the Company, the Operating Partnership, any of their subsidiaries or any joint ventures in which any such entity owns an interest or the Initial Properties. As used herein, “Hazardous Material” shall include, without limitation, any flammable explosives, radioactive materials, chemicals, pollutants, contaminants, wastes, hazardous wastes, toxic substances, petroleum or petroleum products, asbestos-containing materials, mold or any hazardous material as defined by or regulated under any Environmental Law. As used herein, “Environmental Law” (individually, an “Environmental Law” and collectively “Environmental Laws”) shall mean any applicable foreign, federal, state or local law (including statute or common law), ordinance, rule, regulation, or judicial or administrative order,

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consent decree or judgment relating to the protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Secs. 9601-9675 (“CERCLA”), the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Secs. 5101-5127, the Solid Waste Disposal Act, as amended, 42 U.S.C. Secs. 6901-6992k, the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Secs. 11001-11050, the Toxic Substances Control Act, 15 U.S.C. Secs. 2601-2692, the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Secs. 136-136y, the Clean Air Act, 42 U.S.C. Secs. 7401-7671q, the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. Secs. 1251-1387, and the Safe Drinking Water Act, 42 U.S.C. Secs. 300f-300j-26, as any of the above statutes may be amended from time to time, and the regulations promulgated pursuant to any of the foregoing.

     (aa) Condition of Initial Properties. The Company, the Operating Partnership and/or their subsidiaries has received and reviewed property condition reports on each Initial Property. Except as otherwise set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus: (i) none of the Initial Properties is in violation of any applicable building code, zoning ordinance or other law or regulation, except where such violation of any applicable building code, zoning ordinance or other law or regulation would not, singly or in the aggregate, have a Material Adverse Effect; (ii) none the Company, the Operating Partnership nor any of their subsidiaries has received written notice of any proposed material special assessment or any proposed change in any property tax, zoning or land use laws or availability of water affecting any Initial Property that would, singly or in the aggregate, have a Material Adverse Effect; (iii) there does not exist any violation of any declaration of covenants, conditions and restrictions with respect to any Initial Property which would, singly or in the aggregate, have a Material Adverse Effect, or any state of facts or circumstances or condition or event which could, with the giving of notice or passage of time, or both, constitute such a violation; and (iv) the developments or improvements comprising any portion of each Initial Property (the “Developments and Improvements”) are free of any and all physical, mechanical, structural, design or construction defects that would, singly or in the aggregate, have a Material Adverse Effect and the mechanical, electrical and utility systems servicing the Developments and Improvements (including, without limitation, all water, electric, sewer, plumbing, heating, ventilation, gas and air conditioning) are in good condition and proper working order, reasonable wear and tear and need for routine repair and maintenance excepted, and are free of defects, except for such failures and defects that would not, singly or in the aggregate, have a Material Adverse Effect.

     (bb) Access and Utilities. Each of the Initial Properties has rights of access to public ways and is served by water, sewer, sanitary sewer and storm drain facilities adequate to service such Initial Property for its use as described in the Registration Statement, Pricing Disclosure Package and the Prospectus. All public utilities necessary to the use and enjoyment of each of the Initial Properties in the manner described in the Prospectus is located either in the public right-of-way abutting such Initial Property (which are connected so as to serve such Initial Property without passing over other property) or in recorded easements serving such Initial Property, subject to such exceptions which, singly or in the aggregate, would not have a Material Adverse Effect. All roads necessary for the use of each of the Initial Properties as described in the Registration Statement, Pricing Disclosure Package and the Prospectus have been completed and dedicated to public use and accepted by all applicable governmental authorities.

     (cc) No Condemnation. No condemnation or other proceeding has been commenced that has not been completed, and, to the Company’s or the Operating Partnership’s knowledge, no such proceeding is threatened, with respect to all or any portion of the Initial Properties or for the

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relocation away from any Initial Property of any roadway providing access to the Initial Properties or any portion thereof.

     (dd) Compliance with ERISA. (i) Each employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), for which the Company or any member of its “Controlled Group” (defined as any organization which is a member of a controlled group of corporations within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended (the “Code”)) would have any liability (each, a “Plan”) has been maintained in compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations, including but not limited to ERISA and the Code, except for noncompliance that could not reasonably be expected to result in material liability to the Company, the Operating Partnership or their subsidiaries; (ii) no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any Plan excluding transactions effected pursuant to a statutory or administrative exemption that could reasonably be expected to result in a material liability to the Company, the Operating Partnership or their subsidiaries; (iii) for each Plan that is subject to the funding rules of Section 412 of the Code or Section 302 of ERISA, the minimum funding standard of Section 412 of the Code or Section 302 of ERISA, as applicable, has been satisfied (without taking into account any waiver thereof or extension of any amortization period) and is reasonably expected to be satisfied in the future (without taking into account any waiver thereof or extension of any amortization period); (iv) the fair market value of the assets of each Plan exceeds the present value of all benefits accrued under such Plan (determined based on those assumptions used to fund such Plan); (v) no “reportable event” (within the meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected to occur that either has resulted, or could reasonably be expected to result, in material liability to the Company, the Operating Partnership or their subsidiaries; (vi) none of the Company, the Operating Partnership nor any member of the Controlled Group has incurred, nor reasonably expects to incur, any liability under Title IV of ERISA (other than contributions to the Plan or premiums to the Pension Benefit Guaranty Corporation (“PBGC”), in the ordinary course and without default) in respect of a Plan (including a “multiemployer plan,” within the meaning of Section 4001(a)(3) of ERISA); and (vii) there is no pending audit or investigation by the Internal Revenue Service, the U.S. Department of Labor, the PBGC or any other governmental agency or any foreign regulatory agency with respect to any Plan that could reasonably be expected to result in material liability to the Company, the Operating Partnership or their subsidiaries. None of the following events has occurred or is reasonably likely to occur: (x) a material increase in the aggregate amount of contributions required to be made to all Plans by the Company, the Operating Partnership or their subsidiaries in the current fiscal year of the Company, the Operating Partnership or their subsidiaries compared to the amount of such contributions made in the most recently completed fiscal year; or (y) a material increase in the Company’s, the Operating Partnership’s and their subsidiaries’ “accumulated post-retirement benefit obligations” (within the meaning of Statement of Financial Accounting Standards 106) compared to the amount of such obligations in the most recently completed fiscal year. Furthermore, the assets of the Company, the Operating Partnership or their subsidiaries are not deemed to constitute “plan assets” for purposes of ERISA or the regulations of United States Department of Labor under ERISA.

     (ee) Disclosure Controls. The Company, the Operating Partnership and their subsidiaries have taken all necessary actions to ensure that, upon effectiveness of the Registration Statement, the Company, the Operating Partnership and their subsidiaries will maintain an effective system of “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that complies with the requirements of the Exchange Act and the rules and regulations of the Commission thereunder,

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and that has been designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure. The Company, the Operating Partnership and their subsidiaries will evaluate the effectiveness of their disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act.

     (ff) Accounting Controls. The Company, the Operating Partnership and their subsidiaries have taken all necessary actions to ensure that, upon effectiveness of the Registration Statement, the Company, the Operating Partnership and their subsidiaries will maintain systems of “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that comply with the requirements of the Exchange Act and have been designed by, or under the supervision of, their respective principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, including, but not limited to, internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, there are no identified deficiencies in such internal controls. The Company’s auditors and the Audit Committee of the Board of Directors of the Company have been advised of: (i) all identified deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which have adversely affected or are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

     (gg) Insurance. The Company, the Operating Partnership and their subsidiaries have insurance covering their respective properties, operations, personnel and businesses, including business interruption insurance, which insurance is in amounts and insures against such losses and risks as are adequate to protect the Company, the Operating Partnership and their subsidiaries and their respective businesses; and none of the Company, the Operating Partnership nor any of their subsidiaries has (i) received notice from any insurer or agent of such insurer that capital improvements or other expenditures are required or necessary to be made in order to continue such insurance or (ii) any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage at reasonable cost from similar insurers as may be necessary to continue its business.

     (hh) Title Insurance. The Company, the Operating Partnership and/or their subsidiaries carries or is entitled to the benefits of title insurance on the fee interests and/or leasehold interests (in the case of a ground lease interest) with respect to each Initial Property with financially sound and reputable insurers, in an amount not less than such entity’s cost for the real property comprising such Initial Property, insuring that such party is vested with good and insurable title to each such Initial Property.

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     (ii) No Unlawful Payments. None of the Company, the Operating Partnership nor any of their subsidiaries nor, to the knowledge of the Company or the Operating Partnership, any director, officer, agent, employee or other person associated with or acting on behalf of the Company, the Operating Partnership or any of their subsidiaries has: (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

     (jj) Compliance with Money Laundering Laws. The operations of the Company, the Operating Partnership and their subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company, the Operating Partnership or any of their subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or the Operating Partnership, threatened.

     (kk) Compliance with OFAC. None of the Company, the Operating Partnership nor any of their subsidiaries nor, to the knowledge of the Company or the Operating Partnership, any director, officer, agent, employee or affiliate of the Company, the Operating Partnership or any of their subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”); and the Company or the Operating Partnership will not, directly or indirectly, use the proceeds of the offering of the Shares hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

     (ll) No Restrictions on Subsidiaries. No subsidiary of the Company (including the Operating Partnership) is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party or is subject, from paying any dividends to the Company, from making any other distribution on such subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s properties or assets to the Company or any other subsidiary of the Company.

     (mm) No Broker’s Fees. None of the Company, the Operating Partnership nor any of their subsidiaries is a party to any contract, agreement or understanding with any person (other than this Agreement) that would give rise to a valid claim against the Company, the Operating Partnership or any of their subsidiaries or any Underwriter for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Shares.

     (nn) No Registration Rights. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, no person has the right to require the Company, the Operating Partnership or any of their subsidiaries to register any securities for sale under the Securities Act by reason of the filing of the Registration Statement with the Commission or the issuance and sale of the Shares.

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     (oo) No Stabilization. Neither the Company nor the Operating Partnership has taken, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Shares.

     (pp) Margin Rules. The application of the proceeds received by the Company from the issuance, sale and delivery of the Shares as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus will not violate Regulation T, U or X of the Board of Governors of the Federal Reserve System or any other regulation of such Board of Governors.

     (qq) Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Registration Statement, the Pricing Disclosure Package or the Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

     (rr) Statistical and Market Data. Nothing has come to the attention of the Company that has caused the Company to believe that the statistical and market-related data included in the Registration Statement, the Pricing Disclosure Package and the Prospectus is not based on or derived from sources that are reliable and accurate in all material respects and the Company has obtained, if required, the written consent to the use of such data from such sources requiring consent.

     (ss) Sarbanes-Oxley Act. The Company has taken all necessary actions to ensure that, upon effectiveness of the Registration Statement, it will be, and any of the Company’s directors or officers, in their capacities as such will be, in compliance with all applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, including Section 402 related to loans and Sections 302 and 906 related to certifications.

     (tt) Status under the Securities Act. At the time of filing the Registration Statement and any post-effective amendment thereto, at the earliest time thereafter that the Company or any offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Securities Act) of the Shares and at the date hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405 under the Securities Act. The Company has paid the registration fee for this offering as calculated pursuant to Rule 457 under the Securities Act.

     (uu) Real Estate Investment Trust. As of the Closing Date and after giving effect to the issuance and sale of the Shares and the application of the net proceeds therefrom as described in the Registration Statement, Pricing Disclosure Package and the Prospectus, the Company will be organized and will operate in a manner so as to qualify as a “real estate investment trust” (a “REIT”) under Sections 856 to 860 of the Code, and the rules and regulations thereunder, and the Company will elect to be taxed as a REIT under the Code effective for its taxable year ending December 31, 2010. All statements regarding the Company’s qualification and taxation as a REIT and descriptions of the Company’s organization and proposed method of operation set forth in the Registration Statement, Pricing Disclosure Package and the Prospectus are true, complete and correct in all material respects.

     (vv) Partnership Agreement. The Amended and Restated Limited Partnership Agreement of the Operating Partnership (the “Partnership Agreement”), has been duly and validly authorized by Campus Crest Communities GP, LLC, a wholly-owned subsidiary of the Company, acting in its capacity as sole general partner of the Operating Partnership, and at the Closing Date will be duly executed and delivered by Campus Crest Communities GP, LLC, as

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general partner, and will be a valid and binding agreement, enforceable in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles.

     (ww) Operating Partnership. The Operating Partnership will be classified as a partnership for purposes of the Code and will not be treated as a publicly traded partnership, association or corporation.

     (xx) Directed Share Program. The Registration Statement, the Pricing Disclosure Package and the Prospectus comply, and any further amendments or supplements thereto will comply, in all material respects, with any applicable laws or regulations of each jurisdiction in which the Pricing Disclosure Package or the Prospectus, as amended or supplemented, if applicable, is distributed in connection with the Directed Share Program, and no material authorization, approval, consent, license, order, registration or qualification of or with any court or governmental or regulatory authority, other than such as have been obtained or will be obtained or completed by the Closing Date, is necessary under the securities laws and regulations of any such jurisdiction. Neither the Company nor the Operating Partnership has offered, or caused the Underwriters to offer, Shares to any person pursuant to the Directed Share Program with the specific intent to unlawfully influence (i) a customer or supplier of the Company to alter the customer’s or supplier’s level or type of business with the Company or (ii) a trade journalist or publication to write or publish favorable information about the Company or its products.

     4. Further Agreements of the Company and the Operating Partnership. Each of the Company and the Operating Partnership, jointly and severally, covenants and agrees with each Underwriter that:

     (a) Required Filings. The Company will file the Prospectus with the Commission within the time periods specified by Rule 424(b) and Rule 430A, 430B or 430C under the Securities Act, will file any Issuer Free Writing Prospectus to the extent required by Rule 433 under the Securities Act; and will furnish copies of the Prospectus and each Issuer Free Writing Prospectus (to the extent not previously delivered) to the Underwriters in New York City prior to 10:00 A.M., New York City time, on the business day next succeeding the date of this Agreement in such quantities as the Representatives may reasonably request.

     (b) Delivery of Copies. The Company will deliver, without charge, (i) to the Representatives, two signed copies of the Registration Statement as originally filed and each amendment thereto, in each case including all exhibits and consents filed therewith; and (ii) to each Underwriter (A) a conformed copy of the Registration Statement as originally filed and each amendment thereto (without exhibits) and (B) during the Prospectus Delivery Period (as defined below), as many copies of the Prospectus (including all amendments and supplements thereto and each Issuer Free Writing Prospectus) as the Representatives may reasonably request. As used herein, the term “Prospectus Delivery Period” means such period of time after the first date of the public offering of the Shares as in the opinion of counsel for the Underwriters a prospectus relating to the Shares is required by law to be delivered (or required to be delivered but for Rule 172 under the Securities Act) in connection with sales of the Shares by any Underwriter or dealer.

     (c) Amendments or Supplements, Issuer Free Writing Prospectuses. Before preparing, using, authorizing, approving, referring to or filing any Issuer Free Writing Prospectus, and before filing any amendment or supplement to the Registration Statement or the Prospectus, the Company will furnish to the Representatives and counsel for the Underwriters a copy of the

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proposed Issuer Free Writing Prospectus, amendment or supplement for review and will not prepare, use, authorize, approve, refer to or file any such Issuer Free Writing Prospectus or file any such proposed amendment or supplement to which the Representatives object.

     (d) Notice to the Representatives. The Company will advise the Representatives promptly, and confirm such advice in writing: (i) when the Registration Statement has become effective; (ii) when any amendment to the Registration Statement has been filed or becomes effective; (iii) when any supplement to the Prospectus or any Issuer Free Writing Prospectus or any amendment to the Prospectus has been filed; (iv) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or the receipt of any comments from the Commission relating to the Registration Statement or any other request by the Commission for any additional information; (v) of the issuance by the Commission of any order suspending the effectiveness of the Registration Statement or preventing or suspending the use of any Preliminary Prospectus, any of the Pricing Disclosure Package or the Prospectus or the initiation or threatening of any proceeding for that purpose or pursuant to Section 8A of the Securities Act; (vi) of the occurrence of any event within the Prospectus Delivery Period as a result of which the Prospectus, the Pricing Disclosure Package or any Issuer Free Writing Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing when the Prospectus, the Pricing Disclosure Package or any such Issuer Free Writing Prospectus is delivered to a purchaser, not misleading; and (vii) of the receipt by the Company of any notice with respect to any suspension of the qualification of the Shares for offer and sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and the Company will use its best efforts to prevent the issuance of any such order suspending the effectiveness of the Registration Statement, preventing or suspending the use of any Preliminary Prospectus, any of the Pricing Disclosure Package or the Prospectus or suspending any such qualification of the Shares and, if any such order is issued, will obtain as soon as possible the withdrawal thereof.

     (e) Ongoing Compliance. (1) If during the Prospectus Delivery Period (i) any event shall occur or condition shall exist as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances existing when the Prospectus is delivered to a purchaser, not misleading or (ii) it is necessary to amend or supplement the Prospectus to comply with law, the Company will promptly notify the Underwriters thereof and forthwith prepare and, subject to paragraph (c) above, file with the Commission and furnish to the Underwriters and to such dealers as the Representatives may designate such amendments or supplements to the Prospectus as may be necessary so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances existing when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus will comply with law and (2) if at any time prior to the Closing Date (i) any event shall occur or condition shall exist as a result of which the Pricing Disclosure Package as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances existing when the Pricing Disclosure Package is delivered to a purchaser, not misleading or (ii) it is necessary to amend or supplement the Pricing Disclosure Package to comply with law, the Company will promptly notify the Underwriters thereof and forthwith prepare and, subject to paragraph (c) above, file with the Commission (to the extent required) and furnish to the Underwriters and to such dealers as the Representatives may designate such amendments or supplements to the Pricing Disclosure Package as may be necessary so that the statements in the Pricing Disclosure Package as so amended or supplemented will not, in the light

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of the circumstances existing when the Pricing Disclosure Package is delivered to a purchaser, be misleading or so that the Pricing Disclosure Package will comply with law.

     (f) Blue Sky Compliance. The Company will qualify the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Representatives shall reasonably request and will continue such qualifications in effect so long as required for distribution of the Shares; provided that the Company shall not be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject.

     (g) Earning Statement. The Company will make generally available to its security holders and the Representatives as soon as practicable an earnings statement that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act covering a period of at least twelve months beginning with the first fiscal quarter of the Company occurring after the “effective date” (as defined in Rule 158) of the Registration Statement.

     (h) Clear Market. During a period of one year from the date of the Prospectus, the Company will not, directly or indirectly (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, or lend or otherwise transfer or dispose of any             shares of Stock or any securities convertible into or exercisable or exchangeable for or repayable with shares of Stock, whether owned as of the date hereof or hereafter acquired or with respect to which the Company has or hereafter acquires the power of disposition, or file, or cause to be filed, any registration statement under the Securities Act with respect to any of the foregoing (collectively, the “Lock-Up Securities”) or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Lock-Up Securities, whether any such swap, agreement or transaction is to be settled by delivery of Stock or other securities, in cash or otherwise, without the prior written consent of the Representatives, other than the Shares to be sold hereunder and any shares of Stock of the Company issued under the Equity Incentive Plan as described in the Registration Statement, Pricing Disclosure Package and Prospectus. Notwithstanding the foregoing, if (1) during the last 17 days of the one-year restricted period, the Company issues an earnings release or material news or a material event relating to the Company occurs; or (2) prior to the expiration of the one-year restricted period, the Company announces that it will release earnings results or becomes aware that material news or a material event will occur during the 16-day period beginning on the last day of the one-year period, the restrictions imposed by this Agreement shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

     (i) Use of Proceeds. The Company will apply the net proceeds from the sale of the Shares as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus under the heading “Use of Proceeds.”

     (j) No Stabilization. The Company will not take, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Stock.

     (k) Exchange Listing. The Company will use its best efforts to list, subject to notice of issuance, the Shares on the New York Stock Exchange (the “Exchange”).

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     (l) Reports. So long as the Shares are outstanding, the Company will furnish to the Representatives, as soon as they are available, copies of all reports or other communications (financial or other) furnished to holders of the Shares, and copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange or automatic quotation system; provided the Company will be deemed to have furnished such reports and financial statements to the Representatives to the extent they are filed on the Commission’s Electronic Data Gathering, Analysis, and Retrieval system or any successor system.

     (m) Record Retention. The Company will, pursuant to reasonable procedures developed in good faith, retain copies of each Issuer Free Writing Prospectus that is not filed with the Commission in accordance with Rule 433 under the Securities Act.

     (n) Filings. The Company will file with the Commission such reports as may be required by Rule 463 under the Securities Act.

     5. Certain Agreements of the Underwriters. Each Underwriter hereby represents and agrees that:

     (a) It has not used, authorized use of, referred to or participated in the planning for use of, and will not use, authorize use of, refer to or participate in the planning for use of, any “free writing prospectus,” as defined in Rule 405 under the Securities Act (which term includes use of any written information furnished to the Commission by the Company and not incorporated by reference into the Registration Statement and any press release issued by the Company) other than (i) a free writing prospectus that contains no “issuer information” (as defined in Rule 433(h)(2) under the Securities Act) that was not included (including through incorporation by reference) in the Preliminary Prospectus or a previously filed Issuer Free Writing Prospectus, (ii) any Issuer Free Writing Prospectus listed on Annex B or prepared pursuant to Section 3(c) or Section 4(c) above (including any electronic road show), or (iii) any free writing prospectus prepared by such underwriter and approved by the Company in advance in writing (each such free writing prospectus referred to in clauses (i) or (iii), an “Underwriter Free Writing Prospectus”).

     (b) It has not and will not, without the prior written consent of the Company, use any free writing prospectus that contains the final terms of the Shares unless such terms have previously been included in a free writing prospectus filed with the Commission.

     (c) It is not subject to any pending proceeding under Section 8A of the Securities Act with respect to the offering (and will promptly notify the Company if any such proceeding against it is initiated during the Prospectus Delivery Period).

     6. Conditions of Underwriters’ Obligations. The obligation of each Underwriter to purchase the Underwritten Shares on the Closing Date or the Option Shares on the Additional Closing Date, as the case may be, as provided herein is subject to the performance by the Company of its covenants and other obligations hereunder and to the following additional conditions:

     (a) Registration Compliance; No Stop Order. No order suspending the effectiveness of the Registration Statement shall be in effect, and no proceeding for such purpose pursuant to Section 8A under the Securities Act shall be pending before or threatened by the Commission; the Prospectus and each Issuer Free Writing Prospectus shall have been timely filed with the Commission under the Securities Act (in the case of an Issuer Free Writing Prospectus, to the

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extent required by Rule 433 under the Securities Act) and in accordance with Section 4(a) hereof; and all requests by the Commission for additional information shall have been complied with to the reasonable satisfaction of the Representatives.

     (b) Representations and Warranties. The representations and warranties of the Company and the Operating Partnership contained herein shall be true and correct on the date hereof and on and as of the Closing Date or the Additional Closing Date, as the case may be; and the statements of the Company, the Operating Partnership and their respective officers made in any certificates delivered pursuant to this Agreement shall be true and correct on and as of the Closing Date or the Additional Closing Date, as the case may be.

     (c) No Material Adverse Change. No event or condition of a type described in Section 3(f) hereof shall have occurred or shall exist, which event or condition is not described in the Pricing Disclosure Package (excluding any amendment or supplement thereto) and the Prospectus (excluding any amendment or supplement thereto) and the effect of which, in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Shares on the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the manner contemplated by this Agreement, the Pricing Disclosure Package and the Prospectus.

     (d) Company Officers’ Certificate. The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, a certificate of the chief executive officer and chief financial officer or chief accounting officer of the Company (i) confirming that such officers have carefully reviewed the Registration Statement, the Pricing Disclosure Package and the Prospectus and, to the knowledge of such officers, the representations set forth in Sections 3(b) and 3(d) hereof are true and correct, (ii) confirming that the other representations and warranties of the Company in this Agreement are true and correct and that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date or the Additional Closing Date, as the case may be, and (iii) to the effect set forth in paragraphs (a) and (c) above.

     (e) Company’s Chief Financial Officer’s Certificate. The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, a certificate of the chief financial officer of the Company in a form reasonably satisfactory to the Representatives.

     (f) Operating Partnership Officers’ Certificate. The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, a certificate of the chief executive officer and chief financial officer or chief accounting officer of Campus Crest Communities GP, LLC, the general partner of the Operating Partnership, confirming that the representations and warranties of the Operating Partnership in this Agreement are true and correct and that the Operating Partnership has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date or the Additional Closing Date, as the case may be.

     (g) Comfort Letters. On the date of this Agreement and on the Closing Date or the Additional Closing Date, as the case may be, KPMG LLP shall have furnished to the Representatives, at the request of the Company, letters, dated the respective dates of delivery thereof and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives, containing statements and information of the type customarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain

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financial information contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus; provided, that the letter delivered on the Closing Date or the Additional Closing Date, as the case may be, shall use a “cut-off” date no more than three business days prior to such Closing Date or such Additional Closing Date, as the case may be.

     (h) Opinion and 10b-5 Statement of Counsel for the Company and the Operating Partnership. Bradley Arant Boult Cummings LLP and Saul Ewing LLP, counsel for the Company and the Operating Partnership, shall have furnished to the Representatives, at the request of the Company, their respective written opinion and 10b-5 statement, dated the Closing Date or the Additional Closing Date, as the case may be, and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives, to the effect set forth in Annex A-1 and Annex A-2 hereto, respectively.

     (i) Opinion and 10b-5 Statement of Counsel for the Underwriters. The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, an opinion and 10b-5 statement of Sidley Austin llp, counsel for the Underwriters, with respect to such matters as the Representatives may reasonably request, and such counsel shall have received such documents and information as they may reasonably request to enable them to pass upon such matters. In giving such opinion such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of New York and the federal law of the United States, upon the opinion and 10b-5 statement of Saul Ewing LLP delivered pursuant to Section 6(g) as to matters arising under Maryland law, or upon the opinions and 10b-5 statements of counsel satisfactory to the Representatives.

     (j) No Legal Impediment to Issuance. No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date or the Additional Closing Date, as the case may be, prevent the issuance or sale of the Shares; and no injunction or order of any federal, state or foreign court shall have been issued that would, as of the Closing Date or the Additional Closing Date, as the case may be, prevent the issuance or sale of the Shares.

     (k) Good Standing. The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, satisfactory evidence of the good standing of the Company, the Operating Partnership and their subsidiaries in their respective jurisdictions of organization and their good standing as foreign entities in such other jurisdictions as the Representatives may reasonably request, in each case in writing or any standard form of telecommunication from the appropriate governmental authorities of such jurisdictions.

     (l) Exchange Listing. The Shares to be delivered on the Closing Date or Additional Closing Date, as the case may be, shall have been approved for listing on the New York Stock Exchange, subject to official notice of issuance.

     (m) Lock-up Agreements. The “lock-up” agreements, each substantially in the form of Exhibit A hereto, between you and the parties set forth on Exhibit B hereto relating to sales and certain other dispositions of shares of Stock or certain other securities, delivered to you on or before the date hereof, shall be full force and effect on the Closing Date or Additional Closing Date, as the case may be.

     (n) No Objection. FINRA shall have confirmed that it has not raised any objection with respect to the fairness and reasonableness of the underwriting terms and arrangements.

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     (o) Transaction Documents. All of the Transaction Documents shall have been executed and delivered contemporaneously with or prior to the sale of the Shares

     (p) Additional Documents. On or prior to the Closing Date or the Additional Closing Date, as the case may be, the Company shall have furnished to the Representatives such further certificates and documents as the Representatives may reasonably request.

     All opinions, letters, certificates and evidence mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Underwriters.

     7. Indemnification and Contribution.

     (a) Indemnification of the Underwriters. The Company and the Operating Partnership, jointly and severally, agree to indemnify and hold harmless each Underwriter, its affiliates, agents, joint ventures, directors and officers and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, not misleading, (ii) or any untrue statement or alleged untrue statement of a material fact contained in the Prospectus (or any amendment or supplement thereto), any Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act or any Pricing Disclosure Package (including any Pricing Disclosure Package that has subsequently been amended), or caused by any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in paragraph (b) below.

     (b) Indemnification of the Company and the Operating Partnership. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, the Operating Partnership, the Company’s directors and officers who signed the Registration Statement and each person, if any, who controls either the Company or the Operating Partnership within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in the Registration Statement, the Prospectus (or any amendment or supplement thereto), any Issuer Free Writing Prospectus or any Pricing Disclosure Package, it being understood and agreed upon that the only such information furnished by any Underwriter consists of the following information in the Prospectus furnished

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on behalf of each Underwriter: the concession and reallowance figures appearing in the fifth paragraph under the caption “Underwriting.”

     (c) Notice and Procedures. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such person (the “Indemnified Person”) shall promptly notify the person against whom such indemnification may be sought (the “Indemnifying Person”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under paragraph (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under paragraph (a) or (b) above. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person (who shall not, without the consent of the Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified Person in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be paid or reimbursed as they are incurred upon receipt from the Indemnified Persons of a written request for payment thereof accompanied by a written statement with reasonable supporting detail of such fees and expenses. Any such separate firm for any Underwriter, its affiliates, directors and officers and any control persons of such Underwriter shall be designated in writing by the Representatives and any such separate firm for the Company, the Operating Partnership, the Company’s directors and officers who signed the Registration Statement and any control persons of the Company or the Operating Partnership shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Indemnifying Person of such request, (ii) the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement and (iii) arising out of, related to, or in connection with the Directed Share Program, other than losses, claims, damages or liabilities (or expenses relating thereto) that are finally judicially determined to have resulted from the willful misconduct or gross negligence of an Underwriter. No

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Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.

     (d) Contribution. If the indemnification provided for in paragraphs (a) and (b) above is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Operating Partnership, on the one hand, and the Underwriters on the other, from the offering of the Shares or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company and the Operating Partnership, on the one hand, and the Underwriters on the other, in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Operating Partnership, on the one hand, and the Underwriters on the other, shall be deemed to be in the same respective proportions as the net proceeds (before deducting expenses) received by the Company from the sale of the Shares and the total underwriting discounts and commissions received by the Underwriters in connection therewith, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate offering price of the Shares. The relative fault of the Company and the Operating Partnership, on the one hand, and the Underwriters on the other, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, the Operating Partnership or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

     (e) Sale of Directed Shares. In connection with the offer and sale of Directed Shares, the Company and the Operating Partnership, jointly and severally, agree to indemnify and hold harmless each Underwriter, its affiliates, agents, joint ventures, directors and officers and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, (i) the violation of any applicable laws or regulations of any foreign jurisdictions where Directed Shares have been offered or (ii) the failure of any purchaser of Directed Shares, who has agreed to purchase Directed Shares, to pay for and accept delivery of the Directed Shares. Under no circumstances will any Underwriter be liable to the Company, the Operating Partnership or to any purchaser of Directed Shares for any action taken or omitted to be taken in connection with the Directed Shares or any transaction effected with any purchaser of Directed Shares, except to the extent found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from the gross negligence or willful misconduct of such Underwriter.

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     (f) Limitation on Liability. The Company, the Operating Partnership and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of this Section 7, in no event shall an Underwriter be required to contribute any amount in excess of the amount by which the total underwriting discounts and commissions received by such Underwriter with respect to the offering of the Shares exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations to contribute pursuant to this Section 7 are several in proportion to their respective purchase obligations hereunder and not joint.

     (g) Non-Exclusive Remedies. The remedies provided for in this Section 7 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law or in equity.

     8. Effectiveness of Agreement. This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.

     9. Termination. This Agreement may be terminated in the absolute discretion of the Representatives, by notice to the Company, if after the execution and delivery of this Agreement and prior to the Closing Date or, in the case of the Option Shares, prior to the Additional Closing Date: (i) trading generally shall have been suspended or materially limited on or by any of the New York Stock Exchange or the Nasdaq Stock Market; (ii) trading of any securities issued or guaranteed by the Company shall have been suspended on any exchange or in any over-the-counter market; (iii) a general moratorium on commercial banking activities shall have been declared by federal or New York State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis, either within or outside the United States, that, in the judgment of the Representatives, is material and adverse and makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Shares on the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the manner contemplated by this Agreement, the Pricing Disclosure Package and the Prospectus.

     10. Defaulting Underwriter.

     (a) If, on the Closing Date or the Additional Closing Date, as the case may be, any Underwriter defaults on its obligation to purchase the Shares that it has agreed to purchase hereunder on such date, the non-defaulting Underwriters may in their discretion arrange for the purchase of such Shares by other persons satisfactory to the Company on the terms contained in this Agreement. If, within 36 hours after any such default by any Underwriter, the non-defaulting Underwriters do not arrange for the purchase of such Shares, then the Company shall be entitled to a further period of 36 hours within which to procure other persons satisfactory to the non-defaulting Underwriters to purchase such Shares on such terms. If other persons become obligated or agree to purchase the Shares of a defaulting Underwriter, either the non-defaulting

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Underwriters or the Company may postpone the Closing Date or the Additional Closing Date, as the case may be, for up to five full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Underwriters may be necessary in the Registration Statement and the Prospectus or in any other document or arrangement, and the Company agrees to promptly prepare any amendment or supplement to the Registration Statement and the Prospectus that effects any such changes. As used in this Agreement, the term “Underwriter” includes, for all purposes of this Agreement unless the context otherwise requires, any person not listed in Schedule 1 hereto that, pursuant to this Section 10, purchases Shares that a defaulting Underwriter agreed but failed to purchase.

     (b) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by the non-defaulting Underwriters and the Company as provided in paragraph (a) above, the aggregate number of Shares that remain unpurchased on the Closing Date or the Additional Closing Date, as the case may be, is equal to or less than 10% of the aggregate number of Shares to be purchased on such date, then the Company shall have the right to require each non-defaulting Underwriter to purchase the number of Shares that such Underwriter agreed to purchase hereunder on such date plus such Underwriter’s pro rata share (based on the number of Shares that such Underwriter agreed to purchase on such date) of the Shares of such defaulting Underwriter or Underwriters for which such arrangements have not been made.

     (c) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by the non-defaulting Underwriters and the Company as provided in paragraph (a) above, the aggregate number of Shares that remain unpurchased on the Closing Date or the Additional Closing Date, as the case may be, exceeds 10% of the aggregate amount of Shares to be purchased on such date, or if the Company shall not exercise the right described in paragraph (b) above, then this Agreement or, with respect to any Additional Closing Date, the obligation of the Underwriters to purchase Shares on the Additional Closing Date shall terminate without liability on the part of the non-defaulting Underwriters. Any termination of this Agreement pursuant to this Section 10 shall be without liability on the part of the Company, except that the Company will continue to be liable for the payment of expenses as set forth in Section 11 hereof and except that the provisions of Section 7 hereof shall not terminate and shall remain in effect.

     (d) Nothing contained herein shall relieve a defaulting Underwriter of any liability it may have to the Company or any non-defaulting Underwriter for damages caused by its default.

     11. Payment of Expenses.

     (a) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company and/or the Operating Partnership will pay or cause to be paid all costs and expenses incident to the performance of their obligations hereunder, including without limitation: (i) the costs incident to the authorization, issuance, sale, preparation and delivery of the Shares and any taxes payable in that connection; (ii) the costs incident to the preparation, printing and filing under the Securities Act of the Registration Statement, the Preliminary Prospectus, any Issuer Free Writing Prospectus, any Pricing Disclosure Package and the Prospectus (including all exhibits, amendments and supplements thereto) and the distribution thereof; (iii) the costs of reproducing and distributing each of the Transaction Documents; (iv) the fees and expenses of the Company’s and the Operating Partnership’s counsel and independent accountants; (v) the reasonable fees and expenses incurred in connection with the registration or qualification of the Shares under the state or foreign securities or blue sky laws of such

27

jurisdictions as the Representatives may designate and the preparation, printing and distribution of a Blue Sky Memorandum (including the reasonable related fees and expenses of counsel for the Underwriters); (vi) the cost of preparing stock certificates; (vii) the costs and charges of any transfer agent and any registrar; (viii) all expenses and application fees incurred in connection with any filing with, and clearance of the offering by, FINRA (provided, however the Company and/or the Operating Partnership shall only be responsible for the fees and expenses incurred under this subsection (viii) and subsection (v) up to an aggregate amount of $30,000); (ix) all expenses incurred by the Company or the Operating Partnership in connection with any “road show” presentation to potential investors; and (x) all expenses and application fees related to the listing of the Shares on the Exchange. Except as provided in this Agreement, the Underwriters shall pay their own expenses, including the fees and disbursements of their counsel and advisers.

     (b) If (i) this Agreement is terminated pursuant to Section 9, (ii) the Company for any reason fails to tender the Shares for delivery to the Underwriters or (iii) the Underwriters decline to purchase the Shares for any reason permitted under this Agreement, the Company agrees to reimburse the Underwriters for all out-of-pocket costs and expenses (including the fees and expenses of their counsel) reasonably incurred by the Underwriters in connection with this Agreement and the offering contemplated hereby.

     12. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and any controlling persons referred to in Section 7 hereof. Nothing in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. No purchaser of Shares from any Underwriter shall be deemed to be a successor merely by reason of such purchase.

     13. Survival. The respective indemnities, rights of contribution, representations, warranties and agreements of the Company, the Operating Partnership and the Underwriters contained in this Agreement or made by or on behalf of the Company, the Operating Partnership or the Underwriters pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Shares and shall remain in full force and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of the Company, the Operating Partnership or the Underwriters.

     14. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the Securities Act; (b) the term “business day” means any day other than a day on which banks are permitted or required to be closed in New York City and (c) the term “subsidiary” has the meaning set forth in Rule 405 under the Securities Act.

     15. Miscellaneous.

     (a) Authority of the Representatives. Any action by the Underwriters hereunder may be taken by the Representatives on behalf of the Underwriters, and any such action taken by the Representatives shall be binding upon the Underwriters.

     (b) Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted and confirmed by any standard form of telecommunication. Notices to the Underwriters shall be given to Raymond James & Associates, Inc. at 880 Carillon Parkway, St. Petersburg, Florida 33716, attention of General Counsel; Citigroup Global Markets Inc. General Counsel (fax no.: (212) 816-7912) and

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confirmed to the General Counsel, Citigroup Global Markets Inc., at 388 Greenwich Street, New York, New York, 10013, Attention: General Counsel; Goldman, Sachs & Co. at 200 West Street, New York, New York 10282-2198, Attention: Registration Department; Barclays Capital Inc., 745 Seventh Avenue, New York, New York 10019, Attention: Syndicate Registration (fax no.: (646) 834-8133), with a copy, in the case of any notice pursuant to Section 7 hereof, to the Director of Litigation, Office of the General Counsel, Barclays Capital Inc., 745 Seventh Avenue, New York, New York 10019; and to RBC Capital Markets Corporation, Three World Financial Center, 8^th Floor, 200 Vesey Street, New York, New York 10281, Attention: Joe Morea (fax no.: (212) 428-6260). Notices to the Company shall be given to it at 2100 Rexford Road, Suite 414, Charlotte, North Carolina 28211 (704) 496-2500 (fax: (704) 496-2599); Attention: President and notices to the Operating Partnership shall be given to Campus Crest Communities GP, LLC, the general partner of the Operating Partnership, c/o Campus Crest Communities, Inc., 2100 Rexford Road, Suite 414, Charlotte, North Carolina 28211 (704) 496-2500 (fax: (704) 496-2599); Attention: President.

     In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Underwriters are required to obtain, verify and record information that identifies their respective clients, including the Company, which information may include the name and address of their respective clients, as well as other information that will allow the Underwriters to properly identify their respective clients.

     (c) Governing Law. This Agreement and any claim, controversy or dispute arising under or related to this Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in such state.

     (d) Counterparts. This Agreement may be signed in counterparts (which may include counterparts delivered by any standard form of telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument.

     (e) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.

     (f) Headings. The headings herein are included for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.

29

     If the foregoing is in accordance with your understanding, please indicate your acceptance of this Agreement by signing in the space provided below.

Very truly yours, CAMPUS CREST COMMUNITIES, INC.
By:
	Name:
	Title:
CAMPUS CREST COMMUNITIES OPERATING PARTNERSHIP, LP By Campus Crest Communities GP, LLC, its general partner
By:
	Name:
	Title:

Accepted:            , 2010
RAYMOND JAMES & ASSOCIATES, INC.
By:
	Authorized Signatory
CITIGROUP GLOBAL MARKETS INC.
By:
	Authorized Signatory
GOLDMAN, SACHS & CO.
By:
	Authorized Signatory
BARCLAYS CAPITAL INC.
By:
	Authorized Signatory
RBC CAPITAL MARKETS CORPORATION
By:
	Authorized Signatory

For themselves and on behalf of the several Underwriters listed in Schedule 1 hereto.

30

Schedule 1

Underwriter	Number of Shares
Raymond James & Associates, Inc.
Citigroup Global Markets Inc.
Goldman, Sachs & Co.
Barclays Capital Inc.
RBC Capital Markets Corporation
Robert W. Baird & Co. Incorporated
Total

Annex A

Form of Opinion of Bradley Arant Boult Cummings LLP

     (a) The Registration Statement, including any Rule 462(b) Registration Statement, was declared effective under the Securities Act as of the date and time specified in such opinion; each of the Preliminary Prospectus and the Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) under the Securities Act specified in such opinion (without reference to Rule 424(b)(8)) on the date specified therein; any required filing of each Issuer Free Writing Prospectus pursuant to Rule 433 under the Securities Act has been filed with the Commission within the time period required pursuant to Rule 433(d) under the Securities Act; and no order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose or pursuant to Section 8A of the Securities Act against the Company or in connection with the offering is pending or, to the knowledge of such counsel, threatened by the Commission.

     (b) The Registration Statement, including any Rule 462(b) Registration Statement, the Preliminary Prospectus, each Issuer Free Writing Prospectus included in the Pricing Disclosure Package and the Prospectus (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Securities Act.

     (c) The Company is a corporation duly organized and validly existing under and by virtue of the laws of the State of Maryland and is in good standing with the State Department of Assessments and Taxation of Maryland (the “SDAT”).

     (d) The Operating Partnership has been duly organized and is validly existing as a limited partnership in good standing under the laws of state of Delaware.

     (e) The Operating Partnership has the partnership power and authority to own, lease, develop and operate its properties and to conduct its business as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus and to enter into and perform its obligations under the Underwriting Agreement and the Transaction Documents. Except as otherwise stated in the Registration Statement, the Pricing Disclosure Package and the Prospectus, all of the outstanding equity interests of the Operating Partnership have been duly authorized for issuance by the Operating Partnership and are validly issued.

     (f) Each of the Company and the Operating Partnership is duly qualified as a foreign corporation and a limited partnership, respectively, to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect.

     (g) To the knowledge of such counsel, each Significant Subsidiary has been duly organized and is validly existing and in good standing under the laws of its respective jurisdiction of organization, is duly qualified to do business and is in good standing in each jurisdiction in which its respective ownership or lease of property or the conduct of its respective business requires such qualification (except where the failure to so qualify or to be in good standing would not result in a Material Adverse Effect), has all corporate or entity power and authority necessary to own, lease, develop or operate its respective properties and to conduct the business in which it is engaged; except as otherwise disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, to the best of our knowledge,

A-1-1

all of the issued and outstanding capital stock of each Significant Subsidiary has been duly authorized and validly issued, is fully paid and non assessable and is owned by the Company or the Operating Partnership, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the outstanding shares of capital stock or any other equity interests of any subsidiary was issued in violation of the preemptive or similar rights of any securityholder of such subsidiary.

     (h) The Underwriting Agreement has been duly executed and delivered by the Company.

     (i) The Underwriting Agreement has been duly authorized, executed and delivered by the Operating Partnership.

     (j) The Transaction Documents have been duly executed and delivered by the Company and assuming the due authorization thereof and the execution and delivery by each of the other parties thereto, constitute valid and legally binding agreements of the Company, enforceable against the Company in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors’ rights generally or by equitable principles relating to enforceability.

     (k) The Transaction Documents have been duly authorized, executed and delivered by the Operating Partnership and assuming the execution and delivery by each of the other parties thereto, constitute valid and legally binding agreements of the Operating Partnership, enforceable against the Operating Partnership in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors’ rights generally or by equitable principles relating to enforceability.

     (l) The issuance and sale by the Operating Partnership of the OP Units in connection with the contribution of the certain ownership interests in the Initial Properties to the Operating Partnership are exempt from the registration requirements of the Securities Act and applicable state securities, real estate syndication and blue sky laws.

     (m) Each Transaction Document conforms in all material respects to the description thereof contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

     (n) All descriptions in the Registration Statement, the Pricing Disclosure Package and the Prospectus of contracts and other documents to which the Company, the Operating Partnership or any of their subsidiaries are a party are accurate in all material respects.

     (o) The execution, delivery and performance by the Company and the Operating Partnership of the Underwriting Agreement, of each of the Transaction Documents, the compliance by the Company and the Operating Partnership with the terms of the Underwriting Agreement and the Transaction Documents, the issuance and sale of the Shares being delivered on the Closing Date or the Additional Closing Date, as the case may be, and the consummation of the transactions contemplated by the Underwriting Agreement and the Transaction Documents will not (i) to the best of our knowledge, conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company, the Operating Partnership or any of their subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company, the Operating Partnership or any of their subsidiaries is a party or by which the Company, the Operating Partnership or any of their subsidiaries is bound or to which any of the property or assets of the Company, the Operating Partnership or any of their subsidiaries is subject, (ii) result in any violation of the

A-1-2

provisions of the charter or by-laws or similar organizational documents of the Company, the Operating Partnership or any of their subsidiaries or (iii) to the best of our knowledge, result in the violation of any law or statute or any judgment, order or regulation of any court or arbitrator or governmental or regulatory authority except, in the case of clauses (i) and (iii) above, for such conflict, breach, violation or default that is disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus and for which a valid waiver has been obtained or that would not, individually or in the aggregate, have a Material Adverse Effect.

     (p) No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by the Company or the Operating Partnership of the Underwriting Agreement, of each of the Transaction Documents, the compliance by the Company or the Operating Partnership with the terms of the Underwriting Agreement or the Transaction Documents, the issuance and sale of the Shares being delivered on the Closing Date or the Additional Closing Date, as the case may be, and the consummation of the transactions contemplated by the Underwriting Agreement and the Transaction Documents, except for the registration of the Shares under the Securities Act and such consents, approvals, authorizations, orders and registrations or qualifications as may be required under applicable state securities laws in connection with the purchase and distribution of the Shares by the Underwriters.

     (q) To the knowledge of such counsel, except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, there are no legal, governmental or regulatory investigations, actions, suits or proceedings pending to which the Company, the Operating Partnership or any of their subsidiaries is or may be a party or to which any property of the Company, the Operating Partnership or any of their subsidiaries is or may be the subject which, individually or in the aggregate, if determined adversely to the Company, the Operating Partnership or any of their subsidiaries, could reasonably be expected to have a Material Adverse Effect; and to the knowledge of such counsel, no such investigations, actions, suits or proceedings are threatened or contemplated by any governmental or regulatory authority or threatened by others.

     (r) The descriptions in the Registration Statement, the Pricing Disclosure Package and the Prospectus of statutes, legal, governmental and regulatory proceedings and contracts and other documents are accurate in all material respects; the statements in the Preliminary Prospectus and Prospectus under the headings “Risk Factors—Federal Income Tax Risk Factors,” “Shares Eligible for Future Sale,” “Description of Our Operating Partnership,” “Federal Income Tax Considerations,” and “ERISA Considerations” to the extent that they constitute summaries of matters of law or regulation or legal conclusions, fairly summarize the matters described therein in all material respects; and, to the knowledge of such counsel, (A) there are no current or pending legal, governmental or regulatory actions (excluding pending rulemaking), suits or proceedings that are required under the Securities Act to be described in the Registration Statement or the Prospectus and that are not so described in the Registration Statement, the Pricing Disclosure Package and the Prospectus and (B) there are no statutes, regulations or contracts and other documents that are required under the Securities Act to be filed as exhibits to the Registration Statement or described in the Registration Statement or the Prospectus and that have not been so filed as exhibits to the Registration Statement or described in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

     (s) After giving effect to the application of the proceeds from the offering and sale of the Shares as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, neither the Company nor the Operating Partnership will be required to register as an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act.

A-1-3

     (t) To such counsel’s knowledge, except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, there are no persons with registration rights or other similar rights to have any securities registered pursuant to the Registration Statement or otherwise registered by the Company under the Securities Act.

     (u) Commencing with the Company’s taxable year ending December 31, 2010, the Company will be organized in conformity with the requirements for qualification as a real estate investment trust (a “REIT”) under the Code and the Company’s proposed method of operation as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus will enable the Company to continue to meet the requirements for qualification and taxation as a REIT for its taxable years ending after December 31, 2010.

     (v) Such counsel shall also state that they have participated in conferences with representatives of the Company and the Operating Partnership and with representatives of its independent accountants and counsel at which conferences the contents of the Registration Statement, the Pricing Disclosure Package and the Prospectus and any amendment and supplement thereto and related matters were discussed and, although such counsel assume no responsibility for the accuracy, completeness or fairness of the Registration Statement, the Pricing Disclosure Package, the Prospectus and any amendment or supplement thereto (except as expressly provided above), nothing has come to the attention of such counsel to cause such counsel to believe that the Registration Statement, at the time of its effective date (including the information, if any, deemed pursuant to Rule 430A, 430B or 430C to be part of the Registration Statement at the time of effectiveness), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, that the Pricing Disclosure Package, as of the Applicable Time (which such counsel may assume to be the date of the Underwriting Agreement) contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or that the Prospectus or any amendment or supplement thereto as of its date and the Closing Date contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (other than the financial statements and other financial information contained therein, as to which such counsel need express no belief).

     In rendering such opinion, such counsel may rely as to matters of fact on certificates of responsible officers of the Company and the Operating Partnership and public officials that are furnished to the Underwriters.

     The opinion of Bradley Arant Boult Cummings LLP described above shall be rendered to the Underwriters at the request of the Company and the Operating Partnership and shall so state therein.

A-1-4

Annex A-2

Form of Opinion of Saul Ewing LLP

     (a) The Company is a corporation duly organized and validly existing under and by virtue of the laws of the State of Maryland and is in good standing with the SDAT, with corporate power to carry on its business and to own, lease, develop and operate its properties, in all material respects as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

     (b) The authorized, issued and outstanding shares of common stock in the Company are as set forth in the Prospectus under the caption “Capitalization” (except for subsequent issuances, if any, pursuant to the Underwriting Agreement or the equity incentive share plan referred to in the Prospectus); the issued and outstanding shares of common stock in the Company have been duly authorized and validly issued and are fully paid and non assessable; and none of the outstanding shares of common stock in the Company was issued in violation of (a) the charter or the bylaws of the Company or (b) any Maryland law, rule or regulation (other than any law, rule or regulation in connection with the securities laws of the State of Maryland, as to which we express no opinion).

     (c) The form of certificate used to evidence the common stock complies in all material respects with the Maryland General Corporation Law, and with any applicable requirements of the Company’s charter and bylaws.

     (d) The Company has the corporate power to execute, deliver and perform its obligations under the Underwriting Agreement and the Transaction Documents and to issue and deliver the Shares in accordance with and upon the terms and conditions set forth in the Underwriting Agreement. The execution and delivery of the Underwriting Agreement and the Transaction Documents and the performance by the Company of its obligations thereunder have been duly authorized by the Company. The Underwriting Agreement and the Transaction Documents have been duly executed and, to such counsel’s knowledge, delivered by the Company.

     (e) The sale and issuance of the Shares to the Underwriters pursuant to the Underwriting Agreement have been duly authorized by all necessary corporate action of the Company and, when issued and delivered by the Company pursuant to the Underwriting Agreement against payment of the consideration set forth therein, the Shares will be validly issued, fully paid and nonassessable and are not subject to preemptive rights to purchase or subscribe for shares of beneficial interest in the Company arising under the Maryland General Corporation Law, the Company’s charter or the Company’s bylaws in connection with the issuance of the Shares and no holder of the Shares is or will be subject to personal liability solely by reason of being such a holder.

     (f) The execution, delivery and performance by the Company of the Underwriting Agreement and the consummation by the Company of the transactions contemplated in the Underwriting Agreement and in the Registration Statement, the Pricing Disclosure Package and the Prospectus (including the issuance and sale of the Shares and the use of the proceeds from the sale of the Shares as described in the Prospectus under the caption “Use Of Proceeds”) and the compliance by the Company with its obligations under the Underwriting Agreement do not and will not, whether with or without the giving of notice or lapse of time or both, result in any violation of (a) the charter or the bylaws of the Company or (b) any Maryland law, rule or regulation (other than any law, rule or regulation in connection with the securities laws of the State of Maryland, as to which we express no opinion).

A-2-1

     (g) Except for such consents, approvals, authorizations, registrations or qualifications, if any, as may be required under the securities laws of the State of Maryland (as to which we express no opinion) in connection with the offering and sale of the Shares, no approval, authorization, consent or order of, or filing with, any Maryland governmental authority is required in connection with the authorization, execution and delivery by the Company of the Underwriting Agreement and the consummation by the Company of the transactions contemplated thereby or for the offering, issuance, sale or delivery of the Shares by the Company.

     (h) To such counsel’s knowledge, the Company is not in violation of its charter or bylaws.

     (i) The information in the Pricing Disclosure Package and the Prospectus under the captions “Risk Factors—Risks Related to Our Company and Structure,” “Description of Capital Stock,” “Policies with Respect to Certain Activities—Conflicts of Interest Policies—Interested Director and Officer Transactions” and “Certain Provisions of Maryland Law and of our Charter and Bylaws” as of the date of thereof and as of the date hereof, and in the Registration Statement under Item 34, insofar as such information relates to provisions of the Company’s charter, the Company’s bylaws or Maryland law, fairly summarizes such provisions in all material respects.

     The opinion of Saul Ewing LLP described above shall state that it may be relied upon by Sidley Austin LLP as to matters arising under Maryland law.

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Annex B

PRICING DISCLOSURE PACKAGE

B-1

Annex C

INITIAL PROPERTIES

1. The Grove at Asheville (Asheville, NC)

2. The Grove at Carrollton (Carrollton, GA)

3. The Grove at Las Cruces (Las Cruces, NM)

4. The Grove at Milledgeville (Milledgeville, GA)

5. The Grove at Abilene (Abilene, TX)

6. The Grove at Ellensburg (Ellensburg, WA)

7. The Grove at Greeley (Evans, CO)

8. The Grove at Jacksonville (Jacksonville, AL)

9. The Grove at Mobile — Phase I (Mobile, AL)

10. The Grove at Mobile — Phase II (Mobile, AL)

11. The Grove at Nacogdoches (Nacogdoches, TX)

12. The Grove at Cheney (Cheney, WA)

13. The Grove at Jonesboro (Jonesboro, AR)

14. The Grove at Lubbock (Lubbock, TX)

15. The Grove at Stephenville (Stephenville, TX)

16. The Grove at Troy (Troy, AL)

17. The Grove at Waco (Waco, TX)

18. The Grove at Wichita (Wichita, KS)

19. The Grove at Wichita Falls (Wichita Falls, TX)

20. The Grove at Murfreesboro (Murfreesboro, TN)

21. The Grove at San Marcos (San Marcos, TX)

22. The Grove at Lawrence (Lawrence, KS)

23. The Grove at Moscow (Moscow, ID)

24. The Grove at San Angelo (San Angelo, TX)

25. The Grove at Conway (Conway, AR)

26. The Grove at Huntsville (Huntsville, TX)

27. The Grove at Statesboro (Statesboro, GA)

C-1

Annex D

TRANSACTION DOCUMENTS

1. Campus Crest Communities, Inc. Equity Incentive Compensation Plan.

2. Form of Indemnification Agreement.

3. Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Ted W. Rollins.

4. Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Michael S. Hartnett.

5. Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Earl C. Howell.

6. Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Donald L. Bobbitt, Jr.

7. Employment Agreement by and between Campus Crest Communities Operating Partnership, LP and Shannon N. King.

8. Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Ted W. Rollins.

9. Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Michael S. Hartnett.

10. Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Earl C. Howell.

11. Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Donald L. Bobbitt, Jr.

12. Confidentiality and Noncompetition Agreement by and between Campus Crest Communities Operating Partnership, LP and Shannon N. King.

13. Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC, dated May 13, 2010.

14. Amendment No. 1 to Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC, dated      , 2010

15. Tax Protection Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and MXT Capital, LLC.

16. Registration Rights Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, MXT Capital, LLC and certain other parties thereto.

D-1

17. Credit Agreement for Senior Secured Revolving Credit Facility by and among Campus Crest Communities Operating Partnership, LP, Citibank, N.A. and certain other parties thereto.

18. Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Carl H. Ricker, Jr., dated May 13, 2010.

19. First Amendment to Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Carl H. Ricker, Jr., dated September 14, 2010.

20. Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Flynn Development, LLC, dated April 22, 2010.

21. Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Mansion Ridge Investment Company, LLC, dated May 6, 2010.

22. Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Highland Park, LLC, dated May 13, 2010.

23. Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Marc Rollins, dated May 1, 2010.

24. Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and P. Andrew Walker, dated May 13, 2010.

25. Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Joe C. Brumit, II, dated April 19, 2010.

26. Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and BGY, LLC, dated April 15, 2010.

27. Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Jerry V. Sternberg, dated May 13, 2010.

28. Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Marlene Breger Joyce, dated May 13, 2010.

29. Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Steve Emtman, dated May 10, 2010.

30. Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and O.A. Keller, III, dated April 29, 2010.

31. Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and NLR-Cotton Valley Investment, LLC, dated April 19, 2010.

32. Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Horatio Alger Association Endowment Fund, dated May 4, 2010.

D-1

33. Purchase and Sale by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Keith M. Maxwell, dated May 9, 2010.

34. Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Harrison-Zahn Investments, LLC, dated April 19, 2010.

35. Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP, and Matthew S. O’Reilly, dated May 6, 2010.

36. Purchase and Sale Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP and certain other parties thereto, dated March 26, 2010.

37. Contribution Agreement by and among Campus Crest Communities, Inc., Campus Crest Communities Operating Partnership, LP and Thomas A. Odai dated May 13, 2010.

38. Ground Lease by and between USA Research and Technology Corporation and Campus Crest at Mobile, LLC, dated August 8, 2006.

39. Ground Lease by and between USA Research and Technology Corporation and Campus Crest at Mobile Phase II, LLC, dated March 14, 2008.

40. Ground Lease Agreement by and between Indian Hills Trading Company, LLC and Campus Crest Development, LLC, dated March 20, 2008.

41. First Amendment to Ground Lease Agreement by and between Indian Hills Trading Company, LLC and Campus Crest Development, LLC, dated July 28, 2008.

42. Assignment of Ground Lease Agreement and Purchase Option Agreement by Campus Crest Development, LLC and Campus Crest at Moscow, LLC, dated July 28, 2008.

43. Loan Agreement between General Electric Capital Corporation and Campus Crest at Milledgeville, LLC, dated September 7, 2006.

44. Deed to Secure Debt, Security Agreement and Fixture Filing by Campus Crest at Carrollton, LLC to Wachovia Bank, National Association, dated September 18, 2006.

45. Deed of Trust, Security Agreement and Fixture Filing by Campus Crest at Las Cruces, LLC for the benefit of Wachovia Bank, National Association, dated September 22, 2006.

46. Deed of Trust, Security Agreement and Fixture Filing by Campus Crest at Asheville, LLC for the benefit of Wachovia Bank, National Association, dated March 13, 2007.

47. Loan Agreement by and among Campus Crest at Mobile, LLC, Campus Crest at Jacksonville, AL, LLC, Campus Crest at Nacogdoches, LP, Campus Crest at Abilene, LP, Campus Crest at Greeley, LLC, and Campus Crest at Ellensburg, LLC, and Silverton Bank, N.A., dated February 29, 2008.

48. Transfer, Assignment and Assumption Agreement by and among the Federal Deposit Insurance Corporation as receiver and successor-in-interest to Silverton Bank, N.A. and Campus Crest Loan Servicing, LLC, dated March 31, 2010.

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49. Construction Loan Agreement by and among Wachovia Bank, National Association, Campus Crest Group, LLC, Campus Crest at Moscow, LLC, Campus Crest at San Angelo, LP and Campus Crest at San Marcos, LP, dated November 18, 2008.

50. First Amendment to Construction Loan Agreement by and among Wachovia Bank, National Association, Campus Crest Group, LLC, Campus Crest at Moscow, LLC, Campus Crest at San Angelo, LP and Campus Crest at San Marcos, LP, dated June 2009.

51. Construction Loan Agreement by and between Campus Crest at Lawrence, LLC and Mutual of Omaha Bank, dated February 13, 2009.

52. First Amendment to Construction Loan Agreement by and between Campus Crest at Lawrence, LLC and Mutual of Omaha Bank, dated March 19, 2009.

53. Construction Loan Agreement by and between Amegy Mortgage Company, L.L.C. d/b/a Q-10 Amegy Mortgage Capital and Campus Crest at Huntsville, LP, dated June 12, 2009.

54. Secured Construction Loan Agreement by and between Centennial Bank, F/K/A First State Bank and Campus Crest at Conway, LLC, dated July 2, 2009.

55. Construction Loan Agreement by and between Campus Crest at Statesboro, LLC and The Private Bank and Trust Company, dated November 12, 2009.

56. Operating Agreement of HSRE-Campus Crest I, LLC, dated as of November 7, 2008.

57. First Amendment to the Operating Agreement of HSRE-Campus Crest I, LLC, dated as of November 12, 2009.

58. Second Amendment to the Operating Agreement of HSRE-Campus Crest I, LLC, dated March 26, 2010.

59. Third Amendment to the Operating Agreement of HSRE-Campus Crest I, LLC, dated [•].

60. Form of Aircraft Lease.

D-1

Exhibit A

FORM OF LOCK-UP AGREEMENT

                    , 20__

Raymond James & Associates, Inc.
880 Carillon Parkway
St. Petersburg, Florida 33716

Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013

Goldman, Sachs & Co.
200 West Street
New York, New York 10282

Barclays Capital Inc.
745 Seventh Avenue
New York, New York 10019

RBC Capital Markets Corporation
Three World Financial Center, 8^th Floor
200 Vesey Street
New York, New York 10281

As Representatives of the
  several Underwriters listed in Schedule 1
  to the within mentioned Underwriting Agreement

Re:      Campus Crest Communities, Inc. — Public Offering

Ladies and Gentlemen:

     The undersigned understands that you, as Representatives of the several Underwriters, propose to enter into an Underwriting Agreement (the “Underwriting Agreement”) with Campus Crest Communities, Inc., a Maryland corporation (the “Company”) and Campus Crest Communities Operating Partnership, LP, a Delaware limited partnership and the operating partnership of the Company (in such capacity, the “Operating Partnership”), providing for the public offering (the “Public Offering”) by the several Underwriters named in Schedule 1 to the Underwriting Agreement (the “Underwriters”), of common stock, par value $0.01 per share, of the Company (the “Common Stock”). Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Underwriting Agreement.

     In consideration of the Underwriters’ agreement to purchase and make the Public Offering of the common stock, and for other good and valuable consideration receipt of which is hereby acknowledged, the undersigned hereby agrees that, without the prior written consent of the Representatives, the undersigned will not, during the period ending one year after the date of the prospectus relating to the Public Offering (the “Prospectus”), directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, or lend or otherwise dispose of or transfer any Common Stock or any securities convertible into or

Ex. A-1

exchangeable or exercisable for or repayable with Common Stock, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition, or file, or cause to be filed, any registration statement under the Securities Act of 1933, as amended, with respect to any of the foregoing (collectively, the “Lock-Up Securities”) or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Lock-Up Securities, whether any such swap, agreement or transaction is to be settled by delivery of Common Stock or other securities, in cash or otherwise.

     Notwithstanding the foregoing, and subject to the conditions below, the undersigned may transfer the Lock-Up Securities without the prior written consent of the Representatives, provided that (1) the Representatives receive a signed lock-up agreement for the balance of the lock-up period from each donee or trustee, as the case may be, (2) any such transfer shall not involve a disposition for value, (3) such transfers are not required to be reported in any public report or filing with the Securities and Exchange Commission, or otherwise and (4) the undersigned does not otherwise voluntarily effect any public filing or report regarding such transfers:

     (i) as a bona fide gift or gifts; or

     (ii) to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned (for purposes of this lock-up agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin).

     Furthermore, the undersigned may sell shares of Common Stock of the Company purchased by the undersigned on the open market following the Public Offering if and only if (i) such sales are not required to be reported in any public report or filing with the Securities Exchange Commission, or otherwise, and (ii) the undersigned does not otherwise voluntarily effect any public filing or report regarding such sales.

     Notwithstanding the foregoing, if: (1) during the last 17 days of the one year period, the Company issues an earnings release or material news or a material event relating to the Company occurs; or (2) prior to the expiration of the one year restricted period, the Company announces that it will release earnings results or becomes aware that material news or a material event relating to the Company will occur during the 16-day period beginning on the last day of the one year period, the restrictions imposed by this lock-up agreement shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

     In furtherance of the foregoing, the Company, and any duly appointed transfer agent for the registration or transfer of the securities described herein, are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this lock-up agreement.

     The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this lock-up agreement. All authority herein conferred or agreed to be conferred and any obligations of the undersigned shall be binding upon the successors, assigns, heirs or personal representatives of the undersigned.

     The undersigned understands that, if the Underwriting Agreement does not become effective, or if the Underwriting Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated prior to payment for and delivery of the Common Stock to be sold thereunder, the undersigned shall be released from, all obligations under this lock-up agreement. The undersigned understands that the Underwriters are entering into the Underwriting Agreement and proceeding with the Public Offering in reliance upon this lock-up agreement.

Ex. A-2

     This lock-up agreement and any claim, controversy or dispute arising under or related to this lock-up agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof.

Very truly yours, [NAME OF STOCKHOLDER]
By:
	Name:
	Title:

Ex. A-3

Exhibit B

PERSONS AND ENTITIES SUBJECT TO LOCK-UP

Ted W. Rollins
Michael S. Hartnett
Earl C. Howell
Donald L. Bobbitt, Jr.
Shannon N. King
Richard S. Kahlbaugh
Denis McGlynn
Daniel L. Simmons
William G. Popeo
N. Anthony Coles
Brian L. Sharpe
Howard J. Weissman
MXT Capital, LLC
Madeira Group, LLC
TXG, LLC
Carl H. Ricker, Jr.

Ex. B-1

EX-3.1

Exhibit 3.1

ARTICLES OF AMENDMENT AND RESTATEMENT
OF
CAMPUS CREST COMMUNITIES, INC.

          FIRST: Campus Crest Communities, Inc., a Maryland corporation, desires to amend and restate its charter as currently in effect and as hereinafter amended.

          SECOND: The following provisions are all the provisions of the charter currently in effect and hereinafter amended:

ARTICLE I
INCORPORATOR

     The undersigned, John J. Ghingher, III, whose address is 500 East Pratt Street, Baltimore, Maryland 21202, being at least 18 years of age, does hereby form a corporation under the general laws of the State of Maryland.

ARTICLE II
NAME

     The name of the corporation (the “Corporation”) is:

Campus Crest Communities, Inc.

ARTICLE III
PURPOSE

     The purposes for which the Corporation is formed are to engage in any lawful act or activity (including, without limitation or obligation, engaging in business as a real estate investment trust under the Internal Revenue Code of 1986, as amended, or any successor statute (the “Code”)) for which corporations may be organized under the general laws of the State of Maryland as now or hereafter in force. For purposes of these Articles, “REIT” means a real estate investment trust under Sections 856 through 860 of the Code.

ARTICLE IV
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT

     The address of the principal office of the Corporation in the State of Maryland is c/o The Corporation Trust Incorporated, 300 East Lombard Street, 14th floor, Baltimore, MD 21202. The name of the resident agent of the Corporation in the State of Maryland is The Corporation Trust Incorporated, whose post address is 300 East Lombard Street, 14th floor, Baltimore, MD 21202. The resident agent is a Maryland corporation.

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ARTICLE V
PROVISIONS FOR DEFINING, LIMITING
AND REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS

     Section 5.1 Number of Directors. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. The number of directors of the Corporation is three (3), which number may be increased or decreased only by the Board of Directors pursuant to the bylaws of the Corporation (the “Bylaws”), but shall never be less than the minimum number required by the Maryland General Corporation Law (the “MGCL”). The names of the directors who shall serve until the next annual meeting of stockholders and until his or her successors are duly elected and qualify are:

Ted W. Rollins

Michael S. Hartnett

Earl C. Howell

The directors may increase the number of directors and may fill any vacancy, whether resulting from an increase in the number of directors or otherwise, on the Board of Directors in the manner provided in the Bylaws.

     The Corporation elects to be subject to Section 3-804(c) of the MGCL. Except as may be provided by the Board of Directors in setting the terms of any class or series of stock, any and all vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which such vacancy occurred and until a successor is elected and qualifies.

     Section 5.2 Extraordinary Actions. Except as specifically provided in Section 5.7 (relating to removal of directors) and in Article VIII (relating to certain amendments), notwithstanding any provision of law permitting or requiring any action to be taken or approved by the affirmative vote of the holders of shares entitled to cast a greater number of votes, any such action shall be effective and valid if declared advisable by the Board of Directors and taken or approved by the affirmative vote of holders of shares entitled to cast a majority of all the votes entitled to be cast on the matter.

     Section 5.3 Authorization by Board of Stock Issuance. The Board of Directors may authorize the issuance from time to time of shares of stock of the Corporation of any class or series, whether now or hereafter authorized, or securities or rights convertible into shares of its stock of any class or series, whether now or hereafter authorized, for such consideration as the Board of Directors may deem advisable (or without consideration in the case of a stock split or stock dividend), subject to such restrictions or limitations, if any, as may be set forth in the charter (the “Charter”) or the Bylaws.

     Section 5.4 Appraisal Rights. Holders of shares of stock shall not be entitled to exercise any rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the MGCL or any

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successor statute unless the Board of Directors, upon the affirmative vote of a majority of the Board of Directors, shall determine that such rights apply, with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which holders of such shares would otherwise be entitled to exercise such rights.

     Section 5.5 Determinations by Board. The determination as to any of the following matters, made in good faith by or pursuant to the direction of the Board of Directors consistent with the Charter, shall be final and conclusive and shall be binding upon the Corporation and every holder of shares of its stock: the amount of the net income of the Corporation for any period and the amount of assets at any time legally available for the payment of dividends, redemption of its stock or the payment of other distributions on its stock; the amount of paid-in surplus, net assets, other surplus, annual or other cash flow, funds from operations, net profit, net assets in excess of capital, undivided profits or excess of profits over losses on sales of assets; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged); any interpretation of the terms, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to dividends or distributions, qualifications or terms or conditions of redemption of any class or series of stock of the Corporation; the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Corporation or of any shares of stock of the Corporation; the number of shares of stock of any class of the Corporation; any matter relating to the acquisition, holding and disposition of any assets by the Corporation; or any other matter relating to the business and affairs of the Corporation or required or permitted by applicable law, the Charter or Bylaws or otherwise to be determined by the Board of Directors.

     Section 5.6 REIT Qualification. If the Corporation elects to qualify for federal income tax treatment as a REIT, the Board of Directors shall use its reasonable best efforts to take such actions as are necessary or appropriate to preserve the status of the Corporation as a REIT; however, if the Board of Directors determines that it is no longer in the best interests of the Corporation to continue to be qualified as a REIT, the Board of Directors may revoke or otherwise terminate the Corporation’s REIT election pursuant to Section 856(g) of the Code. The Board of Directors also may determine that compliance with any restriction or limitation on stock ownership and transfers set forth in Article VII is no longer required for REIT qualification.

     Section 5.7 Removal of Directors. Subject to the rights of holders of one or more classes or series of Preferred Stock to elect or remove one or more directors, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and then only by the affirmative vote of at least two thirds of the votes entitled to be cast generally in the election of directors. For the purpose of this paragraph, “cause” shall mean, with respect to any particular director, conviction of a felony or a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to the Corporation through bad faith or active and deliberate dishonesty.

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ARTICLE VI
STOCK

     Section 6.1 Authorized Shares. The Corporation has authority to issue One Hundred Million (100,000,000) shares of stock, consisting of 90,000,000 shares of Common Stock, $0.01 par value per share (“Common Stock”), and 10,000,000 shares of Preferred Stock, $0.01 par value per share (“Preferred Stock”). The aggregate par value of all authorized shares of stock having par value is $1,000,000. If shares of one class of stock are classified or reclassified into shares of another class of stock pursuant to Section 6.2, 6.3 or 6.4 of this Article VI, the number of authorized shares of the former class shall be automatically decreased and the number of shares of the latter class shall be automatically increased, in each case by the number of shares so classified or reclassified, so that the aggregate number of shares of stock of all classes that the Corporation has authority to issue shall not be more than the total number of shares of stock set forth in the first sentence of this paragraph. The Board of Directors, with the approval of a majority of the entire Board and without any action by the stockholders of the Corporation, may amend the Charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue.

     Section 6.2 Common Stock. Subject to the provisions of Article VII and except as may otherwise be specified in the terms of any class or series of Common Stock, each share of Common Stock shall entitle the holder thereof to one vote. The Board of Directors may reclassify any unissued shares of Common Stock from time to time in one or more classes or series of stock.

     Section 6.3 Preferred Stock. The Board of Directors may classify any unissued shares of Preferred Stock and reclassify any previously classified but unissued shares of Preferred Stock of any series from time to time, in one or more classes or series of stock.

     Section 6.4 Classified or Reclassified Shares. Prior to issuance of classified or reclassified shares of any class or series, the Board of Directors by resolution shall: (a) designate that class or series to distinguish it from all other classes and series of stock of the Corporation; (b) specify the number of shares to be included in the class or series; (c) set or change, subject to the provisions of Article VII and subject to the express terms of any class or series of stock of the Corporation outstanding at the time, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for each class or series; and (d) cause the Corporation to file articles supplementary with the State Department of Assessments and Taxation of Maryland (“SDAT”). Any of the terms of any class or series of stock set or changed pursuant to clause (c) of this Section 6.4 may be made dependent upon facts or events ascertainable outside the Charter (including determinations by the Board of Directors or other facts or events within the control of the Corporation) and may vary among holders thereof, provided that the manner in which such facts, events or variations shall operate upon the terms of such class or series of stock is clearly and expressly set forth in the articles supplementary or other Charter document.

     Section 6.5 Stockholders’ Consent in Lieu of Meeting. Any action required or permitted to be taken at any meeting of the stockholders may be taken without a meeting by consent, in writing or by electronic transmission, in any manner permitted by the MGCL and set forth in the Bylaws.

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     Section 6.6 Charter and Bylaws. The rights of all stockholders and the terms of all stock are subject to the provisions of the Charter and the Bylaws.

ARTICLE VII
RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES

     Section 7.1 Definitions. For the purpose of this Article VII, the following terms shall have the following meanings:

     Aggregate Stock Ownership Limit. The term “Aggregate Stock Ownership Limit” shall mean not more than 9.8 percent (in value or number of shares, whichever is more restrictive) of the aggregate of the outstanding shares of Capital Stock.

     Beneficial Ownership. The term “Beneficial Ownership” shall mean ownership of Capital Stock by a Person, whether the interest in the shares of Capital Stock is held directly or indirectly (including by a nominee), and shall include interests that would be treated as owned through the application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The terms “Beneficial Owner,” “Beneficially Owns” and “Beneficially Owned” shall have the correlative meanings.

     Business Day. The term “Business Day” shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York City are authorized or required by law, regulation or executive order to close.

     Capital Stock. The term “Capital Stock” shall mean all classes or series of stock of the Corporation, including, without limitation, Common Stock and Preferred Stock.

     Charitable Beneficiary. The term “Charitable Beneficiary” shall mean one or more beneficiaries of the Trust as determined pursuant to Section 7.3.6, provided that each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

     Common Stock Ownership Limit. The term “Common Stock Ownership Limit” shall mean not more than 9.8 percent (in value or in number of shares, whichever is more restrictive) of the aggregate of the outstanding shares of Common Stock of the Corporation.

     Constructive Ownership. The term “Constructive Ownership” shall mean ownership of Capital Stock by a Person, whether the interest in the shares of Capital Stock is held directly or indirectly (including by a nominee), and shall include interests that would be treated as owned through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code. The terms “Constructive Owner,” “Constructively Owns” and “Constructively Owned” shall have the correlative meanings.

     Excepted Holder. The term “Excepted Holder” shall mean a stockholder of the Corporation for whom an Excepted Holder Limit is created by these Articles of Incorporation or by the Board of Directors pursuant to Section 7.2.7.

5

     Excepted Holder Limit. The term “Excepted Holder Limit” shall mean, provided that the affected Excepted Holder agrees to comply with the requirements established by the Board of Directors pursuant to Section 7.2.7 and subject to adjustment pursuant to Section 7.2.8, the percentage limit established by the Board of Directors pursuant to Section 7.2.7.

     Initial Date. The term “Initial Date” shall mean the date immediately following the date of closing of the issuance of Common Stock pursuant to a Registration Statement on Form S-11 declared effective by the Securities and Exchange Commission.

     Market Price. The term “Market Price” on any date shall mean, with respect to any class or series of outstanding shares of Capital Stock, the Closing Price for such Capital Stock on such date. The “Closing Price” on any date shall mean the last sale price for such Capital Stock, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such Capital Stock, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if such Capital Stock is not listed or admitted to trading on the NYSE, as reported on the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such Capital Stock is listed or admitted to trading or, if such Capital Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if such Capital Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such Capital Stock selected by the Board of Directors of the Corporation or, in the event that no trading price is available for such Capital Stock, the fair market value of the Capital Stock, as determined in good faith by the Board of Directors of the Corporation.

     NYSE. The term “NYSE” shall mean the New York Stock Exchange.

     Person. The term “Person” shall mean an individual, corporation, partnership, estate, trust (including a trust qualified under Sections 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, and a group to which an Excepted Holder Limit applies.

     Prohibited Owner. The term “Prohibited Owner” shall mean, with respect to any purported Transfer, any Person who, but for the provisions of Section 7.2.1, would Beneficially Own or Constructively Own shares of Capital Stock, and if appropriate in the context, shall also mean any Person who would have been the record owner of the shares that the Prohibited Owner would have so owned.

     Restriction Termination Date. The term “Restriction Termination Date” shall mean the first day after the Initial Date on which the Corporation determines pursuant to Section 5.7 of the

6

Charter that it is no longer in the best interests of the Corporation to attempt to, or continue to, qualify as a REIT or that compliance with the restrictions and limitations on Beneficial Ownership, Constructive Ownership and Transfers of shares of Capital Stock set forth herein is no longer required in order for the Corporation to qualify as a REIT.

     Transfer. The term “Transfer” shall mean any issuance, sale, transfer, gift, assignment, devise or other disposition, as well as any other event that causes any Person to acquire Beneficial Ownership or Constructive Ownership, or any agreement to take any such actions or cause any such events, of Capital Stock or the right to vote or receive dividends on Capital Stock, including (a) the granting or exercise of any option (or any disposition of any option), (b) any disposition of any securities or rights convertible into or exchangeable for Capital Stock or any interest in Capital Stock or any exercise of any such conversion or exchange right and (c) Transfers of interests in other entities that result in changes in Beneficial or Constructive Ownership of Capital Stock; in each case, whether voluntary or involuntary, whether owned of record, Constructively Owned or Beneficially Owned and whether by operation of law or otherwise. The terms “Transferring” and “Transferred” shall have the correlative meanings.

     Trust. The term “Trust” shall mean any trust provided for in Section 7.3.1.

     Trustee. The term “Trustee” shall mean the Person unaffiliated with the Corporation and a Prohibited Owner, that is appointed by the Corporation to serve as trustee of the Trust.

     Section 7.2 Capital Stock.

          Section 7.2.1 Ownership Limitations. During the period commencing on the Initial Date and prior to the Restriction Termination Date, but subject to Section 7.4:

               (a) Basic Restrictions.

                    (i) (1) No Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own shares of Capital Stock in excess of the Aggregate Stock Ownership Limit, (2) no Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own shares of Common Stock in excess of the Common Stock Ownership Limit and (3) no Excepted Holder shall Beneficially Own or Constructively Own shares of Capital Stock in excess of the Excepted Holder Limit for such Excepted Holder.

                    (ii) No Person shall Beneficially or Constructively Own shares of Capital Stock to the extent that such Beneficial or Constructive Ownership of Capital Stock would result in the Corporation being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year), or otherwise failing to qualify as a REIT (including, but not limited to, Beneficial or Constructive Ownership that would result in the Corporation owning (actually or Constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code).

                    (iii) Any Transfer of shares of Capital Stock that, if effective, would result in the Capital Stock being Beneficially Owned by less than 100 Persons (determined under the

7

principles of Section 856(a)(5) of the Code) shall be void ab initio, and the intended transferee shall acquire no rights in such shares of Capital Stock.

               (b) Transfer in Trust. If any Transfer of shares of Capital Stock occurs which, if effective, would result in any Person Beneficially Owning or Constructively Owning shares of Capital Stock in violation of Section 7.2.1(a)(i) or (ii),

                    (i) then that number of shares of the Capital Stock the Beneficial or Constructive Ownership of which otherwise would cause such Person to violate Section 7.2.1(a)(i) or (ii) (rounded to the nearest whole share) shall be automatically transferred to a Trust for the benefit of a Charitable Beneficiary, as described in Section 7.3, effective as of the close of business on the Business Day prior to the date of such Transfer, and such Person shall acquire no rights in such shares; or

                    (ii) if the transfer to the Trust described in clause (i) of this sentence would not be effective for any reason to prevent the violation of Section 7.2.1(a)(i) or (ii), then the Transfer of that number of shares of Capital Stock that otherwise would cause any Person to violate Section 7.2.1(a)(i) or (ii) shall be void ab initio, and the intended transferee shall acquire no rights in such shares of Capital Stock.

          Section 7.2.2 Remedies for Breach. If the Board of Directors of the Corporation or any duly authorized committee thereof shall at any time determine in good faith that a Transfer or other event has taken place that results in a violation of Section 7.2.1 or that a Person intends to acquire or has attempted to acquire Beneficial or Constructive Ownership of any shares of Capital Stock in violation of Section 7.2.1 (whether or not such violation is intended), the Board of Directors or a committee thereof shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, without limitation, causing the Corporation to redeem shares, refusing to give effect to such Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer or other event; provided, however, that any Transfer or attempted Transfer or other event in violation of Section 7.2.1 shall automatically result in the transfer to the Trust described above, and, where applicable, such Transfer (or other event) shall be void ab initio as provided above irrespective of any action (or non-action) by the Board of Directors or a committee thereof.

          Section 7.2.3 Notice of Restricted Transfer. Any Person who acquires or attempts or intends to acquire Beneficial Ownership or Constructive Ownership of shares of Capital Stock that will or may violate Section 7.2.1(a) or any Person who would have owned shares of Capital Stock that resulted in a transfer to the Trust pursuant to the provisions of Section 7.2.1(b) shall immediately give written notice to the Corporation of such event or, in the case of such a proposed or attempted transaction, give at least 15 days prior written notice, and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer on the Corporation’s status as a REIT.

          Section 7.2.4 Owners Required To Provide Information. From the Initial Date and prior to the Restriction Termination Date:

8

               (a) every owner of five percent or more (or such lower percentage as required by the Code or the Treasury Regulations promulgated thereunder) of the outstanding shares of Capital Stock, within 30 days after the end of each taxable year, shall give written notice to the Corporation stating the name and address of such owner, the number of shares of Capital Stock and other shares of the Capital Stock Beneficially Owned and a description of the manner in which such shares are held. Each such owner shall provide to the Corporation such additional information as the Corporation may request in order to determine the effect, if any, of such Beneficial Ownership on the Corporation’s status as a REIT and to ensure compliance with the Aggregate Stock Ownership Limit and the Common Stock Ownership Limit; and

               (b) each Person who is a Beneficial or Constructive Owner of Capital Stock and each Person (including the stockholder of record) who is holding Capital Stock for a Beneficial or Constructive Owner shall provide to the Corporation such information as the Corporation may request, in good faith, in order to determine the Corporation’s status as a REIT and to comply with requirements of any taxing authority or governmental authority or to determine such compliance.

          Section 7.2.5 Remedies Not Limited. Subject to Section 5.7 of the Charter, nothing contained in this Section 7.2 shall limit the authority of the Board of Directors of the Corporation to take such other action as it deems necessary or advisable to protect the Corporation and the interests of its stockholders in preserving the Corporation’s status as a REIT.

          Section 7.2.6 Ambiguity. In the case of an ambiguity in the application of any of the provisions of this Section 7.2, Section 7.3, or any definition contained in Section 7.1, the Board of Directors of the Corporation shall have the power to determine the application of the provisions of this Section 7.2 or Section 7.3 or any such definition with respect to any situation based on the facts known to it. In the event Section 7.2 or 7.3 requires an action by the Board of Directors and the Charter fails to provide specific guidance with respect to such action, the Board of Directors shall have the power to determine the action to be taken so long as such action is not contrary to the provisions of Sections 7.1, 7.2 or 7.3. Absent a decision to the contrary by the Board of Directors (which the Board may make in its sole and absolute discretion), if a Person would have (but for the remedies set forth in Section 7.2.2) acquired Beneficial or Constructive Ownership of Stock in violation of Section 7.2.1, such remedies (as applicable) shall apply first to the shares of Stock which, but for such remedies, would have been Beneficially Owned or Constructively Owned (but not actually owned) by such Person, pro rata among the Persons who actually own such shares of Stock based upon the relative number of the shares of Stock held by each such Person.

          Section 7.2.7 Exceptions.

               (a) Subject to Section 7.2.1(a)(ii), the Board of Directors of the Corporation shall exempt (prospectively or retroactively) a Person from the Aggregate Stock Ownership Limit and the Common Stock Ownership Limit, as the case may be, and may establish or increase an Excepted Holder Limit for such Person if:

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                    (i) the Board of Directors determines, based on such Person’s representations and undertakings, that such exemption will not cause any individual’s Beneficial or Constructive Ownership of such shares of Capital Stock to violate Section 7.2.1(a)(ii);

                    (ii) the Board of Directors determines that such Person does not and will not own, actually or Constructively, an interest in a tenant of the Corporation (or a tenant of any entity owned or controlled by the Corporation) that would cause the Corporation to own, actually or Constructively, more than a 9.8% interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant and the Board of Directors obtains such representations and undertakings from such Person as are reasonably necessary to ascertain this fact (for this purpose, a tenant from whom the Corporation (or an entity owned or controlled by the Corporation) derives (and is expected to continue to derive) a sufficiently small amount of revenue such that, in the opinion of the Board of Directors of the Corporation, rent from such tenant would not adversely affect the Corporation’s ability to qualify as a REIT shall not be treated as a tenant of the Corporation); and

                    (iii) such Person agrees that any violation or attempted violation of such representations or undertakings (or other action which is contrary to the restrictions contained in Sections 7.2.1 through 7.2.6) will result in such shares of Capital Stock being automatically transferred to a Trust in accordance with Sections 7.2.1(b) and 7.3.

               (b) Prior to granting any exemption pursuant to Section 7.2.7(a), the Board of Directors of the Corporation may require the applicant to submit such information as the Board of Directors may reasonably need to make the determinations described in (i) and (ii) above, and additionally may require an opinion of counsel or a ruling from the Internal Revenue Service, in either case in form and substance satisfactory to the Board of Directors in its sole discretion, as it may deem necessary or advisable in order to determine or ensure the Corporation’s status as a REIT. Notwithstanding the receipt of any ruling or opinion, the Board of Directors may impose such conditions or restrictions as it deems appropriate in connection with granting such exemption.

               (c) Subject to Section 7.2.1(a)(ii), an underwriter which participates in a public offering or a private placement of Capital Stock (or securities convertible into or exchangeable for Capital Stock) may Beneficially Own or Constructively Own shares of Capital Stock (or securities convertible into or exchangeable for Capital Stock) in excess of the Aggregate Stock Ownership Limit, the Common Stock Ownership Limit, or both such limits, but only to the extent necessary to facilitate such public offering or private placement.

               (d) The Board of Directors may only reduce the Excepted Holder Limit for an Excepted Holder: (1) with the written consent of such Excepted Holder at any time, or (2) pursuant to the terms and conditions of the agreements and undertakings entered into with such Excepted Holder in connection with the establishment of the Excepted Holder Limit for that Excepted Holder. No Excepted Holder Limit shall be reduced to a percentage that is less than the Common Stock Ownership Limit.

          Section 7.2.8 Increase or Decrease in Aggregate Stock Ownership and Common Stock Ownership Limits. Subject to Section 7.2.1(a)(ii), in connection with an exemption under Section 7.2.7(a) or at any other time, the Board of Directors may from time to time increase or decrease

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the Common Stock Ownership Limit and the Aggregate Stock Ownership Limit; provided, however, that any decreased Common Stock Ownership Limit and/or Aggregate Stock Ownership Limit will not be effective for any Person whose percentage ownership in Stock is in excess of such decreased Common Stock Ownership Limit and/or Aggregate Stock Ownership Limit until such time as such Person’s percentage of Stock equals or falls below the decreased Common Stock Ownership Limit and/or Aggregate Stock Ownership Limit, but any further acquisition of Stock in excess of such percentage ownership of Stock will be in violation of the Common Stock Ownership Limit and/or Aggregate Stock Ownership Limit and, provided further, that any increased or decreased Common Stock Ownership Limit and/or Aggregate Stock Ownership Limit would not allow five or fewer Persons to Beneficially Own more than 49.9% in value of the outstanding Stock.

          Section 7.2.9 Legend. Each certificate for shares of Capital Stock shall bear substantially the following legend:

     The shares represented by this certificate are subject to restrictions on Beneficial and Constructive Ownership and Transfer for the purpose, among others, of the Corporation’s maintenance of its status as a Real Estate Investment Trust under the Internal Revenue Code of 1986, as amended (the “Code”). Subject to certain further restrictions and except as expressly provided in the Corporation’s Charter, (i) no Person may Beneficially or Constructively Own shares of the Corporation’s Common Stock in excess of 9.8 percent (in value or number of shares) of the outstanding shares of Common Stock of the Corporation unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable); (ii) no Person may Beneficially or Constructively Own shares of Capital Stock of the Corporation in excess of 9.8 percent of the value of the total outstanding shares of Capital Stock of the Corporation, unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable); (iii) no Person may Beneficially or Constructively Own Capital Stock that would result in the Corporation being “closely held” under Section 856(h) of the Code or otherwise cause the Corporation to fail to qualify as a REIT; and (iv) no Person may Transfer shares of Capital Stock if such Transfer would result in the Capital Stock of the Corporation being owned by fewer than 100 Persons. Any Person who Beneficially or Constructively Owns or attempts to Beneficially or Constructively Own shares of Capital Stock which causes or will cause a Person to Beneficially or Constructively Own shares of Capital Stock in excess or in violation of the above limitations must immediately notify the Corporation. If any of the restrictions on transfer or ownership are violated, the shares of Capital Stock represented hereby may be automatically transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries or may be void ab initio. In addition, the Corporation may redeem shares upon the terms and conditions specified by the Board of Directors in its sole discretion if the Board of Directors determines that ownership or a Transfer or other event may violate the restrictions described above. All capitalized terms in this legend have the meanings defined in the Charter of the Corporation, as the same may be amended from time to time, a copy of which, including the restrictions on transfer and ownership, will be furnished to each holder of Capital Stock of the Corporation on request and

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without charge. Requests for such a copy may be directed to the Secretary of the Corporation at its Principal Office.

          Instead of the foregoing legend, the certificate may state that the Corporation will furnish a full statement about certain restrictions on transferability to a stockholder on request and without charge.

     Section 7.3 Transfer of Capital Stock in Trust.

          Section 7.3.1 Ownership in Trust. Upon any purported Transfer or other event described in Section 7.2.1(b) that would result in a transfer of shares of Capital Stock to a Trust, such shares of Capital Stock shall be deemed to have been transferred to the Trustee as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the purported Transfer or other event that results in the transfer to the Trust pursuant to Section 7.2.1(b). The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with the Corporation and any Prohibited Owner. Each Charitable Beneficiary shall be designated by the Corporation as provided in Section 7.3.6.

          Section 7.3.2 Status of Shares Held by the Trustee. Shares of Capital Stock held by the Trustee shall be issued and outstanding shares of Capital Stock of the Corporation. The Prohibited Owner shall have no rights in the shares held by the Trustee. The Prohibited Owner shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends or other distributions and shall not possess any rights to vote or other rights attributable to the shares held in the Trust.

          Section 7.3.3 Dividend and Voting Rights. The Trustee shall have all voting rights and rights to dividends or other distributions with respect to shares of Capital Stock held in the Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary. Any dividend or other distribution paid prior to the discovery by the Corporation that the shares of Capital Stock have been transferred to the Trustee shall be paid by the recipient of such dividend or distribution to the Trustee upon demand and any dividend or other distribution authorized but unpaid shall be paid when due to the Trustee. Any dividend or distribution so paid to the Trustee shall be held in trust for the Charitable Beneficiary. The Prohibited Owner shall have no voting rights with respect to shares held in the Trust and, subject to Maryland law, effective as of the date that the shares of Capital Stock have been transferred to the Trustee, the Trustee shall have the authority (at the Trustee’s sole discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the Corporation that the shares of Capital Stock have been transferred to the Trustee and (ii) to recast such vote in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary; provided, however, that if the Corporation has already taken irreversible corporate action, then the Trustee shall not have the authority to rescind and recast such vote. Notwithstanding the provisions of this Article VII, until the Corporation has received notification that shares of Capital Stock have been transferred into a Trust, the Corporation shall be entitled to rely on its share transfer and other stockholder records for purposes of preparing lists of stockholders entitled to vote at meetings, determining the validity and authority of proxies and otherwise conducting votes of stockholders.

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          Section 7.3.4 Sale of Shares by Trustee. Within 20 days of receiving notice from the Corporation that shares of Capital Stock have been transferred to the Trust, the Trustee of the Trust shall sell the shares held in the Trust to a person, designated by the Trustee, whose ownership of the shares will not violate the ownership limitations set forth in Section 7.2.1(a). Upon such sale, the interest of the Charitable Beneficiary in the shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and to the Charitable Beneficiary as provided in this Section 7.3.4. The Prohibited Owner shall receive the lesser of (1) the price paid by the Prohibited Owner for the shares or, if the event which resulted in the transfer to in the Trust did not involve a purchase of such shares at Market Price, the Market Price of the shares on the trading day immediately preceding the day of the event which resulted in the transfer of such shares to the trust and (2) the price per share received by the Trustee (net of any commissions and other expenses of sale) from the sale or other disposition of the shares held in the Trust. The Trustee may reduce the amount payable to the Prohibited Owner by the amount of dividends and distributions which have been paid to the Prohibited Owner and are owed by the Prohibited Owner to the Trustee pursuant to Section 7.3.3 of this Article VII. Any net sales proceeds in excess of the amount payable to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary. If, prior to the discovery by the Corporation that shares of Capital Stock have been transferred to the Trustee, such shares are sold by a Prohibited Owner, then (i) such shares shall be deemed to have been sold on behalf of the Trust and (ii) to the extent that the Prohibited Owner received an amount for such shares that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to this Section 7.3.4, such excess shall be paid to the Trustee upon demand.

          Section 7.3.5 Purchase Right in Stock Transferred to the Trustee. Shares of Capital Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, if the event which resulted in the transfer to the Trust did not involve a purchase of such shares at Market Price, the Market Price on the trading day immediately preceding the day of the event which resulted in the transfer of such shares to the trust) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation may reduce the amount payable to the Prohibited Owner by the amount of dividends and distributions which has been paid to the Prohibited Owner and are owed by the Prohibited Owner to the Trustee pursuant to Section 7.3.3 of this Article VII. The Corporation may pay the amount of such reduction to the Trustee for the benefit of the Charitable Beneficiary. The Corporation shall have the right to accept such offer until the Trustee has sold the shares held in the Trust pursuant to Section 7.3.4. Upon such a sale to the Corporation, the interest of the Charitable Beneficiary in the shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner.

          Section 7.3.6 Designation of Charitable Beneficiaries. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust such that (i) the shares of Capital Stock held in the Trust would not violate the restrictions set forth in Section 7.2.1(a) in the hands of such Charitable Beneficiary and (ii) each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

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     Section 7.4 NYSE Transactions. Nothing in this Article VII shall preclude the settlement of any transaction entered into through the facilities of the NYSE or any other national securities exchange or automated inter-dealer quotation system. The fact that the settlement of any transaction occurs shall not negate the effect of any other provision of this Article VII and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Article VII.

     Section 7.5 Enforcement. The Corporation is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Article VII.

     Section 7.6 Non-Waiver. No delay or failure on the part of the Corporation or the Board of Directors in exercising any right hereunder shall operate as a waiver of any right of the Corporation or the Board of Directors, as the case maybe, except to the extent specifically waived in writing.

ARTICLE VIII
AMENDMENTS

     The Corporation reserves the right from time to time to make any amendment to its Charter, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in the Charter, of any shares of outstanding stock. All rights and powers conferred by the Charter on stockholders, directors and officers are granted subject to this reservation. Except for amendments to Section 5.7 of Article V, Article VII or the next sentence of the Charter and except for those amendments permitted to be made without stockholder approval under Maryland law or by specific provision in the Charter, any amendment to the Charter shall be valid only if declared advisable by the Board of Directors and approved by the affirmative vote of a majority of all the votes entitled to be cast on the matter. However, any amendment to Section 5.7 of Article V, Article VII or to this sentence of the Charter shall be valid only if declared advisable by the Board of Directors and approved by the affirmative vote of at least two thirds of all the votes entitled to be cast on the matter.

ARTICLE IX
LIMITATION OF LIABILITY

     To the maximum extent that Maryland law in effect from time to time permits limitation of the liability of directors and officers of a corporation, no present or former director or officer of the Corporation shall be liable to the Corporation or its stockholders for money damages. This limitation of liability shall apply to determinations and actions of a director or of the Board of Directors, whether managerial or non-managerial, and whether any actual or potential acquisition of control or other transaction of the Corporation is solicited or unsolicited. Neither the amendment nor repeal of this Article IX, nor the adoption or amendment of any other provision of the Charter or Bylaws inconsistent with this Article IX, shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

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          THIRD: The amendment and restatement of the charter of the Corporation as hereinabove set forth has been duly advised by the Board of Directors and approved by the sole stockholder of the Corporation as required by law.

          FOURTH: The current address of the principal office of the Corporation is as set forth in Article IV of the foregoing amendment and restatement of the charter.

          FIFTH: The name and address of the Corporation’s current resident agent are as set forth in Article IV of the foregoing amendment and restatement of the charter.

          SIXTH: The number of directors of the Corporation and the names of those currently in office are as set forth in Section 5.1 of the foregoing amendment and restatement of the charter.

          SEVENTH: The foregoing amendment and restatement of the charter does not increase the authorized stock of the Corporation.

          EIGHTH: The undersigned Chief Executive Officer acknowledges the foregoing amendment and restatement of the charter to be the corporate act of the Corporation and as to all matters and facts required to be verified under oath, the undersigned Chief Executive Officer acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties of perjury.

[Signature page follows]

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     IN WITNESS WHEREOF, Campus Crest Communities, Inc. has caused the foregoing amendment and restatement of the charter to be signed in its name and on its behalf by its President and attested to by its Secretary on this 15^th day of September, 2010.

CAMPUS CREST COMMUNITIES, INC.
By:	/s/ Ted W. Rollins
	Ted W. Rollins
	Its President
ATTEST
By:	/s/ Donald L. Bobbitt, Jr.
	Donald L. Bobbitt, Jr.
	Its Assistant Secretary

16

EX-3.2

Exhibit 3.2

Bylaws

of

Campus Crest Communities, Inc.

A Maryland corporation

TABLE OF CONTENTS

ARTICLE I.

OFFICES

Section 1.1	PRINCIPAL OFFICE	1
Section 1.2	ADDITIONAL OFFICES	1

ARTICLE II.

MEETINGS OF STOCKHOLDERS

Section 2.1	PLACE	1
Section 2.2	ANNUAL MEETING	1
Section 2.3	SPECIAL MEETINGS	1
(a)	General	1
(b)	Stockholder-Requested Special Meetings	1
Section 2.4	NOTICE	4
Section 2.5	ORGANIZATION AND CONDUCT	4
Section 2.6	QUORUM	5
Section 2.7	VOTING	5
Section 2.8	PROXIES	6
Section 2.9	VOTING OF STOCK BY CERTAIN HOLDERS	6
Section 2.10	INSPECTORS	6
Section 2.11	ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER STOCKHOLDER PROPOSALS	7
Section 2.12	SUBMISSION OF QUESTIONNAIRE, REPRESENTATION AND AGREEMENT	11
Section 2.13	CONTROL SHARE ACQUISITION ACT	11
Section 2.14	RESERVED	11
Section 2.15	TELEPHONE MEETINGS	11
Section 2.16	CONDUCT OF MEETINGS	12
Section 2.17	RATIFICATION	12

ARTICLE III.

DIRECTORS

Section 3.1	GENERAL POWERS	12
Section 3.2	NUMBER, TENURE AND QUALIFICATIONS	12

i

Section 3.3	ANNUAL AND REGULAR MEETINGS	12
Section 3.4	SPECIAL MEETINGS	12
Section 3.5	NOTICE	13
Section 3.6	QUORUM	13
Section 3.7	VOTING	13
Section 3.8	ORGANIZATION	13
Section 3.9	TELEPHONE MEETINGS	14
Section 3.10	CONSENT BY DIRECTORS WITHOUT A MEETING	14
Section 3.11	VACANCIES	14
Section 3.12	COMPENSATION	14
Section 3.13	RESIGNATION AND REMOVAL OF DIRECTORS	14
Section 3.14	RELIANCE	14
Section 3.15	CERTAIN RIGHTS OF DIRECTORS	15
Section 3.16	RATIFICATION	15
Section 3.17	EMERGENCY PROVISIONS	15

ARTICLE IV.

COMMITTEES

Section 4.1	NUMBER, TENURE AND QUALIFICATIONS	15
Section 4.2	POWERS	16
Section 4.3	MEETINGS	16
Section 4.4	TELEPHONE MEETINGS	16
Section 4.5	CONSENT BY COMMITTEES WITHOUT A MEETING	16
Section 4.6	VACANCIES	16

ARTICLE V.

OFFICERS

Section 5.1	GENERAL PROVISIONS	16
Section 5.2	REMOVAL AND RESIGNATION	17
Section 5.3	VACANCIES	17
Section 5.4	CHIEF EXECUTIVE OFFICER	17
Section 5.5	CHIEF OPERATING OFFICER	17
Section 5.6	CHIEF FINANCIAL OFFICER	17
Section 5.7	CHIEF INVESTMENT OFFICER	17
Section 5.8	CHAIRMAN OF THE BOARD	17

ii

Section 5.9	PRESIDENT	17
Section 5.10	VICE PRESIDENTS	18
Section 5.11	SECRETARY	18
Section 5.12	TREASURER	18
Section 5.13	ASSISTANT SECRETARIES AND ASSISTANT TREASURERS	18
Section 5.14	COMPENSATION	19

ARTICLE VI.

CONTRACTS, LOANS, CHECKS AND DEPOSITS

Section 6.1	CONTRACTS	19
Section 6.2	CHECKS AND DRAFTS	19
Section 6.3	DEPOSITS	19

ARTICLE VII.

STOCK

Section 7.1	CERTIFICATES	19
Section 7.2	TRANSFERS	19
Section 7.3	REPLACEMENT CERTIFICATE	20
Section 7.4	FIXING OF RECORD DATE	20
Section 7.5	STOCK LEDGER	20
Section 7.6	FRACTIONAL STOCK; ISSUANCE OF UNITS	21

ARTICLE VIII.

ACCOUNTING YEAR

ARTICLE IX.

DISTRIBUTIONS

Section 9.1	AUTHORIZATION	21
Section 9.2	CONTINGENCIES	21

ARTICLE X.

SEAL

Section 10.1	SEAL	21
Section 10.2	AFFIXING SEAL	21

ARTICLE XI.

INDEMNIFICATION AND ADVANCE OF EXPENSES 21

ARTICLE XII.

WAIVER OF NOTICE 22

iii

ARTICLE XIII.

AMENDMENT OF BYLAWS 22

iv

BYLAWS
OF
CAMPUS CREST COMMUNITIES, INC.

ARTICLE I.
OFFICES

     Section 1.1 PRINCIPAL OFFICE. The principal office of the Corporation in the State of Maryland shall be located at such place as the Board of Directors may designate.

     Section 1.2 ADDITIONAL OFFICES. The Corporation may have additional offices, including a principal executive office, at such places as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II.
MEETINGS OF STOCKHOLDERS

     Section 2.1 PLACE. All meetings of stockholders shall be held at the principal executive office of the Corporation or at such other place as shall be set by the Board of Directors and stated in the notice of the meeting.

     Section 2.2 ANNUAL MEETING. An annual meeting of the stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on the date and at the time set by the Board of Directors.

     Section 2.3 SPECIAL MEETINGS.

          (a) General. A chairman of the board (whether the executive chairman or a co-chairman of the board), the president, chief executive officer or Board of Directors may call a special meeting of the stockholders. Subject to subsection (b) of this Section 2.3, a special meeting of stockholders shall also be called by the secretary of the Corporation to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast on such matter at such meeting.

          (b) Stockholder-Requested Special Meetings.

               (1) Any stockholder of record seeking to have stockholders request a special meeting shall, by sending written notice to the secretary (the “Record Date Request Notice”) by registered mail, return receipt requested, request the Board of Directors to fix a record date to determine the stockholders entitled to request a special meeting (the “Request Record Date”). The Record Date Request Notice shall set forth the purpose of the meeting and the matters proposed to be acted on at it, shall be signed by one or more stockholders of record as of the date of signature (or their agents duly authorized in a writing accompanying the Record Date Request Notice), shall bear the date of signature of each such stockholder (or such agent) and shall set forth all information relating to each such stockholder and each matter proposed to be acted on at the meeting that would be required to be disclosed in connection with the

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solicitation of proxies for the election of directors in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such a solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Upon receiving the Record Date Request Notice, the Board of Directors may fix a Request Record Date. The Request Record Date shall not precede and shall not be more than ten days after the close of business on the date on which the resolution fixing the Request Record Date is adopted by the Board of Directors. If the Board of Directors, within ten days after the date on which a valid Record Date Request Notice is received, fails to adopt a resolution fixing the Request Record Date, the Request Record Date shall be the close of business on the tenth day after the first date on which the Record Date Request Notice is received by the secretary.

               (2) In order for any stockholder to request a special meeting to act on any matter that may properly be considered at a meeting of stockholders, one or more written requests for a special meeting (collectively, the “Special Meeting Request”) signed by stockholders of record (or their agents duly authorized in a writing accompanying the request) as of the Request Record Date entitled to cast not less than a majority of all of the votes entitled to be cast on such matter at such meeting (the “Special Meeting Percentage”) shall be delivered to the secretary. In addition, the Special Meeting Request shall (a) set forth the purpose of the meeting and the matters proposed to be acted on at it (which shall be limited to those lawful matters set forth in the Record Date Request Notice received by the secretary), (b) bear the date of signature of each such stockholder (or such agent) signing the Special Meeting Request, (c) set forth (i) the name and address, as they appear in the Corporation’s books, of each stockholder signing such request (or on whose behalf the Special Meeting Request is signed), (ii) the class, series and number of all shares of stock of the Corporation which are owned by each such stockholder (beneficially or of record) and (iii) the nominee holder for, and number of, shares of stock of the Corporation owned by such stockholder beneficially but not of record, (d) be sent to the secretary by registered mail, return receipt requested, and (e) be received by the secretary within 60 days after the Request Record Date. Any requesting stockholder (or agent duly authorized in a writing accompanying the revocation or the Special Meeting Request) may revoke his, her or its request for a special meeting at any time by written revocation delivered to the secretary.

               (3) The secretary shall inform the requesting stockholders of the reasonably estimated cost of preparing and delivering the notice of the meeting (including the Corporation’s proxy materials). The secretary shall not be required to call a special meeting upon stockholder request and such meeting shall not be held unless, in addition to the documents required by paragraph (2) of this Section 2.3(b), the secretary receives payment of such reasonably estimated cost prior to the preparation and mailing or delivery of such notice of the meeting.

               (4) Except as provided in the next sentence, any special meeting shall be held at such place, date and time as may be designated by a chairman of the board, the chief executive officer, president or Board of Directors, whoever has called the meeting. In the case of any special meeting called by the secretary upon the request of stockholders (a “Stockholder-Requested Meeting”), such meeting shall be held at such place, date and time as may be designated by the Board of Directors; provided, however, that the date of any Stockholder-

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Requested Meeting shall be not more than 90 days after the record date for such meeting (the “Meeting Record Date”); and provided further that if the Board of Directors fails to designate, within ten days after the date that a valid Special Meeting Request is actually received by the secretary (the “Delivery Date”), a date and time for a Stockholder-Requested Meeting, then such meeting shall be held at 2:00 p.m. local time on the 90^th day after the Meeting Record Date or, if such 90^th day is not a Business Day (as defined below), on the first preceding Business Day; and provided further that in the event that the Board of Directors fails to designate a place for a Stockholder-Requested Meeting within ten days after the Delivery Date, then such meeting shall be held at the principal executive office of the Corporation. In fixing a date for any special meeting, a chairman of the board, the chief executive officer, president or Board of Directors may consider such factors as he, she or it deems relevant including, without limitation, the nature of the matters to be considered, the facts and circumstances surrounding any request for the meeting and any plan of the Board of Directors to call an annual meeting or a special meeting. In the case of any Stockholder-Requested Meeting, if the Board of Directors fails to fix a Meeting Record Date that is a date within 30 days after the Delivery Date, then the close of business on the 30^th day after the Delivery Date shall be the Meeting Record Date. The Board of Directors may revoke the notice for any Stockholder-Requested Meeting in the event that the requesting stockholders fail to comply with the provisions of paragraph (3) of this Section 2.3(b).

               (5) If written revocations of the Special Meeting Request have been delivered to the secretary and the result is that stockholders of record (or their agents duly authorized in writing), as of the Request Record Date, entitled to cast less than the Special Meeting Percentage have delivered, and not revoked, requests for a special meeting to the secretary: (i) if the notice of meeting has not already been delivered, the secretary shall refrain from delivering the notice of the meeting and send to all requesting stockholders who have not revoked such requests written notice of any revocation of a request for a special meeting on the matter, or (ii) if the notice of meeting has been delivered and if the secretary first sends to all requesting stockholders who have not revoked requests for a special meeting on the matter written notice of any revocation of a request for the special meeting and written notice of the Corporation’s intention to revoke the notice of the meeting or for the chairman of the meeting to adjourn the meeting without action on the matter, (A) the secretary may revoke the notice of the meeting at any time before ten days before the commencement of the meeting or (B) the chairman of the meeting may call the meeting to order and adjourn the meeting without acting on the matter. Any request for a special meeting received after a revocation by the secretary of a notice of a meeting shall be considered a request for a new special meeting.

               (6) A chairman of the board, the chief executive officer, president or Board of Directors may appoint regionally or nationally recognized independent inspectors of elections to act as the agent of the Corporation for the purpose of promptly performing a ministerial review of the validity of any purported Special Meeting Request received by the secretary. For the purpose of permitting the inspectors to perform such review, no such purported request shall be deemed to have been delivered to the secretary until the earlier of (i) five Business Days after receipt by the secretary of such purported request and (ii) such date as the independent inspectors certify to the Corporation that the valid requests received by the secretary represent, as of the Request Record Date, stockholders of record entitled to cast not less than the Special Meeting Percentage. Nothing contained in this paragraph (6) shall in any way be construed to suggest or imply that the Corporation or any stockholder shall not be entitled to

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contest the validity of any request, whether during or after such five Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).

               (7) For purposes of these Bylaws, “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of Maryland are authorized or obligated by law or executive order to close.

     Section 2.4 NOTICE. Not less than ten nor more than 90 days before each meeting of stockholders, the secretary shall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting notice in writing or by electronic transmission stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, by mail, by presenting it to such stockholder personally, by leaving it at the stockholder’s residence or usual place of business or by any other means permitted by Maryland law. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder’s address as it appears on the records of the Corporation, with postage thereon prepaid. If transmitted electronically, such notice shall be deemed to be given when transmitted to the stockholder by an electronic transmission to any address or number of the stockholder at which the stockholder receives electronic transmissions. The corporation may give a single notice to all stockholders who share an address, which single notice shall be effective as to any stockholder at such address, unless a stockholder objects to receiving such single notice or revokes a consent prior to receiving such single notice. Failure to give notice of any meeting to one or more stockholders, or any irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this Article II, or the validity of any proceedings at any such meeting.

     Subject to Section 2.11(a), any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice. The Corporation may postpone or cancel a meeting of stockholders by making a “public announcement” (as defined in Section 2.11(c)(3)) of such postponement or cancellation prior to the meeting. Notice of the date, time and place to which the meeting is postponed shall be given not less than ten days prior to such date and otherwise in the manner set forth in this section.

     Section 2.5 ORGANIZATION AND CONDUCT. Every meeting of stockholders shall be conducted by an individual appointed by the Board of Directors to be chairman of the meeting or, in the absence of such appointment, by a chairman of the board or, in the case of a vacancy in the office or absence of a chairman of the board, by one of the following officers present at the meeting: the vice chairman of the board, if there is one, the president, the vice presidents in their order of rank and seniority, or, in the absence of such officers, a chairman chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy. The secretary, or, in the secretary’s absence, an assistant secretary, or in the absence of both the secretary and assistant secretaries, a person appointed by the Board of Directors or, in the absence of such appointment, a person appointed by the chairman of the meeting shall act as secretary. In the event that the secretary presides at a meeting of the

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stockholders, an assistant secretary, or in the absence of assistant secretaries, an individual appointed by the Board of Directors or the chairman of the meeting, shall record the minutes of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be determined by the chairman of the meeting. The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of the chairman and without any action by the stockholders, are appropriate for the proper conduct of the meeting, including, without limitation, (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to stockholders of record of the Corporation, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (c) limiting participation at the meeting on any matter to stockholders of record of the Corporation entitled to vote on such matter, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (d) limiting the time allotted to questions or comments by participants; (e) determining when and for how long the polls should be opened and when the polls should be closed; (f) maintaining order and security at the meeting; (g) removing any stockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairman of the meeting; (h) concluding a meeting or recessing or adjourning the meeting to a later date and time and at a place announced at the meeting; and (i) complying with any state and local laws and regulations concerning safety and security. Unless otherwise determined by the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

     Section 2.6 QUORUM. At any meeting of stockholders, the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting on any matter shall constitute a quorum; but this section shall not affect any requirement under any statute or the charter of the Corporation for the vote necessary for the adoption of any measure. If such quorum is not established at any meeting of the stockholders, the chairman of the meeting may adjourn the meeting sine die or from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.

     The stockholders present either in person or by proxy, at a meeting which has been duly called and at which a quorum has been established, may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough stockholders to leave fewer than required to establish a quorum.

     Section 2.7 VOTING. A plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to elect a director. Each share may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted. A majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by statute or by the charter of the Corporation. Unless otherwise provided by statute or by the charter, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders. Voting on any question or in any election may be viva voce unless the chairman of the meeting shall order that voting be by ballot or otherwise.

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     Section 2.8 PROXIES. A stockholder may cast the votes entitled to be cast by the holder of the shares of stock owned of record by the stockholder in person or by proxy executed by the stockholder or by the stockholder’s duly authorized agent in any manner permitted by law. Such proxy or evidence of authorization of such proxy shall be filed with the secretary of the Corporation before or at the meeting. No proxy shall be valid more than eleven months after its date unless otherwise provided in the proxy.

     Section 2.9 VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the Corporation registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a general partner or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock. Any director or other fiduciary may vote stock registered in his or her name in his or her capacity as such fiduciary, either in person or by proxy.

     Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding shares at any given time.

     The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date, the time after the record date within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable. On receipt of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the stockholder of record of the specified stock in place of the stockholder who makes the certification.

     Section 2.10 INSPECTORS. The Board of Directors or the chair of the meeting may appoint, before or at the meeting, one or more inspectors for the meeting and any successor thereto. The inspectors, if any, shall (i) determine the number of shares of stock represented at the meeting, in person or by proxy and the validity and effect of proxies, (ii) receive and tabulate all votes, ballots or consents, (iii) report such tabulation to the chair of the meeting, (iv) hear and determine all challenges and questions arising in connection with the right to vote, and (v) do such acts as are proper to fairly conduct the election or vote. Each such report shall be in writing and signed by him or her or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.

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     Section 2.11 ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER STOCKHOLDER PROPOSALS.

          (a) Annual Meetings of Stockholders.

               (1) Nominations of individuals for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record both at the time of giving of notice by the stockholder as provided for in this Section 2.11(a) and at the time of the annual meeting, who is entitled to vote at the meeting in the election of each individual so nominated and on any such other business, as the case may be, and who has complied with this Section 2.11(a).

               (2) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 2.11, the stockholder must have given timely notice thereof in writing to the secretary of the Corporation and such other business must otherwise be a proper matter for action by the stockholders. To be timely, a stockholder’s notice shall set forth all information required under this Section 2.11 and shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 150^th day nor later than 5:00 p.m., Central Time, on the 120^th day prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the 150^th day prior to the date of such annual meeting and not later than 5:00 p.m., Central Time, on the later of the 120^th day prior to the date of such annual meeting, as originally convened, or the tenth day following the day on which public announcement of the date of such meeting is first made. The public announcement of a postponement or adjournment of an annual meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.

               (3) Such stockholder’s notice shall set forth:

                    (i) as to each individual whom the stockholder proposes to nominate for election or reelection as a director (each, a “Proposed Nominee”), all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder (including the Proposed Nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected);

                    (ii) as to any other business that the stockholder proposes to bring before the meeting, a description of such business, the stockholder’s reasons for proposing such business at the meeting and any material interest in such business of such stockholder or any Stockholder Associated Person (as defined below), individually or in the aggregate,

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including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom;

                    (iii) as to the stockholder giving the notice, any Proposed Nominee and any Stockholder Associated Person,

                         (A) the class, series and number of all shares of stock or other securities of the Corporation or any affiliate thereof (collectively, the “Company Securities”), if any, which are owned (beneficially or of record) by such stockholder, Proposed Nominee or Stockholder Associated Person, the date on which each such Company Security was acquired and the investment intent of such acquisition, and any short interest (including any opportunity to profit or share in any benefit from any decrease in the price of such stock or other security) in any Company Securities of any such person,

                         (B) the nominee holder for, and number of, any Company Securities owned beneficially but not of record by such stockholder, Proposed Nominee or Stockholder Associated Person,

                         (C) whether and the extent to which such stockholder, Proposed Nominee or Stockholder Associated Person directly or indirectly (through brokers, nominees or otherwise), is subject to or during the last six months has engaged in any hedging, derivative or other transaction or series of transactions or entered into any other agreement, arrangement or understanding (including any short interest, any borrowing or lending of securities or any proxy or voting agreement), the effect or intent of which is to manage risk or benefit of changes in the price of Company Securities for such stockholder, Proposed Nominee or Stockholder Associated Person or to increase or decrease the voting power of such stockholder, Proposed Nominee or Stockholder Associated Person in the Corporation or any affiliate thereof disproportionately to such person’s economic interest therein and

                         (D) any substantial interest, direct or indirect (including, without limitation, any existing or prospective commercial, business or contractual relationship with the Corporation), by security holdings or otherwise, of such stockholder, Proposed Nominee or Stockholder Associated Person, in the Corporation or any affiliate thereof, other than an interest arising from the ownership of Company Securities where such stockholder, Proposed Nominee or Stockholder Associated Person receives no extra or special benefit not shared on a pro rata basis by all other holders of the same class or series;

                    (iv) as to the stockholder giving the notice, any Stockholder Associated Person with an interest or ownership referred to in clauses (ii) or (iii) of this paragraph (3) of this Section 2.11(a) and any Proposed Nominee,

                         (A) the name and address of such stockholder, as they appear on the Corporation’s stock ledger, and the current name, business address, if different, and residence address of each such Stockholder Associated Person and any Proposed Nominee and

                         (B) the investment strategy or objective, if any, of such stockholder and each such Stockholder Associated Person who is not an individual and a copy of

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the prospectus, offering memorandum or similar document, if any, provided to investors or potential investors in such stockholder, each such Stockholder Associated Person; and

                    (v) to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election or reelection as a director or the proposal of other business on the date of such stockholder’s notice.

               (4) Such stockholder’s notice shall, with respect to any Proposed Nominee, be accompanied by a certificate executed by the Proposed Nominee (i) certifying that such Proposed Nominee (a) is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than the Corporation in connection with service or action as a director that has not been disclosed to the Corporation and (b) will serve as a director of the Corporation if elected; and (ii) attaching a completed Proposed Nominee questionnaire (which questionnaire shall be provided by the Corporation, upon request, to the stockholder providing the notice and shall include all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder, or would be required pursuant to the rules of any national securities exchange or over-the-counter market).

               (5) Notwithstanding anything in this subsection (a) of this Section 2.11 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased, and there is no public announcement of such action at least 130 days prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting, a stockholder’s notice required by this Section 2.11(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the principal executive office of the Corporation not later than 5:00 p.m., Central Time, on the tenth day following the day on which such public announcement is first made by the Corporation.

               (6) For purposes of this Section 2.11, “Stockholder Associated Person” of any stockholder means (i) any person acting in concert with such stockholder, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary) and (iii) any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such stockholder or such Stockholder Associated Person.

          (b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of individuals for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) provided that the special meeting has been called in accordance with Section 2.3 for the purpose of electing directors, by any stockholder of the Corporation who is a stockholder of record both at the time of giving of notice provided for in this Section 2.11 and at the time of

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the special meeting, who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the notice procedures set forth in this Section 2.11. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more individuals to the Board of Directors, any such stockholder may nominate an individual or individuals (as the case may be) for election as a director as specified in the Corporation’s notice of meeting, if the stockholder’s notice, containing the information required by paragraph (a)(3) of this Section 2.11, shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 120^th day prior to such special meeting and not later than 5:00 p.m., Central Time on the later of the 90^th day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. The public announcement of a postponement or adjournment of a special meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.

          (c) General.

               (1) If information submitted pursuant to this Section 2.11 by any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall be inaccurate in any material respect, such information may be deemed not to have been provided in accordance with this Section 2.11. Any such stockholder shall notify the Corporation of any inaccuracy or change (within two Business Days of becoming aware of such inaccuracy or change) in any such information. Upon written request by the Secretary or the Board of Directors, any such stockholder shall provide, within five Business Days of delivery of such request (or such other period as may be specified in such request), (A) written verification, satisfactory, in the discretion of the Board of Directors or any authorized officer of the Corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 2.11, and (B) a written update of any information submitted by the stockholder pursuant to this Section 2.11 as of an earlier date. If a stockholder fails to provide such written verification or written update within such period, the information as to which written verification or a written update was requested may be deemed not to have been provided in accordance with this Section 2.11.

               (2) Only such individuals who are nominated in accordance with this Section 2.11 shall be eligible for election by stockholders as directors, and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with this Section 2.11. The chairman of the meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 2.11.

               (3) “Public announcement” shall mean disclosure (i) in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or other widely circulated news or wire service or (ii) in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act.

               (4) Notwithstanding the foregoing provisions of this Section 2.11, a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section

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2.11. Nothing in this Section 2.11 shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, nor the right of the Corporation to omit a proposal from, the Corporation’s proxy statement pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act. Nothing in this Section 2.11 shall require disclosure of revocable proxies received by the stockholder or Stockholder Associated Person pursuant to a solicitation of proxies after the filing of an effective Schedule 14A under Section 14(a) of the Exchange Act.

     Section 2.12 SUBMISSION OF QUESTIONNAIRE, REPRESENTATION AND AGREEMENT. To be eligible to be a nominee for election or reelection as a director of the Corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under Section 2.11 of this Article) to the secretary at the principal executive office of the Corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nominee is being nominated (which questionnaire shall be provided by the secretary upon written request) and a written representation and agreement (in the form provided by the secretary upon written request) that that person (i) is not and will not become a party to (a) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how that person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (b) any Voting Commitment that could limit or interfere with that person’s ability to comply, if elected as a director of the Corporation, with that person’s duties to the Corporation under applicable law, (ii) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed in the questionnaire, representation or agreement, and (iii) in the person’s individual capacity and on behalf of any person or entity on whose behalf the nominee is being nominated, would be in compliance, if elected as a director of the Corporation, and will comply, with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

     Section 2.13 CONTROL SHARE ACQUISITION ACT. Notwithstanding any other provision of the charter of the Corporation or these Bylaws, Title 3, Subtitle 7 of the Maryland General Corporation Law, or any successor statute (the “MGCL”), shall not apply to any acquisition by any person of shares of stock of the Corporation. This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition.

     Section 2.14 RESERVED.

     Section 2.15 TELEPHONE MEETINGS. Stockholders may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

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     Section 2.16 CONDUCT OF MEETINGS. The meetings of the stockholders shall be conducted in accordance with the American Bar Association Handbook for the Conduct of Shareholders’ Meetings.

     Section 2.17 RATIFICATION. The stockholders may ratify and make binding on the corporation any action or inaction by the Corporation or its officers to the extent that the stockholders could have originally authorized the matter. Moreover, any action or inaction challenged in any stockholders’ derivative proceeding or any other proceeding on the ground of lack of authority, defective or irregular execution, adverse interest of a director, officer, or stockholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting, or otherwise, may be ratified, before or after judgment, by the stockholders, and if so ratified, shall have the same force and effect as if the challenged action or inaction had been originally duly authorized, and such ratification shall, to the maximum extent permitted by law, be binding upon the Corporation and its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such challenged action or inaction.

ARTICLE III.
DIRECTORS

     Section 3.1 GENERAL POWERS. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors.

     Section 3.2 NUMBER, TENURE AND QUALIFICATIONS. At any regular meeting or at any special meeting called for that purpose, a majority of the entire Board of Directors may establish, increase or decrease the number of directors, provided that the number thereof shall never be less than the minimum number required by the MGCL, nor more than 15, and further provided that the tenure of office of a director shall not be affected by any decrease in the number of directors.

     Section 3.3 ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of Directors shall be held immediately after and at the same place as the annual meeting of stockholders, no notice other than this Bylaw being necessary. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. The Board of Directors may provide, by resolution, the time and place for the holding of regular meetings of the Board of Directors without other notice than such resolution.

     Section 3.4 SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of a chairman of the board, the chief executive officer, the president or by a majority of the directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix any place as the place for holding any special meeting of the Board of Directors called by them. The Board of Directors may provide, by resolution, the time and place for the holding of special meetings of the Board of Directors without other notice than such resolution.

     Section 3.5 NOTICE. Notice of any special meeting of the Board of Directors shall be delivered personally or by telephone, electronic mail, facsimile transmission, courier or United

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States mail to each director at his or her business or residence address. Notice by personal delivery, telephone, electronic mail or facsimile transmission shall be given at least 24 hours prior to the meeting. Notice by United States mail shall be given at least three days prior to the meeting. Notice by courier shall be given at least two days prior to the meeting. Telephone notice shall be deemed to be given when the director or his or her agent is personally given such notice in a telephone call to which the director or his or her agent is a party. Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Corporation by the director. Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given to the Corporation by the director and receipt of a completed answer-back indicating receipt. Notice by United States mail shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid. Notice by courier shall be deemed to be given when deposited with or delivered to a courier properly addressed. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be stated in the notice, unless specifically required by statute or these Bylaws.

     Section 3.6 QUORUM. A majority of the directors shall constitute a quorum for transaction of business at any meeting of the Board of Directors, provided that, if less than a majority of such directors is present at such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to applicable law, the charter of the Corporation or these Bylaws, the vote of a majority or other percentage of a particular group of directors is required for action, a quorum must also include a majority of such group.

     The directors present at a meeting which has been duly called and at which a quorum has been established may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough directors to leave fewer than required to establish a quorum.

     Section 3.7 VOTING. The action of a majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the charter or these Bylaws. If enough directors have withdrawn from a meeting to leave fewer than required to establish a quorum, but the meeting is not adjourned, the action of the majority of that number of directors necessary to constitute a quorum at such meeting shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the charter or these Bylaws.

     Section 3.8 ORGANIZATION. At each meeting of the Board of Directors, a chairman of the board or, in the absence of a chairman, the vice chairman of the board, if any, shall act as chairman of the meeting. In the absence of both a chairman and vice chairman of the board, the chief executive officer or in the absence of the chief executive officer, the president or in the absence of the president, a director chosen by a majority of the directors present, shall act as chairman of the meeting. The secretary or, in his or her absence, an assistant secretary of the Corporation, or in the absence of the secretary and all assistant secretaries, a person appointed by the chairman of the meeting, shall act as secretary of the meeting.

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     Section 3.9 TELEPHONE MEETINGS. Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

     Section 3.10 CONSENT BY DIRECTORS WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each director and is filed with the minutes of proceedings of the Board of Directors.

     Section 3.11 VACANCIES. If for any reason any or all the directors cease to be directors, such event shall not terminate the Corporation or affect these Bylaws or the powers of the remaining directors hereunder. Except as may be provided by the Board of Directors in setting the terms of any class or series of preferred stock, any vacancy on the Board of Directors may be filled only by a majority of the remaining directors, even if the remaining directors do not constitute a quorum. Any director elected to fill a vacancy shall serve for the remainder of the full term of the class in which the vacancy occurred and until a successor is elected and qualifies.

     Section 3.12 COMPENSATION. Directors shall not receive any stated salary for their services as directors but, by resolution of the Board of Directors, may receive compensation per year and/or per meeting and/or per visit to real property or other facilities owned or leased by the Corporation and for any service or activity they performed or engaged in as directors. Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Directors or of any committee thereof and for their expenses, if any, in connection with each property visit and any other service or activity they performed or engaged in as directors; but nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receiving compensation therefor.

     Section 3.13 RESIGNATION AND REMOVAL OF DIRECTORS. Any director may resign by delivering his or her written resignation to the Corporation at its principal office or to the president or secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. Subject to the rights of holders of one or more classes or series of preferred stock of the Corporation to elect or remove one or more directors, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and then only by the affirmative vote of at least two thirds of the votes entitled to be cast generally in the election of directors. For the purpose of this paragraph, “cause” shall mean, with respect to any particular director, conviction of a felony or a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to the Corporation through bad faith or active and deliberate dishonesty.

     Section 3.14 RELIANCE. Each director and officer of the Corporation shall, in the performance of his or her duties with respect to the Corporation, be entitled to rely on any information, opinion, report or statement, including any financial statement or other financial data, prepared or presented by an officer or employee of the Corporation whom the director or officer reasonably believes to be reliable and competent in the matters presented, by a lawyer,

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certified public accountant or other person, as to a matter which the director or officer reasonably believes to be within the person’s professional or expert competence, or, with respect to a director, by a committee of the Board of Directors on which the director does not serve, as to a matter within its designated authority, if the director reasonably believes the committee to merit confidence.

     Section 3.15 CERTAIN RIGHTS OF DIRECTORS. A director in his or her capacity as director shall have no responsibility to devote his or her full time to the affairs of the Corporation.

     Section 3.16 RATIFICATION. The Board of Directors or the stockholders may ratify and make binding on the Corporation any action or inaction by the Corporation or its officers to the extent that the Board of Directors or the stockholders could have originally authorized the matter. Moreover, any action or inaction questioned in any stockholders’ derivative proceeding or any other proceeding on the ground of lack of authority, defective or irregular execution, adverse interest of a director, officer or stockholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting, or otherwise, may be ratified, before or after judgment, by the Board of Directors or by the stockholders, and if so ratified, shall have the same force and effect as if the questioned action or inaction had been originally duly authorized, and such ratification shall be binding upon the Corporation and its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned action or inaction.

     Section 3.17 EMERGENCY PROVISIONS. Notwithstanding any other provision in the charter or these Bylaws, this Section 3.17 shall apply during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directors under Article III of these Bylaws cannot readily be obtained (an “Emergency”). During any Emergency, unless otherwise provided by the Board of Directors, (i) a meeting of the Board of Directors or a committee thereof may be called by any director or officer by any means feasible under the circumstances; (ii) notice of any meeting of the Board of Directors during such an Emergency may be given less than 24 hours prior to the meeting to as many directors and by such means as may be feasible at the time, including publication, television or radio, and (iii) the number of directors necessary to constitute a quorum shall be one-third of the entire Board of Directors.

ARTICLE IV.
COMMITTEES

     Section 4.1 NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors may appoint from among its members an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and other committees, composed of one or more directors, to serve at the pleasure of the Board of Directors.

     Section 4.2 POWERS. The Board of Directors may delegate to committees appointed under Section 4.1 of this Article any of the powers of the Board of Directors, except as prohibited by law.

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     Section 4.3 MEETINGS. Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Directors. A majority of the members of the committee shall constitute a quorum for the transaction of business at any meeting of the committee. The act of a majority of the committee members present at a meeting shall be the act of such committee. The Board of Directors may designate a chairman of any committee, and such chairman or, in the absence of a chairman, any two members of any committee (if there are at least two members of the Committee) may fix the time and place of its meeting unless the Board shall otherwise provide. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member. Each committee shall keep minutes of its proceedings.

     Section 4.4 TELEPHONE MEETINGS. Members of a committee of the Board of Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

     Section 4.5 CONSENT BY COMMITTEES WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each member of the committee and is filed with the minutes of proceedings of such committee.

     Section 4.6 VACANCIES. Subject to the provisions hereof, the Board of Directors shall have the power at any time to change the membership of any committee, to fill any vacancy, to designate an alternate member to replace any absent or disqualified member or to dissolve any such committee.

ARTICLE V.
OFFICERS

     Section 5.1 GENERAL PROVISIONS. The officers of the Corporation shall include a president, a secretary and a treasurer and may include an executive chairman of the board and/or one or more chairmen of the board, a vice chairman of the board, a chief executive officer, one or more vice presidents, a chief operating officer, a chief financial officer, a chief investment officer, one or more assistant secretaries and one or more assistant treasurers. In addition, the Board of Directors may from time to time elect such other officers with such powers and duties as they shall deem necessary or desirable. The officers of the Corporation shall be elected annually by the Board of Directors, except that the chief executive officer or president may from time to time appoint one or more vice presidents, assistant secretaries and assistant treasurers or other officers. Each officer shall serve until his or her successor is elected and qualifies or until his or her death, or his or her resignation or removal in the manner hereinafter provided. Any two or more offices except president and vice president may be held by the same person. Election of an officer or agent shall not of itself create contract rights between the Corporation and such officer or agent.

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     Section 5.2 REMOVAL AND RESIGNATION. Any officer or agent of the Corporation may be removed, with or without cause, by the Board of Directors if in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer of the Corporation may resign at any time by delivering his or her resignation to the Board of Directors, a chairman of the board, the president or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. Such resignation shall be without prejudice to the contract rights, if any, of the Corporation.

     Section 5.3 VACANCIES. A vacancy in any office may be filled by the Board of Directors for the balance of the term.

     Section 5.4 CHIEF EXECUTIVE OFFICER. The Board of Directors may designate a chief executive officer. In the absence of such designation, the executive chairman of the board, or in the absence of an executive chairman of the board, a chairman of the board shall be the chief executive officer of the Corporation. The chief executive officer shall have general responsibility for implementation of the policies of the Corporation, as determined by the Board of Directors, and for administering the business and affairs of the Corporation. He or she may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of chief executive officer and such other duties as may be prescribed by the Board of Directors from time to time.

     Section 5.5 CHIEF OPERATING OFFICER. The Board of Directors may designate a chief operating officer. The chief operating officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.

     Section 5.6 CHIEF FINANCIAL OFFICER. The Board of Directors may designate a chief financial officer. The chief financial officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.

     Section 5.7 CHIEF INVESTMENT OFFICER. The Board of Directors may designate a chief financial officer. The chief financial officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.

     Section 5.8 CHAIRMAN OF THE BOARD. The Board of Directors may designate an executive chairman of the board and/or one or more chairmen of the board. The executive chairman and/or co-chairmen of the board shall preside over the meetings of the Board of Directors and of the stockholders at which he or they shall be present. The executive chairman and/or co-chairmen of the board shall perform such other duties as may be assigned to him, her or them by the Board of Directors.

     Section 5.9 PRESIDENT. In the absence of a chief executive officer, the president shall in general supervise and control all of the business and affairs of the Corporation. In the absence of a designation of a chief operating officer by the Board of Directors, the president

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shall be the chief operating officer. He or she may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the Board of Directors from time to time.

     Section 5.10 VICE PRESIDENTS. In the absence of the president or in the event of a vacancy in such office, the vice president (or in the event there be more than one vice president, the vice presidents in the order designated at the time of their election or, in the absence of any designation, then in the order of their election) shall perform the duties of the president and when so acting shall have all the powers of and be subject to all the restrictions upon the president; and shall perform such other duties as from time to time may be assigned to such vice president by the president or by the Board of Directors. The Board of Directors may designate one or more vice presidents as executive vice president, senior vice president, or as vice president for particular areas of responsibility.

     Section 5.11 SECRETARY. The secretary shall (a) keep the minutes of the proceedings of the stockholders, the Board of Directors and committees of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation; (d) keep a register of the post office address of each stockholder which shall be furnished to the secretary by such stockholder; (e) have general charge of the stock transfer books of the Corporation; and (f) in general perform such other duties as from time to time may be assigned to him or her by the chief executive officer, the president or by the Board of Directors.

     Section 5.12 TREASURER. The treasurer shall have the custody of the funds and securities of the Corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. In the absence of a designation of a chief financial officer by the Board of Directors, the treasurer shall be the chief financial officer of the Corporation.

     The treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and Board of Directors, at the regular meetings of the Board of Directors or whenever it may so require, an account of all his or her transactions as treasurer and of the financial condition of the Corporation.

     Section 5.13 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by the president or the Board of Directors.

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     Section 5.14 COMPENSATION. The compensation of the officers shall be fixed from time to time by or under the authority of the Board of Directors and no officer shall be prevented from receiving such compensation by reason of the fact that he is also a director.

ARTICLE VI.
CONTRACTS, LOANS, CHECKS AND DEPOSITS

     Section 6.1 CONTRACTS. The Board of Directors may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or other document shall be valid and binding upon the Corporation when duly authorized or ratified by action of the Board of Directors and executed by an authorized person.

     Section 6.2 CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation in such manner as shall from time to time be determined by the Board of Directors.

     Section 6.3 DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited or invested from time to time to the credit of the Corporation as the Board of Directors, the chief executive officer, the chief financial officer, or any other officer designated by the Board of Directors may determine.

ARTICLE VII.
STOCK

     Section 7.1 CERTIFICATES. Except as may be otherwise provided by the Board of Directors, stockholders of the Corporation are not entitled to certificates representing the shares of stock held by them. In the event that the Corporation issues shares of stock represented by certificates, such certificates shall be in such form as prescribed by the Board of Directors or a duly authorized officer, shall contain the statements and information required by the MGCL and shall be signed by the officers of the Corporation in the manner permitted by the MGCL. In the event that the Corporation issues shares of stock without certificates, to the extent then required by the MGCL, the Corporation shall provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates. There shall be no differences in the rights and obligations of stockholders based on whether or not their shares are represented by certificates.

     Section 7.2 TRANSFERS. All transfers of shares of stock shall be made on the books of the Corporation, by the holder of the shares, in person or by his or her attorney, in such manner as the Board of Directors or any officer of the Corporation may prescribe and, if such shares are certificated, upon surrender of certificates duly endorsed. The issuance of a new certificate upon the transfer of certificated shares is subject to the determination of the Board of Directors that such shares shall no longer be represented by certificates. Upon the transfer of uncertificated shares, to the extent then required by the MGCL, the Corporation shall provide to

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record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates.

     The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Maryland.

     Notwithstanding the foregoing, transfers of shares of any class or series of stock will be subject in all respects to the charter of the Corporation and all of the terms and conditions contained therein.

     Section 7.3 REPLACEMENT CERTIFICATE. Any officer of the Corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, destroyed, stolen or mutilated; provided, however, if such shares have ceased to be certificated, no new certificate shall be issued unless requested in writing by such stockholder and the Board of Directors has determined that such certificates may be issued. Unless otherwise determined by an officer of the Corporation, the owner of such lost, destroyed, stolen or mutilated certificate or certificates, or his or her legal representative, shall be required, as a condition precedent to the issuance of a new certificate or certificates, to give the Corporation a bond in such sums as it may direct as indemnity against any claim that may be made against the Corporation.

     Section 7.4 FIXING OF RECORD DATE. The Board of Directors may set, in advance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or determining stockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of stockholders for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days and, in the case of a meeting of stockholders, not less than ten days, before the date on which the meeting or particular action requiring such determination of stockholders of record is to be held or taken.

     When a record date for the determination of stockholders entitled to notice of and to vote at any meeting of stockholders has been set as provided in this section, such record date shall continue to apply to the meeting if adjourned or postponed, except if the meeting is adjourned to a date more than 120 days or postponed to a date more than 90 days after the record date originally fixed for the meeting, in which case a new record date for such meeting shall be determined as set forth herein.

     Section 7.5 STOCK LEDGER. The Corporation shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate stock ledger containing the name and address of each stockholder and the number of shares of each class held by such stockholder.

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     Section 7.6 FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors may issue fractional stock or provide for the issuance of scrip, all on such terms and under such conditions as they may determine. Notwithstanding any other provision of the charter or these Bylaws, the Board of Directors may issue units consisting of different securities of the Corporation. Any security issued in a unit shall have the same characteristics as any identical securities issued by the Corporation, except that the Board of Directors may provide that for a specified period securities of the Corporation issued in such unit may be transferred on the books of the Corporation only in such unit.

ARTICLE VIII.
ACCOUNTING YEAR

     The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution.

ARTICLE IX.
DISTRIBUTIONS

     Section 9.1 AUTHORIZATION. Dividends and other distributions upon the stock of the Corporation may be authorized by the Board of Directors, subject to the provisions of law and the charter of the Corporation. Dividends and other distributions may be paid in cash, property or stock of the Corporation, subject to the provisions of law and the charter.

     Section 9.2 CONTINGENCIES. Before payment of any dividends or other distributions, there may be set aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may from time to time, in its absolute discretion, think proper as a reserve fund for contingencies, for equalizing dividends, for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine, and the Board of Directors may modify or abolish any such reserve.

ARTICLE X.
SEAL

     Section 10.1 SEAL. The Board of Directors may authorize the adoption of a seal by the Corporation. The seal shall contain the name of the Corporation and the year of its incorporation and the words “Incorporated Maryland.” The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof.

     Section 10.2 AFFIXING SEAL. Whenever the Corporation is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of the Corporation.

ARTICLE XI.
INDEMNIFICATION AND ADVANCE OF EXPENSES

     To the maximum extent permitted by Maryland law in effect from time to time, the Corporation shall indemnify and, without requiring a preliminary determination of the ultimate

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entitlement to indemnification, shall pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (a) any individual who is a present or former director or officer of the Corporation and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity or (b) any individual who, while a director or officer of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner or trustee of another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity; provided, however, that in order for payment or reimbursement of expenses to be made in advance of final disposition, the director or officer must deliver to the Corporation a written affirmation of the director’s or officer’s good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met and a written undertaking to reimburse the Corporation if a court of competent jurisdiction determines that the director or officer is not entitled to indemnification. The rights to indemnification and advance of expenses provided by the charter of the Corporation and these Bylaws shall vest immediately upon election of a director or officer. The Corporation may, with the approval of its Board of Directors, provide such indemnification and advance for expenses to an individual who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation. The indemnification and payment or reimbursement of expenses provided in these Bylaws shall not be deemed exclusive of or limit in any way other rights to which any person seeking indemnification or payment or reimbursement of expenses may be or may become entitled under any bylaw, regulation, insurance, agreement or otherwise.

     Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of the Bylaws or charter of the Corporation inconsistent with this Article, shall apply to or affect in any respect the applicability of the preceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

ARTICLE XII.
WAIVER OF NOTICE

     Whenever any notice of a meeting is required to be given pursuant to the charter of the Corporation or these Bylaws or pursuant to applicable law, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

ARTICLE XIII.
AMENDMENT OF BYLAWS

     The Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws.

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EX-4.1

Exhibit 4.1

SEE REVERSE FOR CERTAIN DEFINITIONS CUSIP 13466Y 10 5 Countersigned and Registered: AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC (New York, N.Y.) Transfer Agent and Registrar By Authorized Signature FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, $0.01 PAR VALUE PER SHARE, OF SECRETARY CHIEF EXECUTIVE OFFICER transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of the Certificate properly endorsed. This Certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated THIS CERTIFIES THAT IS THE RECORD HOLDER OF MARYLAND SEAL CORPORATE CAMPUS CREST COMMUNITIES, INC. CCG CAMPUS CREST COMMUNITIES, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND CAMPUS CREST COMMUNITIES, INC. SPECIMEN

SIGNATuRE(S) GuARANTEED: THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15. TEN COM — as tenants in common TEN ENT — as tenants by the entireties JT TEN — as joint tenants with right of survivorship and not as tenants in common Additional abbreviations may also be used though not in the above list. For value received, hereby sell, assign and transfer unto THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: NOTICE: Shares PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE OF ASSIGNEE of the common stock represented by the within Cer tificate, and do hereby irrevocably constitute and appoint Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises. Dated, PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE UNIF GIFT MIN ACT — Custodian (Cust) (Minor) under Uniform Gifts to Minors Act (State) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND TRANSFER FOR THE PURPOSE, AMONG OTHERS, OF THE CORPORATION’S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”). SUBJECT TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS EXPRESSLY PROVIDED IN THE CORPORATION’S CHARTER, (I) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF THE CORPORATION’S COMMON STOCK IN EXCESS OF 9.8 PERCENT (IN VALUE OR NUMBER OF SHARES) OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE CORPORATION UNLESS SUCH PERSON IS AN EXCEPTED HOLDER (IN WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (II) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK OF THE CORPORATION IN EXCESS OF 9.8 PERCENT OF THE VALUE OF THE TOTAL OUTSTANDING SHARES OF CAPITAL STOCK OF THE CORPORATION, UNLESS SUCH PERSON IS AN EXCEPTED HOLDER (IN WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (III) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN CAPITAL STOCK THAT WOULD RESULT IN THE CORPORATION BEING “CLOSELY HELD” UNDER SECTION 856(H) OF THE CODE OR OTHERWISE CAUSE THE CORPORATION TO FAIL TO QUALIFY AS A REIT; AND (IV) NO PERSON MAY TRANSFER SHARES OF CAPITAL STOCK IF SUCH TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF THE CORPORATION BEING OWNED BY FEWER THAN 100 PERSONS. ANY PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY OWNS OR ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK WHICH CAUSES OR WILL CAUSE A PERSON TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK IN EXCESS OR IN VIOLATION OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. IF ANY OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE VIOLATED, THE SHARES OF CAPITAL STOCK REPRESENTED HEREBY MAY BE AUTOMATICALLY TRANSFERRED TO A TRUSTEE OF A TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES OR MAY BE VOID AB INITIO. IN ADDITION, THE CORPORATION MAY REDEEM SHARES UPON THE TERMS AND CONDITIONS SPECIFIED BY THE BOARD OF DIRECTORS IN ITS SOLE DISCRETION IF THE BOARD OF DIRECTORS DETERMINES THAT OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE RESTRICTIONS DESCRIBED ABOVE. ALL CAPITALIZED TERMS IN THIS LEGEND HAVE THE MEANINGS DEFINED IN THE CHARTER OF THE CORPORATION, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER AND OWNERSHIP, WILL BE FURNISHED TO EACH HOLDER OF CAPITAL STOCK OF THE CORPORATION ON REQ UEST AND WITHOUT CHARGE. REQUESTS FOR SUCH A COPY MAY BE DIRECTED TO THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL OFFICE.

EX-5.1

Exhibit 5.1

lawyers@saul.com

www.saul.com

September 20, 2010

Campus Crest Communities, Inc.
2100 Rexford Road
Suite 414
Charlotte, N.C. 28211

Re: Campus Crest Communities, Inc.
       Registration Statement on Form S-11

Ladies and Gentlemen:

          We have acted as Maryland counsel to Campus Crest Communities, Inc., a Maryland corporation (the “Company”), in connection with certain matters of Maryland law arising out of the registration of 28,333,333 shares of the Company’s common stock, par value $0.01 per share, and up to 4,250,000 additional shares of the Company’s common stock, par value $0.01 per share, to cover overallotments (collectively, the “Shares”), proposed to be issued and sold in an underwritten initial public offering covered by the Registration Statement on Form S-11 (the “Registration Statement”) filed by the Company (No. 333-166834) with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “1933 Act”), and all amendments thereto.

          As a basis for our opinions, we have examined the following documents (collectively, the “Documents”):

          (i) The Registration Statement; and

          (ii) The prospectus contained in the Registration Statement (the “Prospectus”).

          Also, as a basis for these opinions, we have examined the originals or certified copies of the following:

          (iii) a certified copy of the Articles of Amendment and Restatement of the Company (the “Charter”);

          (iv) a copy of the Bylaws of the Company (the “Bylaws”);

DELAWARE     MARYLAND     NEW JERSEY     NEW YORK     PENNSYLVANIA     WASHINGTON, DC

A DELAWARE LIMITED LIABILITY PARTNERSHIP

Campus Crest Communities, Inc.
September 20, 2010
Page 2

          (v) resolutions adopted by the Board of Directors of the Company, dated May 4, 2010, May 13, 2010, September 14, 2010 and September 20, 2010, relating to, among other matters, the registration and issuance of the Shares (the “Board Resolutions”);

          (vi) a Certificate of Status for the Company issued by the State Department of Assessments and Taxation of Maryland dated September 14, 2010;

          (xii) a Certificate of an officer of the Company as to the authenticity of the Charter and Bylaws of the Company, the Board Resolutions approving the filing of the Registration Statement and authorizing the issuance and sale of the Shares, and other matters that we have deemed necessary and appropriate; and

          (xiii) such other documents and matters as we have deemed necessary and appropriate to express the opinions set forth in this letter, subject to the limitations, assumptions and qualifications noted below.

          In reaching the opinions set forth below, we have assumed:

               (a) that all signatures on all Documents and any other documents submitted to us for examination are genuine;

               (b) the authenticity of all documents submitted to us as originals, the conformity to originals of all documents submitted to us as certified or photographic copies, and the accuracy and completeness of all documents;

               (c) the legal capacity of all natural persons executing any documents, whether on behalf of themselves or other persons;

               (d) that all persons executing Documents on behalf of any party (other than the Company) are duly authorized;

               (e) that there will be no changes in applicable law between the date of this opinion and any date of issuance or delivery of Shares that would have an adverse effect on the due authorization or valid issuance or delivery of the Shares; and

               (f) that at the time of delivery of any Shares to be delivered after the date hereof, the authorization of the issuance of the Shares by the Board of Directors will not have been modified or rescinded.

          As to various questions of fact material to our opinions, we have relied upon a certificate and representations of Donald L. Bobbitt, Jr., as Assistant Secretary of the Company, and have assumed that the Officer’s Certificate and representations continue to remain true and complete as of the date of this letter. We have not examined any court records, dockets, or other public records, nor have we investigated the Company’s history or other transactions, except as

Campus Crest Communities, Inc.
September 20, 2010
Page 3

specifically set forth in this letter.

          Based on our review of the foregoing and subject to the assumptions and qualifications set forth in this letter, it is our opinion, as of the date of this letter, that:

          1. The Company is a corporation duly incorporated and existing under and by virtue of the laws of the State of Maryland and is in good standing with the State Department of Assessments and Taxation of the State of Maryland.

          2. The Shares are duly authorized and, when and if the Shares are duly issued and delivered in the manner and for the consideration contemplated by the each of the Board Resolutions, the Registration Statement, the Prospectus, and the applicable supplement or supplements to the Prospectus, the Shares will be validly issued, fully paid and nonassessable.

          In addition to the qualifications set forth above, the opinions set forth in this letter are also subject to the following qualifications:

          (i) We express no opinion as to the laws of any jurisdiction other than the laws of the State of Maryland.

          (ii) We assume no obligation to supplement our opinions if any applicable law changes after the date of this letter or if we become aware of any facts that might alter the opinions expressed in this letter after the date of this letter.

          (iii) We express no opinion on the application of federal or state securities laws to the transactions contemplated in the Documents.

          The opinions expressed in this letter are furnished only with respect to the transactions contemplated by the Documents. The opinions expressed in this letter are limited to the matters set forth in this letter, and no other opinions shall be implied or inferred beyond the matters expressly stated.

          We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of the name of our firm therein. In giving this consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the Securities Act of 1933.

Very truly yours,

/s/ SAUL EWING LLP

EX-8.1

Exhibit 8.1

September 20, 2010

Campus Crest Communities, Inc.
2100 Rexford Road
Suite 414
Charlotte, NC 28211

Ladies and Gentlemen:

     We have acted as special tax counsel to Campus Crest Communities, Inc., a Maryland corporation (the “Company”), which filed with the Securities and Exchange Commission (the “Commission”) on May 14, 2010, a registration statement on Form S-11 (Registration No. 333-166834), as amended through the date hereof, (the “Registration Statement”), with respect to the offer and sale (the “Offering”) of 28,333,333 shares of common stock, par value $0.01 per share, of the Company, and up to 4,250,000 additional shares of common stock, par value $0.01 per share, of the Company to cover overallotments (collectively, the “Common Stock”). You have requested our opinion regarding certain U.S. federal income tax matters.

     In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the Registration Statement and such other documentation and information provided by the Company to us as we have deemed necessary or appropriate as a basis for the opinion set forth herein. In addition, the Company has provided to us a certificate, dated the date hereof and executed by a duly appointed officer of the Company (the “Officer’s Certificate”), relating to, among other things, the proposed operations of the Company. For purposes of our opinion, we have relied on the Officer’s Certificate only to the extent of the factual statements and representations set forth therein. We have not verified independently all of the facts and representations set forth in the Officer’s Certificate, the Registration Statement, or in any other document. We have assumed and relied on the Company’s representation that the information in the Officer’s Certificate, the Registration Statement, and other documents, or otherwise furnished to us, accurately and completely describes all material facts relevant to the Offering and our opinion. We have assumed that the statements and representations as to issues of fact are true without regard to any qualification as to knowledge and belief. Our opinion is conditioned on the continuing accuracy and completeness of such statements and representations. We are not aware of any facts inconsistent with such statements and representations. Any material change or inaccuracy in the facts referred to, set forth, or assumed herein or in the Officer’s Certificate could affect our conclusions set forth herein.

     In our review of certain documents in connection with our opinion, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies, and the authenticity of the originals of such copies. Where documents have been provided to us in draft form, we have assumed that the final executed versions of such documents will not differ materially from such drafts.

Campus Crest Communities, Inc.
Page 2

September 20, 2010

     Our opinion also is based on the correctness of the following assumptions: (i) the Company will elect to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), with the filing of its 2010 federal income tax return; (ii) the Company and each entity in which the Company owns a beneficial interest has been and will continue to be operated in accordance with the laws of the jurisdiction in which it was formed and in the manner described in the relevant organizational documents; (iii) there will be no changes in the applicable laws of the State of Maryland or of any other jurisdiction under the laws of which any of the entities in which the Company owns a beneficial interest have been formed; and (iv) each of the written agreements to which the Company is a party has been and will be implemented, construed and enforced in accordance with its terms.

     In rendering our opinion, we have considered and relied upon the Code, the regulations promulgated thereunder (“Regulations”), administrative rulings and judicial interpretations of the Code and the Regulations and administrative interpretations of the Code and Regulations by the Internal Revenue Service (the “Service”), all as they exist at the date hereof. The Code, Regulations, judicial decisions, and administrative interpretations are subject to change and, in some circumstances, with retroactive effect. A material change after the date hereof in any of the foregoing bases for our opinion could affect our opinion. An opinion of counsel with respect to an issue represents counsel’s best judgment as to the outcome on the merits with respect to such issue. We can provide no assurance that the Service will not assert a contrary position with respect to such issue or that a court will not sustain such a position if asserted by the Service.

     Based on the foregoing, we are of the opinion that:

     1. Commencing with the Company’s initial tax year ending on December 31, 2010, the Company will be organized in conformity with the requirements for qualification as a REIT under the Code, and the Company’s proposed method of operation will enable it to meet the requirements for qualification and taxation as a REIT under the Code. The Company’s qualification as a REIT for federal income tax purposes depends upon its continuing ability to meet certain requirements relating to the sources of its income, the nature of its assets, distributions made to shareholders, the ownership if its stock and other qualification requirements provided in the Code. We cannot provide assurance that the actual results of the Company’s operation will satisfy the requirements for taxation as a REIT for federal income tax purposes.

     2. Although the discussion set forth in the Registration Statement under the heading “Federal Income Tax Considerations” does not purport to discuss all federal income tax considerations relating to the Company’s qualification as a REIT for federal income tax purposes and the Company’s operations or the federal income tax considerations relating to the ownership and disposition of the Common Stock, such discussion, constitutes, in all material respects, a fair and accurate summary under current law of the material federal income tax considerations relating to the Company’s qualification as a REIT for federal income tax purposes, the

Campus Crest Communities, Inc.
Page 3

September 20, 2010

Company’s operations and the ownership and disposition of the Common Stock, subject to the qualifications set forth therein.

     We express no opinion on any issue relating to the Company or any investment therein, other than as expressly stated above.

     This opinion has been prepared for you in connection with the Offering. We consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to Bradley Arant Boult Cummings LLP under the captions “Federal Income Tax Considerations” and “Legal Matters” in the Registration Statement. In giving this consent, we do not thereby agree that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Commission. This opinion is expressed as of the date hereof, and we are under no obligation to supplement or revise our opinion to reflect any legal developments or factual matters arising subsequent to the date hereof, or the impact of any information, document, certificate, record, statement, representation, covenant, or assumption relied upon herein that becomes incorrect or untrue.

Sincerely,

/s/ Bradley Arant Boult Cummings LLP

EX-10.1

Exhibit 10.1

AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

CAMPUS CREST COMMUNITIES OPERATING PARTNERSHIP, LP

                          , 2010

TABLE OF CONTENTS

ARTICLE 1. DEFINED TERMS
Section 1.1. Definitions	2
Section 1.2. Rules of Construction	17
ARTICLE 2. ORGANIZATIONAL MATTERS
Section 2.1. Organization	17
Section 2.2. Name	17
Section 2.3. Registered Office and Agent; Principal Office	17
Section 2.4. Power of Attorney	18
Section 2.5. Term	19
ARTICLE 3. PURPOSE
Section 3.1. Purpose and Business	19
Section 3.2. Powers	19
Section 3.3. Partnership Only for Purposes Specified	19
Section 3.4. Representations and Warranties by the Parties	20
Section 3.5. Certain ERISA Matters	21
ARTICLE 4. CAPITAL CONTRIBUTIONS
Section 4.1. Capital Contributions	22
Section 4.2. Loans by Third Parties	22
Section 4.3. Additional Funding and Capital Contributions	23
Section 4.4. Other Contribution Provisions	27
Section 4.5. No Preemptive Rights	27
ARTICLE 5. DISTRIBUTIONS
Section 5.1. Requirement and Characterization of Distributions	27
Section 5.2. Distributions in Kind	28
Section 5.3. Distributions Upon Liquidation	28
Section 5.4. Distributions to Reflect Issuance of Additional Partnership Interests	28
ARTICLE 6. ALLOCATIONS
Section 6.1. Timing and Amount of Allocations of Net Income and Net Loss	28
Section 6.2. General Allocations	29
Section 6.3. Special Allocation Provisions	30
Section 6.4. Additional Allocation Rules	32
Section 6.5. Tax Allocations	33
ARTICLE 7. MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1. Management	33
Section 7.2. Certificate of Limited Partnership	37
Section 7.3. Restrictions on General Partner’s Authority	37

Section 7.4. Reimbursement of the General Partner	39
Section 7.5. Outside Activities of the General Partner and the Company	40
Section 7.6. Contracts with Affiliates	41
Section 7.7. Indemnification	42
Section 7.8. Liability of the General Partner	44
Section 7.9. Other Matters Concerning the General Partner	45
Section 7.10. Title to Partnership Assets	45
Section 7.11. Reliance by Third Parties	46
ARTICLE 8. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1. Limitation of Liability	46
Section 8.2. Management of Business	46
Section 8.3. Outside Activities of Limited Partners	47
Section 8.4. Return of Capital	47
Section 8.5. Rights of Limited Partners Relating to the Partnership	47
Section 8.6. Redemption Rights	48
Section 8.7. Conversion of PIUs	51
Section 8.8. Voting Rights of PIUs	52
ARTICLE 9. BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1. Records and Accounting	53
Section 9.2. Fiscal Year	53
Section 9.3. Reports	53
Section 9.4. Nondisclosure of Certain Information	54
ARTICLE 10. TAX MATTERS
Section 10.1. Preparation of Tax Returns	54
Section 10.2. Tax Elections	54
Section 10.3. Tax Matters Partner	54
Section 10.4. Organizational Expenses	56
Section 10.5. Withholding	56
ARTICLE 11. TRANSFERS AND WITHDRAWALS
Section 11.1. Transfer	56
Section 11.2. Transfer of General Partner’s Partnership Interest	57
Section 11.3. Termination Transactions; Transfer of the Company’s Onwership of the General Partner	57
Section 11.4. Limited Partners’ Rights to Transfer	58
Section 11.5. Substituted Limited Partners	59
Section 11.6. Assignees	60
Section 11.7. General Provisions	60
ARTICLE 12. ADMISSION OF PARTNERS
Section 12.1. Admission of Successor General Partner	62
Section 12.2. Admission of Additional Limited Partners	63

Section 12.3. Amendment of Agreement and Certificate of Limited Partnership	63
ARTICLE 13. DISSOLUTION AND LIQUIDATION
Section 13.1. Dissolution	63
Section 13.2. Winding Up	64
Section 13.3. Capital Contribution Obligation	65
Section 13.4. Distribution to Liquidating Trust; Retention of Reserve	66
Section 13.5. Deemed Distribution and Recontribution	66
Section 13.6. Rights of Limited Partners	66
Section 13.7. Notice of Dissolution	66
Section 13.8. Cancellation of Certificate of Limited Partnership	67
Section 13.9. Reasonable Time for Winding-Up	67
Section 13.10. Waiver of Partition	67
ARTICLE 14. AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS
Section 14.1. Amendments	67
Section 14.2. Action by the Partners	67
ARTICLE 15. GENERAL PROVISIONS
Section 15.1. Addresses and Notice	68
Section 15.2. Titles and Captions	68
Section 15.3. Pronouns and Plurals	69
Section 15.4. Further Action	69
Section 15.5. Binding Effect	69
Section 15.6. Creditors	69
Section 15.7. Waiver	69
Section 15.8. Counterparts	69
Section 15.9. Applicable Law	69
Section 15.10. Consent to Jurisdiction	69
Section 15.11. Invalidity of Provisions	70
Section 15.12. Entire Agreement	70
Section 15.13. No Rights as Stockholders	70

THE LIMITED PARTNERSHIP INTERESTS REFERRED TO IN THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. REFERENCE IS MADE TO ARTICLE 8 AND ARTICLE 11 OF THIS AGREEMENT FOR PROVISIONS RELATING TO VARIOUS RESTRICTIONS ON THE SALE OR OTHER TRANSFER OF THESE INTERESTS.

AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF

CAMPUS CREST COMMUNITIES OPERATING PARTNERSHIP, LP

     THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (the “Agreement”), dated as of                               , 2010, is entered into by and among Campus Crest Communities GP, LLC, a Delaware limited liability company (“Communities GP”), as the General Partner, and Campus Crest Communities LP, LLC, a Delaware limited liability company (“Communities LP”), as the Limited Partner, together with any other Persons who become Partners in the Partnership as provided herein.

     WHEREAS, Campus Crest Communities Operating Partnership, LP, a Delaware limited partnership (the “Partnership”), was formed pursuant to that certain Certificate of Limited Partnership filed on March 4, 2010 in the office of the Secretary of State of the State of Delaware and that certain Agreement of Limited Partnership dated as of March 4, 2010 (the “Initial Agreement”);

     WHEREAS, Campus Crest Communities, Inc., a Maryland corporation (the “Company”) and the sole member of Communities GP and Communities LP, proposes to effect a public offering of its common stock and contribute the net proceeds from the public offering to the Partnership, to cause the Partnership to acquire direct and indirect interests in certain student housing properties and other assets, and to cause the Partnership to enter into certain financing transactions;

     WHEREAS, the Partnership will issue Partnership Interests to Communities GP, Communities LP and other Persons who become Partners in the Partnership as provided herein in connection with the foregoing transactions;

     WHEREAS, in connection with the foregoing transactions or with the existing or future equity incentive plans or programs of the Company or the Partnership, the Company or the Partnership may make grants of PIUs (as defined herein) to executives of the Company or its subsidiaries or the Partnership; and

     WHEREAS, the General Partner desires to amend and restate in its entirety the Initial Agreement in order to permit and reflect all of the foregoing actions and transactions involving the Partnership, its Partners and the Company.

     NOW, THEREFORE, BE IT RESOLVED, that for good and adequate consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows.

1

ARTICLE 1.
DEFINED TERMS

Section 1.1. Definitions.

     The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.

     “Act” means the Delaware Revised Uniform Limited Partnership Act, as it may be amended from time to time, and any successor to such statute.

     “Additional Funds” shall have the meaning set forth in Section 4.3.A.

     “Additional Limited Partner” means a Person admitted to the Partnership as a Limited Partner pursuant to Section 12.2 and who is shown as such on the books and records of the Partnership.

     “Adjusted Capital Account Deficit” means, with respect to any Partner, the deficit balance, if any, in such Partner’s Capital Account as of the end of the relevant fiscal year, after giving effect to the following adjustments:

(i)	decrease such deficit by any amounts which such Partner is obligated to restore pursuant to this Agreement or is deemed to be obligated to restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of Regulations Sections 1.704-2(i)(5) and 1.704-2(g); and
(ii)	increase such deficit by the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

     The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

     “Adjustment Date” means, with respect to any Capital Contribution, the close of business on the Business Day immediately preceding the date of the Capital Contribution, provided, that if such Capital Contribution is being made by the Company (either directly or indirectly through Communities GP and Communities LP) in respect of the proceeds from the issuance of REIT Shares (or the issuance of the Company’s securities exercisable for, convertible into or exchangeable for REIT Shares), then the Adjustment Date shall be as of the close of business on the Business Day immediately preceding the date of the issuance of such securities.

     “Adjustment Event” shall have the meaning set forth in Section 4.3.E.(i) hereof.

     “Affiliate” means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with such Person. Control of any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

2

     “Agreed Value” means (i) in the case of any Contributed Property set forth in Exhibit A and as of the time of its contribution to the Partnership, the Agreed Value of such property as set forth in Exhibit A; (ii) in the case of any Contributed Property not set forth in Exhibit A and as of the time of its contribution to the Partnership, the fair market value of such property or other consideration as determined by the General Partner, reduced by any liabilities either assumed by the Partnership upon such contribution or to which such property is subject when contributed; and (iii) in the case of any property distributed to a Partner by the Partnership, the fair market value of such property as determined by the General Partner at the time such property is distributed, reduced by any liabilities either assumed by such Partner upon such distribution or to which such property is subject at the time of the distribution as determined under Section 752 of the Code and the Regulations thereunder.

     “Agreement” means this Amended and Restated Agreement of Limited Partnership, as it may be amended, modified, supplemented or restated from time to time.

     “Allocation Year” means (i) the period commencing on the Effective Date and ending on December 31, 2010, (ii) any subsequent period commencing on January 1 and ending on the following December 31, or (iii) any portion of the period described in clause (ii) for which the Partnership is required to allocate Net Income, Net Losses, and other items of Partnership income, gain, loss, or deduction pursuant to Article 6.

     “Appraisal” means with respect to any assets, the opinion of an independent third party experienced in the valuation of similar assets, selected by the General Partner in good faith; such opinion may be in the form of an opinion by such independent third party that the value for such property or asset as set by the General Partner is fair, from a financial point of view, to the Partnership.

     “Assignee” means a Person to whom one or more Partnership Units have been transferred in a manner permitted under this Agreement, but who has not become a Substituted Limited Partner, and who has the rights set forth in Section 11.6.

     “Available Cash” means, with respect to any period for which such calculation is being made, the excess, if any, of “Receipts” over “Expenditures.” For purposes hereof, the term “Receipts” means the sum of all cash receipts of the Partnership from all sources for such period (including Net Sale Proceeds and Net Financing Proceeds but excluding Capital Contributions) and any amounts held as reserves as of the last day of such period which the General Partner reasonably deems to be in excess of necessary reserves as determined below. The term “Expenditures” means the sum of (a) all cash expenses of the Partnership for such period, (b) the amount of all payments of principal of, premium, if any, and interest on account of any indebtedness of the Partnership and (c) such additions to reserves as of the last day of such period as the General Partner deems necessary or appropriate or any capital, operating or other expenditure, including, without limitation, contingent liabilities, but the term “Expenditures” shall not include any expense paid from a reserve previously established by the Partnership. For this purpose, cash proceeds received by a Joint Venture Partnership shall not be deemed to be received or available to the Partnership until (i) the distribution of such proceeds is actually received by the Partnership, or (ii) under the terms of the Joint Venture Partnership’s partnership

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agreement, the Partnership controls the timing of the Joint Venture Partnership’s distributions and then only to the extent of the Partnership’s entitlement to such distributions.

     “Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to be closed.

     “Capital Account” means, with respect to any Partner, the Capital Account maintained for such Partner in accordance with the following provisions:

     (a) To each Partner’s Capital Account there shall be added such Partner’s Capital Contributions, such Partner’s share of Net Income and any items in the nature of income or gain which are specially allocated pursuant to Section 6.3, and the amount of any Partnership liabilities assumed by such Partner or which are secured by any property distributed to such Partner.

     (b) From each Partner’s Capital Account there shall be subtracted the amount of cash and the Gross Asset Value of any property distributed to such Partner pursuant to any provision of this Agreement, such Partner’s distributive share of Net Losses and any items in the nature of expenses or losses which are specially allocated pursuant to Section 6.3, and the amount of any liabilities of such Partner assumed by the Partnership or which are secured by any property contributed by such Partner to the Partnership (except to the extent already reflected in the amount of such Partner’s Capital Contribution).

     (c) In the event any interest in the Partnership is transferred in accordance with the terms of this Agreement (which does not result in a termination of the Partnership for federal income tax purposes), the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred interest.

     (d) In determining the amount of any liability for purposes of subsections (a) and (b) hereof, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations.

     (e) The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted and applied in a manner consistent with such Regulations. In the event the General Partner shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto (including, without limitation, debits or credits relating to liabilities which are secured by contributed or distributed property or which are assumed by the Partnership, the General Partner, or the Limited Partners) are computed in order to comply with such Regulations, the General Partner may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any Person pursuant to Article 13 of this Agreement upon the dissolution of the Partnership. The General Partner also shall (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Partners and the amount of Partnership capital reflected on the Partnership’s balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate

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modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b) or Section 1.704-2.

     “Capital Contribution” means, with respect to any Partner, the amount of money and the initial Gross Asset Value of any property (other than money) contributed to the Partnership by such Partner (net of any liabilities assumed by the Partnership relating to such property and any liability to which such property is subject).

     “Cash Amount” means, with respect to any Partnership Unit subject to a Redemption, an amount of cash equal to the Deemed Partnership Interest Value attributable to such Partnership Unit.

     “Certificate” means the Certificate of Limited Partnership relating to the Partnership filed in the office of the office of the Secretary of State of the State of Delaware on March 4, 2010, as amended from time to time in accordance with the terms and the Act.

     “Charter” means the Articles of Incorporation of the Company filed with the Maryland State Department of Assessments and Taxation on March 1, 2010 , as further amended or restated from time to time.

     “Code” means the Internal Revenue Code of 1986, as amended from time to time or any successor statute thereto. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law.

     “Common Unit” means a Partnership Unit which is designated as a Common Unit and which has the rights, preferences and other privileges designated herein in respect of Common Unitholders. The number of any Common Units owned by a Partner shall be set forth on Exhibit A, as may be amended from time to time.

     “Common Unitholder” means a Partner that holds Common Units.

     “Common Unit Distribution” shall have the meaning set forth in Section 4.3.E.(ii) hereof.

     “Common Unit Economic Balance” is an amount equal to the quotient that results when (i) the sum of (x) the Capital Account of the General Partner attributable to its Common Units, (y) the General Partner’s share of Partner Minimum Gain, if any, and (z) the General Partner’s share of Partnership Minimum Gain, if any, is divided by (ii) the number of Common Units held by the General Partner.

     “Communities GP” has the meaning set forth in the first paragraph recitals to this Agreement.

     “Communities LP” has the meaning set forth in the first paragraph recitals to this Agreement.

     “Company” has the meaning set forth in the recitals to this Agreement.

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     “Consent” means the consent to, approval of, or vote on a proposed action by a Partner given in accordance with Article 14.

     “Consent of the Limited Partners” means the Consent of a Majority in Interest of the Limited Partners, which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and may be given or withheld by a Majority in Interest of the Limited Partners, unless otherwise expressly provided herein, in their sole and absolute discretion.

     “Consent of the Partners” means the Consent of Partners holding Percentage Interests (other than PIUs) that in the aggregate are equal to or greater than fifty percent (50%) of the aggregate Percentage Interests of all Partners, which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and may be given or withheld by such Partners, in their sole and absolute discretion.

     “Constituent Person” shall have the meaning set forth in Section 8.7.B.

     “Constructively Own” means ownership under the constructive ownership rules described in Exhibit C.

     “Contributed Property” means each property or other asset, in such form as may be permitted by the Act, but excluding cash, contributed or deemed contributed to the Partnership (or, to the extent provided in applicable Regulations, deemed contributed to the Partnership on termination and reconstitution thereof pursuant to Section 708 of the Code).

     “Conversion Date” shall have the meaning set forth in Section 8.7.A.

     “Debt” means, as to any Person, as of any date of determination, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services; (ii) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds, guarantees and other similar instruments guaranteeing payment or other performance of obligations by such Person; (iii) all indebtedness for borrowed money or for the deferred purchase price of property or services secured by any lien on any property owned by such Person, to the extent attributable to such Person’s interest in such property, even though such Person has not assumed or become liable for the payment thereof; and (iv) lease obligations of such Person which, in accordance with generally accepted accounting principles, should be capitalized.

     “Deemed Partnership Interest Value” means, as of any date with respect to any class of Partnership Interests, the Deemed Value of the Partnership Interests of such class multiplied by the applicable Partner’s Percentage Interest of such class.

     “Deemed Value of the Partnership Interests” means, as of any date with respect to any class or series of Partnership Interests, (i) the total number of Partnership Units of the General Partner in such class or series of Partnership Interests (as provided for in Section 4.1 and Section 4.3.B.) issued and outstanding as of the close of business on such date multiplied by the Fair Market Value determined as of such date of a share of capital stock of the Company which corresponds to such class or series of Partnership Interests, as adjusted (x) pursuant to Section

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7.5 (in the event the Company acquires material assets, other than on behalf of the Partnership) and (y) for stock dividends and distributions, stock splits and subdivisions, reverse stock splits and combinations, distribution of warrants or options and distributions of evidences of indebtedness or assets not received by the Company (either directly or indirectly through Communities GP and Communities LP) pursuant to a pro rata distribution by the Partnership; (ii) divided by the Percentage Interest of the General Partner in such class or series of Partnership Interests on such date; provided, that if no outstanding shares of capital stock of the General Partner correspond to a class of series of Partnership Interests, the Deemed Value of the Partnership Interests with respect to such class or series shall be equal to an amount reasonably determined by the General Partner.

     “Depreciation” means, for each fiscal year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner.

     “Distribution Payment Date” shall mean the dates upon which the General Partner makes distributions in accordance with Section 5.1 of the Partnership Agreement.

     “Economic Capital Account Balance” with respect to a PIU Holder means an amount equal to the sum of: (i) the PIU Holder’s Capital Account balance, (ii) the PIU Holder’s share of Partnership Minimum Gain, if any, and (iii) the PIU Holder’s share of Partner Minimum Gain, if any, all determined as of the date the PIU Holder’s Economic Capital Account Balance is to be measured.

     “Effective Date” means the date of closing of the initial public offering of REIT Shares, upon which date the contributions set forth on Exhibit A shall become effective.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     “Fair Market Value” means, with respect to any share of capital stock of the Company, the average of the daily market price for the five (5) consecutive trading days immediately preceding the date with respect to which “Fair Market Value” must be determined hereunder or, if such date is not a Business Day, the immediately preceding Business Day. The market price for each such trading day shall be: (i) if such shares are listed or admitted to trading on any securities exchange or the NASDAQ Global Select Market, the closing price, regular way, on such day, or if no such sale takes place on such day, the average of the closing bid and asked prices on such day, (ii) if such shares are not listed or admitted to trading on any securities exchange or the NASDAQ Global Select Market, the last reported sale price on such day or, if no sale takes place on such day, the average of the closing bid and asked prices on such day, as reported by the quotation source on which such shares are quoted, or (iii) if such shares are not

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listed or admitted to trading on any securities exchange or the NASDAQ Global Select Market and no such last reported sale price or closing bid and asked prices are available, the average of the reported high bid and low asked prices on such day, as reported by the quotation source on which such shares are quoted, or if there shall be no bid and asked prices on such day, the average of the high bid and low asked prices, as so reported, on the most recent day (not more than ten (10) days prior to the date in question) for which prices have been so reported; provided that, if there are no bid and asked prices reported during the five (5) days prior to the date in question, the Fair Market Value of such shares shall be determined by the General Partner acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate. In the event the REIT Shares Amount for such shares includes rights that a holder of such shares would be entitled to receive, then the Fair Market Value of such rights shall be determined by the General Partner acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate; and provided, further that, in connection with determining the Deemed Value of the Partnership Interests for purposes of determining the number of additional Partnership Units issuable to the Company (either directly or indirectly through Communities GP and Communities LP) upon a Capital Contribution funded by an underwritten public offering of shares of capital stock of the Company, the Fair Market Value of such shares shall be the public offering price per share of such class of capital stock sold. Notwithstanding the foregoing, the General Partner in its reasonable discretion may use a different “Fair Market Value” for purposes of making the determinations under subparagraph (b) of the definition of “Gross Asset Value” and Section 4.3.D in connection with the contribution of Property to the Partnership by a third party, provided such value shall be based upon the value per REIT Share (or per Partnership Unit) agreed upon by the General Partner and such third party for purposes of such contribution.

     “General Partner” means Communities GP or its successor as general partner of the Partnership.

     “General Partner Interest” means a Partnership Interest held by the General Partner. A General Partner Interest may be expressed as a number of Partnership Units.

     “Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:

     (a) The initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be the gross fair market value of such asset, as determined by the contributing Partner and the General Partner (as set forth on Exhibit A attached hereto, as such Exhibit may be amended from time to time); provided, that if the contributing Partner is the General Partner then, except with respect to the General Partner’s initial Capital Contribution which shall be determined as set forth on Exhibit A, the determination of the fair market value of the contributed asset shall be determined (i) by the price paid by the General Partner if the asset is acquired by the General Partner contemporaneously with its contribution to the Partnership, (ii) by Appraisal, if otherwise acquired by the General Partner, (iii) by the amount of cash if the asset is cash, and (iv) as reasonably determined by the General Partner if the asset is REIT Shares or other shares of capital stock of the Company.

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     (b) The Gross Asset Values of all Partnership assets shall be adjusted to equal their respective gross fair market values, as determined by the General Partner using such reasonable method of valuation as it may adopt, provided, however, that for such purpose, the net value of all of the Partnership assets, in the aggregate, shall be equal to the Deemed Value of the Partnership Interests of all classes of Partnership Interests then outstanding, regardless of the method of valuation adopted by the General Partner, immediately prior to the times listed below:

(i)	the acquisition of an additional interest in the Partnership by a new or existing Partner in exchange for more than a de minimis Capital Contribution, or in connection with the issuance of a greater than de minimis amount of PIUs or if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership in connection with the grant of an interest in the Partnership (other than a de minimis interest), as consideration for the provision of services to or for the benefit of the Partnership by an existing Partner acting in a Partner capacity, or by a new Partner acting in a Partner capacity or in anticipation of being a Partner;
(ii)	the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property as consideration for an interest in the Partnership if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership;
(iii)	the liquidation of the Partnership within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); and
(iv)	at such other times as the General Partner shall reasonably determine necessary or advisable in order to comply with Regulations Sections 1.704-1(b) and 1.704-2.

     (c) The Gross Asset Value of any Partnership asset distributed to a Partner shall be the gross fair market value of such asset on the date of distribution as determined by the distributee and the General Partner, or if the distributee and the General Partner cannot agree on such a determination, by Appraisal.

     (d) The Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to the extent that the General Partner reasonably determines that an adjustment pursuant to subparagraph (b) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (d).

     (e) If the Gross Asset Value of a Partnership asset has been determined or adjusted pursuant to subparagraph (a), (b) or (d), such Gross Asset Value shall thereafter be adjusted by

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the Depreciation taken into account with respect to such asset for purposes of computing Net Income and Net Losses.

     “Holder” means either the Partner or Assignee owning a Partnership Unit.

     “Immediate Family” means, with respect to any natural Person, such natural Person’s estate or heirs or current spouse or former spouse, parents, parents-in-law, children (whether natural, adopted or by marriage), siblings and grandchildren and any trust or estate, all of the beneficiaries of which consist of such Person or such Person’s spouse, or former spouse, parents, parents-in-law, children, siblings or grandchildren.

     “Incapacity” or “Incapacitated” means, (i) as to any individual Partner, death, total physical disability or entry by a court of competent jurisdiction adjudicating him or her incompetent to manage his or her Person or his or her estate; (ii) as to any corporation which is a Partner, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter; (iii) as to any partnership which is a Partner, the dissolution and commencement of winding up of the partnership; (iv) as to any estate which is a Partner, the distribution by the fiduciary of the estate’s entire interest in the Partnership; (v) as to any trustee of a trust which is a Partner, the termination of the trust (but not the substitution of a new trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For purposes of this definition, bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner commences a voluntary proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and non-appealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect has been entered against the Partner, (c) the Partner executes and delivers a general assignment for the benefit of the Partner’s creditors, (d) the Partner files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Partner in any proceeding of the nature described in clause (b) above, (e) the Partner seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator for the Partner or for all or any substantial part of the Partner’s properties, (f) any proceeding not filed voluntarily by a Partner seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed within 120 days after the commencement thereof, (g) the appointment without the Partner’s consent or acquiescence of a trustee, receiver or liquidator has not been vacated or stayed within 90 days of such appointment, or (h) an appointment referred to in clause (g) is not vacated within 90 days after the expiration of any such stay.

     “Indemnitee” means (i) any Person made a party to a proceeding by reason of his or her status as (A) the General Partner or the direct or the indirect parent of the General Partner or (B) a director or officer, employee or agent of the Partnership, the General Partner or the direct or indirect parent of the General Partner, and (ii) such other Persons (including Affiliates of the General Partner or the Partnership) as the General Partner may designate from time to time (whether before or after the event giving rise to potential liability), in its sole and absolute discretion.

     “Initial Agreement” has the meaning set forth on the recitals of this Agreement.

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     “IRS” means the Internal Revenue Service, which administers the internal revenue laws of the United States.

     “Joint Venture Partnership” shall mean any Subsidiary Partnership in which the Partnership and the Company do not own, directly or indirectly, 100% of the ownership interests in the aggregate.

     “Liens” shall mean any liens, security interests, mortgages, deeds of trust, capital leases, charges, claims, encumbrances, pledges, options, rights of first offer or first refusal and any other similar encumbrances of any nature whatsoever.

     “Limited Partner” means any Person named as a Limited Partner in Exhibit A attached hereto, as such Exhibit may be amended from time to time, or any Substituted Limited Partner or Additional Limited Partner, in such Person’s capacity as a Limited Partner in the Partnership.

     “Limited Partner Interest” means a Partnership Interest of a Limited Partner representing a fractional part of the Partnership Interests of all Limited Partners and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. A Limited Partner Interest may be expressed as a number of Common Units, Preferred Units or PIUs, as applicable.

     “Liquidation Value” means the amount of cash that a recipient of a newly issued partnership interest would receive, if immediately after the partnership interest was issued: (i) the Partnership sold all of its assets substantially as an entirety for cash equal to their Fair Market Value; (ii) the Partnership paid all Partnership liabilities pursuant to Section 13.2, and (iii) the Partnership distributed the remaining proceeds to the Partners in complete liquidation of the Partnership.

     “Liquidating Event” shall have the meaning set forth in Section 13.1.

     “Liquidator” shall have the meaning set forth in Section 13.2.A.

     “Majority in Interest of the Limited Partners” means Limited Partners (including in all cases the Limited Partner Interests held directly or indirectly by the Company) holding in the aggregate Percentage Interests (other than PIUs) that are greater than fifty percent (50%) of the aggregate Percentage Interests of all Limited Partners.

     “Net Financing Proceeds” shall mean the cash proceeds received by the Partnership in connection with any borrowing or refinancing of borrowing by or on behalf of the Partnership or by or on behalf of any Subsidiary Partnership (whether or not secured), after deduction of all costs and expenses incurred by the Partnership or the Subsidiary Partnership in connection with such borrowing, and after deduction of that portion of such proceeds used to (i) acquire the Property with respect to which any such borrowing was specifically incurred, and (ii) repay any other indebtedness of the Partnership or Subsidiary Partnerships with respect to which any such refinancing or borrowing was specifically incurred, or any interest or premium thereon. For this purpose, cash proceeds received by a Joint Venture Partnership shall not be deemed to be received or available to the Partnership until (i) such proceeds are distributed and actually

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received by the Partnership, or (ii) under the terms of the Joint Venture Partnership’s partnership agreement, the Partnership controls the timing and the amount of the Joint Venture Partnership’s distributions and then only to the extent of the Partnership’s entitlement to such distributions.

     “Net Sale Proceeds” shall mean the cash proceeds received by or available to the Partnership in connection with a sale or condemnation of, or casualty or other capital event with respect to, any asset by or on behalf of the Partnership or by or on behalf of a Subsidiary Partnership, after deduction of any costs or expenses incurred by the Partnership or a Subsidiary Partnership with respect to, or payable specifically out of the proceeds of, such transaction (including, without limitation, any repayment of any indebtedness required to be repaid as a result of such sale together with accrued interest and premium, if any, thereon and any sales commissions or other costs and expenses due and payable to any Person in connection with a sale, including to a Partner or its Affiliates). For this purpose, cash proceeds received by a Joint Venture Partnership shall not be deemed to be received or available to the Partnership until (i) such proceeds are distributed and actually received by the Partnership, or (ii) under the terms of the Joint Venture Partnership’s partnership agreement, the Partnership controls the timing and the amount of the Joint Venture Partnership’s distributions and then only to the extent of the Partnership’s entitlement to such distributions.

     “Net Income” or “Net Loss” means for each fiscal year of the Partnership, an amount equal to the Partnership’s taxable income or loss for such fiscal year, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

     (a) Any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition of Net Income or Net Loss shall be added to such taxable income or loss;

     (b) Any expenditures of the Partnership described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition of Net Income or Net Loss shall be subtracted from such taxable income or loss;

     (c) In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to subparagraph (b) or subparagraph (c) of the definition of Gross Asset Value, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss;

     (d) Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;

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     (e) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such fiscal year;

     (f) To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Partner’s interest in the Partnership, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Income or Net Loss; and

     (g) Notwithstanding any other provision of this definition of Net Income or Net Loss, any items which are specially allocated pursuant to Sections 6.3.A. and 6.4 shall not be taken into account in computing Net Income or Net Loss. The amounts of the items of Partnership income, gain, loss, or deduction available to be specially allocated pursuant to Sections 6.3.A. and 6.4 shall be determined by applying rules analogous to those set forth in this definition of Net Income or Net Loss.

     “New Securities” means (i) any rights, options, warrants or convertible or exchangeable securities having the right to subscribe for or purchase REIT Shares or other shares of capital stock of the Company, excluding in each case, securities issued or issuable under any Stock Plan, or (ii) any Debt issued by the Company that provides any of the rights described in clause (i).

     “Nonrecourse Deductions” shall have the meaning set forth in Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(c).

     “Nonrecourse Liability” shall have the meaning set forth in Regulations Section 1.752-1(a)(2).

     “Notice of Redemption” means the Notice of Redemption substantially in the form of Exhibit B to this Agreement.

     “Partner” means a General Partner or a Limited Partner, and “Partners” means the General Partner and the Limited Partners.

     “Partner Minimum Gain” means an amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).

     “Partner Nonrecourse Debt” shall have the meaning set forth in Regulations Section 1.704-2(b)(4).

     “Partner Nonrecourse Deductions” shall have the meaning set forth in Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with respect to a

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Partner Nonrecourse Debt for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(i)(2).

     “Partnership” means the limited partnership formed under the Act and pursuant to this Agreement, and any successor thereto.

     “Partnership Interest” means, an ownership interest in the Partnership of either a Limited Partner or the General Partner, whether by Common Units, Preferred Units or PIUs, and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. A Partnership Interest may be expressed as a number of the applicable type of Partnership Units (i.e. Common Units, Preferred Units or PIUs). Unless otherwise expressly provided for by the General Partner at the time of the original issuance of any Partnership Interests, all Partnership Interests (whether held by a Limited Partner or a General Partner) shall be Common Units.

     “Partnership Minimum Gain” shall have the meaning set forth in Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net increase or decrease in Partnership Minimum Gain, for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(d).

     “Partnership Record Date” means the record date established by the General Partner for the distribution of Available Cash pursuant to Section 5.1 which record date shall be the same as the record date established by the Company for a distribution to its stockholders of some or all of its portion of such distribution.

     “Partnership Unit” means, with respect to any class of Partnership Interest, a fractional, undivided share of such class of Partnership Interest issued pursuant to Sections 4.1 and 4.3.

     “Partnership Year” means the fiscal year of the Partnership, which shall be the calendar year.

     “Percentage Interest” means, as to a Partner holding a class or series of Partnership Interests, its interest in such class or series as determined by dividing the Partnership Units of such class or series owned by such Partner by the total number of Partnership Units of such class then outstanding as specified in Exhibit A attached hereto, as such Exhibit may be amended from time to time. If the Partnership issues more than one class or series of Partnership Interests, the interest in the Partnership among the classes or series of Partnership Interests shall be determined as set forth in the amendment to the Partnership Agreement setting forth the rights and privileges of such additional classes or series of Partnership Interest, if any, as contemplated by Section 4.3.C.

     “Person” means an individual or a corporation, partnership, limited liability company, trust, unincorporated organization, association or other entity.

     “PIU” means a Partnership Unit which is designated as a profits interest unit and which has the rights, preferences and other privileges designated in Section 4.3.E. hereof and elsewhere

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in the Partnership in respect of PIU Holders. The number of any PIUs owned by a Partner shall be set forth on Exhibit A, as may be amended from time to time.

     “PIU Holder” means a Limited Partner that holds PIUs.

     “PIU Vesting Agreement” means each or any, as the context implies, PIU Vesting Agreement entered into by a PIU Holder upon acceptance of an award of PIUs under the Plan (as such agreement may be amended, modified or supplemented from time to time) or in connection with the initial public offering.

     “Plan Asset Regulation” means the regulations promulgated by the United States Department of Labor in Title 29, Code of Federal Regulations, Part 2510, Section 2510.3-101, and any successor regulations thereto.

     “Preferred Unit” means a limited partnership interest (of any series), other than a Common Unit, represented by a fractional, undivided share of the Partnership Interests of all Partners issued hereunder and which is designated as a “Preferred Unit” (or as a particular class or series of Preferred Units) herein and which has the rights, preferences and other privileges designated herein (including by way of a certificate of designations) in respect of a Preferred Unitholder. The number of any Preferred Units owned by a Partner shall be set forth on Exhibit A, as may be amended from time to time.

     “Preferred Unitholder” means a Limited Partner that holds Preferred Units (of any class or series).

     “Property” means any property or other investment in which the Partnership holds a direct or indirect ownership interest.

     “Qualified Transferee” means an “accredited investor” as such term is defined in Rule 501 promulgated under the Securities Act.

     “Redemption” shall have the meaning set forth in Section 8.6.A.

     “Regulations” means the Income Tax Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

     “Regulatory Allocations” shall have the meaning set forth in Section 6.3.B.

     “REIT” means an entity qualifying as a real estate investment trust under Sections 856 through 859 of the Code.

     “REIT Requirements” shall have the meaning set forth in Section 5.1.

     “REIT Share” means a share of common stock of the Company.

     “REIT Shares Amount” means, as of any date, an aggregate number of REIT Shares equal to the number of Tendered Units, as adjusted (x) pursuant to Section 7.5 (in the event the

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Company acquires material assets, other than on behalf of the Partnership) and (y) for stock dividends and distributions, stock splits and subdivisions, reverse stock splits and combinations, distributions of rights, warrants or options, and distributions of evidences of indebtedness or assets relating to assets not received by the Company (either directly or indirectly through Communities GP and Communities LP) pursuant to a pro rata distribution by the Partnership.

     “Safe Harbor” means the ability to treat the fair market value of a Partnership interest that is transferred in connection with the performance of services as being equal to the liquidation value of that interest pursuant to a Safe Harbor Election.

     “Safe Harbor Election” means an election by the Partnership and its Partners to apply the Safe Harbor described in the Safe Harbor Regulation and IRS Notice 2005-43 issued May 19, 2005.

     “Safe Harbor Regulation” means Prop. Treas. Reg. § 1.83-3(l) issued May 19, 2005.

     “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder and any successor statute thereto.

     “Securities Exchange Act” means the Securities Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder and any successor statute thereto.

     “Specified Redemption Date” means the day of receipt by the General Partner of a Notice of Redemption.

     “Stock Plan” means any stock incentive, stock option, stock ownership or employee benefits plan of the Company.

     “Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, joint venture or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person.

     “Subsidiary Partnership” means any partnership or limited liability company that is a Subsidiary of the Partnership.

     “Substituted Limited Partner” means a Person who is admitted as a Limited Partner to the Partnership pursuant to Section 11.5.

     “Surviving Partnership” shall have the meaning set forth in Section 11.3.A.

     “Tax Items” means for income tax purposes each item of income, gain, loss and deduction.

     “Tenant” means any tenant from which the Company derives rent either directly or indirectly through partnerships or other entities, including the Partnership.

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     “Tendered Units” shall have the meaning set forth in Section 8.6.A.

     “Tendering Partner” shall have the meaning set forth in Section 8.6.A.

     “Termination Transaction” shall have the meaning set forth in Section 11.3.A.

     “Transaction” shall have the meaning set forth in Section 8.7.B.

     “Unvested PIUs” means each or any, as the context implies, PIU that has not yet vested pursuant to such PIU’s PIU Vesting Agreement.

     “Vested PIUs” means each or any, as the context implies, PIU that has vested pursuant to such PIU’s PIU Vesting Agreement.

Section 1.2. Rules of Construction

     Unless otherwise indicated, all references herein to “REIT,” “REIT Requirements,” “REIT Shares” and “REIT Shares Amount” shall apply only with reference to the Company.

ARTICLE 2.
ORGANIZATIONAL MATTERS

Section 2.1. Organization

     The Partnership is a limited partnership formed pursuant to the provisions of the Act and upon the terms and conditions set forth in this Agreement. Except as expressly provided herein, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Act. The Partnership Interest of each Partner shall be personal property for all purposes.

Section 2.2. Name

     The name of the Partnership is “Campus Crest Communities Operating Partnership, LP.” The Partnership’s business may be conducted under any other name or names deemed advisable by the General Partner, including the name of the General Partner or any Affiliate thereof. The words “Limited Partnership,” “LP,” “Ltd.” or similar words or letters shall be included in the Partnership’s name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. The General Partner in its sole and absolute discretion may change the name of the Partnership at any time and from time to time.

Section 2.3. Registered Office and Agent; Principal Office

     The Registered Agent of the Partnership shall be The Corporation Trust Company or such other Person as the General Partner may select in its sole discretion. The Registered Office of the Partnership and the address of the principal office of the partnership in Delaware shall be The Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 or such other location as the General Partner may select in its sole and absolute discretion. The principal office of the Partnership outside of Delaware is located at 2100 Rexford Road, Suite 414, Charlotte,

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North Carolina 28211, or such other place as the General Partner may from time to time designate. The Partnership may maintain offices at such other place or places within or outside the State of North Carolina as the General Partner deems advisable.

Section 2.4. Power of Attorney

     A. Each Limited Partner and each Assignee constitutes and appoints the General Partner, any Liquidator, and authorized officers and attorneys-in-fact of each, and each of those acting singly, in each case with full power of substitution, as its true and lawful agent and attorney-in-fact, with full power and authority in its name, place and stead to:

          (1) execute, swear to, acknowledge, deliver, file and record in the appropriate public offices (a) all certificates, documents and other instruments (including, without limitation, this Agreement and the Certificate and all amendments or restatements thereof) that the General Partner or the Liquidator deems appropriate or necessary to form, qualify or continue the existence or qualification of the Partnership as a limited partnership (or a partnership in which the Limited Partners have limited liability) in the State of Delaware and in all other jurisdictions in which the Partnership may conduct business or own property; (b) all instruments that the General Partner or any Liquidator deems appropriate or necessary to reflect any amendment, change, modification or restatement of this Agreement in accordance with its terms; (c) all conveyances and other instruments or documents that the General Partner or any Liquidator deems appropriate or necessary to reflect the dissolution and liquidation of the Partnership pursuant to the terms of this Agreement, including, without limitation, a certificate of cancellation; (d) all instruments, agreements or other documents relating to the admission, withdrawal, removal or substitution of any Partner pursuant to, or to other events described in, Articles 11, 12 or 13 or the Capital Contribution of any Partner; and (e) all certificates, documents and other instruments relating to the determination of the rights, preferences and privileges of Partnership Interests; and

          (2) execute, swear to, acknowledge and file all ballots, consents, approvals, waivers, certificates and other instruments appropriate or necessary, in the sole and absolute discretion of the General Partner or any Liquidator, to make, evidence, give, confirm or ratify any vote, consent, approval, agreement or other action which is made or given by the Partners hereunder or is consistent with the terms of this Agreement or appropriate or necessary, in the sole discretion of the General Partner or any Liquidator, to effectuate the terms or intent of this Agreement.

     B. The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest, in recognition of the fact that each of the Partners will be relying upon the power of the General Partner and any Liquidator to act as contemplated by this Agreement in any filing or other action by it on behalf of the Partnership, and it shall survive and not be affected by the subsequent Incapacity of any Limited Partner or Assignee and the transfer of all or any portion of such Limited Partner’s or Assignee’s Partnership Units and shall extend to such Limited Partner’s or Assignee’s heirs, successors, assigns and personal representatives. Each such Limited Partner or Assignee hereby agrees to be bound by any representation made by the General Partner or any Liquidator, acting in good faith pursuant to such power of attorney; and each such Limited Partner or Assignee hereby waives any and all defenses which may be

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available to contest, negate or disaffirm the action of the General Partner or any Liquidator, taken in good faith under such power of attorney. Each Limited Partner or Assignee shall execute and deliver to the General Partner or any Liquidator, within 15 days after receipt of the General Partner’s or Liquidator’s request therefor, such further designation, powers of attorney and other instruments as the General Partner or the Liquidator, as the case may be, deems necessary or appropriate to effectuate this Agreement and the purposes of the Partnership.

Section 2.5. Term

     The Partnership’s term shall commence upon the filing of the Certificate of Limited Partnership with the Secretary of State of the State of Delaware and shall continue until it is dissolved pursuant to the provisions of Article 13 or as otherwise provided by law.

ARTICLE 3.
PURPOSE

Section 3.1. Purpose and Business

     The purpose and nature of the business to be conducted by the Partnership is to conduct any business that may be lawfully conducted by a limited partnership organized pursuant to the Act; provided, however, that such business shall be limited to and conducted in such a manner as to permit the Company at all times to qualify as a REIT, unless the Company otherwise ceases to qualify as a REIT. The General Partner also shall be empowered to do any and all acts and things necessary or prudent to ensure that the Partnership will not be classified as a “publicly traded partnership” for purposes of Section 7704 of the Code.

Section 3.2. Powers

     The Partnership is empowered to do any and all acts and things necessary, appropriate, proper, advisable, incidental to, desirable or convenient for the furtherance and accomplishment of the purposes and business described herein and for the protection and benefit of the Partnership, including, without limitation, full power and authority, directly or through its ownership interest in other entities, to enter into, perform and carry out contracts of any kind, borrow money and issue evidences of indebtedness, whether or not secured by mortgage, deed of trust, pledge or other Liens, acquire, own, manage, improve and develop real property, and lease, sell, transfer and dispose of real property.

Section 3.3. Partnership Only for Purposes Specified

     No Limited Partner shall have any authority to act for, bind, commit or assume any obligation or responsibility on behalf of the Partnership, its properties or any other Partner unless such authority is specifically delegated to such Limited Partner by the General Partner. No Partner, in its capacity as a Partner under this Agreement, shall be responsible or liable for any indebtedness or obligation of another Partner, nor shall the Partnership be responsible or liable for any indebtedness or obligation of any Partner, incurred either before or after the execution and delivery of this Agreement by such Partner, except as to those responsibilities, liabilities, indebtedness or obligations incurred pursuant to and as limited by the terms of this Agreement and the Act.

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Section 3.4. Representations and Warranties by the Parties

     A. Each Partner that is an individual represents and warrants to each other Partner that (i) such Partner has the legal capacity to enter into this Agreement and perform such Partner’s obligations hereunder, (ii) except as disclosed in a contribution agreement by and between the Partner, the Company and the Partnership with respect to any transfer of property to the Partnership, the consummation of the transactions contemplated by this Agreement to be performed by such Partner will not result in a breach or violation of, or a default under, any agreement by which such Partner or any of such Partner’s property is or are bound, or any statute, regulation, order or other law to which such Partner is subject, (iii) such Partner is a “United States person” within the meaning of Section 7701(a)(30) of the Code, and (iv) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms.

     B. Each Partner that is not an individual represents and warrants to each other Partner that (i) its execution and delivery of this Agreement and all transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action, including without limitation, that of its general partner(s), committee(s), trustee(s), beneficiaries, directors and/or stockholder(s), as the case may be, as required, (ii) except as disclosed in a contribution agreement by and between the Partner, the Company and the Partnership with respect to any transfer of property to the Partnership, the consummation of such transactions shall not result in a breach or violation of, or a default under, its certificate of limited partnership, partnership agreement, trust agreement, limited liability company operating agreement, charter, bylaws or other agreements or instruments governing its organization and operation, as the case may be, any agreement by which such Partner or any of such Partner’s properties or any of its partners, beneficiaries, trustees or stockholders, as the case may be, is or are bound, or any statute, regulation, order or other law to which such Partner or any of its partners, trustees, beneficiaries or stockholders, as the case may be, is or are subject, (iii) such Partner is a “United States person” within the meaning of Section 7701(a)(30) of the Code, and (iv) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms.

     C. Each Partner represents, warrants, and agrees that it has acquired and continues to hold its interest in the Partnership for its own account for investment only and not for the purpose of, or with a view toward, the resale or distribution of all or any part thereof, nor with a view toward selling or otherwise distributing such interest or any part thereof at any particular time or under any predetermined circumstances. Each Partner further represents and warrants that it is a sophisticated investor, able and accustomed to handling sophisticated financial matters for itself, particularly real estate investments, and that it has a sufficiently high net worth that it does not anticipate a need for the funds it has invested in the Partnership in what it understands to be a highly speculative and illiquid investment. Each Partner represents, warrants and agrees that such Partner is an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act).

     D. Each Partner acknowledges that (i) the Partnership Units have not been registered under the Securities Act and may not be transferred unless they are subsequently registered under the Securities Act or an exemption from such registration is available (it being understood that the Partnership has no intention of so registering the Partnership Units) and any REIT Shares that might be issued in exchange for Partnership Units may not be registered under the Securities Act,

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which would limit the transferability of such REIT Shares in a manner similar to the limitations described above for the Partnership Units and (ii) a notation shall be made in the appropriate records of the Partnership indicating that the Partnership Units are subject to restrictions on transfer.

     E. Each Partner further represents, warrants, covenants and agrees as follows:

          (1) Except as provided in Exhibit D, at any time such Partner actually or Constructively Owns a 25% or greater capital interest or profits interest in the Partnership, it does not and will not, without the prior written consent of the General Partner (or in the case of the General Partner, a Majority in Interest of the Partners exclusive of the interest of the General Partner), actually own or Constructively Own (a) with respect to any Tenant that is a corporation, any stock of such Tenant, and (b) with respect to any Tenant that is not a corporation, any interests in either the assets or net profits of such Tenant.

          (2) Upon request of the General Partner (or in the case of the General Partner, a Majority in Interest of the Partners exclusive of the interest of the General Partner), it will promptly disclose to the General Partner the amount of REIT Shares or other shares of capital stock of the Company that it actually owns or Constructively Owns.

     Each Partner understands that if, for any reason, (a) the representations, warranties or agreements set forth in E.(1) or (2) above are violated, or (b) the Partnership’s actual or Constructive Ownership of REIT Shares or other shares of capital stock of the Company violates the limitations set forth in the Charter, then (x) some or all of the Redemption rights of the Partners may become non-exercisable, and (y) some or all of the REIT Shares owned by the Partners may be automatically transferred to a trust for the benefit of a charitable beneficiary, as provided in the Charter.

     F. The representations and warranties contained in this Section 3.4 shall survive the execution and delivery of this Agreement by each Partner and the dissolution and winding up of the Partnership.

     G. Each Partner hereby acknowledges that no representations as to potential profit, cash flows, funds from operations or yield, if any, in respect of the Partnership or the General Partner have been made by any Partner or any employee or representative or Affiliate of any Partner, and that projections and any other information, including, without limitation, financial and descriptive information and documentation, which may have been in any manner submitted to such Partner shall not constitute any representation or warranty of any kind or nature, express or implied.

Section 3.5. Certain ERISA Matters

     Each Partner acknowledges that the Partnership is intended to qualify as a “real estate operating company” (as such term is defined in the Plan Asset Regulation). The General Partner shall use its commercially reasonable efforts to structure the investments in, relationships with and conduct with respect to Properties and any other assets of the Partnership so that the Partnership will be a “real estate operating company” (as such term is defined in the Plan Asset Regulation).

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ARTICLE 4.
CAPITAL CONTRIBUTIONS

Section 4.1. Capital Contributions.

     A. Concurrently herewith, the General Partner shall contribute to the Partnership cash in the amount set forth opposite the General Partner’s name on Exhibit A hereto, in immediately available funds to a Partnership bank account.

     B. Concurrently herewith, each Limited Partner shall contribute to the Partnership the Capital Contributions, Contributed Property and such other property related interests as set forth opposite such Limited Partner’s name on Exhibit A.

     C. Each Partner shall have a Percentage Interest in the Partnership as set forth in Exhibit A, which Percentage Interest shall be adjusted in Exhibit A from time to time by the General Partner to the extent necessary to reflect accurately exchanges, redemptions, Capital Contributions, the issuance of additional Partnership Units or similar events having an effect on a Partner’s Percentage Interest. Except as required by law, as otherwise provided in Sections 4.3, 4.4 or 10.5, or as otherwise agreed to by a Partner and the Partnership, no Partner shall be required or permitted to make any additional Capital Contributions or loans to the Partnership. Unless otherwise specified by the General Partner at the time of the creation of any class of Partnership Interests, the corresponding class or series of capital stock for any Partnership Units issued shall be REIT Shares.

     D. A Limited Partner shall be unconditionally liable to the Partnership for all or a portion of any deficit in its Capital Account if it so elects to be liable for such deficit or portion thereof. Such election may be for either a limited or an unlimited amount and may be amended or withdrawn at any time. The election, and any amendment thereof, shall be made by written notice to the General Partner stating that the Limited Partner elects to be liable, and specifying the limitations, if any, on the maximum amount or duration of such liability. Said election, or amendment thereof, shall be effective only from the date the written notice is received by the General Partner, and shall terminate upon the date, if any, specified therein as a termination date or upon delivery to the General Partner of a subsequent written notice withdrawing or otherwise amending such election. A withdrawal, or an amendment reducing the Limited Partner’s maximum liability, shall not be effective to avoid responsibility for any loss incurred prior to such amendment or withdrawal.

Section 4.2. Loans by Third Parties

     Subject to Section 4.3, the Partnership may incur Debt, or enter into other similar credit, guarantee, financing or refinancing arrangements for any purpose (including, without limitation, in connection with any further acquisition of Properties) with any Person that is not the General Partner upon such terms as the General Partner determines appropriate; provided that, the Partnership shall not incur any Debt that is recourse to the General Partner, except to the extent otherwise agreed to by the General Partner in its sole discretion.

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Section 4.3. Additional Funding and Capital Contributions

     A. General. The General Partner may, at any time and from time to time determine that the Partnership requires additional funds (“Additional Funds”) for the acquisition of additional Properties or for such other Partnership purposes as the General Partner may determine. Additional Funds may be raised by the Partnership, at the election of the General Partner, in any manner provided in, and in accordance with, the terms of this Section 4.3. No Person shall have any preemptive, preferential or similar right or rights to subscribe for or acquire any Partnership Interest, except as set forth in this Section 4.3.

     B. Issuance of Additional Partnership Interests. The General Partner, in its sole and absolute discretion, may raise all or any portion of the Additional Funds by accepting additional Capital Contributions. In connection therewith, the General Partner is hereby authorized to cause the Partnership from time to time to issue to Partners (including the General Partner) or other Persons (including, without limitation, in connection with the contribution of property to the Partnership) additional Partnership Units or other Partnership Interests in one or more classes, or one or more series of any of such classes, with such designations, preferences and relative, participating, optional or other special rights, powers, and duties, including rights, powers, and duties senior to then existing Limited Partner Interests, all as shall be determined by the General Partner in its sole and absolute discretion, without the approval of any Limited Partners, subject to Delaware law, including without limitation, (i) the allocations of items of Partnership income, gain, loss, deduction, and credit to such class or series of Partnership Interests, (ii) the rights, designations, preferences and priorities of each such class or series of Partnership Interests to share in Partnership distributions, (iii) the rights, designations, preferences and priorities of each such class or series of Partnership Interests upon dissolution and liquidation of the Partnership, and (iv) the right to vote, including, without limitation, the Limited Partner approval rights set forth in Section 11.2.

     C. Issuance of REIT Shares or Other Securities by the Company. From and after the Company’s completion of its first public offering of REIT Shares, the Company shall not issue any additional REIT Shares, other shares of capital stock of the Company or New Securities (other than REIT Shares issued pursuant to Section 8.6 or pursuant to a dividend or distribution (including any stock split) of REIT Shares, other shares of capital stock of the Company or New Securities to all of its stockholders on a pro rata basis) unless (i) the Partnership shall issue to the Company (either directly or indirectly through Communities GP and Communities LP), Partnership Interests or rights, options, warrants or convertible or exchangeable securities of the Partnership having designations, preferences and other rights, all such that the economic interests thereof are substantially similar to those of the REIT Shares, other shares of capital stock of the Company or New Securities and (ii) the Company shall contribute (either directly or indirectly through Communities GP and Communities LP) the net proceeds from the issuance of such additional REIT Shares, other shares of capital stock of the Company or New Securities, as the case may be, and from the exercise of the rights contained in such REIT Shares, other capital stock of the Company or New Securities, as applicable, to the Partnership as a Capital Contribution. Without limiting the foregoing, the Company is expressly authorized to issue REIT Shares, other shares of capital stock of the Company or New Securities for no tangible value or for less than fair market value, and the Company is expressly authorized to cause the General Partner to cause the Partnership to issue to the Company (either directly or indirectly through

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Communities GP and Communities LP) corresponding Partnership Interests, so long as (x) the General Partner concludes in good faith that such issuance of Partnership Interests is in the interests of the Partnership, and (y) the Company contributes (either directly or indirectly through Communities GP and Communities LP) the net proceeds, if any, from such issuance and exercise to the Partnership.

     In connection with the Company’s initial public offering of REIT Shares and any other issuance of REIT Shares, other capital stock of the Company or New Securities, the Company shall contribute to the Partnership (either directly or indirectly through Communities GP and Communities LP) any net proceeds raised in connection with such issuance; provided, that if the net proceeds actually received by the Company are less than the gross proceeds of such issuance as a result of any underwriter’s discount or other expenses paid or incurred in connection with such issuance, then the Company shall be deemed to have made a Capital Contribution to the Partnership in the amount equal to the sum of the net proceeds of such issuance plus the amount of such underwriter’s discount and other expenses paid by the Company (which discount and expense shall be treated as an expense for the benefit of the Partnership for purposes of Section 7.4). In the case of issuances of REIT Shares, other capital stock of the Company or New Securities pursuant to any Stock Plan at a discount from fair market value or for no value, the amount of such discount representing compensation to the employee, as determined by the General Partner, shall be treated as an expense for the benefit of the Partnership for purposes of Section 7.4 and, as a result, the Company shall be deemed to have made a Capital Contribution to the Partnership (either directly or indirectly through Communities GP and Communities LP) in an amount equal to the sum of any net proceeds of such issuance plus the amount of such expense.

     D. Percentage Interest Adjustments in the Case of Capital Contributions for Partnership Units. Upon the acceptance of additional Capital Contributions in exchange for any class or series of Partnership Units, the Percentage Interest in such class or series of Partnership Units shall be equal to a fraction, the numerator of which is equal to the amount of cash and the Agreed Value of the Property contributed as of the Business Day immediately preceding the date on which the additional Capital Contributions are made (an “Adjustment Date”) and the denominator of which is equal to the sum of (i) the Deemed Value of the Partnership Interests of such class or series (computed as of the Business Day immediately preceding the Adjustment Date) and (ii) the aggregate Agreed Value of additional Capital Contributions contributed by all Partners and/or third parties to the Partnership on such Adjustment Date in such class or series of Partnership Interests. The Percentage Interest of each other Partner holding Partnership Interests of such class or series not making a full pro rata Capital Contribution shall be adjusted to equal a fraction, the numerator of which is equal to the sum of (i) the Deemed Partnership Interest Value of such Partner in respect of such class or series (computed as of the Business Day immediately preceding the Adjustment Date) and (ii) the Agreed Value of additional Capital Contributions, if any, made by such Partner to the Partnership in such class or series of Partnership Interests as of such Adjustment Date, and the denominator of which is equal to the sum of (i) the Deemed Value of the Partnership Interests of such class or series (computed as of the Business Day immediately preceding the Adjustment Date), plus (ii) the aggregate Agreed Value of additional Capital Contributions contributed by all Partners and/or third parties to the Partnership on such Adjustment Date in such class or series. Provided, however, solely for purposes of calculating a Partner’s Percentage Interest pursuant to this Section 4.3.D., (i) in the case of cash Capital

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Contributions by the Company (either directly or indirectly through Communities GP and Communities LP) funded by an offering of REIT Shares or other shares of capital stock of the Company and (ii) in the case of the contribution of properties by the Company (either directly or indirectly through Communities GP and Communities LP) which were acquired by the Company in exchange for REIT Shares or other shares of capital stock of the Company immediately prior to such contribution, the Company shall be issued (either directly or indirectly through Communities GP and Communities LP) a number of Partnership Units equal and corresponding to the number of such shares issued by the Company in exchange for such cash or Properties, the Partnership Units held by the other Partners shall not be adjusted, and the Partners’ Percentage Interests shall be adjusted accordingly. The General Partner shall promptly give each Partner written notice of its Percentage Interest, as adjusted.

     E. Issuance of PIUs. The General Partner may from time to time issue PIUs to Persons who provide services to the Partnership or its Affiliates, for such consideration as the General Partner may determine to be appropriate, and admit such Persons as Limited Partners. Subject to the following provisions of this Section 4.3.E and the special provisions of Sections 6.3.C., 8.7 and 8.8, PIUs shall be treated as Common Units, with all of the rights, privileges and obligations attendant thereto. For purposes of computing the Partners’ Percentage Interests, holders of PIUs shall be treated as Common Unit holders and PIUs shall be treated as Common Units. In particular, the Partnership shall maintain at all times a one-to-one correspondence between PIUs and Common Units for conversion, distribution and other purposes, including without limitation complying with the following procedures:

          (i) If an Adjustment Event (as defined below) occurs, then the General Partner shall make a corresponding adjustment to the PIUs to maintain a one-for-one conversion and economic equivalence ratio between Common Units and PIUs. The following shall be “Adjustment Events”: (A) the Partnership makes a distribution on all outstanding Common Units in Partnership Units; (B) the Partnership subdivides the outstanding Common Units into a greater number of units or combines the outstanding Common Units into a smaller number of units; or (C) the Partnership issues any Partnership Units in exchange for its outstanding Common Units by way of a reclassification or recapitalization of its Common Units. If more than one Adjustment Event occurs, the adjustment to the PIUs need be made only once using a single formula that takes into account each and every Adjustment Event as if all Adjustment Events occurred simultaneously. For the avoidance of doubt, the following shall not be Adjustment Events: (x) the issuance of Partnership Units in a financing, reorganization, acquisition or other similar business transaction; (y) the issuance of Partnership Units pursuant to any Stock Plan; or (z) the issuance of any Partnership Units to the Company (either directly or indirectly through Communities GP and Communities LP) in respect of a capital contribution to the Partnership of proceeds from the sale of securities by the Company. If the Partnership takes an action affecting the Common Units other than actions specifically described above as “Adjustment Events” and in the opinion of the General Partner such action would require an adjustment to the PIUs to maintain the one-to-one correspondence described above, the General Partner shall have the right to make such adjustment to the PIUs, to the extent permitted by law and by the Stock Plan, in such manner and at such time as the General Partner, in its sole discretion, may determine to be appropriate under the circumstances without the consent of any Limited Partner. If

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an adjustment is made to the PIUs as herein provided the Partnership shall promptly file in the books and records of the Partnership an officer’s certificate setting forth such adjustment and a brief statement of the facts requiring such adjustment, which certificate shall be conclusive evidence of the correctness of such adjustment absent manifest error. Promptly after filing of such certificate, the Partnership shall mail a notice to each PIU Holder setting forth the adjustment to his or her PIUs and the effective date of such adjustment; and

          (ii) The PIU Holders shall, in respect of each Distribution Payment Date, when, as and if authorized and declared by the General Partner out of assets legally available for that purpose, be entitled to receive distributions in an amount per PIU equal to the distributions per Common Unit (the “Common Unit Distribution”), paid to holders of record on the same record date established by the General Partner with respect to such Distribution Payment Date.

     The PIUs shall rank pari passu with the Common Units as to the payment of regular and special periodic distributions. As to the payment of distributions, any class or series of Partnership Units or Partnership Interests which by its terms specifies that it shall rank junior to, or pari passu with, or senior to the Common Units shall also rank junior to, or pari passu with, or senior to, as the case may be, the PIUs. Subject to the terms of any PIU Vesting Agreement, a PIU Holder shall be entitled to transfer his or her PIUs to the same extent, and subject to the same restrictions as holders of Common Units are entitled to transfer their Common Units pursuant to Article 11.

PIUs shall be subject to the following special provisions:

          (i) PIU Vesting Agreements. PIUs may, in the sole discretion of the General Partner, be issued subject to vesting, forfeiture and additional restrictions on transfer pursuant to the terms of a PIU Vesting Agreement. The terms of any PIU Vesting Agreement may be modified by the General Partner from time to time in its sole discretion, subject to any restrictions on amendment imposed by the relevant PIU Vesting Agreement or by the Stock Plan, if applicable.

          (ii) Forfeiture. Unless otherwise specified in the PIU Vesting Agreement, upon the occurrence of any event specified in a PIU Vesting Agreement resulting in either the right of the Partnership or the General Partner to repurchase PIUs at a specified purchase price or some other forfeiture of any PIUs, if the Partnership or the General Partner exercises such right to repurchase or forfeiture in accordance with the applicable PIU Vesting Agreement, then the relevant PIUs shall immediately, and without any further action, be treated as cancelled and no longer outstanding for any purpose. Unless otherwise specified in the PIU Vesting Agreement, no consideration or other payment shall be due with respect to any PIUs that have been forfeited, other than any distributions declared with respect to a Partnership Record Date prior to the effective date of the forfeiture. In connection with any repurchase or forfeiture of PIUs, the balance of the portion of the Capital Account of the PIU Holder that is attributable to all of his or her PIUs shall be reduced by the amount, if any, by which it exceeds the target balance

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contemplated by Section 6.3.C., calculated with respect to the PIU Holder’s remaining PIUs, if any.

          (iii) Allocations. PIU Holders shall be entitled to certain special allocations of gain under Section 6.3.C.

          (iv) Redemption. The Redemption right provided to Limited Partners under Section 8.6 shall not apply with respect to PIUs unless and until they are converted to Common Units as provided in clause (v) below and Section 8.7.

          (v) Conversion To Common Units. Vested PIUs will be converted into Common Units as provided in Section 8.7.

          (vi) Voting. PIUs shall have the voting rights provided in Section 8.8.

Section 4.4. Other Contribution Provisions

     In the event that any Partner is admitted to the Partnership and is given (or is treated as having received) a Capital Account in exchange for services rendered to the Partnership, such transaction shall be treated by the Partnership and the affected Partner as if the Partnership had compensated such Partner in cash, and the Partner had contributed such cash to the capital of the Partnership. In addition, with the consent of the General Partner, in its sole discretion, one or more Limited Partners may enter into agreements with the Partnership, in the form of a guarantee or contribution agreement, which have the effect of providing a guarantee of certain obligations of the Partnership.

Section 4.5. No Preemptive Rights

     Except to the extent expressly granted by the Partnership pursuant to another agreement, no Person shall have any preemptive, preferential or other similar right with respect to (i) additional Capital Contributions or loans to the Partnership or (ii) issuance or sale of any Partnership Units or other Partnership Interests.

ARTICLE 5.
DISTRIBUTIONS

Section 5.1. Requirement and Characterization of Distributions

     The General Partner shall cause the Partnership to distribute quarterly all, or such portion as the General Partner may in its discretion determine, of Available Cash generated by the Partnership to the Partners who are Partners on the applicable record date with respect to such distribution, (1) first, with respect to any class or series of Partnership Interests that are entitled to any preference in distributions, in accordance with the rights of such class or series of Partnership Interests (and within such class or series, pro rata in proportion to the respective Percentage Interests on the applicable record date), and (2) second, with respect to any class or series of Partnership Interests that are not entitled to any preference in distributions, such as Common Units and PIUs, pro rata to each such class or series in accordance with the terms of such class or series to the Partners who are Partners of such class or series on the Partnership

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Record Date with respect to such distribution (and within each such class or series, pro rata in proportion to the respective Percentage Interests on such Partnership Record Date). Unless otherwise expressly provided for herein or in an agreement, if any, entered into in connection with the creation of a new class or series of Preferred Units created in accordance with Article 4, no Partnership Interest shall be entitled to a distribution in preference to any other Partnership Interest. The Company shall undertake such reasonable efforts, as determined by it in its sole and absolute discretion and consistent with its qualification as a REIT, to cause the General Partner to cause the Partnership to distribute sufficient amounts to enable the Company, for so long as the Company has determined to qualify as a REIT, to pay stockholder dividends that will (a) satisfy the requirements for qualifying as a REIT under the Code and Regulations (“REIT Requirements”), and (b) except to the extent otherwise determined by the Company, avoid any federal income or excise tax liability of the Company.

Section 5.2. Distributions in Kind

     No right is given to any Partner to demand and receive property other than cash. The General Partner may determine, in its sole and absolute discretion, to make a distribution in-kind to the Partners of Partnership assets, and such assets shall be distributed in such a fashion as to ensure that the fair market value is distributed and allocated in accordance with Articles 5, 6 and 10.

Section 5.3. Distributions Upon Liquidation

     Notwithstanding Section 5.1, proceeds from a Liquidating Event shall be distributed to the Partners in accordance with Section 13.2.

Section 5.4. Distributions to Reflect Issuance of Additional Partnership Interests

     In the event that the Partnership issues additional Partnership Interests to the General Partner or any Additional Limited Partner pursuant to Section 4.3.B. or 4.3.C. or 4.3.E., the General Partner shall make such revisions to this Article 5 as it determines are necessary to reflect the issuance of such additional Partnership Interests. In the absence of any agreement to the contrary, an Additional Limited Partner shall be entitled to the distributions set forth herein (without regard to this Section 5.4) with respect to the period during which the closing of its contribution to the Partnership occurs, multiplied by a fraction the numerator of which is the number of days from and after the date of such closing through the end of the applicable period, and the denominator of which is the total number of days in such period.

ARTICLE 6.
ALLOCATIONS

Section 6.1. Timing and Amount of Allocations of Net Income and Net Loss

     Net Income and Net Loss of the Partnership shall be determined and allocated with respect to each Allocation Year of the Partnership as of the end of each such Allocation Year. Subject to the other provisions of this Article 6, an allocation to a Partner of a share of Net Income or Net Loss shall be treated as an allocation of the same share of each item of income, gain, loss or deduction that is taken into account in computing Net Income or Net Loss.

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Section 6.2. General Allocations

     A. Allocation of Net Income and Net Losses.

          (1) Net Income. After first giving effect to the special allocations provided in Section 6.3.A. and 6.4, Net Income for any Allocation Year shall be allocated to the Partners in the following manner and order of priority:

               (a) First, to the General Partner in an amount equal to the excess, if any, of: (i) the cumulative Net Losses allocated to the General Partner pursuant to Section 6.2.C. for all prior Allocation Years, over (ii) the cumulative Net Income allocated to the General Partner pursuant to this Section 6.2.A.(1)(a) for all prior Allocation Years;

               (b) Second, to each Partner other than the General Partner in an amount equal to the excess, if any, of: (i) the cumulative Net Losses allocated to each such Partner pursuant to Sections 6.2.C. for all prior Partnership Years, over (ii) the cumulative Net Income allocated to such Partner pursuant to this Section 6.2.A.(1)(b) for all prior Allocation Years; and

               (c) The balance, if any, to and among the Partners in accordance with their respective Percentage Interests.

In determining the amount of cumulative Net Income and cumulative Net Losses allocated to a Partner, Net Income and Net Losses allocated to a predecessor or transferor to such Partner shall be taken into account. To the extent the allocations of Net Income set forth above in any paragraph of this Section 6.2.A.(1) are insufficient to satisfy the full amount of any allocations set forth in such paragraph, such allocations shall be made in proportion to the total amounts that would have been allocated pursuant to this Section 6.2.A.(1) without regard to such shortfall.

          (2) Net Losses. After first giving effect to the special allocations provided in Section 6.3.A. and 6.4, and subject to the limitation provided in Section 6.2.C., Net Losses for any Allocation Year shall be allocated to and among the Partners in accordance with their Percentage Interests.

     B. Allocations to Reflect Issuance of Additional Partnership Interests. In the event that the Partnership issues additional Partnership Interests to the General Partner, a Limited Partner or any Additional Limited Partner pursuant to Section 4.3, the General Partner shall make such revisions to this Section 6.2 as it determines are necessary to reflect the terms of the issuance of such additional Partnership Interests, including making preferential allocations to certain classes of Partnership Interests in accordance with any method selected by the General Partner.

     C. Limitation on Allocations of Net Losses. The Net Losses allocated pursuant to Section 6.2.A.(2) hereof shall not exceed the maximum amount of Net Losses that can be so allocated without causing any Limited Partner to have an Adjusted Capital Account Deficit at the end of any Allocation Year. In the event some but not all of the Limited Partners would have Adjusted Capital Account Deficits as a consequence of an allocation of Net Losses pursuant to Section 6.2.A.(2), the limitation set forth in this Section 6.2.C. shall be applied on a Limited

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Partner by Limited Partner basis so as to allocate the maximum permissible Net Losses to each Limited Partner under Regulations Section 1.704-1(b)(2)(ii)(d). All Net Losses in excess of the limitation set forth in this Section 6.2.C. shall be allocated to the General Partner.

Section 6.3. Special Allocation Provisions

     A. Regulatory Allocations.

     (1) Minimum Gain Chargeback. Except as otherwise provided in Regulations Section 1.704-2(f), if there is a net decrease in Partnership Minimum Gain during any Allocation Year, each Holder shall be specially allocated items of Partnership income and gain for such Allocation Year (and, if necessary, subsequent Allocation Years) in an amount equal to such Holder’s share of the net decrease in Partnership Minimum Gain, as determined under Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Holder pursuant thereto. The items to be allocated shall be determined in accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3.A(1) is intended to qualify as a “minimum gain chargeback” within the meaning of Regulation Section 1.704-2(f) which shall be controlling in the event of a conflict between such Regulation and this Section 6.3.A.(1).

     (2) Partner Minimum Gain Chargeback. Except as otherwise provided in Regulations Section 1.704-2(i)(4), if there is a net decrease in Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any Allocation Year, each Holder who has a share of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Partnership income and gain for such Allocation Year (and, if necessary, subsequent Allocation Years) in an amount equal to such Holder’s share of the net decrease in Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Holder pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.3.A.(2) is intended to qualify as a “chargeback of partner nonrecourse debt minimum gain” within the meaning of Regulation Section 1.704-2(i) which shall be controlling in the event of a conflict between such Regulation and this Section 6.3.A.(2).

     (3) Qualified Income Offset. In the event any Limited Partner unexpectedly receives any adjustments, allocations, or distributions described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5), or Section 1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially allocated to each such Limited Partner in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted Capital Account Deficit of such Limited Partner as quickly as possible, provided that an allocation pursuant to this Section 6.3.A.(3) shall be made only if and to the extent that such Limited Partner would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article 6 have been tentatively made as if this Section 6.3.A.(3) were not in the Agreement.

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     (4) Gross Income Allocation. In the event any Limited Partner has a deficit Capital Account at the end of any Allocation Year that is in excess of the sum of (i) the amount such Limited Partner is obligated to restore pursuant to any provision of this Agreement and (ii) the amount such Limited Partner is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Limited Partner shall be specially allocated items of Partnership income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this Section 6.3.A.(4) shall be made only if and to the extent that such Limited Partner would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Article 6 have been made as if Section 6.3.A.(3) and this Section 6.3.A.(4) were not in the Agreement.

     (5) Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions for any Allocation Year shall be specially allocated to the Holder(s) who bears the economic risk of loss with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable, in accordance with Regulations Sections 1.704-2(b)(4) and 1.704-2(i).

     (6) Nonrecourse Deductions. Any Nonrecourse Deductions for any Allocation Year shall be specially allocated to the Holders in accordance with their respective Percentage Interests.

     (7) Section 754 Adjustment. To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Holder in complete liquidation of his interest in the Partnership, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Holders in accordance with their interests in the Partnership in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Holders to whom such distribution was made in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

     B. Curative Allocations. The allocations set forth in Sections 6.3.A.(1), (2), (3), (4), (5) and (6) (the “Regulatory Allocations”) are intended to comply with certain regulatory requirements, including the requirements of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding the provisions of Sections 6.1 and 6.2, the Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss and deduction among the Holders so that, to the extent possible, the net amount of such allocations of other items and the Regulatory Allocations to each Holder shall be equal to the net amount that would have been allocated to each such Holder if the Regulatory Allocations had not occurred.

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     C. Special Allocation to PIU Holders.

     (1) Gross Income Allocation. In accordance with Section 6.3A(4), if a PIU Holder has a deficit Capital Account at the end of any Allocation Year that is in excess of the sum of (i) the amount such PIU Holder is obligated to restore pursuant to any provision of this Agreement and (ii) the amount such PIU Holder is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such PIU Holder shall be specially allocated items of Partnership income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this Section 6.3.C.(1) shall be made only if and to the extent that such PIU Holder would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Article 6 have been made as if Section 6.3.A.(3), Section 6.3.A.(4) and this Section 6.3.C.(1) were not in the Agreement.

     (2) Allocation of Gain. Any remaining gain for any Allocation Year with respect to all sales and other dispositions of Partnership Property (other than sales or other dispositions in the ordinary course of business of the Partnership), including any adjustments to the Gross Asset Value of Partnership Property pursuant to sections (b) and (c) of the definition of “Gross Asset Value” in Section 1.1 of this Agreement, shall be allocated 100% to the PIU Holders until the Economic Capital Account Balance of each Limited Partner attributable to that Limited Partner’s ownership of PIUs is equal to (i) the Common Unit Economic Balance multiplied by (ii) the number of PIUs held by such Limited Partner. Allocations under this Section 6.3.C(2) shall be made among PIU Holders in proportion to the number of PIUs held by each such PIU Holder. For clarity, the parties agree that this Section 6.3.C(2) is intended to make the Capital Account balances of the PIU Holders with respect to their PIUs economically equivalent to the Capital Account balance of the Company (held either directly or indirectly through Communities GP and Communities LP) with respect to its Common Units (i.e., the “target balance” for the PIUs).

Section 6.4. Additional Allocation Rules

     A. Excess Nonrecourse Liabilities. The General Partner is authorized to cause the Partnership to allocate “excess nonrecourse liabilities” that are secured by any property contributed to the Partnership to the contributing Partner up to the amount of the built-in gain that is allocable to the contributing Partner under Section 704(c) of the Code, to the extend such built-in gain exceeds the gain described in Regulations Section 1.752-3(a)(2). Any remaining “excess nonrecourse liabilities” shall be allocated in accordance with each Holder’s interest in Partnership profits, which for this purpose shall be in accordance with such Holder’s Percentage Interest.

     B. Safe Harbor Election. In the event the Safe Harbor Regulation is finalized, the Partnership agrees that the General Partner shall be authorized and directed to make the Safe Harbor Election for the Partnership and the Partnership and each Partner, including any person to whom an interest in the Partnership is transferred in connection with the performance of services, agrees to comply with all requirements of the Safe Harbor with respect to all interests in the Partnership transferred in connection with the performance of services to which the Safe Harbor Election applies. The General Partner shall retain all such records as may be necessary to indicate that an effective Safe Harbor Election has been made and remains in effect. The

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General Partner shall be authorized to and shall prepare, execute, and file the Safe Harbor Election.

Section 6.5. Tax Allocations

     Tax Items with respect to Partnership property that is contributed to the Partnership by a Partner shall be shared among the Holders for income tax purposes pursuant to Regulations promulgated under Section 704(c) of the Code, so as to take into account the variation, if any, between the basis of the property to the Partnership and its initial Gross Asset Value. The Partnership shall account for such variation under any method consistent with Section 704(c) of the Code and the applicable regulations as chosen by the General Partner. In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to subparagraph (b) of the definition of Gross Asset Value (provided in Article 1), subsequent allocations of Tax Items with respect to such asset shall take account of the variation, if any, between the adjusted basis of such asset and its Gross Asset Value in the same manner as under Section 704(c) of the Code and the applicable regulations consistent with the requirements of Regulations Section 1.704-1(b)(2)(iv)(g) using any method approved under Section 704(c) of the Code and the applicable regulations as chosen by the General Partner.

ARTICLE 7.
MANAGEMENT AND OPERATIONS OF BUSINESS

Section 7.1. Management

     A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including Sections 7.3 and 11.2, shall have full power and authority to do all things deemed necessary, appropriate, convenient or desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 3.2 and to effectuate the purposes set forth in Section 3.1, including, without limitation:

          (1) the making of any expenditures, the lending or borrowing of money (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the Company (so long as the Company has determined to qualify as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its stockholders sufficient to permit the Company to maintain REIT status), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness (including the securing of same by mortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any obligations it deems necessary for the conduct of the activities of the Partnership;

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          (2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership or which the General Partner agrees to cause the Partnership to file, the registration of any class of securities of the Partnership under the Securities Exchange Act, and the listing of any debt securities of the Partnership on any exchange and communication with any and all governmental authorities;

          (3) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any assets of the Partnership or the merger or other combination of the Partnership with or into another entity;

          (4) the acquisition, ownership, disposition, lease, management, mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, and the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with the terms of this Agreement and on any terms it sees fit, including, without limitation, the financing of the conduct or the operations of the General Partner or the Partnership, the lending of funds to other Persons (including, without limitation, the General Partner or any Subsidiaries of the Partnership) and the repayment of obligations of the Partnership, any of its Subsidiaries and any other Person in which it has an equity investment, and the making of capital contributions to its Subsidiaries, and specifically including entering into agreements incident to the acquisition of property through which the Partnership indemnifies the contributing party for tax liabilities incurred related to the Partnership’s disposition of the property or reducing the debt of the Partnership allocable to the contributing party;

          (5) the negotiation, execution, and performance of any contracts, leases, conveyances or other instruments that the General Partner considers appropriate, useful or necessary to the conduct of the Partnership’s operations or the implementation of the General Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other professional advisors and other agents and the payment of their expenses and compensation out of the Partnership’s assets;

          (6) the distribution of Partnership cash or other Partnership assets in accordance with this Agreement;

          (7) the establishment of one or more divisions of the Partnership, the selection and dismissal of employees of the Partnership (including, without limitation, employees having titles such as “president,” “vice president,” “secretary” and “treasurer”), and agents, outside attorneys, accountants, consultants and contractors of the Partnership, the determination of their compensation and other terms of employment or hiring, including waivers of conflicts of interest and the payment of their expenses and compensation out of the Partnership’s assets;

          (8) the maintenance of insurance for the benefit of the Partnership, its assets and the Partners and directors and officers of the Partnership, the General Partner or the direct or indirect parent of the General Partner in such amounts, on such terms and of such types as it deems necessary or appropriate;

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          (9) the formation of, or acquisition of an interest in, and the contribution of property to, any further limited or general partnerships, joint ventures or other relationships that it deems desirable (including, without limitation, the acquisition of interests in, and the contributions of property to any Subsidiary and any other Person in which it has an equity investment from time to time); provided, that, as long as the Company has determined to continue to qualify as a REIT, the Partnership may not engage in any such formation, acquisition or contribution that could cause the Company to fail to qualify as a REIT;

          (10) the control of any matters affecting the rights and obligations of the Partnership, including the settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment of, any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitration or other forms of dispute resolution, and the representation of the Partnership in all suits or legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, the incurring of legal expense, and the indemnification of any Person against liabilities and contingencies to the extent permitted by law;

          (11) the undertaking of any action in connection with the Partnership’s direct or indirect investment in any Person (including, without limitation, contributing or loaning Partnership funds to, incurring indebtedness on behalf of, or guarantying the obligations of any such Persons);

          (12) subject to the other provisions in this Agreement, the determination, in good faith, of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as it may adopt, provided, that such methods are otherwise consistent with requirements of this Agreement;

          (13) the management, operation, leasing, landscaping, repair, alteration, demolition or improvement of any real property or improvements owned by the Partnership or any Subsidiary of the Partnership or any Person in which the Partnership has made a direct or indirect equity investment;

          (14) holding, managing, investing and reinvesting cash and other assets of the Partnership;

          (15) the collection and receipt of revenues and income of the Partnership;

          (16) the exercise, directly or indirectly through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership;

          (17) the exercise of any of the powers of the General Partner under this Agreement on behalf of, in connection with or jointly with any Subsidiary of the Partnership or any other Person in which the Partnership has a direct or indirect interest;

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          (18) the exercise of any of the powers of the General Partner under this Agreement on behalf of any Person in which the Partnership does not have an interest pursuant to contractual or other arrangements with such Person;

          (19) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases, documents, legal instruments or agreements, in writing, as may be necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement;

          (20) the issuance of additional Partnership Interests, as appropriate, in connection with the contribution of Additional Funds pursuant to Section 4.3;

          (21) the distribution of cash to acquire Partnership Units held by a Limited Partner in connection with a Limited Partner’s exercise of its Redemption right under Section 8.6 hereof; and

          (22) the amendment and restatement of Exhibit A hereto to reflect the Capital Contributions and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of Partnership Units, the admission of any Additional Limited Partner or any Substituted Limited Partner or otherwise, which amendment and restatement, notwithstanding anything in this Agreement to the contrary, shall not be deemed an amendment to this Agreement, as long as the matter or event being reflected in Exhibit A hereto otherwise is authorized by this Agreement.

     B. Each of the Limited Partners agrees that the General Partner is authorized to perform the actions authorized by Section 7.1.A. and to execute, deliver and perform the above-mentioned agreements and transactions on behalf of the Partnership without any further act, approval or vote of the Partners, notwithstanding any other provisions of this Agreement (except as provided in Section 7.3 or 11.2), the Act or any applicable law, rule or regulation to the fullest extent permitted under the Act or other applicable law, rule or regulation. The execution, delivery or performance, the taking of any action or the failure to take any action, by the General Partner or the Partnership of any agreement authorized or permitted under this Agreement shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement or of any duty stated or implied by law or equity.

     C. In addition to the authority granted to it in Section 7.1.A.(8), at all times from and after the date hereof, the General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the properties of the Partnership and (ii) liability insurance for the Indemnities hereunder.

     D. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time.

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     E. In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the Company, Communities GP and Communities LP) of any action taken (or not taken) by the General Partner. The General Partner and the Partnership shall not have liability to a Partner under this Agreement as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement.

     F. Except as otherwise provided herein, to the extent the duties of the General Partner require expenditures of funds to be paid to third parties, the General Partner shall not have any obligations hereunder to make such payments except to the extent that Partnership funds are reasonably available to it for the performance of such duties, and nothing herein contained shall be deemed to authorize or require the General Partner, in its capacity as such, to expend its individual funds for payment to third parties or to undertake any individual liability or obligation on behalf of the Partnership.

     G. The General Partner shall not permit the Partnership to engage in any “prohibited transaction” as defined in Section 857(b)(6)(B)(iii) of the Code.

Section 7.2. Certificate of Limited Partnership

     To the extent that such action is determined by the General Partner to be necessary, reasonable or appropriate, the General Partner shall file amendments to and restatements of the Certificate and do all the things to maintain the Partnership as a limited partnership (or a partnership in which the limited partners have limited liability) under the laws of the State of Delaware and each other state, the District of Columbia or other jurisdiction, in which the Partnership may elect to do business or own property, and no vote of the Limited Partners shall be required in connection therewith. Subject to the terms of Section 8.5.A.(3), the General Partner shall not be required, before or after filing, to deliver or mail a copy of the Certificate or any amendment thereto to any Limited Partner. The General Partner shall use all reasonable efforts to cause to be filed such other certificates or documents as may be necessary or as it deems reasonable or appropriate for the formation, continuation, qualification and operation of a limited partnership (or a partnership in which the limited partners have limited liability) in the State of Delaware, any other state, or the District of Columbia or other jurisdiction, in which the Partnership may elect to do business or own property, and no vote of the Limited Partners shall be required in connection therewith.

Section 7.3. Restrictions on General Partner’s Authority

     A. The General Partner may not take any action in contravention of an express prohibition or limitation of this Agreement without the written Consent of the Limited Partners and may not (i) perform any act that would subject a Limited Partner to liability as a general partner in any jurisdiction or, except as provided herein or under the Act, to any other liability, or (ii) enter into any contract, mortgage, loan or other agreement that prohibits or restricts, or has the effect of prohibiting or restricting, the ability of a Limited Partner to exercise its rights to a Redemption in full, except in each case with the written consent of such Limited Partner.

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     B. The General Partner shall not, without the prior consent of the Partners holding Percentage Interests that in the aggregate are not less than 66 ^2/3% of the aggregate Percentage Interests of all the Partners (including in all cases the Limited Partner Interests owned directly or indirectly by the Company and in addition to any Consent of the Limited Partners required by any other provision hereof), or except as provided in Section 7.3.C., amend, modify or terminate this Agreement.

     C. Notwithstanding Section 7.3.B., the General Partner shall have the exclusive power and authority to amend this Agreement as may be required to facilitate or implement any of the following purposes:

          (1) to add to the obligations of the General Partner or surrender any right or power granted to the General Partner or any Affiliate of the General Partner for the benefit of the Limited Partners;

          (2) to reflect the issuance of additional Partnership Interests pursuant to this Agreement, including, without limitation, Sections 4.3.B., 5.4 and 6.2.B. or the admission, substitution, termination, or withdrawal of Partners in accordance with this Agreement;

          (3) to reflect a change that is of an inconsequential nature and does not adversely affect the Limited Partners in any material respect, or to cure any ambiguity, correct or supplement any provision in this Agreement not inconsistent with law or with other provisions, or make other changes with respect to matters arising under this Agreement that will not be inconsistent with law or with the provisions of this Agreement;

          (4) to satisfy any requirements, conditions, or guidelines contained in any order, directive, opinion, ruling or regulation of a federal or state agency or contained in federal or state law;

          (5) to reflect such changes as are reasonably necessary for the Company to maintain its status as a REIT, including changes which may be necessitated due to a change in applicable law (or an authoritative interpretation thereof) or a ruling of the IRS; and

          (6) to modify, as set forth in the definition of “Capital Account,” the manner in which Capital Accounts are computed.

     The General Partner will provide notice to the Limited Partners when any action under this Section 7.3.C. is taken.

     D. Notwithstanding Sections 7.3.B. and 7.3.C., this Agreement shall not be amended with respect to any Partner adversely affected, and no action may be taken by the General Partner, without the Consent of such Partner adversely affected if such amendment or action would (i) convert a Limited Partner’s interest in the Partnership into a general partner’s interest (except as the result of the General Partner acquiring such interest), (ii) modify the limited liability of a Limited Partner, (iii) alter rights of the Partner to receive distributions pursuant to Article 5 or Section 13.2.A.(4) or Section 13.2.A.(5), or the allocations specified in Article 6 (except as permitted or as a consequence of matters permitted pursuant to Sections 4.3, 5.4, 6.2.B. and Section 7.3.C.(3)), (iv) materially alter or modify the rights to a Redemption or the

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REIT Shares Amount as set forth in Section 8.6, and related definitions hereof, or (v) amend this Section 7.3.D. Further, no amendment may alter the restrictions on the General Partner’s authority set forth elsewhere in this Section 7.3 or in Section 11.2 without the Consent specified in such section. This Section 7.3.D. does not require unanimous consent of all Partners adversely affected unless the amendment is to be effective against all partners adversely affected.

Section 7.4. Reimbursement of the General Partner

     A. Except as provided in this Section 7.4 and elsewhere in this Agreement (including the provisions of Articles 5 and 6 regarding distributions, payments and allocations to which it may be entitled), the General Partner shall not be compensated for its services as general partner of the Partnership.

     B. The Partnership shall be responsible for and shall pay all expenses relating to the Partnership’s and the General Partner’s organization, the ownership of its assets and its operations. The General Partner is hereby authorized to pay compensation for accounting, administrative, legal, technical, management and other services rendered to the Partnership. Except to the extent provided in this Agreement, the General Partner and its Affiliates shall be reimbursed on a monthly basis, or such other basis as the General Partner may determine in its sole and absolute discretion, for all expenses that the General Partner and its Affiliates incur relating to the ownership and operation of, or for the benefit of, the Partnership (including, without limitation, administrative expenses and the Company’s expenses as a company whose securities are publicly traded); provided, that the amount of any such reimbursement shall be reduced by any interest earned by the General Partner with respect to bank accounts or other instruments or accounts held by it on behalf of the Partnership. The Partners acknowledge that all such expenses of the General Partner and its Affiliates are deemed to be for the benefit of the Partnership. Such reimbursement shall be in addition to any reimbursement made as a result of indemnification pursuant to Section 7.7 hereof. In the event that certain expenses are incurred for the benefit of the Partnership and other entities (including the General Partner), such expenses will be allocated to the Partnership and such other entities in such a manner as the General Partner in its sole and absolute discretion deems fair and reasonable. All payments and reimbursements hereunder shall be characterized for federal income tax purposes as expenses of the Partnership incurred on its behalf, and not as expenses of the General Partner.

     C. If the Company shall elect to purchase from its stockholders REIT Shares for the purpose of delivering such REIT Shares to satisfy an obligation under any dividend reinvestment program adopted by the Company, any employee stock purchase plan adopted by the Company, or any similar obligation or arrangement undertaken by the Company in the future or for the purpose of retiring such REIT Shares, the purchase price paid by the Company for such REIT Shares and any other expenses incurred by the Company in connection with such purchase shall be considered expenses of the Partnership and shall be advanced to the Company or reimbursed to the Company, subject to the condition that: (i) if such REIT Shares subsequently are sold by the Company, the Company shall pay to the Partnership any proceeds received by the Company for such REIT Shares (which sales proceeds shall include the amount of dividends reinvested under any dividend reinvestment or similar program; provided, that a transfer of REIT Shares for Partnership Units pursuant to Section 8.6 would not be considered a sale for such purposes); and (ii) if such REIT Shares are not retransferred by the Company within thirty (30) days after the

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purchase thereof, or the Company otherwise determines not to retransfer such REIT Shares, the Company shall cause the General Partner to cause the Partnership to redeem a number of Partnership Units held by the Company equal to the number of such REIT Shares, as adjusted (x) pursuant to Section 7.5 (in the event the Company has acquired material assets, other than on behalf of the Partnership) and (y) for stock dividends and distributions, stock splits and subdivisions, reverse stock splits and combinations, distributions of rights, warrants or options, and distributions of evidences of indebtedness or assets relating to assets not received by the Company pursuant to a pro rata distribution by the Partnership (in which case such advancement or reimbursement of expenses shall be treated as having been made as a distribution in redemption of such number of Partnership Units held by the Company).

     D. As set forth in Section 4.3, the Company shall be treated as having made a Capital Contribution in the amount of all expenses that it incurs relating to the Company’s offering of REIT Shares, other shares of capital stock of the Company or New Securities.

     E. If and to the extent any reimbursements to the General Partner pursuant to this Section 7.4 constitute gross income of the General Partner (as opposed to the repayment of advances made by the General Partner on behalf of the Partnership), such amounts shall constitute guaranteed payments within the meaning of Section 707(c) of the Code, shall be treated consistently therewith by the Partnership and all Partners, and shall not be treated as distributions for purposes of computing the Partners’ Capital Accounts.

Section 7.5. Outside Activities of the General Partner and the Company

     A. Without the written consent of the Limited Partners, the General Partner shall not directly or indirectly enter into or conduct any business other than in connection with the ownership, acquisition and disposition of Partnership Interests and the management of the business of the Partnership, and such activities as are incidental thereto. In the event the General Partner desires to contribute cash to any Subsidiary Partnership to acquire or maintain an interest of 1% or less in the capital of such partnership, the General Partner may acquire or maintain an interest of 1% or less in the capital of such partnership, and the General Partner may acquire such cash from the Partnership as a loan or in exchange for a reduction in the General Partner’s Partnership Units, in an amount equal to the amount of such cash divided by the Fair Market Value of a REIT Share on the day such cash is received by the General Partner. Notwithstanding the foregoing, the General Partner may acquire Properties in exchange for REIT Shares, to the extent such Properties are immediately contributed by the General Partner to the Partnership, pursuant to the terms described in Section 4.3.D. Any Limited Partner Interests acquired by the General Partner, whether pursuant to exercise by a Limited Partner of its right of Redemption, or otherwise, shall be automatically converted into a General Partner Interest comprised of an identical number of Partnership Units with the same rights, priorities and preferences as the class or series so acquired. If, at any time, the General Partner acquires material assets (other than on behalf of the Partnership) the definition of “REIT Shares Amount” and the definition of “Deemed Value of Partnership Interests” shall be adjusted, as reasonably determined by the General Partner, to reflect the relative Fair Market Value of a share of capital stock of the General Partner relative to the Deemed Partnership Interest Value of the related Partnership Unit. The General Partner’s General Partner Interest in the Partnership, its minority interest in any Subsidiary Partnership(s) (held directly or indirectly through a Qualified REIT Subsidiary) that

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the General Partner holds in order to maintain such Subsidiary Partnership’s status as a partnership, and interests in such short-term liquid investments, bank accounts or similar instruments as the General Partner deems necessary to carry out its responsibilities contemplated under this Agreement and the Charter are interests which the General Partner is permitted to acquire and hold for purposes of this Section 7.5.A.

     B. In the event the Company exercises its rights under the Charter to purchase REIT Shares, other capital stock of the Company or New Securities, as the case may be, then the Company shall cause the General Partner to cause the Partnership to purchase from it a number of Partnership Units equal to the number of REIT Shares, other capital stock of the Company or New Securities, as the case may be, so purchased on the same terms that the Company purchased such REIT Shares, other capital stock of the Company or New Securities, as the case may be.

Section 7.6. Contracts with Affiliates

     A. The Partnership may lend or contribute to Persons in which it has an equity investment, and such Persons may borrow funds from the Partnership, on terms and conditions established in the sole and absolute discretion of the General Partner. The foregoing authority shall not create any right or benefit in favor of any Person.

     B. Except as provided in Section 7.5.A., the Partnership may transfer assets to joint ventures, other partnerships, corporations or other business entities in which it is or thereby becomes a participant upon such terms and subject to such conditions consistent with this Agreement and applicable law as the General Partner in its sole discretion deems advisable.

     C. The General Partner, in its sole and absolute discretion and without the approval of the Limited Partners, may propose and adopt on behalf of the Partnership employee benefit plans funded by the Partnership for the benefit of employees of the General Partner, the Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in respect of services performed, directly or indirectly, for the benefit of the Partnership, the General Partner, or any of the Partnership’s Subsidiaries. The General Partner also is expressly authorized to cause the Partnership to issue to the Company Partnership Units corresponding to REIT Shares issued by the Company pursuant to any Stock Plan or any similar or successor plan and to repurchase such Partnership Units from the Company to the extent necessary to permit the Company to repurchase such REIT Shares in accordance with such plan.

     D. Except as expressly permitted by this Agreement, neither the General Partner nor any of its Affiliates shall sell, transfer or convey any property to, or purchase any property from, the Partnership, directly or indirectly, except pursuant to transactions that are determined by the General Partner in good faith to be fair and reasonable.

     E. The General Partner is expressly authorized to enter into, in the name and on behalf of the Partnership, a right of first opportunity arrangement and other conflict avoidance agreements with various Affiliates of the Partnership and the Company, on such terms as the General Partner, in its sole and absolute discretion, believes are advisable.

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Section 7.7. Indemnification

     A. To the fullest extent permitted by law, the Partnership shall indemnify an Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, settlements, and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Partnership as set forth in this Agreement in which any Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, unless it is established that: (i) the act or omission of the Indemnitee was material to the matter giving rise to the proceeding and either was committed in bad faith, fraud or was the result of active and deliberate dishonesty; (ii) the Indemnitee actually received an improper personal benefit in money, property or services; or (iii) in the case of any criminal proceeding, the Indemnitee had reasonable cause to believe that the act or omission was unlawful. Without limitation, the foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to a loan guaranty or otherwise, for any indebtedness of the Partnership or any Subsidiary of the Partnership (including, without limitation, any indebtedness which the Partnership or any Subsidiary of the Partnership has assumed or taken subject to), and the General Partner is hereby authorized and empowered, on behalf of the Partnership, to enter into one or more indemnity agreements consistent with the provisions of this Section 7.7 in favor of any Indemnitee having or potentially having liability for any such indebtedness. The termination of any proceeding by judgment, order or settlement does not create a presumption that the Indemnitee did not meet the requisite standard of conduct set forth in this Section 7.7.A. The termination of any proceeding by conviction or upon a plea of nolo contendere or its equivalent, or any entry of an order of probation prior to judgment, creates a rebuttable presumption that the Indemnitee acted in a manner contrary to that specified in this Section 7.7.A. Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the Partnership, and any insurance proceeds from the liability policy covering the General Partner and any Indemnitee, and neither the General Partner nor any Limited Partner shall have any obligation to contribute to the capital of the Partnership or otherwise provide funds to enable the Partnership to fund its obligations under this Section 7.7, except to the extent otherwise expressly agreed to by such Partner and the Partnership.

     B. Reasonable expenses incurred by an Indemnitee who is a party to a proceeding may be paid or reimbursed by the Partnership in advance of the final disposition of the proceeding upon receipt by the Partnership of (i) a written affirmation by the Indemnitee of the Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Partnership as authorized in this Section 7.7 has been met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay the amount if it shall ultimately be determined that the standard of conduct has not been met.

     C. The indemnification provided by this Section 7.7 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Partners, as a matter of law or otherwise, and shall continue as to an Indemnitee who has ceased to serve in such capacity unless otherwise provided in a written agreement pursuant to which such Indemnitee is indemnified.

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     D. The Partnership may, but shall not be obligated to, purchase and maintain insurance, on behalf of the Indemnitees and such other Persons as the General Partner shall determine, against any liability that may be asserted against or expenses that may be incurred by such Person in connection with the Partnership’s activities, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement.

     E. For purposes of this Section 7.7, the Partnership shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its duties to the Partnership also imposes duties on, or otherwise involves services by, it to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute fines within the meaning of Section 7.7; and actions taken or omitted by the Indemnitee with respect to an employee benefit plan in the performance of its duties for a purpose reasonably believed by it to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the Partnership.

     F. In no event may an Indemnitee subject the Limited Partners to personal liability by reason of the indemnification provisions set forth in this Agreement.

     G. An Indemnitee shall not be denied indemnification in whole or in part under this Section 7.7 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

     H. The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons. Any amendment, modification or repeal of this Section 7.7 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the Partnership’s liability to any Indemnitee under this Section 7.7 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

     I. If and to the extent any reimbursements to the General Partner pursuant to this Section 7.7 constitute gross income of the General Partner or the Company (as opposed to the repayment of advances made by the General Partner on behalf of the Partnership) such amounts shall constitute guaranteed payments within the meaning of Section 707(c) of the Code, shall be treated consistently therewith by the Partnership and all Partners, and shall not be treated as distributions for purposes of computing the Partners’ Capital Accounts.

     J. Any indemnification hereunder is subject to, and limited by, the provisions of Section 10-107 of the Act.

     K. In the event the Partnership is made a party to any litigation or otherwise incurs any loss or expense as a result of or in connection with any Partner’s personal obligations or liabilities unrelated to Partnership business, such Partner shall indemnify and reimburse the

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Partnership for all such loss and expense incurred, including legal fees, and the Partnership interest of such Partner may be charged therefor. The liability of a Partner under this Section 7.7.K. shall not be limited to such Partner’s Partnership Interest, but shall be enforceable against such Partner personally.

Section 7.8. Liability of the General Partner

     A. Notwithstanding anything to the contrary set forth in this Agreement, none of the General Partner nor any of its officers, directors, agents or employees shall be liable or accountable in damages or otherwise to the Partnership, any Partners or any Assignees, or their successors or assigns, for losses sustained, liabilities incurred or benefits not derived as a result of any one or more acts or omissions, errors in judgment or mistakes of fact or law if the General Partner acted in good faith.

     B. The Limited Partners expressly acknowledge that the General Partner is acting for the benefit of the Partnership, the Limited Partners and the Company’s stockholders collectively. The General Partner is under no obligation to give priority to the separate interests of the Limited Partners or the Company’s stockholders (including, without limitation, the tax consequences to Limited Partners or Assignees or to stockholders) in deciding whether to cause the Partnership to take (or decline to take) any actions. If there is a conflict between the interests of the stockholders of the Company on one hand and the Limited Partners on the other, the General Partner shall endeavor in good faith to resolve the conflict in a manner not adverse to either the stockholders of the Company or the Limited Partners; provided, however, that for so long as the Company owns a controlling interest in the Partnership, any such conflict that cannot be resolved in a manner not adverse to either the stockholders of the Company or the Limited Partners shall be resolved in favor of the stockholders. The General Partner shall not be liable under this Agreement to the Partnership or to any Partner for monetary damages for losses sustained, liabilities incurred, or benefits not derived by Limited Partners in connection with such decisions or actions based on such decisions; provided, that the General Partner has acted in good faith.

     C. Subject to its obligations and duties as General Partner set forth in Section 7.1.A., the General Partner may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its agents. The General Partner shall not be responsible for any misconduct or negligence on the part of any such agent appointed by it in good faith.

     D. Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the liability of the General Partner or that of any of its officers, directors, agents or employees to the Partnership and the Limited Partners that were provided for under this Section 7.8 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

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Section 7.9. Other Matters Concerning the General Partner

     A. A General Partner shall be fully protected from liability to the Partnership, the Partners or other persons party to or otherwise bound by the Agreement in relying in good faith upon the records of the Partnership and upon information, opinions, reports or statements presented by any other Partner, an officer or employee of the Partnership, a liquidating trustee, or committees of the Partnership, or by any other person as to matters the General Partner reasonably believes are within such other person’s professional or expert competence, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits or losses of the Partnership, or the value and amount of assets or reserves or contracts, agreements or other undertakings that would be sufficient to pay claims and obligations of the Partnership or to make reasonable provision to pay such claims and obligations, or any other facts pertinent to the existence and amount of assets from which distributions to Partners or creditors might properly be paid. Furthermore, the General Partner may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.

     B. The General Partner may consult with legal counsel, accountants, appraisers, management consultants, investment bankers and other consultants and advisers selected by it, and any act taken or omitted to be taken in reliance upon the opinion of such Persons as to matters which such General Partner reasonably believes to be within such Person’s professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such opinion.

     C. The General Partner shall have the right, in respect of any of its powers or obligations hereunder, to act through any of its duly authorized officers and a duly appointed attorney or attorneys-in-fact. Each such attorney shall, to the extent provided by the General Partner in the power of attorney, have full power and authority to do and perform all and every act and duty which is permitted or required to be done by the General Partner hereunder.

     D. Notwithstanding any other provisions of this Agreement or any non-mandatory provision of the Act, any action of the General Partner on behalf of the Partnership or any decision of the General Partner to refrain from acting on behalf of the Partnership, undertaken in the good faith belief that such action or omission is necessary or advisable in order (i) to protect the ability of the Company, for so long as the Company has determined to qualify as a REIT, to continue to qualify as a REIT or (ii) to avoid the Company incurring any taxes under Section 857 or Section 4981 of the Code, is expressly authorized under this Agreement and is deemed approved by all of the Limited Partners.

Section 7.10. Title to Partnership Assets

     Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partners, individually or collectively, shall have any ownership interest in such Partnership assets or any portion thereof. Title to any or all of the Partnership assets may be held in the name of the

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Partnership, the General Partner or one or more nominees, as the General Partner may determine, including Affiliates of the General Partner. The General Partner hereby declares and warrants that any Partnership assets for which legal title is held in the name of the General Partner or any nominee or Affiliate of the General Partner shall be held by the General Partner for the use and benefit of the Partnership in accordance with the provisions of this Agreement; provided, however, that the General Partner shall use its best efforts to cause beneficial and record title to such assets to be vested in the Partnership as soon as reasonably practicable. All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in which legal title to such Partnership assets is held.

Section 7.11. Reliance by Third Parties

     Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Partnership shall be entitled to assume that the General Partner has full power and authority to encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter into any contracts on behalf of the Partnership, and such Person shall be entitled to deal with the General Partner as if it were the Partnership’s sole party in interest, both legally and beneficially. Each Limited Partner hereby waives any and all defenses or other remedies which may be available against such Person to contest, negate or disaffirm any action of the General Partner in connection with any such dealing. In no event shall any Person dealing with the General Partner or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expedience of any act or action of the General Partner or its representatives. Each and every certificate, document or other instrument executed on behalf of the Partnership by the General Partner or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (i) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (ii) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Partnership and (iii) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Partnership.

ARTICLE 8.
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

Section 8.1. Limitation of Liability

     The Limited Partners shall have no liability under this Agreement or for the obligations of the Partnership except as expressly provided in this Agreement or under the Act.

Section 8.2. Management of Business

     No Limited Partner or Assignee (other than the General Partner, any of its Affiliates or any officer, director, employee, partner, agent or trustee of the General Partner, the Partnership or any of their Affiliates, in their capacity as such) shall take part in the operations, management or control (within the meaning of the Act) of the Partnership’s business, transact any business in the Partnership’s name or have the power to sign documents for or otherwise bind the Partnership. The transaction of any such business by the General Partner, any of its Affiliates or

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any officer, director, employee, partner, agent or trustee of the General Partner, the Partnership or any of their Affiliates, in their capacity as such, shall not affect, impair or eliminate the limitations on the liability of the Limited Partners or Assignees under this Agreement.

Section 8.3. Outside Activities of Limited Partners

     Subject to any agreements entered into by a Limited Partner or its Affiliates with the General Partner, Partnership or a Subsidiary, any Limited Partner and any officer, director, employee, agent, trustee, Affiliate or stockholder of any Limited Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities in direct competition with the Partnership or that are enhanced by the activities of the Partnership. Neither the Partnership nor any Partners shall have any rights by virtue of this Agreement in any business ventures of any Limited Partner or Assignee. Subject to such agreements, none of the Limited Partners nor any other Person shall have any rights by virtue of this Agreement or the partnership relationship established hereby in any business ventures of any other Person, other than the Limited Partners benefiting from the business conducted by the General Partner, and such Person shall have no obligation pursuant to this Agreement to offer any interest in any such business ventures to the Partnership, any Limited Partner or any such other Person, even if such opportunity is of a character which, if presented to the Partnership, any Limited Partner or such other Person, could be taken by such Person.

Section 8.4. Return of Capital

     Except pursuant to the rights of Redemption set forth in Section 8.6, no Limited Partner shall be entitled to the withdrawal or return of his or her Capital Contribution, except to the extent of distributions made pursuant to this Agreement or upon termination of the Partnership as provided herein. Except as expressly set forth herein, no Limited Partner or Assignee shall have priority over any other Limited Partner or Assignee either as to the return of Capital Contributions, or otherwise expressly provided in this Agreement, or as to profits, losses, distributions or credits.

Section 8.5. Rights of Limited Partners Relating to the Partnership

     A. In addition to other rights provided by this Agreement or by the Act and except as limited by Section 8.5.C., each Limited Partner shall have the right to obtain:

          (1) a copy of the most recent annual and quarterly reports filed with the Securities and Exchange Commission by the Company pursuant to the Securities Exchange Act and each communication sent to the stockholders of the Company at such Limited Partner’s Expense;

          (2) a copy of the Partnership’s federal, state and local income tax returns for each Partnership Year; and

          (3) a copy of this Agreement and the Certificate and all amendments thereto.

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     B. The Partnership shall notify each Limited Partner in writing of any adjustment made in the calculation of the REIT Shares Amount within a reasonable time after the date such change becomes effective.

     C. Notwithstanding any other provision of this Section 8.5 other than Section 8.5.D., the General Partner may keep confidential from the Limited Partners, for such period of time as the General Partner determines in its sole and absolute discretion to be reasonable, any information that (i) the General Partner believes to be in the nature of trade secrets or other information the disclosure of which the General Partner in good faith believes is not in the best interests of the Partnership or (ii) the Partnership or the General Partner is required by law or by agreements with unaffiliated third parties to keep confidential.

     D. Notwithstanding anything in this Agreement to the contrary, each Limited Partner also shall have the rights provided by Section 10-305 of the Act.

Section 8.6. Redemption Rights

     A. On or after the date twelve (12) months after (i) the Effective Date, with respect to the Partnership Units acquired on or contemporaneously with the Effective Date (including, without limitation, those Partnership Units set forth on Exhibit A), or on or after such later date as expressly provided in an agreement entered into between the Partnership and any Limited Partner, each Limited Partner shall have the right (subject to the terms and conditions set forth herein and in any other such agreement, as applicable) to require the Partnership to redeem all or a portion of the Partnership Units held by such Limited Partner (such Partnership Units being hereafter referred to as “Tendered Units”) in exchange for the Cash Amount (a “Redemption”); provided that the terms of such Partnership Units do not provide that such Partnership Units are not entitled to a right of Redemption. Unless otherwise expressly provided in this Agreement or in a separate agreement entered into between the Partnership and the holders of such Partnership Units, all Partnership Units shall be entitled to a right of Redemption hereunder. The Tendering Partner shall have no right, with respect to any Partnership Units so redeemed, to receive any distributions paid on or after the Specified Redemption Date. Any Redemption shall be exercised pursuant to a Notice of Redemption delivered to the General Partner by the Limited Partner who is exercising the right (the “Tendering Partner”). Subject to Section 8.6.F.(3), the Cash Amount shall be payable to the Tendering Partner within ten (10) days of the Specified Redemption Date.

     B. Notwithstanding Section 8.6.A. above, if a Limited Partner has delivered to the General Partner a Notice of Redemption then the General Partner may, in its sole and absolute discretion, (subject to the limitations on ownership and transfer of REIT Shares set forth in the Charter) elect to acquire some or all of the Tendered Units from the Tendering Partner in exchange for the REIT Shares Amount (as of the Specified Redemption Date) and, if the Company so elects, the Tendering Partner shall transfer the Tendered Units to the Company in exchange for the REIT Shares Amount. In such event, the Tendering Partner shall have no right to cause the Partnership to redeem such Tendered Units. The Company shall promptly give such Tendering Partner written notice of its election, and the Tendering Partner may elect to withdraw its redemption request at any time prior to the acceptance of the cash or REIT Shares Amount by such Tendering Partner.

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     C. The REIT Shares Amount, if applicable, shall be delivered as duly authorized, validly issued, fully paid and nonassessable REIT Shares and, if applicable, free of any pledge, lien, encumbrance or restriction, other than those provided in the Charter, the Bylaws of the Company, the Securities Act, relevant state securities or blue sky laws and any applicable registration rights agreement with respect to such REIT Shares entered into by the Tendering Partner. Notwithstanding any delay in such delivery (but subject to Section 8.6.E and 8.6.F(3)), but only upon the effectiveness of the Redemption, the Tendering Partner shall be deemed the owner of such REIT Shares for all purposes, including without limitation, rights to vote or consent, and receive dividends, as of the Specified Redemption Date. In addition, the REIT Shares for which the Partnership Units might be exchanged shall also bear (or, in the event that the REIT Shares are uncertificated, be subject to) a legend which generally provides the following:

     THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND TRANSFER FOR THE PURPOSE, AMONG OTHERS, OF THE CORPORATION’S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”). SUBJECT TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS EXPRESSLY PROVIDED IN THE CORPORATION’S CHARTER, (I) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF THE CORPORATION’S COMMON STOCK IN EXCESS OF 9.8 PERCENT (IN VALUE OR NUMBER OF SHARES) OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE CORPORATION UNLESS SUCH PERSON IS AN EXCEPTED HOLDER (IN WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (II) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK OF THE CORPORATION IN EXCESS OF 9.8 PERCENT OF THE VALUE OF THE TOTAL OUTSTANDING SHARES OF CAPITAL STOCK OF THE CORPORATION, UNLESS SUCH PERSON IS AN EXCEPTED HOLDER (IN WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (III) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN CAPITAL STOCK THAT WOULD RESULT IN THE CORPORATION BEING “CLOSELY HELD” UNDER SECTION 856(H) OF THE CODE OR OTHERWISE CAUSE THE CORPORATION TO FAIL TO QUALIFY AS A REIT; AND (IV) NO PERSON MAY TRANSFER SHARES OF CAPITAL STOCK IF SUCH TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF THE CORPORATION BEING OWNED BY FEWER THAN 100 PERSONS. ANY PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY OWNS OR ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK WHICH CAUSES OR WILL CAUSE A PERSON TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK IN EXCESS OR IN VIOLATION OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. IF ANY OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE VIOLATED, THE SHARES OF CAPITAL STOCK REPRESENTED HEREBY MAY BE AUTOMATICALLY TRANSFERRED TO A TRUSTEE OF A TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES OR MAY BE VOID AB INITIO. IN ADDITION, THE CORPORATION MAY REDEEM SHARES UPON THE TERMS AND CONDITIONS SPECIFIED BY THE BOARD OF DIRECTORS IN ITS SOLE DISCRETION IF THE BOARD OF DIRECTORS DETERMINES THAT OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE RESTRICTIONS DESCRIBED ABOVE. ALL CAPITALIZED TERMS IN THIS LEGEND HAVE THE MEANINGS DEFINED IN THE CHARTER OF THE CORPORATION, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER AND OWNERSHIP, WILL BE FURNISHED TO EACH HOLDER OF CAPITAL STOCK OF THE CORPORATION ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR SUCH A COPY MAY BE DIRECTED TO THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL OFFICE.

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     D. Each Limited Partner covenants and agrees with the Company that all Tendered Units shall be delivered to the Company free and clear of all liens, claims and encumbrances whatsoever and should any such liens, claims and/or encumbrances exist or arise with respect to such Tendered Units, the Company shall be under no obligation to acquire the same. Each Limited Partner further agrees that, in the event any state or local property transfer tax is payable as a result of the transfer of its Tendered Units to the Company (or its designee), such Limited Partner shall assume and pay such transfer tax.

     E. Notwithstanding the provisions of Section 8.6.A., 8.6.B., 8.6.C. or any other provision of this Agreement, a Limited Partner (i) shall not be entitled to effect a Redemption for cash or an exchange for REIT Shares to the extent the ownership or right to acquire REIT Shares pursuant to such exchange by such Partner on or as of the Specified Redemption Date could cause such Partner or any other Person to violate the restrictions on ownership and transfer of REIT Shares set forth in the Charter and (ii) shall have no rights under this Agreement to acquire REIT Shares which would otherwise be prohibited under the Charter. To the extent any attempted Redemption or exchange for REIT Shares would be in violation of this Section 8.6.E., it shall be null and void ab initio and such Limited Partner shall not acquire any rights or economic interest in the cash otherwise payable upon such Redemption or the REIT Shares otherwise issuable upon such exchange.

     F. Notwithstanding anything herein to the contrary (but subject to Section 8.6.E.), with respect to any Redemption or exchange for REIT Shares pursuant to this Section 8.6:

          (1) Without the consent of the General Partner, no Limited Partner may effect a Redemption for less than 1,000 Partnership Units or, if the Limited Partner holds less than 1,000 Partnership Units, all of the Partnership Units held by such Limited Partner.

          (2) Without the consent of the General Partner, no Limited Partner may effect a Redemption during the period after the Partnership Record Date with respect to a distribution and before the record date established by the General Partner for a distribution to its stockholders of some or all of its portion of such distribution.

          (3) The consummation of any Redemption or exchange for REIT Shares shall be subject to the expiration or termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

          (4) Each Tendering Partner shall continue to own all Partnership Units subject to any Redemption or exchange for REIT Shares, and be treated as a Limited Partner with respect to such Partnership Units for all purposes of this Agreement, until such Partnership Units are transferred and paid for or exchanged pursuant to the Redemption. Until such Partnership

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Units are transferred and paid for or exchanged pursuant to the Redemption, the Tendering Partner shall have no rights as a stockholder of the Company with respect to such Tendering Partner’s Partnership Units.

     G. In the event that the Partnership issues additional Partnership Interests to any Additional Limited Partner pursuant to Section 4.3.B., the General Partner shall make such revisions to this Section 8.6 as it determines are necessary to reflect the issuance of such additional Partnership Interests.

Section 8.7. Conversion of PIUs.

     A. PIUs will automatically convert into an equal number of fully paid and non-assessable Common Units, giving effect to all adjustments (if any) made pursuant to Section 4.3.E., at such time (a “Conversion Date”) as the Economic Capital Account Balance attributable to such PIUs is equal to the Common Unit Economic Balance, in each case as determined as of the effective date of conversion (the “Capital Account Limitation”). The resulting Common Units will be vested or unvested in accordance with the PIU Vesting Agreement governing the converted PIUs.

     Notwithstanding anything herein to the contrary, a holder of vested PIUs may deliver a Notice of Redemption pursuant to Section 8.6.A. of the Partnership Agreement relating to those Common Units that will be issued to such holder upon conversion of such PIUs into Common Units in advance of the Conversion Date; provided, however, that the redemption of such Common Units by the Partnership shall in no event take place until after the Conversion Date. For clarity, it is noted that the objective of this paragraph is to put a PIU Holder in a position where, if he or she so wishes, the Common Units into which his or her Vested PIUs will be converted can be redeemed by the Partnership simultaneously with such conversion, with the further consequence that, if the Company elects to assume the Partnership’s Redemption obligation with respect to such Common Units under Section 8.6.B. of the Agreement by delivering to such holder REIT Shares rather than cash, then such holder can have such REIT Shares issued to him or her simultaneously with the conversion of his or her Vested PIUs into Common Units. The General Partner and the Company shall reasonably cooperate with a PIU Holder to coordinate the timing of the different events described in the foregoing sentence.

     B. If the Partnership or the General Partner shall be a party to any transaction (including, without limitation, a merger, consolidation, unit exchange, self tender offer for all or substantially all Common Units or other business combination or reorganization, or sale of all or substantially all of the Partnership’s assets, but excluding any transaction which constitutes an Adjustment Event) in each case as a result of which Common Units shall be exchanged for or converted into the right, or the holders of such Units shall otherwise be entitled, to receive cash, securities or other property or any combination thereof (each of the foregoing being referred to herein as a “Transaction”), the PIUs held by each PIU Holder will be converted into a number of Common Units equal to the Economic Capital Account Balance of the PIU Holder (to the extent attributable to its ownership of PIUs) divided by the Common Unit Economic Balance. For this purposes, the Economic Capital Account Balance of the PIU Holder will be adjusted by taking into account any allocations that occur in connection with the Transaction or that would occur in connection with the Transaction if the assets of the Partnership were sold at the

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Transaction price or, if applicable, at a value determined by the General Partner in good faith using the value attributed to the Partnership Units in the context of the Transaction (in which case the Conversion Date shall be the effective date of the Transaction). The Common Units received in the Conversion will be vested or unvested in accordance with the PIU Vesting Agreement governing the converted PIUs.

     In anticipation of such Conversion and the consummation of the Transaction, the Partnership shall use commercially reasonable efforts to cause each PIU Holder to be afforded the right to receive in connection with such Transaction in consideration for the Common Units into which his or her PIUs will be converted the same kind and amount of cash, securities and other property (or any combination thereof) receivable upon the consummation of such Transaction by a holder of the same number of Common Units, assuming such holder of Common Units is not a Person with which the Partnership consolidated or into which the Partnership merged or which merged into the Partnership or to which such sale or transfer was made, as the case may be (a “Constituent Person”), or an affiliate of a Constituent Person. In the event that holders of Common Units have the opportunity to elect the form or type of consideration to be received upon consummation of the Transaction, prior to such Transaction the General Partner shall give prompt written notice to each PIU Holder of such election, and shall use commercially reasonable efforts to afford the PIU Holders the right to elect, by written notice to the General Partner, the form or type of consideration to be received upon conversion of each PIU held by such holder into Common Units in connection with such Transaction. If a PIU Holder fails to make such an election, such holder (and any of its transferees) shall receive upon conversion of each PIU held him or her (or by any of his or her transferees) the same kind and amount of consideration that a holder of a Common Unit would receive if such Common Unit holder failed to make such an election.

     Subject to the rights of the Partnership and the Company under any PIU Vesting Agreement and the Stock Plan, the Partnership shall use commercially reasonable efforts to cause the terms of any Transaction to be consistent with the provisions of this Section 8.7.B and to enter into an agreement with the successor or purchasing entity, as the case may be, for the benefit of any PIU Holders whose PIUs will not be converted into Common Units in connection with the Transaction that will (i) contain provisions enabling the holders of PIUs that remain outstanding after such Transaction to convert their PIUs into securities as comparable as reasonably possible under the circumstances to the Common Units and (ii) preserve as far as reasonably possible under the circumstances the distribution, special allocation, conversion, and other rights set forth in the Partnership Agreement for the benefit of the PIU Holders.

Section 8.8. Voting Rights of PIUs

     PIU Holders shall:

     (a) have those voting rights required from time to time by applicable law, if any; and (b) have the additional voting rights that are expressly set forth below. So long as any PIUs remain outstanding, the Partnership shall not, without the affirmative vote of the holders of at least a majority of the PIUs outstanding at the time, given in person or by proxy, either in writing or at a meeting (voting separately as a class), amend, alter or repeal, whether by merger, consolidation or otherwise, the provisions of the Partnership Agreement applicable to PIUs so as

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to materially and adversely affect any right, privilege or voting power of the PIUs or the PIU Holders as such, unless such amendment, alteration, or repeal affects equally, ratably and proportionately the rights, privileges and voting powers of the holders of Common Units; but subject, in any event, to the following provisions:

     (i) With respect to any Transaction, so long as the PIUs are treated in accordance with Section 8.7.B. hereof, the consummation of such Transaction shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers of the PIUs or the PIU Holders as such; and

     (ii) Any creation or issuance of any Partnership Units or of any class or series of Partnership Interest including without limitation additional Common Units, PIUs or Preferred Units, whether ranking senior to, junior to, or on a parity with the PIUs with respect to distributions and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers of the PIUs or the PIU Holders as such.

     The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required will be effected, all outstanding PIUs shall have been converted into Common Units.

ARTICLE 9.
BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 9.1. Records and Accounting

     A. The General Partner shall keep or cause to be kept at the principal office of the Partnership appropriate books and records with respect to the Partnership’s business, including without limitation, all books and records necessary to provide to the Limited Partners any information, lists and copies of documents required to be provided pursuant to Section 9.3. Any records maintained by or on behalf of the Partnership in the regular course of its business may be kept on, or be in the form of any information storage device, provided, that the records so maintained are convertible into clearly legible written form within a reasonable period of time.

     B. The books of the Partnership shall be maintained, for financial and tax reporting purposes, on an accrual basis in accordance with generally accepted accounting principles.

Section 9.2. Fiscal Year

     The fiscal year of the Partnership shall be the calendar year.

Section 9.3. Reports

     A. As soon as practicable, but in no event later than 105 days after the close of each Partnership Year, or such earlier date as they are filed with the Securities and Exchange Commission, the General Partner shall cause to be mailed to each Limited Partner as of the close of the Partnership Year, an annual report containing financial statements of the Partnership, or of the Company if such statements are prepared solely on a consolidated basis with those of the

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Company, for such Partnership Year, presented in accordance with generally accepted accounting principles, such statements to be audited by a nationally recognized firm of independent public accountants selected by the General Partner.

     B. As soon as practicable, but in no event later than 45 days after the close of each calendar quarter (except the last calendar quarter of each year), or such earlier date as they are filed with the Securities and Exchange Commission, the General Partner shall cause to be mailed to each Limited Partner as of the last day of the calendar quarter, a report containing unaudited financial statements of the Partnership, or of the Company, if such statements are prepared solely on a consolidated basis with those of the Company, or as the General Partner determines to be appropriate.

Section 9.4. Nondisclosure of Certain Information

     Notwithstanding the provisions of Sections 9.1 and 9.3, the General Partner may keep confidential from the Limited Partners any information that the General Partner believes to be in the nature of trade secrets or other information the disclosure of which the General Partner in good faith believes is not in the best interest of the Partnership or could damage the Partnership or its business or which the Partnership is required by law or by agreements with unaffiliated third parties to keep confidential.

ARTICLE 10.
TAX MATTERS

Section 10.1. Preparation of Tax Returns

     The General Partner shall arrange for the preparation and timely filing of all returns of Partnership income, gains, deductions, losses and other items required of the Partnership for federal and state income tax purposes and shall use all reasonable efforts to furnish, within 90 days of the close of each taxable year, the tax information reasonably required by Limited Partners for federal and state income tax reporting purposes. Each Limited Partner shall promptly provide the General Partner with any information reasonably requested by the General Partner relating to any Contributed Property contributed (directly or indirectly) by such Limited Partner to the Partnership.

Section 10.2. Tax Elections

     Except as otherwise provided herein, the General Partner shall, in its sole and absolute discretion, determine whether to make any available election pursuant to the Code, including the election under Section 754 of the Code. The General Partner shall have the right to seek to revoke any such election (including without limitation, any election under Section 754 of the Code) upon the General Partner’s determination in its sole and absolute discretion.

Section 10.3. Tax Matters Partner

     A. The General Partner shall be the “tax matters partner” of the Partnership for federal income tax purposes. Pursuant to Section 6223(c) of the Code, upon receipt of notice from the IRS of the beginning of an administrative proceeding with respect to the Partnership,

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the tax matters partner shall furnish the IRS with the name, address and profit interest of each of the Limited Partners and Assignees; provided, however, that such information is provided to the Partnership by the Limited Partners and Assignees.

     B. The tax matters partner is authorized, but not required:

          (1) to enter into any settlement with the IRS with respect to any administrative or judicial proceedings for the adjustment of Partnership items required to be taken into account by a Partner for income tax purposes (such administrative proceedings being referred to as a “tax audit” and such judicial proceedings being referred to as “judicial review”), and in the settlement agreement the tax matters partner may expressly state that such agreement shall bind all Partners, except that such settlement agreement shall not bind any Partner (i) who (within the time prescribed pursuant to the Code and Regulations) files a statement with the IRS providing that the tax matters partner shall not have the authority to enter into a settlement agreement on behalf of such Partner or (ii) who is a “notice partner” (as defined in Section 6231 of the Code) or a member of a “notice group” (as defined in Section 6223(b)(2) of the Code);

          (2) in the event that a notice of a final administrative adjustment at the Partnership level of any item required to be taken into account by a Partner for tax purposes (a “final adjustment”) is mailed to the tax matters partner, to seek judicial review of such final adjustment, including the filing of a petition for readjustment with the Tax Court or the United States Claims Court, or the filing of a complaint for refund with the District Court of the United States for the district in which the Partnership’s principal place of business is located;

          (3) to intervene in any action brought by any other Partner for judicial review of a final adjustment;

          (4) to file a request for an administrative adjustment with the IRS at any time and, if any part of such request is not allowed by the IRS, to file an appropriate pleading (petition or complaint) for judicial review with respect to such request;

          (5) to enter into an agreement with the IRS to extend the period for assessing any tax which is attributable to any item required to be taken into account by a Partner for tax purposes, or an item affected by such item; and

          (6) to take any other action on behalf of the Partners of the Partnership in connection with any tax audit or judicial review proceeding to the extent permitted by applicable law or regulations.

          (7) The taking of any action and the incurring of any expense by the tax matters partner in connection with any such proceeding, except to the extent required by law, is a matter in the sole and absolute discretion of the tax matters partner and the provisions relating to indemnification of the General Partner set forth in Section 7.7 shall be fully applicable to the tax matters partner in its capacity as such.

     C. The tax matters partner shall receive no compensation for its services. All third party costs and expenses incurred by the tax matters partner in performing its duties as such (including legal and accounting fees) shall be borne by the Partnership. Nothing herein shall be

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construed to restrict the Partnership from engaging an accounting firm to assist the tax matters partner in discharging its duties hereunder, so long as the compensation paid by the Partnership for such services is reasonable.

Section 10.4. Organizational Expenses

     The Partnership shall elect to deduct expenses, if any, incurred by it in organizing the Partnership ratably over a 60-month period as provided in Section 709 of the Code.

Section 10.5. Withholding

     Each Limited Partner hereby authorizes the Partnership to withhold from or pay on behalf of or with respect to such Limited Partner any amount of federal, state, local, or foreign taxes that the General Partner determines that the Partnership is required to withhold or pay with respect to any amount distributable or allocable to such Limited Partner pursuant to this Agreement, including, without limitation, any taxes required to be withheld or paid by the Partnership pursuant to Sections 1441, 1442, 1445 or 1446 of the Code. Any amount paid on behalf of or with respect to a Limited Partner shall constitute a receivable of the Partnership from such Limited Partner, which receivable shall be paid by such Limited Partner within 15 days after notice from the General Partner that such payment must be made unless (i) the Partnership withholds such payment from a distribution which would otherwise be made to the Limited Partner or (ii) the General Partner determines, in its sole and absolute discretion, that such payment may be satisfied out of the available funds of the Partnership which would, but for such payment, be distributed to the Limited Partner. Any amounts withheld pursuant to the foregoing clauses (i) or (ii) shall be treated as having been distributed to such Limited Partner. Each Limited Partner hereby unconditionally and irrevocably grants to the Partnership a security interest in such Limited Partner’s Partnership Interest to secure such Limited Partner’s obligation to pay to the Partnership any amounts required to be paid pursuant to this Section 10.5. Any amounts payable by a Limited Partner hereunder shall bear interest at the base rate on corporate loans at large United States money center commercial banks, as published from time to time in The Wall Street Journal, plus two percentage points (but not higher than the maximum lawful rate) from the date such amount is due (i.e., 15 days after demand) until such amount is paid in full. Each Limited Partner shall take such actions as the Partnership or the General Partner shall request in order to perfect or enforce the security interest created hereunder.

ARTICLE 11.
TRANSFERS AND WITHDRAWALS

Section 11.1. Transfer

     A. The term “transfer,” when used in this Article 11 with respect to a Partnership Interest, shall be deemed to refer to a transaction by which the General Partner purports to assign its General Partner Interest to another Person or by which a Limited Partner purports to assign its Limited Partner Interest to another Person, and includes a sale, assignment, gift (outright or in trust), pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition by law or otherwise. The term “transfer” when used in this Article 11 does not include any Redemption or exchange for REIT Shares pursuant to Section 8.6 except as otherwise provided herein. No

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part of the Partnership Interest of a Limited Partner shall be subject to the claims of any creditor, any spouse for alimony or support, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered except as may be specifically provided for in this Agreement or consented to by the General Partner.

     B. No Partnership Interest shall be transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article 11. Any transfer or purported transfer of a Partnership Interest not made in accordance with this Article 11 shall be null and void ab initio unless otherwise consented by the General Partner in its sole and absolute discretion.

Section 11.2. Transfer of General Partner’s Partnership Interest

     The General Partner shall not withdraw from the Partnership and shall not transfer all or any portion of its interest as General Partner in the Partnership (whether by sale, statutory merger or consolidation, liquidation or otherwise) without the Consent of the Limited Partners, which may be given or withheld by each Limited Partner in its sole and absolute discretion, and only upon the admission of a successor General Partner pursuant to Section 12.1. Upon any transfer of a Partnership Interest in accordance with the provisions of this Section 11.2, the transferee shall become a Substitute General Partner for all purposes herein, and shall be vested with the powers and rights of the transferor General Partner, and shall be liable for all obligations and responsible for all duties of the General Partner, once such transferee has executed such instruments as may be necessary to effectuate such admission and to confirm the agreement of such transferee to be bound by all the terms and provisions of this Agreement with respect to the Partnership Interest so acquired. It is a condition to any transfer otherwise permitted hereunder that the transferee assumes, by operation of law or express agreement, all of the obligations of the transferor General Partner under this Agreement with respect to such transferred Partnership Interest, and no such transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor General Partner are assumed by a successor corporation by operation of law) shall relieve the transferor General Partner of its obligations under this Agreement without the Consent of the Limited Partners, in their reasonable discretion. In the event the General Partner withdraws from the Partnership, in violation of this Agreement or otherwise, or otherwise dissolves or terminates, or upon the Incapacity of the General Partner, all of the remaining Partners may elect to continue the Partnership business by selecting a Substitute General Partner in accordance with the Act.

Section 11.3. Termination Transactions; Transfer of the Company’s Onwership of the General Partner

     A. Termination Transactions. The Company shall not engage in any merger, consolidation or other combination with or into another person, or sale of all or substantially all of its assets (a “Termination Transaction”) unless either clause (a) or (b) below is satisfied:

          (a) in connection with such Termination Transaction all Limited Partners either will receive, or will have the right to elect to receive, for each Partnership Unit an amount of cash, securities, or other property equal to the product of the REIT Shares Amount and the greatest amount of cash, securities or other property paid to a holder of one REIT Share in

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consideration of one REIT Share at any time during the period commencing upon and continuing after the date on which the Termination Transaction is consummated; or

          (b) the following conditions are met: (i) substantially all of the assets directly or indirectly owned by the surviving entity are held directly or indirectly by the Partnership or another limited partnership or limited liability company which is the survivor of a merger, consolidation or combination of assets with the Partnership (in each case, the “Surviving Partnership”); (ii) the holders of Partnership Units own a percentage interest of the Surviving Partnership based on the relative fair market value of the net assets of the Partnership and the other net assets of the Surviving Partnership immediately prior to the consummation of such transaction; (iii) the rights, preferences and privileges of such holders in the Surviving Partnership are at least as favorable as those in effect immediately prior to the consummation of such transaction and as those applicable to any other limited partners or non-managing members of the Surviving Partnership; and (iv) such rights of the Limited Partners include at least one of the following: (a) the right to redeem their interests in the Surviving Partnership for the consideration available to such persons pursuant to Section 8.6.A.; or (b) the right to redeem their Partnership Units for cash on terms equivalent to those in effect with respect to their Partnership Units immediately prior to the consummation of such transaction, or, if the ultimate controlling person of the Surviving Partnership has publicly traded common equity securities, such common equity securities, with an exchange ratio based on the determination of relative fair market value of such securities and the REIT Shares.

     B. Transfer of the Company’s Ownership of the General Partner. Except in connection with a Termination Transaction, the Company shall not directly transfer all or any portion of its interest in the General Partner (whether by sale, statutory merger or consolidation, liquidation or otherwise) without the Consent of the Limited Partners (not including the Company), which may be given or withheld by each Limited Partner in its sole and absolute discretion.

Section 11.4. Limited Partners’ Rights to Transfer

     A. Subject to Section 11.7, no Limited Partner shall transfer all or any portion of its Partnership Interest to any transferee without the consent of the General Partner, which consent may be withheld in its sole and absolute discretion; provided, however, that any Limited Partner may, at any time, without the consent of the General Partner, (i) transfer all or any portion of its Partnership Interest to the General Partner, (ii) transfer all or any portion of its Partnership Interest to an Affiliate or to an Immediate Family Member, subject to the provisions of Section 11.7 and (iii) transfer all or any portion of its Partnership Interest to an organization described in Section 501(c)(3) of the Code (or to a trust for the benefit of such an organization), subject to the provisions of Section 11.7.

     B. It is a condition to any transfer otherwise permitted hereunder that the transferee assumes by operation of law or express agreement all of the obligations of the transferor Limited Partner under this Agreement with respect to such transferred Partnership Interest and no such transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor Partner are assumed by a successor corporation by operation of law) shall relieve the transferor Partner of its obligations under this Agreement without the approval

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of the General Partner, in its reasonable discretion. Notwithstanding the foregoing, any transferee of any transferred Partnership Interest shall be subject to any and all ownership limitations contained in the Charter and to the representations in Section 3.4.D. Any transferee, whether or not admitted as a Substituted Limited Partner, shall take subject to the obligations of the transferor hereunder. Unless admitted as a Substitute Limited Partner, no transferee, whether by a voluntary transfer, by operation of law or otherwise, shall have any rights hereunder, other than the rights of an Assignee as provided in Section 11.6.

     C. If a Limited Partner is subject to Incapacity, the executor, administrator, trustee, committee, guardian, conservator, or receiver of such Limited Partner’s estate shall have all the rights of a Limited Partner, but not more rights than those enjoyed by other Limited Partners, for the purpose of settling or managing the estate, and such power as the Incapacitated Limited Partner possessed to transfer all or any part of his or its interest in the Partnership. The Incapacity of a Limited Partner, in and of itself, shall not dissolve or terminate the Partnership.

     D. The General Partner may prohibit any transfer otherwise permitted under this Section 11.4 by a Limited Partner of his or her Partnership Units if, in the opinion of legal counsel to the Partnership, such transfer would require the filing of a registration statement under the Securities Act by the Partnership or would otherwise violate any federal or state securities laws or regulations applicable to the Partnership or the Partnership Unit.

Section 11.5. Substituted Limited Partners

     A. Except as otherwise provided below, no Limited Partner shall have the right to substitute a transferee as a Limited Partner in his or her place (including any transferee permitted by Section 11.4). The General Partner shall, however, have the right to consent to the admission of a transferee of the interest of a Limited Partner pursuant to this Section 11.5 as a Substituted Limited Partner, which consent may be given or withheld by the General Partner in its sole and absolute discretion. The General Partner’s failure or refusal to permit a transferee of any such interests to become a Substituted Limited Partner shall not give rise to any cause of action against the Partnership or any Partner.

     B. A transferee who has been admitted as a Substituted Limited Partner in accordance with this Article 11 shall have all the rights and powers and be subject to all the restrictions and liabilities of a Limited Partner under this Agreement. The admission of any transferee as a Substituted Limited Partner shall be subject to the transferee executing and delivering to the Partnership an acceptance of all of the terms and conditions of this Agreement (including without limitation, the provisions of Section 2.4 and such other documents or instruments as may be required to effect the admission), each in form and substance satisfactory to the General Partner) and the acknowledgment by such transferee that each of the representations and warranties set forth in Section 3.4 are true and correct with respect to such transferee as of the date of the transfer of the Partnership Interest to such transferee and will continue to be true to the extent required by such representations and warranties.

     C. Upon the admission of a Substituted Limited Partner, the General Partner shall amend Exhibit A to reflect the name, address, number of Partnership Units, and Percentage

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Interest of such Substituted Limited Partner and to eliminate or adjust, if necessary, the name, address and interest of the predecessor of such Substituted Limited Partner.

Section 11.6. Assignees

     If the General Partner, in its sole and absolute discretion, does not consent to the admission of any permitted transferee under Section 11.4 as a Substituted Limited Partner, as described in Section 11.5, such transferee shall be considered an Assignee for purposes of this Agreement. An Assignee shall be entitled to all the rights of an assignee of a limited partnership interest under the Act, including the right to receive distributions from the Partnership and the share of Net Income, Net Losses, gain and loss attributable to the Partnership Units assigned to such transferee, the rights to transfer the Partnership Units provided in this Article 11, the right of Redemption provided in Section 8.6, but shall not be deemed to be a holder of Partnership Units for any other purpose under this Agreement, and shall not be entitled to effect a Consent with respect to such Partnership Units on any matter presented to the Limited Partners for approval (such Consent remaining with the transferor Limited Partner). In the event any such transferee desires to make a further assignment of any such Partnership Units, such transferee shall be subject to all the provisions of this Article 11 to the same extent and in the same manner as any Limited Partner desiring to make an assignment of Partnership Units. Notwithstanding anything contained in this Agreement to the contrary, as a condition to becoming an Assignee, any prospective Assignee must first execute and deliver to the Partnership an acknowledgment that each of the representations and warranties set forth in Section 3.4 are true and correct with respect to such prospective Assignee as of the date of the prospective assignment of the Partnership Interest to such prospective Assignee and will continue to be true to the extent required by such representations or warranties.

Section 11.7. General Provisions

     A. No Limited Partner may withdraw from the Partnership other than as a result of (i) a permitted transfer of all of such Limited Partner’s Partnership Interests in accordance with this Article 11 and the transferee(s) of such Partnership Units being admitted to the Partnership as a Substituted Limited Partner or (ii) pursuant to the exercise of its right of Redemption of all of such Limited Partner’s Partnership Units under Section 8.6; provided that after such transfer, exchange or redemption such Limited Partner owns no Partnership Units. No Limited Partner who withdraws from the Partnership, other than as expressly permitted by this Section 11.7.A., shall thereafter be entitled to consent or vote with respect to any matter requiring the vote or consent of the Limited Partners and all Partnership Units of such Limited Partner shall be disregarded for purposes of determining whether the requisite Percentage Interest required to consent to or approve such matter has been given or obtained.

     B. Any Limited Partner who shall transfer all of such Limited Partner’s Partnership Units in a transfer permitted pursuant to this Article 11 where such transferee was admitted as a Substituted Limited Partner or pursuant to the exercise of its rights of Redemption of all of such Limited Partner’s Partnership Units under Section 8.6 shall cease to be a Limited Partner; provided that after such transfer, exchange or redemption such Limited Partner owns no Partnership Units.

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     C. Transfers pursuant to this Article 11 may only be made on the first day of a fiscal quarter of the Partnership, unless the General Partner otherwise agrees.

     D. If any Partnership Interest is transferred, assigned or redeemed during any quarterly segment of the Partnership’s fiscal year in compliance with the provisions of this Article 11 or transferred or redeemed pursuant to Section 8.6, on any day other than the first day of a Partnership Year, then Net Income, Net Losses, each item thereof and all other items attributable to such Partnership Interest for such fiscal year shall be divided and allocated between the transferor Partner and the transferee Partner by taking into account their varying interests during the fiscal year using a method selected by the General Partner that is in accordance with Section 706(d) of the Code. All distributions of Available Cash with respect to which the Partnership Record Date is before the date of such transfer, assignment, exchange or redemption shall be made to the transferor Partner, and all distributions of Available Cash thereafter, in the case of a transfer or assignment other than an exchange or a redemption for REIT Shares, shall be made to the transferee Partner.

     E. In addition to any other restrictions on transfer herein contained, including without limitation the provisions of this Article 11, in no event may any transfer or assignment of a Partnership Interest by any Partner (including pursuant to a Redemption or exchange for REIT Shares pursuant to Section 8.6) be made: (i) to any person or entity who lacks the legal right, power or capacity to own a Partnership Interest; (ii) in violation of applicable law; (iii) except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, of any economic component portion of a Partnership Interest, such as the Capital Account, or rights to distributions, separate and apart from all other components of a Partnership Interest; (iv) except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, if in the opinion of legal counsel to the Partnership such transfer could cause a termination of the Partnership for federal or state income tax purposes (except as a result of the Redemption or exchange for REIT Shares of all Partnership Units held by all Limited Partners or pursuant to a transaction expressly permitted under Section 11.3); (v) if in the opinion of counsel to the Partnership such transfer could cause the Partnership to cease to be classified as a partnership for federal income tax purposes (except as a result of the Redemption or exchange for REIT Shares of all Partnership Units held by all Limited Partners); (vi) if such transfer would cause the Partnership to become, with respect to any employee benefit plan subject to Title I of ERISA, a “party-in-interest” (as defined in Section 3(14) of ERISA) or a “disqualified person” (as defined in Section 4975(c) of the Code); (vii) if such transfer would, in the opinion of counsel to the Partnership, cause any portion of the assets of the Partnership to constitute assets of any employee benefit plan pursuant to Department of Labor Regulation Section 2510.3-101; (viii) if such transfer requires the registration of such Partnership Interest pursuant to any applicable federal or state securities laws; (ix) except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, if such transfer (1) could be treated as effectuated through an “established securities market” or a “secondary market” (or the substantial equivalent thereof) within the meaning of Section 7704 of the Code, (2) could cause the Partnership to become a “Publicly Traded Partnership,” as such term is defined in Sections 469(k)(2) or 7704(b) of the Code or (3) could cause the Partnership to fail one or more of the Safe Harbors (as defined below); (x) if such transfer subjects the Partnership to be regulated under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or the Employee Retirement Income Security Act of 1974, each as amended; (xi)

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except with the consent of the General Partner, which may be given or withheld in its sole discretion, if the proposed transferee or assignee of such Partnership Interest is unable to make the representations set forth in Section 3.4.C; (xii) if such transfer is made to a lender to the Partnership or any Person who is related (within the meaning of Section 1.752-4(b) of the Regulations) to any lender to the Partnership whose loan constitutes a Nonrecourse Liability, except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion; and provided, that, as a condition to granting such consent the lender may be required to enter into an arrangement with the Partnership and the General Partner to redeem or exchange for the REIT Shares Amount any Partnership Units in which a security interest is held simultaneously with the time at which such lender would be deemed to be a partner in the Partnership for purposes of allocating liabilities to such lender under Section 752 of the Code; or (xiii) if in the opinion of legal counsel for the Partnership such transfer could adversely affect the ability of the Company to continue to qualify as a REIT or, except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, subject the General Partner to any additional taxes under Section 857 or Section 4981 of the Code.

     F. The General Partner shall monitor the transfers of interests in the Partnership to determine (i) if such interests are being traded on an “established securities market” or a “secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code and (ii) whether such transfers of interests would result in the Partnership being unable to qualify for the “safe harbors” set forth in Regulations Section 1.7704-1 (or such other guidance subsequently published by the IRS setting forth safe harbors under which interests will not be treated as “readily tradable on a secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code) (the “Safe Harbors”). The General Partner shall have the authority (but shall not be required) to take any steps it determines are necessary or appropriate in its sole and absolute discretion to prevent any trading of interests which could cause the Partnership to become a “publicly traded partnership,” or any recognition by the Partnership of such transfers, or to insure that one or more of the Safe Harbors is met.

     G. No Partner who withdraws, or attempts to withdraw, from the Partnership shall be entitled to receive the fair value of such Partner’s partnership interest in the Partnership.

ARTICLE 12.
ADMISSION OF PARTNERS

Section 12.1. Admission of Successor General Partner

     A successor to all of the General Partner’s General Partner Interest pursuant to Section 11.2 who is proposed to be admitted as a successor General Partner shall be admitted to the Partnership as the General Partner, effective upon such transfer. Any such transferee shall carry on the business of the Partnership without dissolution. In each case, the admission shall be subject to the successor General Partner executing and delivering to the Partnership an acceptance of all of the terms and conditions of this Agreement and such other documents or instruments as may be required to effect the admission. In the case of such admission on any day other than the first day of a Partnership Year, all items attributable to the General Partner Interest for such Partnership Year shall be allocated between the transferring General Partner and such successor as provided in Article 11.

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Section 12.2. Admission of Additional Limited Partners

     A. After the admission to the Partnership of the initial Limited Partners on the date hereof, a Person who makes a Capital Contribution to the Partnership in accordance with this Agreement shall be admitted to the Partnership as an Additional Limited Partner upon, and only upon, furnishing to the General Partner (i) evidence of acceptance in form satisfactory to the General Partner of all of the terms and conditions of this Agreement, including, without limitation, the power of attorney granted in Section 2.4 and (ii) such other documents or instruments as may be required in the discretion of the General Partner in order to effect such Person’s admission as an Additional Limited Partner.

     B. Notwithstanding anything to the contrary in this Section 12.2, no Person shall be admitted as an Additional Limited Partner without the consent of the General Partner, which consent may be given or withheld in the General Partner’s sole and absolute discretion. The admission of any Person as an Additional Limited Partner shall become effective on the date upon which the name of such Person is recorded on the books and records of the Partnership, following the receipt of the Capital Contribution in respect of such Limited Partner and the consent of the General Partner to such admission. If any Additional Limited Partner is admitted to the Partnership on any day other than the first day of a Partnership Year, then Net Income, Net Losses, each item thereof and all other items allocable among Partners and Assignees for such Partnership Year shall be allocated among such Limited Partner and all other Partners and Assignees by taking into account their varying interests during the Partnership Year using a method selected by the General Partner that is in accordance with Section 706(d) of the Code. All distributions of Available Cash with respect to which the Partnership Record Date is before the date of such admission shall be made solely to Partners and Assignees other than the Additional Limited Partner (other than in its capacity as an Assignee) and, except as otherwise agreed to by the Additional Limited Partners and the General Partner, all distributions of Available Cash thereafter shall be made to all Partners and Assignees including such Additional Limited Partner.

Section 12.3. Amendment of Agreement and Certificate of Limited Partnership

     For the admission to the Partnership of any Partner, the General Partner shall take all steps necessary and appropriate under the Act to amend the records of the Partnership and, if necessary, to prepare as soon as practical an amendment of this Agreement (including an amendment of Exhibit A) and, if required by law, shall prepare and file an amendment to the Certificate and may for this purpose exercise the power of attorney granted pursuant to Section 2.4.

ARTICLE 13.
DISSOLUTION AND LIQUIDATION

Section 13.1. Dissolution

     The Partnership shall not be dissolved by the admission of Substituted Limited Partners or Additional Limited Partners or by the admission of a successor General Partner in accordance with the terms of this Agreement. Upon the withdrawal of the General Partner, any successor

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General Partner (selected as described in Section 13.1.A. below) shall continue the business of the Partnership. The Partnership shall dissolve, and its affairs shall be wound up, upon the first to occur of any of the following (each a “Liquidating Event”):

     A. subject to compliance with Section 11.2, an event of withdrawal of the General Partner, as defined in the Act, unless, within 90 days after the withdrawal, remaining Partners holding Percentage Interests that in the aggregate are not less than 66 ^2/3% of the aggregate Percentage Interests of all the remaining Partners (including in all cases the Limited Partner Interests owned directly or indirectly by the Company) agree in writing, in their sole and absolute discretion, to continue the business of the Partnership and to the appointment, effective as of the date of withdrawal, of a substitute General Partner;

     B. an election to dissolve the Partnership made by the General Partner, in its sole and absolute discretion;

     C. consent to dissolution by Partners holding Percentage Interests that in the aggregate are not less than 66 ^2/3% of the aggregate Percentage Interests of all the Partners (including in all cases the Limited Partner Interests owned directly or indirectly by the Company);

     D. entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of the Act;

     E. subject to compliance with Section 11.3, any sale or other disposition of all or substantially all of the assets of the Partnership or a related series of transactions that, taken together, result in the sale or other disposition of all or substantially all of the assets of the Partnership;

     F. a final and non-appealable judgment is entered by a court of competent jurisdiction ruling that the General Partner is bankrupt or insolvent, or a final and non-appealable order for relief is entered by a court with appropriate jurisdiction against the General Partner, in each case under any federal or state bankruptcy or insolvency laws as now or hereafter in effect, unless prior to the entry of such order or judgment all of the remaining Partners agree in writing to continue the business of the Partnership and to the appointment, effective as of a date prior to the date of such order or judgment, of a substitute General Partner.

Section 13.2. Winding Up

     A. Upon the occurrence of a Liquidating Event, the Partnership shall continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors and Partners. No Partner shall take any action that is inconsistent with, or not necessary to or appropriate for, the winding up of the Partnership’s business and affairs. The General Partner (or, in the event there is no remaining General Partner, any Person elected by a Majority in Interest of the Limited Partners (the “Liquidator”)) shall be responsible for overseeing the winding up and dissolution of the Partnership and shall take full account of the Partnership’s liabilities and property and the Partnership property shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds

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therefrom (which may, to the extent determined by the General Partner, include shares of stock in the Company) shall be applied and distributed in the following order:

          (1) First, to the payment and discharge of all of the Partnership’s debts and liabilities to creditors other than the Partners;

          (2) Second, to the payment and discharge of all of the Partnership’s debts and liabilities to the General Partner;

          (3) Third, to the payment and discharge of all of the Partnership’s debts and liabilities to the other Partners;

          (4) Fourth, to the payment and discharge of any preferred distributions due to Preferred Unitholders (each such distribution reducing such Preferred Unitholder’s Capital Account); and

          (5) Fifth, the balance, if any, to the General Partner, Common Unitholders and Preferred Unitholders in accordance with their positive Capital Account balances, determined after taking into account all Capital Account adjustments for all prior periods and the Partnership taxable year during which the liquidation occurs (other than those made as a result of the liquidating distribution set forth in this Section 13.2.A.).

     The General Partner shall not receive any additional compensation for any services performed pursuant to this Article 13 other than reimbursement of its expenses as provided in Section 7.4.

     B. Notwithstanding the provisions of Section 13.2.A. which require liquidation of the assets of the Partnership, but subject to the order of priorities set forth therein, if prior to or upon dissolution of the Partnership the Liquidator determines that an immediate sale of part or all of the Partnership’s assets would be impractical or would cause undue loss to the Partners, the Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of any assets except those necessary to satisfy liabilities of the Partnership (including those to Partners as creditors) and/or distribute to the Partners, in lieu of cash, as tenants in common and in accordance with the provisions of Section 13.2.A., undivided interests in such Partnership assets as the Liquidator deems not suitable for liquidation. Any such distributions in-kind shall be made only if, in the good faith judgment of the Liquidator, such distributions in-kind are in the best interest of the Partners, and shall be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and to any agreements governing the operation of such properties at such time. The Liquidator shall determine the fair market value of any property distributed in kind using such reasonable method of valuation as it may adopt.

Section 13.3. Capital Contribution Obligation

     If any Partner has a deficit balance in his or her Capital Account (after giving effect to all contributions, distributions and allocations for the taxable years, including the year during which such liquidation occurs), such Partner shall have no obligation to make any contribution to the capital of the Partnership with respect to such deficit, and such deficit at any time shall not be

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considered a debt owed to the Partnership or to any other Person for any purpose whatsoever, except to the extent otherwise expressly agreed to by such Partner and the Partnership pursuant to an election under Section 4.1.D.

Section 13.4. Distribution to Liquidating Trust; Retention of Reserve

     In the discretion of the Liquidator or the General Partner, a pro rata portion of the distributions that would otherwise be made to the General Partner and Limited Partners pursuant to this Article 13 may be:

          (1) distributed to a trust established for the benefit of the General Partner and Limited Partners for the purposes of liquidating Partnership assets, collecting amounts owed to the Partnership, and paying any contingent or unforeseen liabilities or obligations of the Partnership or of the General Partner arising out of or in connection with the Partnership. The assets of any such trust shall be distributed to the General Partner and Limited Partners from time to time, in the reasonable discretion of the Liquidator or the General Partner, in the same proportions and the amount distributed to such trust by the Partnership would otherwise have been distributed to the General Partner and Limited Partners pursuant to this Agreement; or

          (2) withheld or escrowed to provide a reasonable reserve for Partnership liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Partnership, provided, that such withheld or escrowed amounts shall be distributed to the General Partner and Limited Partners in the manner and priority set forth in Section 13.2.A as soon as practicable.

Section 13.5. Deemed Distribution and Recontribution

     Notwithstanding any other provision of this Article 13, in the event the Partnership is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership’s property shall not be liquidated, the Partnership’s liabilities shall not be paid or discharged, and the Partnership’s affairs shall not be wound up. Instead, the Partnership shall be deemed to have contributed all of its assets and liabilities to a new partnership in exchange for an interest in the new partnership. Immediately thereafter, the Partnership shall be deemed to distribute interests in the new partnership to the General Partner and Limited Partners in proportion to their respective interests in the Partnership in liquidation of the Partnership.

Section 13.6. Rights of Limited Partners

     Except as otherwise provided in this Agreement, each Limited Partner shall look solely to the assets of the Partnership for the return of his Capital Contribution and shall have no right or power to demand or receive property from the General Partner.

Section 13.7. Notice of Dissolution

     In the event a Liquidating Event occurs or an event occurs that would, but for provisions of Section 13.1, result in a dissolution of the Partnership, the General Partner shall, within 30 days thereafter, provide written notice thereof to each of the Partners and to all other parties with

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whom the Partnership regularly conducts business (as determined in the discretion of the General Partner) and shall publish notice thereof in a newspaper of general circulation in each place in which the Partnership regularly conducts business (as determined in the discretion of the General Partner).

Section 13.8. Cancellation of Certificate of Limited Partnership

     Upon the completion of the liquidation of the Partnership cash and property as provided in Section 13.2, the Partnership shall be terminated and the Certificate and all qualifications of the Partnership as a foreign limited partnership in jurisdictions other than the State of Delaware shall be cancelled and such other actions as may be necessary to terminate the Partnership shall be taken.

Section 13.9. Reasonable Time for Winding-Up

     A reasonable time shall be allowed for the orderly winding-up of the business and affairs of the Partnership and the liquidation of its assets pursuant to Section 13.2, in order to minimize any losses otherwise attendant upon such winding-up, and the provisions of this Agreement shall remain in effect between the Partners during the period of liquidation.

Section 13.10. Waiver of Partition

     Each Partner hereby waives any right to partition of the Partnership property.

ARTICLE 14.
AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS

Section 14.1. Amendments

     A. The actions requiring consent or approval of the Partners or of the Limited Partners pursuant to this Agreement, including Section 7.3, or otherwise pursuant to applicable law, are subject to the procedures in this Article 14.

     B. Amendments to this Agreement requiring the consent or approval of Limited Partners may be proposed by the General Partner or by Limited Partners holding twenty-five percent (25%) or more of the Partnership Interests held by Limited Partners. The General Partner shall seek the written consent of the Limited Partners on the proposed amendment or shall call a meeting to vote thereon and to transact any other business that it may deem appropriate. For purposes of obtaining a written consent, the General Partner may require a response within a reasonable specified time, but not less than 15 days, and failure to respond in such time period shall constitute a consent which is consistent with the General Partner’s recommendation (if so recommended) with respect to the proposal; provided, that, an action shall become effective at such time as requisite consents are received even if prior to such specified time.

Section 14.2. Action by the Partners

     A. Meetings of the Partners may be called by the General Partner and shall be called upon the receipt by the General Partner of a written request by Limited Partners holding

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twenty-five percent (25%) or more of the Partnership Interests held by Limited Partners. The notice shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Partners not less than seven days nor more than 30 days prior to the date of such meeting. Partners may vote in person or by proxy at such meeting. Whenever the vote or Consent of the Limited Partners or of the Partners is permitted or required under this Agreement, such vote or Consent may be given at a meeting of Partners or may be given in accordance with the procedure prescribed in Section 14.1.

     B. Any action required or permitted to be taken at a meeting of the Partners may be taken without a meeting if a written consent setting forth the action so taken is signed by the percentage as is expressly required by this Agreement for the action in question. Such consent may be in one instrument or in several instruments, and shall have the same force and effect as a vote of the Percentage Interests of the Partners (expressly required by this Agreement). Such consent shall be filed with the General Partner. An action so taken shall be deemed to have been taken at a meeting held on the effective date so certified.

     C. Each Limited Partner may authorize any Person or Persons to act for him by proxy on all matters in which a Limited Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Every proxy must be signed by the Limited Partner or his attorney-in-fact. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Limited Partner executing it.

     D. Each meeting of Partners shall be conducted by the General Partner or such other Person as the General Partner may appoint pursuant to such rules for the conduct of the meeting as the General Partner or such other Person deems appropriate.

     E. On matters on which Limited Partners are entitled to vote, each Limited Partner shall have a vote equal to the number of Partnership Units held.

ARTICLE 15.
GENERAL PROVISIONS

Section 15.1. Addresses and Notice

     Any notice, demand, request or report required or permitted to be given or made to a Partner or Assignee under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when sent by first class United States mail or by other means of written communication to the Partner or Assignee at the address set forth in Exhibit A or such other address as the Partners shall notify the General Partner in writing.

Section 15.2. Titles and Captions

     All article or section titles or captions in this Agreement are for convenience only. They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Except as specifically provided otherwise, references to “Articles” and “Sections” are to Articles and Sections of this Agreement.

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Section 15.3. Pronouns and Plurals

     Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.

Section 15.4. Further Action

     The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.

Section 15.5. Binding Effect

     This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.

Section 15.6. Creditors

     Other than as expressly set forth herein with respect to Indemnitees, none of the provisions of this Agreement shall be for the benefit of, or shall be enforceable by, any creditor of the Partnership.

Section 15.7. Waiver

     No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon any breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.

Section 15.8. Counterparts

     This Agreement may be executed in counterparts (including by facsimile), all of which together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature hereto.

Section 15.9. Applicable Law

     This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflicts of law.

Section 15.10. Consent to Jurisdiction

     The Partners hereby agree that, except as otherwise required by the Act, any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may be brought by or against any Partner in the courts of the State of North Carolina, or, if it has or can acquire jurisdiction, in the United States District Court for the Western District

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of North Carolina, and each of the Partners hereby consents to the non-exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to personal jurisdiction, venue, and inconvenient forum laid therein.

Section 15.11. Invalidity of Provisions

     If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.

Section 15.12. Entire Agreement

     This Agreement contains the entire understanding and agreement among the Partners with respect to the subject matter hereof and supersedes any other prior written or oral understandings or agreements among them with respect thereto.

Section 15.13. No Rights as Stockholders

     Nothing contained in this Agreement shall be construed as conferring upon the holders of Partnership Units any rights whatsoever as stockholders of the Company, including without limitation any right to receive dividends or other distributions made to stockholders of the Company or to vote or to consent or to receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the Company or any other matter.

     IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Agreement of Limited Partnership as of the date first written above.

General Partner:
CAMPUS CREST COMMUNITIES OPERATING PARTNERSHIP, LP
By:	Campus Crest Communities GP, LLC, a Delaware limited liability company Its General Partner
	By:	Campus Crest Communities, Inc., a Maryland corporation Its Sole Member
		By:
		Name: Donald L. Bobbitt, Jr.
		Title: Chief Financial Officer

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Limited Partners:
CAMPUS CREST COMMUNITIES LP, LLC
By:	Campus Crest Communities, Inc., a Maryland corporation Its Sole Member
	By:
	Name: Donald L. Bobbitt, Jr.
	Title: Chief Financial Officer
Name:
Name:
Name:
Name:

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EXHIBIT A
PARTNERS, CONTRIBUTIONS AND PERCENTAGE INTERESTS

	Gross		Agreed Value Of				Number Of
	Asset	Cash	Contributed		Total	Partnership	Partnership	Percentage
Name And Address Of Partner	Value	Contributions	Property*		Contributions	Unit Type	Units	Interest
General Partner
Campus Crest Communities GP, LLC		$		—	$	Common
2100 Rexford Road, Suite 414 Charlotte, NC 28211
Limited Partners
Campus Crest Communities LP, LLC		$		—	$	Common
2100 Rexford Road, Suite 414 Charlotte, NC 28211

EXHIBIT B
NOTICE OF REDEMPTION

The undersigned hereby irrevocably (i) transfers _________ Limited Partnership Units in Campus Crest Communities Operating Partnership, LP in accordance with the terms of the Amended and Restated Agreement of Limited Partnership of Campus Crest Communities Operating Partnership, LP and the rights of Redemption referred to therein, (ii) surrenders such Limited Partnership Units and all right, title and interest therein, and (iii) directs that the cash (or, if applicable, REIT Shares) deliverable upon Redemption or exchange be delivered to the address specified below, and if applicable, that such REIT Shares be registered or placed in the name(s) and at the address(es) specified below.

Dated:
	Name of Limited Partner:

(Signature of Limited Partner)

(Street Address)

(City) (State) (Zip Code)

Signature Guaranteed by:

Issue REIT Shares to:

Please insert social security or identifying number:

Name:

B-1

EXHIBIT C
CONSTRUCTIVE OWNERSHIP DEFINITION

     The term “Constructively Owns” means ownership determined through the application of the constructive ownership rules of Section 318 of the Code, as modified by Section 856(d)(5) of the Code. Generally, these rules provide the following:

          a. an individual is considered as owning the Ownership Interest that is owned, actually or constructively, by or for his spouse, his children, his grandchildren, and his parents;

          b. an Ownership Interest that is owned, actually or constructively, by or for a partnership, limited liability company or estate is considered as owned proportionately by its partners or beneficiaries;

          c. an Ownership Interest that is owned, actually or constructively, by or for a trust is considered as owned by its beneficiaries in proportion to the actuarial interest of such beneficiaries (provided, however, that in the case of a “grantor trust” the Ownership Interest will be considered as owned by the grantors);

          d. if ten (10) percent or more in value of the stock in a corporation is owned, actually or constructively, by or for any person, such person shall be considered as owning the Ownership Interest that is owned, actually or constructively, by or for such corporation in that proportion which the value of the stock which such person so owns bears to the value of all the stock in such corporation;

          e. an Ownership Interest that is owned, actually or constructively, by or for a partner or member which actually or constructively owns a 25% or greater capital interest or profits interest in a partnership or limited liability company, or by or to or for a beneficiary of an estate or trust shall be considered as owned by the partnership, limited liability company, estate, or trust (or, in the case of a grantor trust, the grantors);

          f. if ten (10) percent or more in value of the stock in a corporation is owned, actually or constructively, by or for any person, such corporation shall be considered as owning the Ownership Interest that is owned, actually or constructively, by or for such person;

          g. if any person has an option to acquire an Ownership Interest (including an option to acquire an option or any one of a series of such options), such Ownership Interest shall be considered as owned by such person;

          h. an Ownership Interest that is constructively owned by a person by reason of the application of the rules described in paragraphs (a) through (g) above shall, for purposes of applying paragraphs (a) through (g), be considered as actually owned by such person provided, however, that (i) an Ownership Interest constructively owned by an individual by reason of paragraph (a) shall not be considered as owned by him for purposes of again applying paragraph (a) in order to make another the constructive owner of such Ownership Interest, (ii) an Ownership Interest constructively owned by a partnership, estate, trust, or corporation by reason of the application of paragraphs (e) or (f) shall not be considered as owned by it for purposes of applying paragraphs (b), (c), or (d) in order to make another the constructive owner of such

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Ownership Interest, (iii) if an Ownership Interest may be considered as owned by an individual under paragraphs (a) or (g), it shall be considered as owned by him under paragraph (g), and (iv) for purposes of the above described rules, an S corporation shall be treated as a partnership and any stockholder of the S corporation shall be treated as a partner of such partnership except that this rule shall not apply for purposes of determining whether stock in the S corporation is constructively owned by any person.

          i. For purposes of the above summary of the constructive ownership rules, the term “Ownership Interest” means the ownership of stock with respect to a corporation and, with respect to any other type of entity, the ownership of an interest in either its assets or net profits.

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EXHIBIT D

SCHEDULE OF PARTNERS’ OWNERSHIP
WITH RESPECT TO TENANTS

NONE

D-1

EXHIBIT E

SCHEDULE OF REIT SHARES
ACTUALLY OR CONSTRUCTIVELY OWNED BY LIMITED PARTNERS
OTHER THAN THOSE ACQUIRED PURSUANT TO AN EXCHANGE

E-1

EX-10.14

Exhibit 10.14

CONTRIBUTION AGREEMENT

     This CONTRIBUTION AGREEMENT (this “Agreement”) is made as of May 13, 2010, by and among Campus Crest Communities, Inc., a Maryland corporation (the “Company”), and Campus Crest Communities Operating Partnership, LP, a Delaware limited partnership (the “Operating Partnership” and, together with the Company, the “Company Entities”), and MXT Capital, LLC, a Delaware limited liability company (“MXT”, and also referred to herein as the “Sponsor”).

     WHEREAS, MXT has formed and is the sole stockholder of the Company, and the Company, through Campus Crest Communities GP, LLC, its wholly-owned subsidiary, is the sole general partner of the Operating Partnership, and, through Campus Crest Communities LP, LLC, its wholly—owned subsidiary, is the sole limited partner of the Operating Partnership;

     WHEREAS, the Company Entities were formed for the purpose of (i) continuing the student housing business previously owned and conducted, directly or indirectly, by MXT’s wholly-owned subsidiary, Campus Crest Group, LLC, a North Carolina limited liability company, and certain other parties, and (ii) consummating the IPO (as defined below);

     WHEREAS, in connection with the potential initial public offering (the “IPO”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”), the Company intends to file with the Securities and Exchange Commission a registration statement on Form S—11 after the date of this Agreement (together with all amendments and supplements thereto, the “Registration Statement”); and

     WHEREAS, the parties hereto desire that the Sponsor transfer all of its ownership interests in the Student Housing Entities (as defined below) to the Operating Partnership in exchange for the consideration set forth in Section 1.3 (the “Formation Transactions”) and otherwise conclude such agreements under terms and conditions as are set forth herein.

     NOW, THEREFORE, in consideration of the mutual covenants and conditions set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company Entities and the Sponsor agree as follows:

ARTICLE I.
FORMATION TRANSACTIONS

     1.1. Formation Transactions. Subject to the terms and conditions of this Agreement, each of the Company Entities and the Sponsor hereby consents to each of the Formation Transactions and agrees to take all actions reasonably necessary or advisable to consummate, and to cause its direct and indirect subsidiaries and affiliates, where applicable, to consummate, the Formation Transactions. It is the intent of the parties that, as a result of the Formation Transactions, the Company Entities will own, directly or indirectly, all of the interests previously owned by the Sponsor in the entities identified in Schedule 1.1 attached hereto (the “Student Housing Entities”), and through their ownership of such Student Housing Entities, the Company Entities will succeed to all of the student housing business previously conducted, directly or indirectly, by the Sponsor and certain other parties.

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     1.2. Simultaneous Closing. The Formation Transactions shall close simultaneously with the closing of the IPO and the receipt of the net proceeds of the IPO by the Company (the “Closing”). The date on which the Formation Transactions close shall be the “Closing Date.”

     1.3. Consideration for the Formation Transactions. Upon the Closing, MXT, in exchange for the MXT Interests (as defined herein), shall receive from the Operating Partnership 1,333,333 limited partnership units in the Operating Partnership (the “MXT OP Units”) and $4,464,062 of the net proceeds of the IPO in cash or other immediately available funds (the “Exchange Consideration”).

     1.4. Further Acts. The Company Entities and the Sponsor shall perform, execute, and deliver, or cause to be performed, executed, and delivered by their direct or indirect subsidiaries, at the Closing or after the Closing, any and all further acts, instruments, and agreements and provide such further assurances as the other parties may reasonably require to consummate the transactions and otherwise satisfy the covenants and conditions contemplated hereunder.

ARTICLE II.
CONDITIONS TO CLOSING

     2.1. Company Conditions to Closing. The obligations of each Company Entity hereunder are subject to the satisfaction of the conditions set forth below on or before the Closing.

          (a) Representations and Warranties True and Correct. The representations and warranties herein of the Sponsor shall be true and correct in all material respects as of the Closing Date;

          (b) Covenants. The obligations of the Sponsor hereunder, including without limitation, with respect to the Formation Transactions, shall have been performed or complied with in all material respects; and

          (c) Closing Date. The Closing Date shall have occurred by no later than December 31, 2010.

     2.2. Sponsor’s Conditions to Closing. The obligations of the Sponsor hereunder are subject to the satisfaction of the conditions set forth below on or before the Closing:

          (a) Representations and Warranties True and Correct. The representations and warranties herein of each of the Company Entities shall be true and correct in all material respects as of the Closing Date;

          (b) Covenants. The obligations of the Company Entities hereunder, including without limitation, with respect to the Formation Transactions, shall have been performed or complied with in all material respects; and

          (c) Closing Date. The Closing Date shall have occurred by no later than December 31, 2010.

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     2.3. Abandonment of IPO. If, at any time, the Company shall determine in its sole and absolute discretion to abandon the IPO, this Agreement shall be immediately terminated and thereupon each party shall be released from its obligations hereunder and shall have no further liability hereunder.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES AMONG THE PARTIES

     3.1. Definitions. As used in this Article III, the following terms shall have the following meanings:

          (a) “Actions” means all actions, litigation, complaints, charges, accusations, investigations, petitions, suits, arbitrations, mediations or other proceedings, whether civil or criminal, at law or in equity, or before any arbitrator or Governmental Entity.

          (b) “Code” means the Internal Revenue Code of 1986, as amended.

          (c) “Environmental Law” means all applicable statutes, regulations, rules, ordinances, codes, licenses, permits, orders, demands, approvals, authorizations and similar items of any Governmental Entity and all applicable judicial, administrative and regulatory decrees, judgments and orders relating to the protection of human health or the environment as in effect on the date of hereof, including but not limited to those pertaining to reporting, licensing, permitting, investigation, removal and remediation of Hazardous Materials, including without limitation: (i) the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251), the Safe Drinking Water Act (42 U.S.C. 300f et seq.), the Toxic Substances Control Act (15 U.S.C. 2601 et seq.), the Endangered Species Act (16 U.S.C. 1531 et seq.) and the Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C. 11001 et seq.), and (ii) applicable state and local statutory and regulatory laws, statutes and regulations pertaining to Hazardous Materials.

          (d) “Environmental Permits” means any and all licenses, certificates, permits, directives, requirements, registrations, government approvals, agreements, authorizations, and consents that are required under or are issued pursuant to any Environmental Laws.

          (e) “Governmental Entity” means any governmental agency or quasi—governmental agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign.

          (f) “Hazardous Material” means any substance which is controlled, regulated or prohibited under any Environmental Law as in effect as of the date hereof.

          (g) “Lease” means any space lease, license, concession, signage agreement, occupancy agreement or other such arrangement for use of space within a MXT Property, together with all agreements which are amendatory or supplementary thereto.

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          (h) “Liens” means any mortgages, pledges, liens, options, charges, security interests, mortgage deed, restrictions, prior assignments, encumbrances, covenants, encroachments, assessments, purchase rights, rights of others, licenses, easements, voting agreements, liabilities or claims of any kind or nature whatsoever, direct or indirect, including, without limitation, interests in or claims to revenues generated by such property.

          (i) “Material Adverse Effect” means a material adverse effect, individually or in the aggregate, on the business, financial condition, results of operations or properties of the Company Entities and Student Housing Entities, taken as a whole, whether or not arising from transactions in the ordinary course of business.

          (j) “MXT Properties” means the real property owned (whether directly or indirectly) by the Student Housing Entities.

          (k) “Permits” means all licenses, permits, variances, and certificates used in connection with the ownership, operation, use, or occupancy of each of the MXT Properties (including certificates of occupancy, business licenses, state health department licenses, licenses to conduct business and all such other permits, licenses and rights, obtained from any Governmental Entity or private Person concerning ownership, operation, use, or occupancy of such MXT Property).

          (l) “Permitted Liens” means:

               (1) Liens securing taxes, the payment of which is not delinquent or the payment of which is actively being contested in good faith by appropriate proceedings diligently pursued and which, if material in amount, are disclosed in the Registration Statement (including, without limitation, any matters for which a reserve has been established as reflected in the pro forma financial statements contained in the Registration Statement);

               (2) Zoning laws and ordinances applicable to the MXT Properties which are not violated by the existing structures or present uses thereof;

               (3) Liens imposed by laws such as carriers’, warehousemen’s and mechanics’ liens, and other similar liens arising in the ordinary course of business which secure payment of obligations arising in the ordinary course of business not more than sixty (60) days past due or which are being contested in good faith by appropriate proceedings diligently pursued and which, if material in amount, are disclosed in the Registration Statement (including, without limitation, any matters for which a reserve has been established as reflected in the pro forma financial statements contained in the Registration Statement);

               (4) non–exclusive easements for public utilities that do not have a Material Adverse Effect upon, or interfere with the use of, the MXT Properties;

               (5) leases to student occupants of the MXT Properties; and

               (6) any exceptions contained in the existing owner’s or leasehold title insurance policies with respect to each MXT Property.

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          (m) “Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint–stock company, trust, unincorporated organization or Governmental Entity.

          (n) “Release” shall have the same meaning as the definition of “release” in the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) at 42 U.S.C. Section 9601(22).

     3.2. Representations by MXT. MXT represents and warrants to each of the Company Entities, other than with respect to such matters set forth in the MXT Disclosure Schedule attached to this Agreement as Exhibit A, that each and every one of the following statements is true, correct, and complete in all material respects as of the date of this Agreement and will be true, correct, and complete in all material respects as of the Closing Date; provided, however, that none of the representations and warranties hereunder with respect to the Student Housing Entities shall apply with respect to any other party, as to which no representations and warranties are being made by MXT hereunder:

          (a)  Organization and Power. MXT is duly organized, validly existing and in good standing under the laws of the state of its formation and has full right, power, and authority to enter into this Agreement, and to assume and perform all of its obligations under this Agreement. The execution, delivery and performance of this Agreement have been duly authorized by MXT, and this Agreement constitutes the legal, valid and binding obligation of MXT, enforceable against it in accordance with its terms, subject to bankruptcy, reorganization, insolvency and other similar laws affecting the enforcement of creditors’ rights generally and to general principles of equity.

          (b)  Capitalization. The interests owned by MXT directly and indirectly in the Student Housing Entities (the “MXT Interests”) constitute all of the issued and outstanding interests owned by MXT in the Student Housing Entities owning (directly or indirectly) the MXT Properties and other assets to be conveyed by MXT to the Company Entities in accordance with the Formation Transactions. MXT is the sole owner of the MXT Interests, beneficially and of record free and clear of any Liens of any nature, except Permitted Liens and such other Liens that would not have, or reasonably be expected to have, a Material Adverse Effect, and has full power and authority to convey the MXT Interests, free and clear of any Liens, except Permitted Liens and such other Liens that would not have, or reasonably be expected to have, a Material Adverse Effect, and, upon delivery of the MXT OP Units and the Exchange Consideration as herein provided, the Company (or its direct or indirect subsidiary) will acquire good and valid title thereto, free and clear of any Liens except Permitted Liens, Liens created in favor of the Company Entities by the transactions contemplated hereby and such Liens that would not have, or reasonably be expected to have, a Material Adverse Effect. There are no rights to purchase, options or similar rights relating to any of the MXT Properties or the MXT Interests. Except as contemplated in the Formation Transactions, MXT has no commitment or legal obligation, absolute or contingent, to any other Person other than the Company Entities to sell, assign, transfer or effect a sale of any right, title or interest in or to any MXT Interests, MXT Properties or other assets to be conveyed to the Company Entities by MXT in accordance with the Formation Transactions.

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          (c) No Litigation. To MXT’s knowledge, except for Actions covered by existing policies of insurance, there are no Actions pending or threatened, affecting all or any portion of the MXT Interests or the Student Housing Entities or MXT’s ability to consummate the transactions contemplated hereby or that would have a Material Adverse Effect. MXT has no knowledge of any outstanding order, writ, injunction or decree of any court, Governmental Entity or arbitration against or affecting all or any portion of the MXT Interests or any Student Housing Entity which in any such case would impair MXT’s ability to enter into and perform all of its obligations under the Agreement or would have a Material Adverse Effect.

          (d) No Consents. Except as shall have been cured, consented to or waived in writing by the Company prior to the Closing or except as set forth on Schedule 3.2(d) attached hereto, none of the execution, delivery or performance of this Agreement, any agreement contemplated hereby and the transactions contemplated hereby and thereby does or will, with or without the giving of notice, lapse of time, or both, (i) violate, conflict with, result in a breach of, or constitute a default under or give to others any right of termination, acceleration, cancellation or other right adverse to the Company Entities of (A) the organizational documents, including the charters and bylaws, if any, of MXT or the Student Housing Entities, (B) any agreement, document or instrument to which MXT is a party or by which MXT or any of the Student Housing Entities are bound or (C) to MXT’s knowledge, any term or provision of any judgment, order, writ, injunction, or decree, or require any approval, consent or waiver of, or make any filing with, any person or governmental or regulatory authority or foreign, federal, state, local or other law binding on MXT or the Student Housing Entities or by which MXT, the Student Housing Entities or any of their assets or properties are bound or subject; provided in the case of (B) and (C) above, unless any such violation, conflict, breach or default would not have a Material Adverse Effect or (ii) result in the creation of any Lien upon any of the MXT Interests or any Student Housing Entity or any interests therein except such Liens that would not have, or reasonably be expected to have, a Material Adverse Effect.

          (e) No Breach or Default. Except as shall have been cured, consented to or waived in writing by the Company prior to the Closing or except as set forth on Schedule 3.2(e) attached hereto, none of the execution, delivery or performance of this Agreement and the transactions contemplated hereby does or will, with or without the giving of notice, lapse of time, or both, (i) violate, conflict with, result in a breach of, or constitute a default under or give to others any right of termination, acceleration, cancellation or other right adverse to the Company Entities of (A) the organizational documents, including the charters and bylaws, if any, of the Sponsor, (B) any agreement, document or instrument to which the Sponsor is a party or by which the Sponsor is bound or (C) to the Sponsor’s knowledge, any term or provision of any judgment, order, writ, injunction, or decree binding on the Sponsor or by which the Sponsor or any of its assets or properties are bound or subject; provided in the case of (B) and (C) above, unless any such violation, conflict, breach or default would not have a Material Adverse Effect or (ii) result in the creation of any Lien upon any of the MXT Interests or any interests therein except such Liens that would not have, or reasonably be expected to have, a Material Adverse Effect.

          (f) No Related Party Transactions. Except as set forth on Schedule 3.2(f) attached hereto, there are no material contracts, agreements or other transactions between any Company Entity or Student Housing Entity or any of their respective affiliates, on the one part,

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and MXT or any person holding a direct interest in MXT or any of their respective affiliates, on the other part.

          (g) No Broker or Finder. There are no contracts, agreements or understanding between MXT, or any person holding a direct or indirect controlling interest in MXT, or any of their respective affiliates and any other person that would give rise to a valid claim against any Company Entity or any underwriter under the IPO for a brokerage commission, finder’s fee or other like payment in connection with the IPO or other transactions contemplated by this Agreement.

          (h) Withholding; Non-Foreign Status. MXT is not subject to any federal or state withholding provisions in connection with the transactions contemplated hereby, including withholding of sales proceeds to foreign persons. MXT is a United States person (as defined in Section 7701(a)(30) of the Code), and is, therefore, not subject to the provisions of the Code relating to the withholding of sales proceeds to foreign persons, and is not subject to any state withholding requirements.

          (i) Taxes. To MXT’s knowledge, for federal income tax purposes, each Student Housing Entity is, and at all times during its existence has been, a partnership or limited liability company taxable as a partnership (rather than an association or a publicly traded partnership taxable as a corporation). To the knowledge of MXT, each Student Housing Entity has timely and properly filed all tax returns required to be filed by it and has timely paid all taxes required to be paid by it, except with respect to those taxes being contested in good faith. To MXT’s knowledge, none of the tax returns filed by any Student Housing Entity is the subject of a pending or ongoing audit, and no federal, state, local or foreign taxing authority has asserted any tax deficiency or other assessment against a MXT Property or a Student Housing Entity. To MXT’s knowledge, neither MXT nor the Student Housing Entities have received any notification of any material new or increased general or special tax assessments for any of the MXT Properties or the MXT Interests.

          (j) Real Property.

               (1) Except as disclosed in the Registration Statement, neither the Sponsor nor any of the Student Housing Entities has given or received any written notice of any uncured default with respect to any agreement affecting the MXT Properties that would have a Material Adverse Effect, and no event has occurred or, to the Sponsor’s knowledge, is threatened, which through the passage of time or the giving of notice, or both, would constitute a material default thereunder or would cause the acceleration of any obligation of any party thereto or the creation of a Lien upon any MXT Property, except for such Liens that would not have, or reasonably be expected to have, a Material Adverse Effect.

               (2) Each Student Housing Entity identified on Schedule 1.1 as owning an underlying MXT Property has insurable fee simple or ground lease title to such MXT Property.

               (3) Neither the Sponsor nor any Student Housing Entity has received any written notice from a Governmental Entity (i) charging any violation of any

7

applicable law or asserting the need for any correction under any applicable law, (ii) revoking, canceling, denying renewal of, or threatening any such action with respect to, any Permit, or (iii) indicating that any inquiry, complaint, proceeding or investigation (excluding routine, periodic inspections) is contemplated or pending regarding compliance of any MXT Property with any applicable law, other than, in each case, to the extent not causing or reasonably expecting to cause a Material Adverse Effect.

               (4) There is no existing or, to the Sponsor’s knowledge, proposed or threatened condemnation, eminent domain or similar proceeding, or private purchase in lieu of such a proceeding, which would affect all or any portion of the MXT Properties in any material respect.

               (5) The ground leases listed on Schedule 3.2(j)(5) attached hereto (the “Ground Leases”) are the only ground leases in which any of the Student Housing Entities hold an interest as lessee or tenant. The Ground Leases are in full force and effect. To the Sponsor’s knowledge, no ground lessor under any of the Ground Leases is in default thereunder or is presently the subject of any voluntary or involuntary bankruptcy or insolvency proceedings. Except for the mechanics’ and/or materialmen’s liens disclosed in the Registration Statement, neither the Sponsor nor any of the Student Housing Entities is in default under any Ground Lease, and, to the Sponsor’s knowledge, no event has occurred which with the passage of time or the giving of notice (or both) would constitute a default under any Ground Lease.

               (6) No written notice has been received by any Student Housing Entity from any Governmental Entity that a MXT Property is in material violation of the terms and conditions of any Permit applicable thereto or that any Permit not in effect is required for the lawful operation of such MXT Property as currently conducted. True, complete and correct copies of all material Permits and all amendments and supplements thereto have been made available to the Company Entities prior to the date hereof.

          (k) Tenant Leases. Except as identified on Schedule 3.2(k) attached hereto, there are no Leases encumbering any of the MXT Properties other than Leases to residents on such Student Housing Entity’s standard form therefor. Except as identified on Schedule 3.2(k) attached hereto, there are no security deposits or letters of credit held by a Student Housing Entity or its agents under any Lease, and each Student Housing Entity and its agents hold any tenant security deposits in compliance with any applicable laws and the terms of the applicable Leases. (1) No rent or other payment due from the tenant under any Lease is delinquent for greater than thirty (30) days past its due date or has been paid more than one month in advance of its due date, (2) no default, or event or condition which upon notice or passage of time or both will mature into a default, exists under any Lease on the part of the landlord or on the part of the tenant, (3) there is no right of any tenant under any Lease to any “free” rent or rent abatement (other than upon damage to or destruction or condemnation of the leased premises), (4) there is no remaining obligation, present or contingent, on the part of any Student Housing Entity to pay any commission, finder’s fee or similar compensation with respect to the current term of any Lease, and (5) there are no current eviction proceedings, in all cases except to the extent such items, taken individually and as a whole, would not reasonably be expected to have a Material Adverse Effect on the applicable Student Housing Entity, the applicable MXT Property, or the MXT Properties collectively.

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          (1) Management. There are no agreements relating to the management of the MXT Properties other than as set forth on Schedule 3.2(1) attached hereto. Each of the management agreements set forth on Schedule 3.2(1) is in full force and effect and there have been no amendments or modifications to such management agreements other than as set forth on Schedule 3.2(1).

          (m) Environmental Compliance. Except as would not have a Material Adverse Effect, the MXT Properties are currently in material compliance with all Environmental Laws and Environmental Permits. The Sponsor has not received any written notice from the United States Environmental Protection Agency or any other Governmental Entity that regulates Hazardous Materials or public health risks or other environmental matters or any other private party or Person claiming any violation of, or requiring compliance with, any Environmental Laws or Environmental Permits or demanding payment or contribution for any Release or other environmental damage in, on, under, or upon any of the MXT Properties. No investigation or litigation with respect to Hazardous Materials located in, on, under or upon any of the MXT Properties is pending or, to the Sponsor’s knowledge, has been overtly threatened in writing in the last twelve (12) months by any Governmental Entity or any third party.

          (n) Intellectual Property. Except as would not have a Material Adverse Effect, there are no Actions involving the Sponsor, any Student Housing Entities, or the MXT Properties, pending or threatened, that concern any copyrights, copyright application, trademarks, trademark registrations, trade names, service marks, service mark registrations, trade names and trade name registrations or any trade secrets (the “Proprietary Rights”) being transferred directly or indirectly to the Company Entities hereunder by the Sponsor. Except as would not have a Material Adverse Effect, the Sponsor has the right and authority to use the Proprietary Rights being transferred to the Company Entities hereunder by the Sponsor necessary in connection with the operation of the MXT Properties in the manner in which it is currently used, and to convey such right and authority to the Company Entities on the Closing Date.

          (o) Existing Loans. The Registration Statement lists all secured loans presently encumbering the MXT Properties or any direct or indirect interest in any Student Housing Entity, and any unsecured loans made to the Sponsor or any Student Housing Entity to be assumed by or indirectly transferred to the Company Entities or any subsidiary of the Company Entities on the Closing Date, as of the date hereof (the “Existing Loans”). The Existing Loans and the documents entered into in connection therewith (collectively, the “Loan Documents”) are in full force and effect as of the date hereof. Except as disclosed in the Registration Statement, to the Sponsor’s knowledge, no event of default or event that with the passage of time or giving of notice or both would constitute an event of default has occurred as of the date hereof under any of the Loan Documents that would have a Material Adverse Effect. True and correct copies of the existing Loan Documents have been made available to the Company Entities.

          (p) Investment Representations. The Sponsor:

(1) is an “accredited investor” as defined in Rule 501(a) of Regulation D, attached hereto as Exhibit B, promulgated under the Securities Act of 1933, as amended (the “Securities Act”);

9

(2)	is acquiring the MXT OP Units solely for his, her or its own account for the purpose of investment and not as a nominee or agent for any other person and not with a view to, or for offer or sale in connection with, any distribution of any thereof; the Sponsor agrees and acknowledges that it will not, directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of (“Transfer”) any of the MXT OP Units unless (i) the Transfer is pursuant to an effective registration statement under the Securities Act and qualification or other compliance under applicable blue sky or state securities laws, or (ii) counsel for the Sponsor (which counsel shall be reasonably acceptable to the Operating Partnership) shall have furnished the Operating Partnership with an opinion, reasonably satisfactory in form and substance to the Operating Partnership, to the effect that no such registration is required because of the availability of an exemption from registration under the Securities Act and qualification or other compliance under applicable blue sky or state securities laws; the term “Transfer” shall not include any redemption of the MXT OP Units or exchange of the MXT OP Units pursuant to the partnership agreement of the Operating Partnership; notwithstanding the foregoing, no Transfer shall be made unless it is permitted under the partnership agreement of the Operating Partnership;
(3)	understands that (i) the MXT OP Units (1) have not been registered under the Securities Act or any state securities laws, (2) when and if issued, will be issued in reliance upon an exemption from the registration and prospectus delivery requirements of the Securities Act pursuant to Section 4(2) and/or Regulation D thereunder, and (3) when and if issued, will be issued in reliance upon exemptions from the registration and prospectus delivery requirements of state securities laws which relate to private offerings, and (ii) the Sponsor must therefore bear the economic risk of such investments indefinitely unless a subsequent disposition thereof is registered under the Securities Act and applicable state securities laws or is exempt therefrom; pursuant to the foregoing, the Sponsor understands that (A) the certificates, if any, representing the MXT OP Units (and any common stock in the Company that might be exchanged therefor) acquired by the Sponsor shall bear a restrictive legend in the form hereafter set forth, and (B) a notation shall be made in the appropriate records of the Operating Partnership (and the Company) indicating that the MXT OP Units (and any common stock in the Company that might be exchanged therefor) are subject to restrictions on transfer; and
(4)	is knowledgeable, sophisticated and experienced in business and financial matters; the Sponsor has previously invested in securities

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similar to the MXT OP Units and fully understands the limitations on transfer imposed by the Federal securities laws and as described in this Agreement; the Sponsor is able to bear the economic risk of holding the MXT OP Units for an indefinite period and is able to afford the complete loss of its investment in the MXT OP Units; the Sponsor has received and reviewed all information and documents about or pertaining to the Company Entities, the business and prospects of the Company Entities and the issuance of the MXT OP Units as the Sponsor deems necessary or desirable, has had cash flow and operations data for the Student Housing Entities made available by MXT upon request and has been given the opportunity to obtain any additional information or documents and to ask questions and to receive answers about such information and documents, the Company Entities, the Student Housing Entities, the business and prospects of the Company Entities and the MXT OP Units which the Sponsor deems necessary or desirable to evaluate the merits and risks related to its investment in the MXT OP Units and to conduct its own independent valuation of the Student Housing Entities; and the Sponsor understands and has taken cognizance of all risk factors related to the purchase of the MXT OP Units; the Sponsor is a sophisticated real estate investor; the Sponsor is relying upon its own independent analysis and assessment (including with respect to taxes), and the advice of the Sponsor’s advisors (including tax advisors), and not upon that of MXT or the Company Entities or any of their respective affiliates, for purposes of evaluating, entering into, and consummating the transactions contemplated by the Agreement.

Each certificate, if any, representing the MXT OP Units (and any common stock in the Company that might be exchanged therefor) shall bear the following legend:

     THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE OPERATING PARTNERSHIP AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS;

In addition, the common stock of the Company for which the MXT OP Units might be exchanged shall also bear a legend which generally provides the following:

     THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON BENEFICIAL AND CONSTRUCTIVE

11

OWNERSHIP AND TRANSFER FOR THE PURPOSES OF THE COMPANY’S QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”). SUBJECT TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS EXPRESSLY PROVIDED IN THE COMPANY’S ARTICLES OF INCORPORATION, (i) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF THE COMPANY’S COMMON STOCK IN EXCESS OF 9.8% (BY VALUE OR BY NUMBER OF SHARES, WHICHEVER IS MORE RESTRICTIVE) OF THE OUTSTANDING COMMON STOCK OF THE COMPANY; (ii) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF COMMON STOCK THAT WOULD RESULT IN THE COMPANY BEING “CLOSELY HELD” UNDER SECTION 856(h) OF THE CODE OR OTHERWISE CAUSE THE COMPANY TO FAIL TO QUALIFY AS A REIT; AND (iii) NO PERSON MAY TRANSFER SHARES OF COMMON STOCK IF SUCH TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF THE COMPANY BEING OWNED BY FEWER THAN 100 PERSONS. ANY PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY OWNS OR ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF COMMON STOCK IN VIOLATION OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE COMPANY. IF ANY OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE VIOLATED, THE SHARES OF COMMON STOCK REPRESENTED HEREBY WILL BE AUTOMATICALLY TRANSFERRED TO THE TRUSTEE OF A TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES. IN ADDITION, THE COMPANY MAY REDEEM SHARES UPON THE TERMS AND CONDITIONS SPECIFIED BY THE BOARD OF DIRECTORS IN ITS SOLE DISCRETION IF THE BOARD OF DIRECTORS DETERMINES THAT OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE RESTRICTIONS DESCRIBED ABOVE. FURTHERMORE, UPON THE OCCURRENCE OF CERTAIN EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AB INITIO. ALL TERMS IN THIS LEGEND THAT ARE DEFINED IN THE ARTICLES OF INCORPORATION OF THE COMPANY SHALL HAVE THE MEANINGS ASCRIBED TO THEM IN THE ARTICLES OF INCORPORATION OF THE COMPANY, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER AND OWNERSHIP, WILL BE FURNISHED TO EACH HOLDER OF SHARES OF COMMON STOCK ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR SUCH A COPY MAY BE DIRECTED TO THE SECRETARY OF THE COMPANY AT ITS PRINCIPAL OFFICE.

          (q) Solvency. The Sponsor has been and will be solvent at all times prior to and for the ninety (90) day period immediately following the transfer of the MXT Interests to the Operating Partnership.

          (r) FINRA Affiliation. The Sponsor represents severally that neither it nor any affiliate of the Sponsor is a member, affiliate of a member or person associated with a member of the Financial Industry Regulatory Authority (“FINRA”). The Sponsor further represents severally that neither it nor any of its affiliates owns any stock or any other securities of any FINRA member not purchased in the open market, or has made any outstanding subordinated loans to a FINRA member. (A company or natural person is presumed to control a member of FINRA and is therefore presumed to constitute an affiliate of such member if the company or person is the beneficial owner of 10% or more of the outstanding securities of a member which is

12

a corporation. Additionally, a natural person is presumed to control a member of the FINRA and is therefore presumed to constitute an affiliate of such member if such person has the power to direct or cause the direction of the management or policies of such member.)

          (s) For purposes of this Section 3.2, “knowledge” of MXT shall be limited to the actual knowledge as of the date of this Agreement of Messrs. Ted W. Rollins, Michael S. Hartnett and Donald L. Bobbitt, Jr.

     3.3. Representations by the Company and Operating Partnership. Each of the Company Entities represents and warrants to the Sponsor that each and every one of the following statements is true, correct, and complete in every material respect as of the date of this Agreement and will be true, correct, and complete in every material respect as of the Closing Date:

          (a) Organization and Power. Such entity is duly organized, validly existing and in good standing under the laws of the state of its formation and has full right, power, and authority to enter into this Agreement, and to assume and perform all of its obligations under this Agreement. The execution, delivery and performance of this Agreement have been duly authorized by such entity, and this Agreement constitutes the legal, valid and binding obligation of such entity, enforceable against such entity in accordance with its terms, subject to bankruptcy, reorganization, insolvency and other similar laws affecting the enforcement of creditors’ rights generally and to general principles of equity.

          (b) Litigation. To such entity’s knowledge, there is no Action pending or, to such entity’s knowledge, threatened in any court, before any arbitrator, or before or by any Governmental Entity or other regulatory authority naming any Company Entity as a party that is reasonably likely to materially and adversely affect the ability of the Company Entities to perform their obligations hereunder, or otherwise delay the consummation of any of the transactions contemplated hereby (including, without limitation, the Formation Transactions). No Company Entity is subject to any order, writ, injunction or decree of any court relating to the transactions contemplated by this Agreement (including, without limitation, the Formation Transactions).

          (c) No Consents. To such entity’s knowledge, no authorization, consent, approval or waiver, or filing with, any Person, Governmental Entity or regulatory authority is required in connection with, the execution, delivery, and performance of this Agreement on the part of such entity other than as expressly set forth on Schedule 3.3(c) attached hereto.

          (d) For purposes of this Section 3.3, “knowledge” of the Company Entities shall be limited to the actual knowledge as of the date of this Agreement of Ted W. Rollins, Michael S. Hartnett and Donald L. Bobbitt, Jr.

     3.4. Survival. Each of the representations and warranties contained in this Article III shall survive the Closing.

13

ARTICLE IV.
COVENANTS

     4.1. From the date hereof through the Closing Date, and except in connection with the Formation Transactions, the Sponsor shall not:

          (a) Sell, transfer, redeem, repurchase (or agree to sell, transfer, redeem or repurchase) or otherwise dispose of, or cause or allow the sale, transfer, redemption, repurchase or disposition of (or agree to do any of the foregoing), all or any portion of the equity interests in the Company Entities or any of the Student Housing Entities, or permit them to issue or agree to issue any such equity interests;

          (b) Pledge or encumber (or permit to become encumbered) all or any portion of the equity interests in the Company Entities or any of the Student Housing Entities or any real property owned or ground leased by the Student Housing Entities other than as set forth on Schedule 4.1(b) attached hereto;

          (c) Permit the Company Entities or any of the Student Housing Entities to enter into any material transaction not in the ordinary course of business other than any such transaction required or advisable in connection with the IPO;

          (d) Permit the Company Entities or any of the Student Housing Entities to sell, transfer or dispose of, or cause the sale, transfer or disposition of (or agree to do any of the foregoing with respect to) any of its assets, except in the ordinary course of business consistent with past practice;

          (e) Cause or take any action that would render any of their representations or warranties as set forth herein untrue in any material respect;

          (f) Materially alter or cause the alteration of the manner of keeping of the books, accounts or records of the Company Entities or any of the Student Housing Entities, or the accounting practices therein reflected; or

          (g) Allow any of the Company Entities or any of the Student Housing Entities to make or pay any distributions or dividends to any person other than another Student Housing Entity.

     4.2. From the date hereof and subsequent to the Closing for a period of six (6) years, the Sponsor agrees to provide the Company with such tax information relating to the Company Entities or any of the Student Housing Entities as reasonably requested by the Company and to cooperate with the Company with respect to the filing of tax returns.

     4.3. The Sponsor shall take such other actions and execute such additional documents following the Closing Date as the Company Entities may reasonably request in order to effect the transactions contemplated hereby, except that the Sponsor shall not be obligated to take any action or execute any document if the additional actions or documents impose additional liabilities, obligations, covenants, responsibilities, representations or warranties on the Sponsor which are not contemplated by this Agreement or reasonably inferable by the terms herein.

14

     4.4. The Sponsor covenants to use all reasonable efforts within its control (a) to prevent the breach of any representation or warranty of the Sponsor hereunder, (b) to satisfy all covenants of the Sponsor hereunder and (c) to promptly cure any breach of a representation, warranty or covenant of the Sponsor hereunder upon its learning of same

     4.5. The Company shall:

          (a) At or prior to the Closing, make all filings and otherwise do all things so as to comply with all applicable regulatory requirements of the New York Stock Exchange and FINRA in connection with the IPO; and

          (b) At or promptly following the Closing, satisfy all transaction costs incurred by the Company Entities in connection with the Formation Transactions and the IPO, as determined by the Company Entities in their sole and complete discretion.

ARTICLE V.
INDEMNIFICATION

     5.1. Indemnification and Contribution.

          (a) The Sponsor agrees to indemnify, defend and hold harmless the Company Entities and their respective affiliates, shareholders, partners, directors, officers, employees, representatives and agents, from and against (i) all costs, expenses, losses and damages (including, without limitation, reasonable attorneys’ fees and expenses) (collectively, “Losses”) incurred by such parties resulting from any misrepresentation or breach of representation, warranty or covenants made by the Sponsor and (ii) any real estate transfer or mortgage recording tax liabilities incurred by the Company Entities as a result of the transactions set forth herein. The provisions of this Section 5.1(a) shall survive the Closing for a period of eighteen (18) months (except with respect to the representations and warranties set forth in Sections 3.2(a), (b), (g), (p) and (q) and shall be subject to the limitations specified in Section 5.1(d) hereof.

          (b) The Company agrees to indemnify, defend and hold harmless the Sponsor and its affiliates, partners, managers, members, officers, employees, representatives and agents, from and against all Losses incurred by such parties resulting from any misrepresentation or breach of representation, warranty or covenants made by the Company Entities, but only to the extent such Losses in the aggregate exceed $250,000.00. The provisions of this Section 5.1(b) shall survive the Closing for a period of eighteen (18) months. The Company’s obligations under this Section 5.1(b) shall (i) not apply to or be borne by any affiliate, shareholder, officer, director, employee, representative or agent of the Company, (ii) shall not exceed the aggregate value of the MXT OP Units and the Exchange Consideration with respect to a breach of Section 3.3(a) hereof and (iii) not exceed $6,000,000.00 in the aggregate.

          (c) Upon written request by any indemnified party hereunder, the applicable indemnitor shall defend same (if requested by any indemnified party, in the name of such indemnified party) by attorneys and other professionals approved by such indemnified party.

15

Notwithstanding the foregoing, any indemnified parties may, in its sole and absolute discretion, engage its own attorneys and other professionals to defend or assist such indemnified party, and, at the option of such indemnified party, such attorneys shall control the resolution of any claim or proceeding, providing that no compromise or settlement shall be entered without the applicable indemnitor’s consent, which consent shall not be unreasonably withheld. Upon demand, an indemnitor shall pay or, in the sole and absolute discretion of the applicable indemnified party, reimburse, such indemnified parties for the payment of reasonable fees and disbursements of attorneys and other professionals in connection therewith.

          (d) In no event shall the amounts paid or payable by the Sponsor in respect of the obligations of the Sponsor under Section 5.1(a) exceed (i) the aggregate value of the MXT OP Units and the Exchange Consideration with respect to a breach of Sections 3.2(a), (b), (g), (p) and (q) hereof and (ii) $6,000,000.00 in the aggregate with respect to all other misrepresentations or breaches of representations, warranties or covenants made by the Sponsor; provided, however, that the limitations of this Section 5.1(d) shall not apply to any obligations of the Sponsor under Section 5.1 (a)(ii).

ARTICLE VI.
MISCELLANEOUS

     6.1. Entire Agreement; Modifications and Waivers; Cumulative Remedies. This Agreement constitutes the entire agreement among the parties hereto and may not be modified or amended except by an instrument in writing signed by the parties hereto, and no provisions or conditions may be waived other than by a writing signed by the party waiving such provisions or conditions. No delay or omission in the exercise of any right or remedy accruing to a Company Entity or a Sponsor upon any breach under this Agreement shall impair such right or remedy or be construed as a waiver of any such breach theretofore or thereafter occurring. The waiver by a Company Entity or a Sponsor of any breach of any term, covenant, or condition herein stated shall not be deemed to be a waiver of any other breach, or of a subsequent breach of the same or any other term, covenant, or condition herein contained. All rights, powers, options, or remedies afforded to a Company Entity or a Sponsor either hereunder or by law shall be cumulative and not alternative, and the exercise of one right, power, option, or remedy shall not bar other rights, powers, options, or remedies allowed herein or by law, unless expressly provided to the contrary herein.

     6.2. Notices. Any notice provided for by this Agreement and any other notice, demand, or communication which any party may wish to send to another shall be in writing and either delivered in person or sent by registered or certified mail or overnight courier, return receipt requested, in a sealed envelope, postage prepaid, and addressed to the party for which such notice, demand or communication is intended at such party’s address as set forth in this Section. The address for any of the Company Entities for all purposes under this Agreement shall be as follows:

Campus Crest Communities, Inc.
2100 Rexford Road, Suite 414
Charlotte, NC 28211

16

Attn: Chief Financial Officer

with a copy to:

Bradley Arant Boult Cummings LLP
One Federal Place
1819 Fifth Avenue North
Birmingham, AL 35203
Attn: Dawn H. Sharff
          J. Andrew Robison

The address of the Sponsor for all purposes under this Agreement shall be as follows:

MXT Capital, LLC
2100 Rexford Road, Suite 414
Charlotte, NC 28211
Attn: President

with a copy to:

Bradley Arant Boult Cummings LLP
One Federal Place
1819 Fifth Avenue North
Birmingham, AL 35203
Attn: Dawn H. Sharff
          J. Andrew Robison

Arnall Golden Gregory LLP
l7l l7^th Street NW
Suite 2100
Atlanta, GA 30363-1031
Attn: Jonathan Golden

     Any address or name specified above may be changed by a notice given by the addressee to the other parties. Any notice, demand or other communication shall be deemed given and effective as of the date of delivery in person or receipt set forth on the return receipt. The inability to deliver because of changed address of which no notice was given, or rejection or other refusal to accept any notice, demand or other communication, shall be deemed to be receipt of the notice, demand or other communication as of the date of such attempt to deliver or rejection or refusal to accept.

     6.3. Exhibits. All exhibits and schedules referred to in this Agreement and attached hereto are hereby incorporated in this Agreement by reference.

     6.4. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina, without regard to its conflicts of laws principles.

17

     6.5.Severability. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein.

     6.6. Successors and Assigns. This Agreement may not be assigned by any Company Entity or any Sponsor without the prior approval of each Company Entity or Sponsor, as applicable; provided, however, that each Company Entity may assign its rights under this Agreement (but not its obligations) to a direct or indirect wholly—owned subsidiary of the Company without the prior approval of the Sponsor. This Agreement shall be binding upon, and inure to the benefit of, each Company Entity, the Sponsor, and their respective legal representatives, successors, and permitted assigns.

     6.7. Headings. Article headings and article and section numbers are inserted herein only as a matter of convenience and in no way define, limit, or prescribe the scope or intent of this Agreement or any part hereof and shall not be considered in interpreting or construing this Agreement.

     6.8. Recitals. The recital and introductory paragraphs hereof are a part hereof, form a basis for this Agreement and shall be considered prima facie evidence of the facts and documents referred to therein.

     6.9. Counterparts. This Agreement may be executed in any number of counterparts and by any party hereto on a separate counterpart, each of which when so executed and delivered shall be deemed an original and all of which taken together shall constitute but one and the same instrument. Copies of executed counterparts transmitted by telecopy, telefax or other electronic transmission service shall be considered original executed counterparts.

     6.10. Specific Performance. Each party to this Agreement agrees that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Each party to this Agreement agrees that each other party hereto will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the provisions of this Agreement in any federal or state court located in the State of North Carolina (as to which each party to this Agreement agrees to submit to jurisdiction for purposes of such action), this being in addition to any other remedies to which such party may be entitled under this Agreement or otherwise at law or in equity.

     6.11. Confidentiality. All press releases and other public communications of any kind relating to the IPO or the transactions contemplated herein, and the method and timing of release for publication thereof, will be subject to the prior written approval of the Company Entities.

[Signature Page Follows]

18

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

COMPANY ENTITIES:
CAMPUS CREST COMMUNITIES, INC.
By:	/s/ Donald L. Bobbitt, Jr.
	Name: Donald L. Bobbitt, Jr.
	Title: Chief Financial Officer
CAMPUS CREST COMMUNITIES
OPERATING PARTNERSHIP, LP
By:	Campus Crest Communities GP, LLC,
	Its General Partner
	By:	Campus Crest Communities, Inc.
		Its Sole Member
		By:	/s/ Donald L. Bobbitt, Jr.
			Name: Donald L. Bobbitt, Jr.
			Title: Chief Financial Officer
SPONSOR:
MXT CAPITAL, LLC
By:	Campus Crest Properties, LLC,
	Its Manager
	By:	/s/ Michael S. Hartnett
		Name: Michael S. Hartnett
		Title: Manager

Schedule 1.1
Student Housing Entities and MXT Interests

	MXT
	Ownership
	Interests in
Entity	Entity
General Entities:
Campus Crest Group, LLC	100% — MXT Capital, LLC
Campus Crest Properties, LLC	100% — Campus Crest Group, LLC
Campus Crest GP, LLC	100% — Campus Crest Group, LLC
Campus Crest Construction, LLC	100% — Campus Crest Group, LLC
Campus Crest Development, LLC	100% — Campus Crest Group, LLC
The Grove Student Properties, LLC	100% — Campus Crest Group, LLC
Campus Crest Lease, LLC	100% — Campus Crest Group, LLC
Campus Crest at San Marcos GP, LLC	100% — Campus Crest Group, LLC
Investment Entities:
Campus Crest Ventures I, LLC	75.181% — Campus Crest Properties, LLC
Campus Crest Ventures III, LLC	100% — Campus Crest Properties, LLC
Campus Crest Ventures IV, LLC	50% — Campus Crest Properties, LLC
Campus Crest Ventures V, LLC	100% — Campus Crest Properties, LLC
HSRE Entities:
HSRE-Campus Crest I, LLC	0.1% — Campus Crest Ventures III, LLC
HSRE-Campus Crest II, LLC	10% — Campus Crest Ventures IV, LLC
HSRE-Campus Crest GP I, LLC	100% — HSRE-Campus Crest I, LLC
HSRE-CC Huntsville GP, LLC	100% — HSRE-Campus Crest I, LLC
Management Entities:
Campus Crest Springing Member, LLC	100% — Campus Crest Properties, LLC
Student Housing Entities:
THE GROVE AT MILLEDGEVILLE
Campus Crest at Milledgeville, LLC	100% — HSRE-Campus Crest II, LLC
Campus Crest Milledgeville Manager, LLC	100% — HSRE-Campus Crest II, LLC
THE GROVE AT LAWRENCE
Campus Crest at Lawrence, LLC	100% — HSRE-Campus Crest I, LLC
THE GROVE AT MOSCOW
Campus Crest at Moscow, LLC	100% — HSRE-Campus Crest I, LLC

1

THE GROVE AT STATESBORO
Campus Crest at Statesboro, LLC	100% — HSRE-Campus Crest I, LLC
THE GROVE AT CONWAY
Campus Crest at Conway, LLC	100% — HSRE-Campus Crest I, LLC
THE GROVE AT HUNTSVILLE
Campus Crest at Huntsville, LP	99% — HSRE-Campus Crest I, LLC
	1% — HSRE-CC Huntsville GP, LLC
THE GROVE AT SAN MARCOS
Campus Crest at San Marcos, LP	99% — HSRE-Campus Crest I, LLC
	1% — HSRE-Campus Crest GP I, LLC
THE GROVE AT SAN ANGELO
Campus Crest at San Angelo, LP	99% — HSRE-Campus Crest I, LLC
	1% — HSRE-Campus Crest GP I, LLC
THE GROVE AT ABILENE
Campus Crest at Abilene, LP	49% — Campus Crest Ventures I, LLC
	1% — Campus Crest GP, LLC
THE GROVE AT NACOGDOCHES
Campus Crest at Nacogdoches, LP	49% — Campus Crest Ventures I, LLC
	1% — Campus Crest GP, LLC
THE GROVE AT ELLENSBURG
Campus Crest at Ellensburg, LLC	48% — Campus Crest Ventures I, LLC
THE GROVE AT LAS CRUCES
Campus Crest at Las Cruces, LLC	40% — Campus Crest Ventures I, LLC
THE GROVE AT GREELEY
Campus Crest at Greeley, LLC	40% — Campus Crest Ventures I, LLC
THE GROVE AT MOBILE PHASE II
Campus Crest at Mobile Phase II, LLC	50% — Campus Crest Ventures I, LLC
THE GROVE AT CARROLLTON
Campus Crest at Carrollton, LLC	49% — Campus Crest Ventures I, LLC
	1.02% — Campus Crest Properties, LLC
THE GROVE AT ASHEVILLE
Campus Crest at Asheville, LLC	49% — Campus Crest Ventures I, LLC
	3% — Campus Crest Properties, LLC

2

THE GROVE AT MOBILE
Campus Crest at Mobile, LLC	50% — Campus Crest Ventures I, LLC
THE GROVE AT JACKSONVILLE
Campus Crest at Jacksonville, AL, LLC	50% — Campus Crest Ventures I, LLC
THE GROVE AT TROY
Campus Crest at Troy, LLC	52% — Campus Crest Properties, LLC
THE GROVE AT CHENEY
Campus Crest at Cheney, LLC	52% — Campus Crest Properties, LLC
THE GROVE AT MURFREESBORO
Campus Crest at Murfreesboro, LLC	52% — Campus Crest Properties, LLC
THE GROVE AT JONESBORO
Campus Crest at Jonesboro, LLC	42% — Campus Crest Properties, LLC
THE GROVE AT WICHITA
Campus Crest at Wichita, LLC	42% — Campus Crest Properties, LLC
THE GROVE AT WICHITA FALLS
Campus Crest at Wichita Falls, LP	51% — Campus Crest Properties, LLC
	1% — Campus Crest GP, LLC
THE GROVE AT WACO
Campus Crest at Waco, LP	51% — Campus Crest Properties, LLC
	1% — Campus Crest GP, LLC
THE GROVE AT STEPHENVILLE
Campus Crest at Stephenville, LP	49% — Campus Crest Properties, LLC
	1% — Campus Crest GP, LLC
THE GROVE AT LUBBOCK
Campus Crest at Lubbock, LP	39% — Campus Crest Properties, LLC
	1% — Campus Crest GP, LLC

3

Schedule 3.2(c)
Litigation

Liens and claims related to the construction of the student housing real estate properties of the Student Housing Entities.

4

Schedule 3.2(d)
Consents for MXT

Wells Fargo Bank, National Association (successor by merger to Wachovia Bank, National Association)
Campus Crest Loan Servicing, LLC
Harrison Street Real Estate Capital, LLC
Amegy Mortgage Company
PrivateBank and Trust Company
Centennial Bank
Mutual of Omaha Bank
The servicers of the loans made to Campus Crest at Asheville, LLC, Campus Crest at Carrollton, LLC,
Campus Crest at Milledgeville, LLC and Campus Crest at Las Cruces, LLC

5

Schedule 3.2(e)
Breaches or Defaults

Any breaches or defaults resulting from (i) the failure to receive consent from the parties listed on Schedule 3.2(d), (ii) the terms and provisions of any of the limited liability company operating agreements or limited partnership agreements of the Student Housing Entities or (iii) the existing loans listed in the Registration Statement.

6

Schedule 3.2(f)
Related Party Transactions

Personal guarantees of any loans made to any of the Student Housing Entities and the related agreements, promissory notes, loan documents or related transaction documents or instruments associated therewith.

MXT Capital, LLC, by virtue of its ownership in its underlying subsidiaries, is a party to development, construction and management agreements with certain of the Student Housing Entities.

7

Schedule 3.2(g)
No Broker or Finder

Raymond James & Associates, Inc.
The CenterCap Group, LLC

8

Schedule 3.2(j)(5)
Ground Leases

1.	Ground Lease Agreement dated July 20, 2007, between Murfreesboro-CHR Campus Crest LLC, as lessor, and Campus Crest at Murfreesboro, LLC, as lessee.
2.	Ground Lease Agreement dated June 27, 2007, between Stephenville-CHR Campus Crest LLC, as lessor, and Campus Crest at Stephenville, LP, as lessee.
3.	Ground Lease Agreement dated September 14, 2007, between Cheney-CHR Campus Crest LLC, as lessor, and Campus Crest at Cheney, LLC, as lessee.
4.	Ground Lease Agreement dated June 6, 2007, between Troy-CHR Campus Crest LLC, as lessor, and Campus Crest at Troy, LLC, as lessee.
5.	Ground Lease Agreement dated June 27, 2007, between Waco-CHR Campus Crest LLC, as lessor, and Campus Crest at Waco, LP, as lessee.
6.	Ground Lease Agreement dated September 5, 2007, between Jonesboro-CHR Campus Crest LLC, as lessor, and Campus Crest at Jonesboro, LLC, as lessee.
7.	Ground Lease Agreement dated October 11, 2007, between Wichita-CHR Campus Crest LLC, as lessor, and Campus Crest at Wichita, LLC, as lessee.
8.	Ground Lease Agreement dated August 2007, between Wichita Falls-CHR Campus Crest LLC, as lessor, and Campus Crest at Wichita Falls, LP, as lessee.
9.	Ground Lease Agreement dated September 8, 2006, between USA Research and Technology Corporation, as lessor, and Campus Crest at Mobile, LLC, as lessee.
10.	Ground Lease Agreement dated March 14, 2008, between USA Research and Technology Corporation, as lessor, and Campus Crest at Mobile Phase II, LLC, as lessee.
11.	Ground Lease Agreement dated July 28, 2008, between Indian Hills Trading Company, LLC, as lessor, and Campus Crest at Moscow, LLC, as lessee.

9

Schedule 3.2(k)
Leases

None.

10

Schedule 3.2(l)
Management Agreements

1.	Property Management Agreement by and between Campus Crest at Abilene, LP and The Grove Student Properties, LLC dated August 1, 2007
2.	Property Management Agreement by and between Campus Crest at Asheville, LLC and The Grove Student Properties, LLC dated March 13, 2007
3.	Property Management Agreement by and between Campus Crest at Carrollton, LLC and The Grove Student Properties, LLC dated September 7, 2006
4.	Property Management Agreement by and between Campus Crest at Cheney, LLC and The Grove Student Properties, LLC dated July 31, 2008
5.	Property Management Agreement by and between Campus Crest at Conway, LLC and The Grove Student Properties, LLC dated July 2, 2009
6.	Property Management Agreement by and between Campus Crest at Ellensburg, LLC and The Grove Student Properties, LLC dated August 1, 2007
7.	Property Management Agreement by and between Campus Crest at Greeley, LLC and The Grove Student Properties, LLC dated August 1, 2007
8.	Property Management Agreement by and between Campus Crest at Huntsville, LP and The Grove Student Properties, LLC dated June 12, 2009
9.	Property Management Agreement by and between Campus Crest at Jacksonville, LLC and The Grove Student Properties, LLC dated August 1, 2007
10.	Property Management Agreement by and between Campus Crest at Jonesboro, LLC and The Grove Student Properties, LLC dated July 31, 2008
11.	Property Management Agreement by and between Campus Crest at Las Cruces, LLC and The Grove Student Properties, LLC dated September 7, 2006
12.	Property Management Agreement by and between Campus Crest at Lawrence, LLC and The Grove Student Properties, LLC dated February 13, 2009
13.	Property Management Agreement by and between Campus Crest at Lubbock, LLC and The Grove Student Properties, LLC dated July 31, 2008
14.	Amended and Restated Property Management Agreement by and between Campus Crest at Milledgeville, LLC and The Grove Student Properties, LLC dated November 20, 2009

11

15.	Property Management Agreement by and between Campus Crest at Mobile, LLC and The Grove Student Properties, LLC dated August 1, 2007
16.	Property Management Agreement by and between Campus Crest at Mobile Phase II, LLC and The Grove Student Properties, LLC dated July 31, 2008
17.	Property Management Agreement by and between Campus Crest at Moscow, LLC and The Grove Student Properties, LLC dated November 18, 2008
18.	Property Management Agreement by and between Campus Crest at Murfreesboro, LLC and The Grove Student Properties, LLC dated July 31, 2008
19.	Property Management Agreement by and between Campus Crest at Nacogdoches, LP and The Grove Student Properties, LLC dated August 1, 2007
20.	Property Management Agreement by and between Campus Crest at San Angelo, LP and The Grove Student Properties, LLC dated November 18, 2008
21.	Property Management Agreement by and between Campus Crest at San Marcos, LP and The Grove Student Properties, LLC dated November 18, 2008
22.	Property Management Agreement by and between Campus Crest at Statesboro, LLC and The Grove Student Properties, LLC dated November 12, 2009
23.	Property Management Agreement by and between Campus Crest at Stephenville, LLC and The Grove Student Properties, LLC dated July 31, 2008
24.	Property Management Agreement by and between Campus Crest at Troy, LLC and The Grove Student Properties, LLC dated July 31, 2008
25.	Property Management Agreement by and between Campus Crest at Waco, LP and The Grove Student Properties, LLC dated July 31, 2008
26.	Property Management Agreement by and between Campus Crest at Wichita, LLC and The Grove Student Properties, LLC dated July 31, 2008
27.	Property Management Agreement by and between Campus Crest at Wichita Falls, LLC and The Grove Student Properties, LLC dated July 31, 2008

12

Schedule 3.3(c)
Consents for the Company Entities

The Registration Statement

13

Schedule 4.1(b)
Pledges and Encumbrances

None.

14

Exhibit A

MXT Disclosure Schedule

None other than those items already set forth in the schedules to this Agreement.

15

Exhibit B

Rule 501(a) of Regulation D

(See attached.)

16

General Rules and Regulations
promulgated
under the
Securities Act of 1933

Rule 501 — Definitions and Terms Used in Regulation D

As used, in Regulation D, the following terms shall have the meaning indicated;

a. Accredited investor. Accredited investor shall mean any person who comes within any of the following categories, or who the issuer reasonably believes comes within any of the following categories, at the time of the sale of the securities to that person:

1.	Any bank as defined in section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(a)(13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
2.	Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;
3.	Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
4.	Any director, executive officer, or general partner of the issuera. of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;
5.	Any natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his purchase exceeds $1,000,000;

6.	Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
7.	Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) and
8.	Any entity in which all of the equity owners are accredited investors.

EX-10.15

Exhibit 10.15

AMENDMENT NO. 1 TO CONTRIBUTION AGREEMENT

     THIS AMENDMENT NO. 1 TO CONTRIBUTION AGREEMENT (this “Agreement”), dated as of September 15, 2010, by and among Campus Crest Communities, Inc., a Maryland corporation (the “Company”), and Campus Crest Communities Operating Partnership, LP, a Delaware limited partnership (the “Operating Partnership” and, together with the Company, the “Company Entities”), and MXT Capital, LLC, a Delaware limited liability company (“MXT”, and also referred to herein as the “Sponsor”).

W I T N E S S E T H:

     WHEREAS, the Company Entities and MXT have entered into that certain Contribution Agreement, dated as of May 13, 2010 (the “Contribution Agreement”); and

     WHEREAS, the Company Entities and MXT desire to amend certain provisions of the Contribution Agreement.

     NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties to the Contribution Agreement hereby agree that the Contribution Agreement shall be amended as follows:

     1. Amendment to Section 1.3. Section 1.3 of the Contribution Agreement is hereby deleted in its entirety and replaced with the following:

          “Consideration for the Formation Transactions. Upon the Closing, MXT, in exchange for the MXT Interests (as defined herein), shall receive from the Operating Partnership 973,333 limited partnership units in the Operating Partnership (the “MXT OP Units”) and $4,464,062 of the net proceeds of the IPO in cash or other immediately available funds (the “Exchange Consideration”).”

     2. Amendment to Section 4.1(g). Section 4.1(g) of the Contribution Agreement is hereby deleted in its entirety and replaced with the following:

          “(g) Allow any of the Company Entities or any of the Student Housing Entities to make or pay any distributions or dividends to any person other than another Student Housing Entity, except in the ordinary course of business consistent with past practice.”

     3. Amendment to Section 5.1(a). Section 5.1(a) of the Contribution Agreement is hereby deleted in its entirety and replaced with the following:

          “(a) The Sponsor agrees to indemnify, defend and hold harmless the Company Entities and their respective affiliates, shareholders, partners, directors, officers, employees representatives and agents, from and against (i) all costs, expenses, losses and damages (including, without limitation, reasonable attorneys’ fees and expenses) (collectively, “Losses”) incurred by such parties resulting from any misrepresentation or breach of representation, warranty or covenant made by the Sponsor but only to the extent that such Losses in the aggregate exceed $250,000.00 and (ii) any real estate transfer or mortgage recording tax liabilities incurred by the Company Entities as a result of the transactions set forth herein. The provisions of this Section 5.1(a) shall survive the Closing for a period of eighteen (18) months

(except with respect to the representations and warranties set forth in Sections 3.2(a), (b), (g), (p) and (q) and shall be subject to the limitations specified in Section 5.1(d) hereof.”

     4. Amendment to Section 5.1(d). Section 5.1(d) of the Contribution Agreement is hereby deleted in its entirety and replaced with the following:

          “(d) In no event shall the amounts paid or payable by the Sponsor in respect of the obligations of the Sponsor under Section 5.1(a) exceed the aggregate value of the MXT OP Units; provided, however, that the limitations of this Section 5.1(d) shall not apply to any obligations of the Sponsor under Section 5.1(a)(ii).”

     5. Contribution of Campus Crest Ventures V, LLC Membership Interest. In the event that affiliates of the Sponsor contribute their respective interests in Campus Crest at Carrollton, LLC to Campus Crest Ventures V, LLC, a Delaware limited liability company (“CCV V”), and receive, in exchange therefore, a membership interest in CCV V (the “CCV V Interest”), the Sponsor shall contribute, or cause to be contributed, the CCV V Interest to the Operating Partnership at the Closing. The contribution by the Sponsor of the CCV V Interest to the Operating Partnership shall be part of the other Formation Transactions for which the Sponsor shall receive the consideration set forth in the Contribution Agreement, as amended by this Amendment. The Company Entities agree that the transaction set forth in this Section 5 shall not be considered a breach of or default under any provision of the Contribution Agreement, as amended by this Amendment.

     6. Contribution of CC-Encore, LLC Membership Interest. In the event that subsidiaries of the Sponsor own interests (the “Encore Interests”) in CC-Encore, LLC, a Delaware limited liability company (“Encore”), at the Closing, the Sponsor shall contribute, or cause to be contributed, the Encore Interests to the Operating Partnership at the Closing. The contribution by the Sponsor of the Encore Interests to the Operating Partnership shall be part of the other Formation Transactions for which the Sponsor shall receive the consideration set forth in the Contribution Agreement, as amended by this Amendment. The Company Entities agree that the transaction set forth in this Section 6 shall not be considered a breach of or default under any provision of the Contribution Agreement, as amended by this Amendment.

     7. Remainder of Contribution Agreement Unchanged. Except as amended by this Amendment, the Contribution Agreement shall otherwise remain in full force and effect.

     8. Governing Law. This Amendment shall be governed by and construed under the laws of the State of North Carolina, without giving effect to choice of law principles thereof.

     9. Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Signature page follows]

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written.

COMPANY ENTITIES:
CAMPUS CREST COMMUNITIES, INC.
By:	/s/ Donald L. Bobbitt, Jr.
Name:	Donald L. Bobbitt, Jr.
Title:	Chief Financial Officer
CAMPUS CREST COMMUNITIES
OPERATING PARTNERSHIP, LP
By:	Campus Crest Communities GP, LLC,
	Its General Partner
	By:	Campus Crest Communities, Inc.
		Its Sole Member
		By:	/s/ Donald L. Bobbitt, Jr.
		Name:	Donald L. Bobbitt, Jr.
		Title:	Chief Financial Officer
SPONSOR:
MXT CAPITAL, LLC
By:	Campus Crest Properties, LLC,
	Its Manager
	By:	/s/ Michael S. Hartnett
	Name:	Michael S. Hartnett
	Title:	Manager

EX-10.16

Exhibit 10.16

TAX PROTECTION AGREEMENT

     THIS TAX PROTECTION AGREEMENT (this “Agreement”) is made and entered into as of                     , 2010 by and among CAMPUS CREST COMMUNITIES OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the “Partnership”), CAMPUS CREST COMMUNITIES, INC., a Maryland corporation (the “REIT”), and MXT CAPITAL, LLC, a Delaware limited liability company (“MXT Capital”).

     WHEREAS, pursuant to that certain Contribution Agreement dated as of May 13, 2010, (the “Contribution Agreement”), MXT Capital agreed to transfer to the Partnership all of MXT Capital’s direct or indirect ownership interests in the Student Housing Entities (as defined in the Contribution Agreement), in exchange for 973,333 units of limited partnership interest (“Units”) in the Partnership and a cash payment of $4,464,062.00 (the “Formation Transactions”) upon the consummation of the initial public offering of the REIT’s common stock;

     WHEREAS, the Student Housing Entities, directly or indirectly, own certain real estate properties (subject to certain liabilities) (the “Student Housing Properties”) and directly or indirectly conduct the student housing business of MXT and certain other parties;

     WHEREAS, in consideration for the agreement of MXT Capital to enter into the Formation Transactions the REIT and the Partnership desire to enter into this Agreement regarding amounts that may become payable as a result of certain actions taken or to be taken by the Partnership regarding the disposition of certain of the contributed assets and actions taken or to be taken with respect to certain indebtedness of the Partnership and its Subsidiaries.

     NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein and in the Contribution Agreement, the parties hereto hereby agree as follows:

ARTICLE 1
DEFINITIONS

     To the extent not otherwise defined herein, capitalized terms used in this Agreement have the following meanings:

     “Closing Date” means the closing date of the Formation Transactions.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Consent” means the prior written consent to do the act or thing for which the consent is required or solicited, which consent may be executed by a duly authorized officer or agent of the party granting such consent.

     “Deficit Restoration Obligation” or “DRO” means a written obligation by a Protected Partner to restore part or all of its deficit capital account balance in the Partnership upon the occurrence of certain events.

     “DRO Amount” means the aggregate amount that is subject to a DRO by the Protected Partners at any time.

     “General Partner” means Campus Crest Communities GP, LLC, the general partner of the Partnership.

     “Guaranteed Amount” means the aggregate amount of each Guaranteed Debt that is guaranteed at any time by Partner Guarantors.

     “Guaranteed Debt” means any loans assumed by the Partnership pursuant to the Formation Transactions, or incurred (or assumed) by the Partnership or any Subsidiary that are guaranteed by Partner Guarantors pursuant to Article 3 hereof at any time after the Closing Date.

     “Indirect Owner” in the case of a Protected Partner that is an entity classified as an “S corporation”, a partnership or disregarded entity for federal income tax purposes, any person owning an equity interest in such Protected Partner, and, in the case of any Indirect Owner that is an entity classified as an “S corporation”, a partnership or disregarded entity for federal income tax purposes, any person owning an equity interest in such entity.

     “Minimum Liability Amount” means, the amount set forth on Schedule 3.1 hereto.

     “Nonrecourse Liability” has the meaning set forth in Treasury Regulations Section 1.752-1(a)(2).

     “Partner Guarantors” means those Protected Partners (or Indirect Owners) who have guaranteed any portion of the Guaranteed Debt. The Partner Guarantors and each Partner Guarantor’s share of the Guaranteed Amount will be set forth on Exhibit A to Schedule 3.7 hereto, as may be amended from time to time.

     “Partnership” means Campus Crest Communities Operating Partnership, L.P., a Delaware limited partnership.

     “Partnership Agreement” means the Amended and Restated Agreement of Limited Partnership of Campus Crest Communities Operating Partnership, L.P., dated as of the Closing Date as amended, and as the same may be further amended in accordance with the terms thereof.

     “Protected Gain” shall mean, with respect to each Protected Property, the gain that would be allocated to and recognized by a Protected Partner under Section 704(c) of the Code in the event of the sale, exchange, transfer, distribution or other disposition of all or any portion of such Protected Property in a fully taxable transaction. The initial amount of Protected Gain of a Protected Partner with respect to a Protected Property shall be such Protected Partner’s allocable share of the Protected Gain determined as if the Partnership sold the Protected Property in a fully taxable transaction on the Closing Date for consideration equal to the Section 704(c) Value of such Protected Property on the Closing Date, and is set forth on Schedule 2.1(b) hereto.

     “Protected Partner” means (i) MXT Capital, LLC; and (ii) any person who acquires Units from a Protected Partner in a transaction in which gain or loss is not recognized in whole or in part and in which such transferee’s adjusted basis, as determined for federal income tax

2

purposes, is determined in whole or in part by reference to the adjusted basis of a Protected Partner in such Units

     “Protected Property” means (i) each of the Student Housing Properties identified as a Protected Property on Schedule 2.1 hereto as of the date hereof; (ii) any direct or indirect interest of the Partnership in (A) a Subsidiary that owns an interest in a Protected Property, or (B) any other properties or assets hereafter acquired by the Partnership, if the sale, exchange, transfer or other disposition of all or a portion of the Partnership’s interest in such Subsidiary or other properties or assets would result in the recognition of all or any portion of a Protected Gain by a Protected Partner; and (iii) any other property that the Partnership directly or indirectly receives that is in whole or in part a “substituted basis property” as defined in Section 7701(a)(42) of the Code with respect to a Protected Property, including but not limited to a replacement property or properties acquired by the Partnership pursuant to a transaction that qualifies as either a like kind exchange under Section 1031 of the Code or an involuntary conversion under Section 1033 of the Code.

     “Qualified Guarantee” has the meaning set forth in Section 3.2.

     “Qualified Guarantee Indebtedness” has the meaning set forth in Section 3.2.

     “Recourse Liability” has the meaning set forth in Treasury Regulations Section 1.752-1(a)(1).

     “Section 704(c) Value” means, with respect to a Protected Property, the fair market value of the Protected Property as agreed to by the Partnership and the Protected Partner and as set forth next to each Protected Property on Schedule 2.1 hereto, as applicable. For purposes of this Agreement, the aggregate Section 704(c) Value for all properties contributed to the Partnership by the Protected Partner pursuant to the Contribution Agreement will be the agreed value of the Units to be issued to the Protected Partner pursuant to the Contribution Agreement plus the debt secured by or allocable to such Protected Properties and outstanding on the Closing Date. The Section 704(c) Value for each Protected Property shall be as determined by agreement between the Protected Partner and the Partnership pursuant to this Agreement. The Partnership initially shall carry each Protected Property on its books at a value equal to the Section 704(c) Value assigned to such Protected Property as set forth above.

     “Subsidiary” means any entity in which the Partnership owns a direct or indirect interest after giving effect to the Formation Transactions.

     “Tax Protection Period’ means the period commencing on the Closing Date and ending on the tenth (10^th) anniversary of the Closing Date.

     “Units” means units of limited partnership interest of the Partnership, as described in the Partnership Agreement.

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ARTICLE 2
RESTRICTIONS ON DISPOSITIONS OF PROTECTED PROPERTIES

     2.1 General Restrictions on Dispositions of Protected Properties. The REIT and the Partnership agree, for the benefit of the Protected Partner, that during the Tax Protection Period, neither the Partnership nor any Subsidiary, will sell, exchange, transfer, or otherwise dispose of all or any portion of a Protected Property, or any direct or indirect interest in all or any portion of a Protected Property (a “Disposition”) (without regard to whether such Disposition is voluntary or involuntary) or engage in any other transaction that results in the recognition and allocation to a Protected Partner of all or any portion of a Protected Gain. Without limiting the foregoing, a “Disposition” shall be deemed to include, and the prohibition shall extend to:

          (a) any direct or indirect distribution by the Partnership of a Protected Property (or any direct or indirect interest therein) that results in the recognition of all or a portion of a Protected Gain by a Protected Partner as a result of the application of Section 704(c)(1)(B) of the Code and the Treasury Regulations thereunder; and

          (b) any direct or indirect distribution by the Partnership to a Protected Partner that results in the recognition of all or a portion of a Protected Gain by the Protected Partner as a result of the application of Section 737 of the Code and the Treasury Regulations thereunder; and

          (c) any Disposition, whether voluntary or involuntary, by the Partnership or any Subsidiary of a Protected Property (or any direct or indirect interest therein) in a foreclosure proceeding, pursuant to a deed in lieu of foreclosure, or in a bankruptcy proceeding.

          (d) any merger or consolidation involving the Partnership or any Subsidiary, whether or not the Partnership or Subsidiary is the surviving entity in such merger or consolidation, that results in a Protected Partner’s being required to recognize part or all of the Protected Gain.

     2.2 Exceptions Where No Gain Recognized. Notwithstanding the restriction set forth in Section 2.1, the Partnership or any Subsidiary may Dispose of any Protected Property (or any direct or indirect interest therein) if such Disposition is (a) part of a transaction or series of transactions that qualifies as a like-kind exchange under Section 1031 of the Code, (b) part of a transaction or series of transactions that qualifies as an involuntary conversion under Section 1033 of the Code, or (c) such other transaction, or series of transactions, including, but not limited to, a contribution of property to an entity that qualifies for the non-recognition of gain under either Section 721 or Section 351 of the Code, or a merger or consolidation of the Partnership (or a Subsidiary) with or into another entity that qualifies for taxation as a “partnership” for federal income tax purposes (a “Successor Partnership”) that, as to each of the foregoing, does not result in the recognition of Protected Gain by a Protected Partner with respect to any of the Units; provided, however, that:

          (a) in the case of a Section 1031 like kind exchange, if such exchange is with a “related party” within the meaning of Section 1031(f)(3) of the Code, any direct or indirect Disposition by such related party of the Protected Property or any other transaction prior to the expiration of the two (2) year period following such exchange that would cause Section

4

1031(f)(1) of the Code to apply with respect to such Protected Property (including by reason of the application of Section 1031(f)(4) of the Code) shall be considered a violation of Section 2.1 by the Partnership;

          (b) in the event of a merger or consolidation involving the Partnership, or any Subsidiary, and a Successor Partnership, the Successor Partnership shall have agreed in writing for the benefit of the Protected Partner (and Indirect Owners) that all of the covenants and restrictions set forth in this Agreement shall continue to apply, including, but not limited to, those covenants and restrictions set forth in Articles 2, 3 and 6 of this Agreement; and

          (c) in any case, prior to the time that the Partnership (or a Subsidiary) enters into an agreement to consummate a transaction with respect to a Protected Property that (i) may result in the realization of a Protected Gain but (ii) which the Partnership may report for federal, state, or local income tax purposes, as not resulting (in whole or in part) in the recognition of such Protected Gain, and in any case not less than thirty (30) days prior to consummating such transaction, the Partnership shall provide the Protected Partner with a written description of the transaction containing all relevant details and shall thereafter, as promptly as possible upon the Protected Partner’s reasonable request, and in any case not less than twenty (20) days prior to consummating such transaction, provide the Protected Partner with an opinion of counsel that (i) meets all the requirements for “covered opinions” set forth in Section 10.35(c) of IRS Circular 230, including the requirement that a covered opinion consider all significant federal tax issues, (ii) is based on a statement of facts that is not inaccurate or unreasonable in any material respect, and (iii) concludes, at least a “more likely than not” level of comfort, that all or part of the Protected Gain realized in such transaction will not be recognized for tax purposes (such an opinion, a “Qualifying Opinion”). If the Partnership does not provide the Protected Partner with a description of the transaction and, if reasonably requested by the Protected Partner, a Qualifying Opinion, in a timely manner pursuant to the first sentence of this paragraph, then such proposed transaction shall be treated for purposes of this Agreement as a Disposition in violation of Section 2.1 of this Agreement. Furthermore, the Partnership shall not report any transaction as resulting (in whole or in part) in the realization, but not the recognition, of a Protected Gain unless either (i) the Partnership previously provided the Protected Partner with a Qualifying Opinion in a timely manner pursuant to the first sentence of this paragraph or (ii) the Partnership obtains the consent of the Protected Partner prior to taking such reporting position.

     2.3 Debt Secured by Protected Property. If at the time of any Disposition the Protected Property secures, directly or indirectly, indebtedness that is guaranteed by a Protected Partner (or Indirect Owner), or for which a Protected Partner (or Indirect Owner) otherwise has personal liability, and the transferee is not a Subsidiary of the Partnership that both is more than 50% owned, directly or indirectly, by the Partnership and is and will continue to be under the legal control of the Partnership (which shall include a partnership or limited liability company in which the Partnership or a wholly owned Subsidiary of the Partnership is the sole managing general partner or sole managing member, as applicable), (i) either (A) such indebtedness shall be repaid in full; or (B) the Partnership shall obtain from the lenders with respect to such indebtedness a full and complete release of liability for the Protected Partner (and each Indirect Owner) that has guaranteed, or otherwise has liability for, such indebtedness, and (ii) if such indebtedness is a Guaranteed Debt and the Tax Protection Period shall not have expired, the Partnership shall comply with its covenants set forth in Article 3 below with respect to such

5

Guaranteed Debt and the Partner Guarantors that are considered to have liability for such Guaranteed Debt (determined under Section 3.4 treating such events as a repayment of the Guaranteed Debt).

     2.4 Reporting of Formation Transactions. For federal, state and local income tax purposes, the Partnership shall report: (i) MXT Capital’s contribution of the Student Housing Entities to the Partnership as a tax free contribution pursuant to Section 721 of the Code (or the corresponding provisions of state or local law, as applicable); (ii) the payment $4,464,062.00 by the Partnership to MXT Capital as a reimbursement of “pre-formation expenditures” (to the maximum extent permissible) under Section 1.707-4(d) of the Treasury Regulations or such other exception to the disguised sale rules; and (iii) MXT Capital as a partner in the Partnership with respect to all Units received by MXT Capital pursuant to the Formation Transactions. Notwithstanding the foregoing, the Partnership shall not be deemed to have breached its obligations under this Section 2.4 solely because a governmental taxing authority determines that the Partnership would be required to file an amended return or amended information statement that reports the Formation Transactions other than as a contribution pursuant to Section 721 of the Code and a reimbursement of “preformation expenditures” pursuant to Section 1.707-4(d) of the Treasury Regulations.

ARTICLE 3
ALLOCATION OF LIABILITIES; GUARANTEE OPPORTUNITY

     3.1 Minimum Liability Allocation. During the Tax Protection Period, the Partnership will offer to each Protected Partner (or, at the request of an Indirect Owner, such Indirect Owner) the opportunity either (a) to enter into Qualified Guarantees (whether such guarantee is in the form of a direct guarantee to the lender or an indemnification of the General Partner or the REIT in the case of debt guaranteed or to be guaranteed by the General Partner or the REIT) of Qualified Guarantee Indebtedness; or (b) to enter into a Deficit Restoration Obligation or “DRO”, in such amount or amounts so as to cause the amount of partnership liabilities allocated to such Protected Partner for purposes of Section 752 of the Code to be not less than such Protected Partner’s Minimum Liability Amount, and to cause that amount of Partnership liabilities with respect to which such Protected Partner will be considered “at risk” for purposes of Section 465 of the Code to be not less than such Protected Partner’s Minimum Liability Amount, as provided in this Article 3. In order to minimize the need for the Protected Partner (or Indirect Owner) to enter into Qualified Guarantees or DROs, the Partnership will use the optional method under Treasury Regulations Section 1.752-3(a)(3) to allocate Nonrecourse Liabilities considered secured by a Protected Property to the Protected Partners to the extent that the “built-in gain” with respect to the Protected Properties exceeds the amount of the Nonrecourse Liabilities considered secured by such Protected Properties allocated to the Protected Partners under Treasury Regulations Section 1.752-3(a)(2).

     3.2 Qualified Guarantee Indebtedness and Qualified Guarantee: Treatment of Qualified Guarantee Indebtedness as Guaranteed Debt. In order for an offer by the Partnership of an opportunity to guarantee indebtedness to satisfy the requirements of this Article 3 (whether in the form of a direct guarantee to the lender or an indemnification of the General Partner or the REIT in the case of debt guaranteed or to be guaranteed by the General Partner or the REIT), (i) the indebtedness to be guaranteed must satisfy all of the conditions set

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forth in this Section 3.2 (indebtedness satisfying all such conditions is referred to as “Qualified Guarantee Indebtedness”); (ii) the guarantee by the Partner Guarantors must be pursuant to a Guarantee Agreement that satisfies the conditions set forth in Section 3.2(a) (each, a “Qualified Guarantee”); (iii) the amount of debt required to be guaranteed by the Partner Guarantor must not exceed the portion of the Guaranteed Amount for which an additional or replacement guarantee is being offered; (iv) the debt to be guaranteed must be considered indebtedness of the Partnership for purposes of determining the adjusted tax basis in their partnership interests of the partners in the Partnership; and (v) the guarantee must cause the Guaranteed Amount to be included in basis for federal income tax purposes of the Partner Guarantor and considered to be “at risk” for purposes of Section 465 of the Code. If, and to the extent that, a Partner Guarantor elects to guarantee Qualified Guarantee Indebtedness pursuant to an offer made in accordance with this Article 3, such indebtedness thereafter shall be considered a Guaranteed Debt and subject to all of the provisions of this Article 3. The conditions that must be satisfied at all times with respect to any additional or replacement Guaranteed Debt offered pursuant to this Article 3 hereof and the guarantees with respect thereto are as follows:

          (a) each such guarantee shall be a “bottom dollar guarantee” such that the lender with respect to the Guaranteed Debt is required to pursue all other collateral and security for the Guaranteed Debt (other than any “bottom dollar guarantees” permitted pursuant to this paragraph (a) and/or Section 3.3 below) prior to seeking to collect on such a guarantee, and the lender shall have recourse against the guarantee only if, and solely to the extent that, the total amount recovered by the lender with respect to the Guaranteed Debt after the lender has exhausted its remedies as set forth above is less than the aggregate of the Guaranteed Amounts with respect to such Guaranteed Debt (plus the aggregate amounts of any other guarantees (x) that are in effect with respect to such Guaranteed Debt at the time the guarantees pursuant to this Article 3 are entered into, or (y) that are entered into after the date the guarantees pursuant to this Article 3 are entered into with respect to such Guaranteed Debt and that comply with Section 3.5 below, but only to the extent that, in either case, such guarantees are “bottom dollar guarantees” with respect to the Guaranteed Debt), and the maximum aggregate liability of each Partner Guarantor for all Guaranteed Debt shall be limited to the amount actually guaranteed by such Partner Guarantor;

          (b) the fair market value of the collateral against which the lender has recourse pursuant to the Guaranteed Debt, determined as of the time the guarantee is entered into (an independent appraisal relied upon by the lender in making the loan shall be conclusive evidence of such fair market value when the guarantee is being entered into in connection with the closing of such loan), shall not be less than 150% of the sum of (1) the aggregate of the Guaranteed Amounts with respect to such Guaranteed Debt, plus (2) the dollar amount of any other indebtedness that is senior to or pari passu with the Guaranteed Debt and as to which the lender thereunder has recourse against property that is collateral of the Guaranteed Debt, plus (3) the aggregate amounts of any other guarantees that are in effect with respect to such Guaranteed Debt at the time the guarantees pursuant to this Article 3 are entered into with respect to such Guaranteed Debt and that comply with Section 3.2(e) below, but only to the extent that such guarantees are “bottom dollar guarantees” with respect to the Guaranteed Debt);

          (c) (i) the executed guarantee must be delivered to the lender, and (ii) (A) the execution of the guarantee by the Partner Guarantors must be acknowledged by the lender as an

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inducement to it to make a new loan, to continue an existing loan (which continuation is not otherwise required), or to grant a material consent under an existing loan (which consent is not otherwise required to be granted) or, alternatively, (B) the guarantee must otherwise be enforceable under the laws of the state governing the loan and in which the property securing the loan is located or in which the lender has a significant place of business (with any bona fide branch or office of the lender through which the loan is made, negotiated, or administered being deemed a “significant place of business” for the purposes hereof);

          (d) as to each Partner Guarantor that is executing a guarantee pursuant to this Agreement, there must be no other person that would be considered to “bear the economic risk of loss,” within the meaning of Treasury Regulations Section 1.752-2, or would be considered to be “at risk” for purposes of Section 465(b) of the Code with respect to that portion of such debt for which such Partner Guarantor is being made liable for purposes of satisfying the Partnership’s obligations to such Partner Guarantor under this Article 3;

          (e) the aggregate Guaranteed Amounts with respect to the Guaranteed Debt will not exceed 25% of the amount of the Guaranteed Debt outstanding at the time the guarantee is executed. Except for guarantees already in place at the time a guarantee opportunity is presented to the Protected Partners, at no time can there be guarantees with respect to the Guaranteed Debt that are provided by other persons that are “pari passu” with or at a lower level of risk than the guarantees provided by the Protected Partners. If there are guarantees already in place at the time a guarantee opportunity is presented to the Protected Partners that are “pari passu” with or at a lower level of risk than the guarantees provided by the Protected Partners, then the amount of Guaranteed Debt subject to such existing guarantees shall be added to the Guaranteed Amount for purposes of calculating the 25% limitation set forth in this Section 3.2(d); and

          (f) the obligor with respect to the Guaranteed Debt is the Partnership or an entity which is and will continue to be under the legal control of the Partnership (which shall include a partnership or limited liability company in which the Partnership or a wholly-owned Subsidiary of the Partnership is the sole managing general partner or sole managing member, as applicable).

     3.3 Covenant With Respect to Guaranteed Debt Collateral. The Partnership covenants with the Partner Guarantors with respect to the Guaranteed Debt that (i) it will comply with the requirements set forth in Section 2.3 upon any disposition of any collateral for a Guaranteed Debt, whether during or following the Tax Protection Period, and (ii) it will not at any time, whether during or following the Tax Protection Period, pledge the collateral with respect to a Guaranteed Debt to secure any other indebtedness (unless such other indebtedness is, by its terms, subordinate in all respects to the Guaranteed Debt for which such collateral is security) or otherwise voluntarily dispose of or reduce the amount of such collateral unless either (A) after giving effect thereto the conditions in Section 3.2(b) would continue to be satisfied with respect to the Guaranteed Debt, and the Guaranteed Debt otherwise would continue to be Qualified Guarantee Indebtedness, or (B) the Partnership (x) obtains from the lender with respect to the original Guaranteed Debt a full and complete release of any Partner Guarantor unless the Partner Guarantor expressly requests that it not be released, and (y) if the Tax Protection Period has not expired, offers to each Partner Guarantor with respect to such original Guaranteed Debt,

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not less than thirty (30) days prior to such pledge or disposition, the opportunity to enter into a Qualified Guarantee of other Partnership indebtedness that constitutes Qualified Guarantee Indebtedness (with such replacement indebtedness thereafter being considered a Guaranteed Debt and subject to this Article 3) in an amount equal to the amount of such original Guaranteed Debt that was guaranteed by such Partner Guarantor or, at the option of the Protected Partner, to enter into a Deficit Restoration Obligation in the amount of the original Guaranteed Debt that was guaranteed by such Partner Guarantor.

     3.4 Repayment or Refinancing of Guaranteed Debt. The Partnership shall not, at any time during the Tax Protection Period applicable to a Partner Guarantor, repay or refinance all or any portion of any Guaranteed Debt unless (i) after taking into account such repayment, the applicable Partner Guarantor would be entitled to include in its basis for its Units an amount of Guaranteed Debt equal to its Minimum Liability Amount, or (ii) alternatively, the Partnership, not less than thirty (30) days prior to such repayment or refinancing, offers to the applicable Partner Guarantors the opportunity either (1) to enter into a Qualified Guarantee with respect to other Qualified Guarantee Indebtedness; or (2) to enter into a Deficit Restoration Obligation, in either case, in an amount sufficient so that, taking into account such guarantees of such other Qualified Guaranteed Indebtedness, as applicable, each Partner Guarantor who guarantees such other Qualified Guaranteed Indebtedness or enters into a Deficit Restoration Obligation would be entitled to include in its adjusted tax basis of its Units debt equal to the Minimum Liability Amount for such Partner Guarantor.

     3.5 Limitation on Additional Guarantees With Respect to Debt Secured by Collateral for Guaranteed Debt. The Partnership shall not offer the opportunity or make available to any person or entity other than a Protected Partner (or Indirect Owner) a guarantee of any Guaranteed Debt or other debt that is secured, directly or indirectly, by any collateral for Guaranteed Debt unless (i) such debt by its terms is subordinate in all respects to the Guaranteed Debt or, if such other guarantees are of the Guaranteed Debt itself, such guarantees by their terms must be paid in full before the lender can have recourse to the Partner Guarantors (i.e., the first dollar amount of recovery by the applicable lenders must be applied to the Guaranteed Amount); provided that the foregoing shall not apply with respect to additional guarantees of Guaranteed Debt so long as the conditions set forth in Sections 3.2(b) and (e) would be satisfied immediately after the implementation of such additional guarantee (determined in the case of Section 3.2(b), based upon the fair market value of the collateral for such Guaranteed Debt at the time the additional guarantee is entered into and adding the amount of such additional guarantee(s) to the sum of the applicable Guaranteed Amounts plus any other preexisting “bottom dollar guarantee” previously permitted pursuant to this Section 3.5 or Sections 3.2(a) and (b) above, for purposes of making the computation provided for in Section 3.2(b)), and (ii) such other guarantees do not have the effect of reducing the amount of the Guaranteed Debt that is includible by any Partner Guarantor in its adjusted tax basis for its Units pursuant to Treasury Regulations Section 1.752-2.

     3.6 Process. Whenever the Partnership is required under this Article 3 to offer to one or more of the Partner Guarantors an opportunity to guarantee Qualified Guarantee Indebtedness or enter into a DRO, the Partnership shall be considered to have satisfied its obligation if the other conditions in this Article 3 are satisfied and, not less than thirty (30) days prior to the date that such guarantee would be required to be executed in order to satisfy this Article 3, the

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Partnership sends by first class mail, return receipt requested, to the last known address of each such Partner Guarantor (as reflected in the records of the Partnership) the Guarantee Agreement, or DRO, as applicable, to be executed and an explanation of the relevant circumstances (including, as applicable, that the offer is being made pursuant to this Article 3, the circumstances giving rise to the offer, a brief summary of the terms of the Qualified Guarantee Indebtedness to be guaranteed, a brief description of the collateral for the Qualified Guarantee Indebtedness, a statement of the amount to be guaranteed, the address to which the executed Guarantee Agreement or DRO, as applicable, must be sent and the date by which it must be received, and a statement to the effect that, if the Protected Partner fails to execute and return such Agreement within the time period specified, the Partner Guarantor thereafter would lose its rights under this Article 3 with respect to the amount of debt that the Partnership is required to offer to be guaranteed or made available for the DRO, and depending upon the Partner Guarantor’s circumstances and other circumstances related to the Partnership, the Partner Guarantor could be required to recognize taxable gain as a result thereof, either currently or prior to the expiration of the Tax Protection Period, that otherwise would have been deferred).

     3.7 Presumption as to Schedule 3.7. The form of the Guarantee Agreement attached hereto as Schedule 3.7 shall be conclusively presumed to satisfy the conditions set forth in Section 3.2 and to have caused the Guaranteed Debt to be considered allocable to the Guarantor Partner who enters into such Guarantee Agreement pursuant to Treasury Regulation § 1.752-2 and Section 465 of the Code so long as all of the following conditions are met with respect such Guaranteed Debt:

(i)	there are no other guarantees in effect with respect to such Guaranteed Debt (other than the guarantees contemporaneously being entered into by the Partner Guarantors pursuant to this Article 3);
(ii)	the collateral securing such Guaranteed Debt is not, and shall not thereafter become, collateral for any other indebtedness that is senior to or pari passu with such Guaranteed Debt;
(iii)	no additional guarantees with respect to such Guaranteed Debt will be entered into during the applicable Tax Protection Period pursuant to the proviso set forth in Section 3.3;
(iv)	the lender with respect to such Guaranteed Debt is not the Partnership, any Subsidiary or other entity in which the Partnership owns a direct or indirect interest, the REIT, any other partner in the Partnership, or any person related to any partner in the Partnership as determined for purposes of Treasury Regulation § 1.752-2 or any person that would be considered a “related party” as determined for purposes of Section 465 of the Code; and
(v)	none of the REIT, nor any other partner in the Partnership, nor any person related to any partner in the Partnership as determined for purposes of Treasury Regulation § 1.752-2 shall have provided, or shall thereafter provide, collateral for, or otherwise shall have entered into, or shall thereafter enter into, a relationship that would cause such person or entity to be considered to bear the

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risk of loss with respect to such Guaranteed Debt, as determined for purposes of Treasury Regulation § 1.752-2 or that would cause such entity to be considered “at risk” with respect to such Guaranteed Debt, as determined for purposes of Section 465 of the Code.

     3.8 Deficit Restoration Obligation. The Partnership will maintain an amount of indebtedness of the Partnership that would be considered a Recourse Liability (taking into account all of the facts and circumstances related to the indebtedness, the Partnership and the General Partner) equal to or greater than the sum of the amounts subject to a DRO of all Protected Partners and other partners in the Partnership (the “Aggregate DRO Amount”). The deficit restoration obligation shall be conclusively presumed to cause the Protected Partner to be allocated an amount of liabilities equal to the DRO Amount of such Protected Partner for purposes of Section 752 of the Code, provided that (1) the Partnership maintains an amount of debt that is considered “recourse” indebtedness (determined for purposes of Section 752 of the Code and taking into account all of the facts and circumstances related to the indebtedness, the Partnership and the General Partner) equal to the aggregate DRO Amounts of all partners of the Partnership and (2) all other terms and conditions of the Partnership Agreement with respect to such deficit restoration obligation are met. For the avoidance of doubt, the purpose of this Section 3.8 is not to require the Partnership to incur or increase the amount of Recourse Liabilities, if any, to which the Protected Properties are subject, provided that the Partnership maintains in place sufficient Recourse Liabilities to cover the Aggregate DRO Amount, if any, from time to time and does not take any actions (or cause or permit such actions to be taken) that would decrease the amount of such Recourse Liabilities that are allocable to the Protected Partners under Section 752 of the Code as a result of any such DRO entered into by such Protected Partner.

     3.9 Additional Guarantee and DRO Opportunities. Without limiting any of the other obligations of the Partnership under this Agreement, from and after the expiration of the Tax Protection Period, the Partnership shall, upon a request from a Protected Partner, use commercially reasonable efforts to permit such Protected Partner to enter into an agreement with the Partnership to bear the economic risk of loss as to a portion of the Partnership’s recourse indebtedness by undertaking an obligation to restore a portion of its negative capital account balance upon liquidation of such Protected Partner’s interest in the Partnership and/or to bear financial liability under a Guarantee Agreement substantially in the form of Schedule 3.7 hereto for indebtedness that would be considered Qualifying Guarantee Indebtedness under Section 3.2 hereof, if such Protected Partner shall provide information from its professional tax advisor satisfactory to the Partnership showing that, in the absence of such agreement, such Protected Partner likely would not be allocated from the Partnership sufficient indebtedness under Section 752 of the Code and the at-risk provisions under Section 465 of the Code to avoid the recognition of gain (other than gain required to be recognized by reason of actual cash distributions from the Partnership). The Partnership and its professional tax advisors shall cooperate in good faith with such Protected Partner and its professional tax advisors to provide such information regarding the allocation of the Partnership liabilities and the nature of such liabilities as is reasonably necessary in order to determine the Protected Partner’s adjusted tax basis in its Units and at-risk amount. If the Partnership permits a Protected Partner to enter into an agreement under this Section 3.9, the Partnership shall be under no further obligation with

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respect thereto, and the Partnership shall not be required to indemnify such Protected Partner for any damage incurred, in connection with or as a result of such agreement or the indebtedness, including without limitation a refinancing or prepayment thereof or taking any of the other actions required by Article 3 hereof with respect to Qualified Indebtedness.

ARTICLE 4
REMEDIES FOR BREACH

     4.1 Monetary Damages. In the event that the Partnership breaches its obligations set forth in Article 2, Article 3, or Article 6 with respect to a Protected Partner (or Indirect Owner), the Protected Partner’s sole right shall be to receive from the Partnership, and the Partnership shall pay to such Protected Partner as damages, an amount equal to:

          (a) in the case of a violation of Articles 3 or 6, the aggregate federal, state and local income taxes incurred by the Protected Partner (or Indirect Owner) as a result of the income or gain allocated to, or otherwise recognized by, such Protected Partner (or Indirect Owner) with respect to its Units by reason of such breach; and

          (b) in the case of a violation of Article 2, the aggregate federal state, and local income taxes incurred with respect the Protected Gain incurred with respect to the Protected Property that is allocable to such Protected Partner under the Partnership Agreement;

plus in the case of either (a) or (b), an amount equal to the aggregate federal, state, and local income taxes payable by the Protected Partner (or Indirect Owner) as a result of the receipt of any payment required under this Section 4.1.; provided that the amount payable in the case of a violation of Article 2 shall be reduced, commencing on the fifth anniversary of the Closing Date, by twenty percent (20%) and an additional twenty percent (20%) on each successive anniversary date until the amount payable in respect of a violation of Article 2 is reduced to zero on the tenth (10^th) anniversary of the Closing Date.

     For purposes of determining the amount of the indemnity payment owed to a Protected Partner or Indirect Owner pursuant to this Section 4.1 (1) all income arising from a transaction or event that is treated as ordinary income under applicable provisions of the Code and all payments under this Section 4.1 shall be treated as subject to federal, state, and local income tax at an effective tax rate imposed on ordinary income of individuals residing in the city and state of residence of such Protected Partner, determined using the maximum federal rate of tax on ordinary income and the maximum state and local rates of tax on ordinary income then in effect in such city and state, (2) all income arising from a transaction or event that is treated as “unrecaptured section 1250 gain” within the meaning of Section 1(h)(6) of the Code with respect to such Protected Partner shall be subject to federal, state, and local income tax at the effective tax rate imposed on the unrecaptured section 1250 gain of individuals residing in the city and state of residence of such Protected Partner, (3) all other income arising from the transaction or event shall be subject to federal, state and local income tax at the effective tax rate imposed on long-term capital gains of individuals residing in the city and state of residence of the Protected Partner, determined using the maximum federal, state, and local rates of tax imposed on long-

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term capital gains then in effect, (4) any amounts giving rise to a payment under this Section 4.1 will be determined assuming that the transaction or event giving rise to the Partnership’s obligation to make a payment was the only transaction or event reported on the Protected Partner’s tax return (i.e., without giving effect to any loss carryforwards or other deductions attributable to such Protected Partner) with respect to its direct or indirect investment in the Partnership, and (5) any amounts payable with respect to state and local income taxes shall be treated as deductible for federal income tax purposes (taking into account any limitation or phaseout of itemized deductions applicable to taxpayers in the highest federal income tax bracket). In the case of a Protected Partner that is a partnership, “S corporation” or a disregarded entity for federal income tax purposes, the preceding sentence shall be applied treating each Indirect Owner of such partnership, “S corporation” or disregarded entity as if it were directly a Protected Partner.

     4.2 Process for Determining Damages.

          (a) At the time the Partnership (or a Subsidiary) enters into an agreement to consummate a transaction that, if consummated, would result in a breach of the Partnership’s obligations under Article 2, Article 3 or Article 6 hereof (a “Prohibited Transaction”), and in any case not less than thirty (30) days prior to consummating such Prohibited Transaction, the Partnership shall notify each affected Protected Partner (or Indirect Owner) in writing, which such notice shall include the approximate sales price or other amount to be realized for income tax purposes in connection with such Prohibited Transaction and all other relevant details of the Prohibited Transaction and shall request from the Protected Partner (or Indirect Owner) such information that is within the Protected Partner’s (or Indirect Owner’s) possession or control and is relevant to the calculation of the indemnity set forth in Section 4.1 hereof within ten (10) days of such request. Within ten (10) days after receipt of such information from the Protected Partner (or Indirect Owner) (or, if no such information is requested, at the same time the Partnership notifies the Protected Partner (or Indirect Owner) of the Prohibited Transaction as provided above), the Partnership shall provide to the Protected Partner a computation of the indemnity payment, if any, owing to the Protected Partner pursuant to Section 4.1 resulting from such Prohibited Transaction. The Protected Partner (or Indirect Owner) shall have five (5) days from its receipt of the Partnership’s calculation of the amount of the indemnity due under Section 4.1 hereof to review and raise any objections to such calculation. The Partnership and the Protected Partner (or Indirect Owner) hereby agree to negotiate in good faith any objections raised by the Protected Partner (or Indirect Owner) to such indemnity calculation.

          (b) Notwithstanding anything to the contrary contained herein, the Partnership may not enter into a Prohibited Transaction unless, at least fourteen (14) days prior to entering into such transaction, the Partnership will have provided the Protected Partner with evidence reasonably satisfactory to the Protected Partner that, following such transaction, and including any proceeds from such transaction, the Partnership will have the requisite liquidity to make any necessary indemnification payments required pursuant to this Agreement. The Protected Partner shall have the right to seek and obtain specific performance or injunctive relief with respect to this Section 4.2(b).

     4.3 Required Notices: Time for Payment. The Partnership shall make any required indemnity payment owing to a Protected Partner (or Indirect Owner) pursuant to Section 4.1 no

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later than five (5) days prior to the due date of the quarterly estimated tax payment for individuals which next follows the date that the Prohibited Transaction is consummated or, if later, ten (10) days after the date required for the Partnership’s delivery of the computation of the indemnity payment to the Protected Partner (or Indirect Owner). In the event of a payment required after the date required pursuant to this Section 4.3, interest shall accrue on the aggregate amount required to be paid from such date to the date of actual payment at a rate equal to the “prime rate” of interest, as published in the Wall Street Journal, or comparable publication if the aforementioned rate is not available, effective as of the date the payment is required to be made.

     4.4 Additional Damages for Breaches of Section 2.3 and/or Section 3.3. Notwithstanding any of the foregoing in this Article 4, in the event that the Partnership should breach any of its covenants set forth in Section 2.3 and/or Section 3.3 and a Protected Partner (or Indirect Owner) is required to make a payment in respect of such indebtedness that it would not have had to make if such breach had not occurred (an “Excess Payment”), then, in addition to the damages provided for in the other Sections of this Article 4, the Partnership shall pay to such Protected Partner (or Indirect Owner) an amount equal to the sum of (i) the Excess Payment, and (ii) an amount equal to the aggregate federal, state and local income taxes required to be paid by the Protected Partner (computed as set forth in Section 4.1) as a result of any payment required under this Section 4.4. Such amount shall be paid within fifteen (15) days of the Partnership’s receipt of notice from the Protected Partner (or Indirect Owner) of the Partnership’s breach of the covenants set forth in Section 2.3 and/or 3.3 hereof.

ARTICLE 5
SECTION 704(C) METHOD AND ALLOCATIONS

     Notwithstanding any provision of the Partnership Agreement, the Partnership shall use, and shall cause any other entity in which the Partnership has a direct or indirect interest to use, the “traditional method” under Treasury Regulations Section 1.704-3(b) for purposes of making all allocations under Section 704(c) of the Code with respect to each property listed on Schedule 5 to take into account the book-tax disparities as of the Closing Date and with respect to any revaluation of such property pursuant to Treasury Regulations Sections 1.704-1(b)(2)(iv)(f), 1.704-1(b)(2)(iv)(g), or 1.704-3(a)(6) with no “curative allocations”, “remedial allocations” or adjustments to other items to offset the effects of the “ceiling rule,” including upon any sale of any property listed on Schedule 5.

ARTICLE 6
ALLOCATIONS OF LIABILITIES PURSUANT TO REGULATIONS UNDER
SECTION 752

     6.1 Allocation Methods to be Followed. Except as provided in Section 6.2, all tax returns prepared by the Partnership with respect to the Tax Protection Period that allocate liabilities of the Partnership for purposes of Section 752 of the Code and the Treasury Regulations thereunder shall treat each Partner Guarantor as being allocated for federal income tax purposes an amount of debt comprised of (i) Recourse Debt allocated pursuant to Treasury Regulations Section 1.752-2, (ii) any nonrecourse debt otherwise allocable to such Partner Guarantor in accordance with the Partnership Agreement and Treasury Regulations Section 1.752-3 and (iii) any other recourse liabilities allocable to such Partner Guarantor by reason of

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guarantees of indebtedness entered into pursuant to other agreements with the Partnership atl least equal to such Partner Guarantor’s Minimum Liability Amount, as set forth on Schedule 3.1 hereto and as maybe reduced pursuant to the terms of this Agreement, and the Partnership and the REIT shall not, during or with respect to the Tax Protection Period, take any contrary or inconsistent position in any federal or state income tax returns (including, without limitation, information returns, such as Forms K-1, provided to partners in the Partnership and returns of Subsidiaries of the Partnership) or any dealings involving the Internal Revenue Service (including, without limitation, any audit, administrative appeal or any judicial proceeding involving the income tax returns of the Partnership or the tax treatment of any holder of partnership interests the Partnership).

     6.2 Exception to Required Allocation Method. Notwithstanding the provisions of this Agreement, the Partnership shall not be required to make allocations of Guaranteed Debt or other recourse debt of the Partnership to the Protected Partners as set forth in this Agreement if and to the extent that the Partnership determines in good faith that there may not be “substantial authority” (within the meaning of Treasury Regulations §1.6662-4(d)) for such allocation; provided that the Partnership shall provide to each Protected Partner, notice of such determination and if, within forty-five (45) days after the receipt thereof, the Partnership is provided an opinion of a law firm recognized as expert in such matters or a nationally recognized public accounting firm to the effect that there is “substantial authority” (within the meaning of Treasury Regulations §1.6662-4(d)) for such allocations, the Partnership shall continue to make allocations of Guaranteed Debt or other recourse debt of the Partnership to the Protected Partners as set forth in this Agreement; provided further that if there shall have been a judicial determination in a proceeding to which the Partnership is a party to the effect that such allocations are not correct, Section 6.1 shall not apply unless the matter is being appealed to an applicable court of appeals, the requirements of Section 9.10 shall have been satisfied in connection therewith, and the opinion described above from counsel or accountants engaged by a Protected Partner shall have been provided, except that such opinion shall be to the effect that it is more likely than not that such allocations will be respected. In no event shall this Section 6.2 be construed to relieve the Partnership for liability arising from a failure by the Partnership to comply with one or more of the provisions of Article 3 of this Agreement.

     6.3 Cooperation in the Event of a Change. If a change in the Partnership’s allocations of Guaranteed Debt or other recourse debt of the Partnership to the Protected Partners is required by reason of circumstances described in Section 6.2, the Partnership and its professional tax advisors shall cooperate in good faith with each Protected Partner (or in the event of their death or disability, their executor, guardian or custodian, as applicable) and their professional tax advisors to develop alternative allocation arrangements and/or other mechanisms that protect the federal income tax positions of the Protected Partners in the manner contemplated by the allocations of Guaranteed Debt or other recourse debt of the Partnership to the Protected Partners as set forth in this Agreement.

ARTICLE 7
TAX PROCEEDINGS

     7.1 Notice of Tax Audits. If any claim, demand, assessment (including a notice of proposed assessment) or other assertion is made with respect to taxes against the Protected

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Partners or the Partnership, the calculation of which involves a matter covered in this Agreement, that could result in tax liability to a Protected Partner (“Tax Claim”) or if the REIT or the Partnership receives any notice from any jurisdiction with respect to any current or future audit, examination, investigation or other proceeding (“Tax Proceeding”) involving the Protected Partners or the Partnership or that otherwise could involve a matter covered in this Agreement and could directly or indirectly affect the Protected Partners (adversely or otherwise), the REIT or the Partnership, as applicable, shall promptly notify the Protected Partners of such Tax Claim or Tax Proceeding.

     7.2 Control of Tax Proceedings. The REIT, as the sole member in the general partner of the Partnership, shall have the right to control the defense, settlement or compromise of any Tax Proceeding or Tax Claim; provided, however, that the REIT shall not consent to the entry of any judgment or enter into any settlement with respect to such Tax Claim or Tax Proceeding that could result in tax liability to a Protected Partner (or Indirect Owner) without the prior written consent of the affected Protected Partners (unless, and only to the extent, that any taxes required to be paid by the Protected Partner (or Indirect Owners) as a result thereof would be required to be reimbursed by the Partnership and the REIT under Article 4, and the Partnership and the REIT agree in connection with such settlement or consent to make such required payments); provided further that the Partnership shall keep the Protected Partners duly informed of the progress thereof to the extent that such Proceeding or Tax Claim could directly or indirectly affect (adversely or otherwise) the Protected Partners (or Indirect Owners) and that the Protected Partner shall have the right to review and comment on any and all submissions made to the to Internal Revenue Service, a court, or other governmental body with respect to such Tax Claim or Tax Proceeding and that the Partnership will consider such comments in good faith.

     7.3 Timing of Tax Returns: Periodic Tax Information. The Partnership shall cause to be delivered to each Protected Partner, as soon as practicable each year, the Schedules K-1 that the Partnership is required to deliver to such Protected Partner with respect to the prior taxable year. In addition, the Partnership agrees to provide to each Protected Partner, upon request, an estimate of the taxable income expected to be allocable for a specified taxable year from the Partnership to such Protected Partner, provided that such estimates shall not be required to be provided more frequently than once each calendar quarter.

ARTICLE 8
AMENDMENT OF THIS AGREEMENT; WAIVER OF CERTAIN PROVISIONS;
APPROVAL OF CERTAIN TRANSACTIONS

     8.1 Amendment. This Agreement may not be amended, directly or indirectly (including by reason of a merger between the Partnership and another entity) except by a written instrument signed by the REIT, the General Partner, and each of the Protected Partners.

     8.2 Waiver. Notwithstanding the foregoing, upon written request by the Partnership, each Protected Partner (or Indirect Owner), in its sole discretion, may waive the payment of any damages that is otherwise payable to such Protected Partner (or Indirect Owner) pursuant to Article 4 hereof. Such a waiver shall be effective only if obtained in writing from the affected Protected Partner (or Indirect Owner).

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ARTICLE 9
MISCELLANEOUS

     9.1 Additional Actions and Documents. Each of the parties hereto hereby agrees to take or cause to be taken such further actions, to execute, deliver, and file or cause to be executed, delivered and filed such further documents, and will obtain such consents, as may be necessary or as may be reasonably requested in order to fully effectuate the purposes, terms and conditions of this Agreement.

     9.2 Assignment. No party hereto shall assign its or his rights or obligations under this Agreement, in whole or in part, except by operation of law, without the prior written consent of the other parties hereto, and any such assignment contrary to the terms hereof shall be null and void and of no force and effect.

     9.3 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Protected Partner, the Indirect Owners, and their respective successors and permitted assigns, whether so expressed or not. This Agreement shall be binding upon the REIT, the Partnership, and any entity that is a direct or indirect successor, whether by merger, transfer, spin-off or otherwise, to all or substantially all of the assets of either the REIT or the Partnership (or any prior successor thereto as set forth in the preceding portion of this sentence), provided that none of the foregoing shall result in the release of liability of the REIT and the Partnership hereunder. The REIT and the Partnership covenant with and for the benefit of the Protected Partner (and Indirect Owners) not to undertake any transfer of all or substantially all of the assets of either entity (whether by merger, transfer, spin-off or otherwise) unless the transferee has acknowledged in writing and agreed in writing to be bound by this Agreement, provided that the foregoing shall not be deemed to permit any transaction otherwise prohibited by this Agreement.

     9.4 Modification: Waiver. No failure or delay on the part of any party hereto in exercising any power or right hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and not exclusive of any rights or remedies which they would otherwise have. No modification or waiver of any provision of this Agreement, nor consent to any departure by any party therefrom, shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any party in any case shall entitle such party to any other or further notice or demand in similar or other circumstances.

     9.5 Representations and Warranties Regarding Authority: Noncontravention.

          (a) Representations and Warranties of the REIT and the Partnership. Each of the REIT and the Partnership has the requisite corporate or other (as the case may be) power and authority to enter into this Agreement and to perform its respective obligations hereunder. The execution and delivery of this Agreement by each of the REIT and the Partnership and the performance of each of its respective obligations hereunder have been duly authorized by all necessary corporate, partnership, or other (as the case may be) action on the part of each of the

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REIT and the Partnership. This Agreement has been duly executed and delivered by each of the REIT and the Partnership and constitutes a valid and binding obligation of each of the REIT and the Partnership, enforceable against each of the REIT and the Partnership in accordance with its terms, except as such enforcement may be limited by (i) applicable bankruptcy or insolvency laws (or other laws affecting creditors’ rights generally) or (ii) general principles of equity. The execution and delivery of this Agreement by each of the REIT and the Partnership do not, and the performance by each of its respective obligations hereunder will not, conflict with, or result in any violation of (x) the Partnership Agreement or (y) any other agreement applicable to the REIT and/or the Partnership, other than, in the case of clause (y), any such conflicts or violations that would not materially adversely affect the performance by the Partnership and the REIT of their obligations hereunder.

     (b) Representations and Warranties of the Protected Partner. The Protected Partner has the requisite corporate or other (as the case may be) power and authority to enter into this Agreement and to perform its respective obligations hereunder. The execution and delivery of this Agreement by the Protected Partner and the performance of its respective obligations hereunder have been duly authorized by all necessary trust, partnership, or other (as the case may be) action on the part of the Protected Partner. This Agreement has been duly executed and delivered by the Protected Partner and constitutes a valid and binding obligation of the Protected Partner.

     9.6 Captions. The Article and Section headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.

     9.7 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made as of the date delivered, mailed or transmitted, and shall be effective upon receipt, if delivered personally, mailed by registered or certified mail (postage prepaid, return receipt requested) to the parties at the following addresses (or at such other address for a party as shall be specified by like changes of address) or sent by electronic transmission to the telecopier number specified below:

     (i) if to the Partnership or the REIT, to:

Campus Crest Communities, Inc.
2100 Rexford Road, Suite 414
Charlotte, NC 28211
Attention: Chief Financial Officer
Facsimile: (704) 937-0965

     (ii) if to a Protected Partner, (or Indirect Owner) to the address on file with the Partnership.

Each party may designate by notice in writing a new address to which any notice, demand, request or communication may thereafter be so given, served or sent. Each notice, demand, request, or communication which shall be hand delivered, sent, mailed, telecopied or telexed in

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the manner described above, or which shall be delivered to a telegraph company, shall be deemed sufficiently given, served, sent, received or delivered for all purposes at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, or (with respect to a telecopy or telex) the answerback being deemed conclusive, but not exclusive, evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation.

     9.8 Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and each of which shall be deemed an original.

     9.9 Governing Law. The interpretation and construction of this Agreement, and all matters relating thereto, shall be governed by the laws of the State of North Carolina, without regard to the choice of law provisions thereof

     9.10 Dispute Resolution/Arbitration/Mediation.

          (a) Dispute Resolution. The parties hereby agree that, in order to obtain prompt and expeditious resolution of any disputes under this Agreement, each claim, dispute or controversy of whatever nature, arising out of, in connection with, or in relation to this Agreement (or any other agreement contemplated by or related to this Agreement), including, the interpretation, performance or breach thereof, and including without limitation any claim based on contract, tort or statute, or the arbitrability of any claim hereunder (an “Arbitrable Claim”), shall be settled by final and binding arbitration conducted in Charlotte, North Carolina. Any Arbitrable Claims under this Agreement shall be resolved in accordance with a two-step dispute resolution process administered by Judicial Arbitration & Mediation Services, Inc. (“JAMS”) involving, first, mediation before a member of the JAMS panel, followed, if necessary, by final and binding arbitration before the same, or if requested by either party, another JAMS panelist. Such dispute resolution process shall be confidential, except as required for financial, tax, or legal advice; to enforce the terms of this Agreement; or to secure and/or enforce a judgment on any award.

          (b) Mediation. In the event any Arbitrable Claim is not resolved by an informal negotiation between the parties within fifteen (15) days after either party receives written notice that a Arbitrable Claim exists, the matter shall be referred to the Atlanta, Georgia office of JAMS, or any other office agreed to by the parties, for an informal, non-binding mediation consisting of one or more conferences between the parties in which JAMS panelist will seek to guide the parties to a resolution of the Arbitrable Claims. In the event the parties cannot agree on a mediator, the Administrator of JAMS will appoint a mediator. The mediation process shall continue until the earliest to occur of the following: (i) the Arbitrable Claims are resolved, (ii) the mediator makes a finding that there is no possibility of resolution through mediation, or (iii) thirty (30) days have elapsed since the Arbitrable Claim was first scheduled for mediation.

          (c) Arbitration. Should any Arbitrable Claims remain after the completion of the mediation process described above, the parties agree to submit all remaining Arbitrable

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Claims to final and binding arbitration administered by a single JAMS arbitrator in accordance with the then existing JAMS Comprehensive Arbitration Rules & Procedures. Neither party nor the arbitrator shall disclose the existence, content, or results of any arbitration hereunder without the prior written consent of all parties, except as required for financial, tax, or legal advice; to enforce the terms of this Agreement; or to secure and/or enforce a judgment on any arbitration award. Except as provided herein, the North Carolina Revised Uniform Arbitration Act shall govern the interpretation, enforcement and all proceedings pursuant to this subparagraph. The arbitrator is without jurisdiction to apply any substantive law other than the laws selected or otherwise expressly provided in this Agreement. The arbitrator shall render an award and a written, reasoned opinion in support thereof. Judgment upon the award may be entered in any court having jurisdiction thereof.

          (d) Survivability. This dispute resolution process shall survive the termination of this Agreement. The parties expressly acknowledge that by signing this Agreement, they are giving up their respective right to a jury trial.

     9.11 Severability. If any part of any provision of this Agreement shall be invalid or unenforceable in any respect, such part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining parts of such provision or the remaining provisions of this Agreement.

     9.12 Costs of Disputes. Except as otherwise expressly set forth in this Agreement, the nonprevailing party in any dispute arising hereunder shall bear and pay the costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) incurred by the prevailing party or parties in connection with resolving such dispute.

     9.13 Conflicts. The parties understand and agree that the obligations of the Partnership under this Agreement shall be in addition to its obligations under the Partnership Agreement, and to the extent of any inconsistency between this Agreement and the Partnership Agreement, the terms of this Agreement shall control; provided, that under no circumstances shall the terms or application of this Section 9.13 be deemed to be or result in an amendment to the Partnership Agreement.

Signatures on the Following Page

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     IN WITNESS WHEREOF, the REIT, the Partnership, the Protected Partner and the Indirect Owners have caused this Agreement to be signed by their respective officers (or general partners) thereunto duly authorized all as of the date first written above.

THE REIT:
CAMPUS CREST COMMUNITIES, INC.
By:
	, President
THE PARTNERSHIP:
CAMPUS CREST COMMUNITIES OPERATING PARTNERSHIP, L.P.
By: CAMPUS CREST COMMUNITIES, GP, LLC, its General Partner
By: CAMPUS CREST COMMUNITIES, INC., its sole Member
By:
	, President
THE PROTECTED PARTNER:
MXT CAPITAL, LLC
By:
its Managing Member
THE INDIRECT OWNERS:
TED W. ROLLINS
MICHAEL S. HARTNETT

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SCHEDULE 2.1

Protected Property /Protected Gain/Section 704(c) Value

Protected Property	Protected Gain		Section 704(c) Value
1. The Grove at Asheville	$	4,197,999	$	18,527,802
2. The Grove at Carrollton	$	5,425,982	$	22,020,904
3. The Grove at Las Cruces	$	3,217,165	$	18,749,767
4. The Grove at Mobile	$	6,849,240	$	22,656,643
5. The Grove at Mobile Phase II	$	4,785,512	$	23,703,453
6. The Grove at Nacogdoches	$	3,299,921	$	22,981,607
7. The Grove at Stephenville	$	3,319,759	$	19,552,547
8. The Grove at Troy	$	3,663,370	$	22,363,580
9. The Grove at Waco	$	3,581,293	$	20,786,696

SCHEDULE 3.1

MINIMUM LIABILITY AMOUNT

Fifty Six Million and No/100 ($56,000,000)

SCHEDULE 3.7

FORM OF GUARANTEE¹

GUARANTEE

     This Guarantee is made and entered into as of the ____ day of ___________ ____, by the persons listed on Exhibit A annexed hereto (the “Guarantors”) for the benefit of the Lender set forth on Exhibit B annexed hereto and made a part hereof (the “Lender”) which term shall include any person or entity who hereafter holds the Note (as defined below) in accordance with the terms hereof).

RECITALS

     WHEREAS, the Lender has loaned to the borrower set forth on Exhibit B (the “Borrower”) the amount set forth opposite such Lender’s name on Exhibit B, which loan (i) is evidenced by the promissory note described on Exhibit C hereto (the “Note”), (ii) has a current outstanding balance in the amount set forth on Exhibit B annexed hereto, and (ii) is secured by a mortgage or deed of trust on the collateral described on Exhibit D annexed hereto (the “Deed of Trust”), with the property and other assets securing such Deed of Trust referred to as the “Collateral”);

¹ This Form of the Guarantee is for Guaranteed Debt where the following conditions all are applicable:

(i)	there are no other guarantees in effect with respect to such Guaranteed Debt;
(ii)	the collateral securing such Guaranteed Debt is not collateral for any other indebtedness that is senior to or pari passu with such Guaranteed Debt;
(iii)	no additional guarantees with respect to such Guaranteed Debt will be entered into during the applicable Tax Protection Period pursuant to the proviso set forth in Section 3.5;
(iv)	the lender with respect to such Guaranteed Debt is not the Partnership, any Subsidiary or other entity in which the Partnership owns a direct or indirect interest, the REIT, any other partner in the Partnership, or any person related to any partner in the Partnership is determined for purposes of Treasury Regulation § 1.752-2; and
(v)	none of the REIT, nor any other partner in the Partnership, nor any person related to any partner in the Partnership as determined for purposes of Treasury Regulation § 1.752-2 shall have provided, or shall thereafter provide, collateral for, or otherwise shall have entered, or thereafter shall enter, into a relationship that would cause such person or entity to be considered to bear risk of loss with respect to such Guaranteed Debt, as determined for purposes of Treasury Regulation § 1.752-2.
(vi)	If, and to the extent that, one or more of these conditions is not applicable, appropriate changes to the attached Form of Guaranty will be required in order to cause the various conditions set forth in Article 3 of the Tax Protection Agreement to be satisfied.

     WHEREAS, the Borrower is either Campus Crest Communities Operating Partnership L.P., a Delaware limited partnership (the “Partnership”) or a Subsidiary of the Partnership in which the Partnership owns a [__%] or greater interest in the Subsidiary

     WHEREAS, the Guarantors are limited partners in the Partnership; and

     WHEREAS, the Guarantors are executing and delivering this Guarantee to guarantee a portion of the Borrower’s payments with respect to the Note, subject to and otherwise in accordance with the terms and conditions hereinafter set forth.

     NOW THEREFORE, in consideration of the foregoing recitals and facts and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, each of the Guarantors hereby agree as follows:

     1. Guarantee and Performance of Payment.

     (a) The Guarantors hereby irrevocably and unconditionally guarantee the collection by the Lender of, and hereby agree to pay to the Lender upon demand (following (1) foreclosure of the Deed of Trust, exercise of the powers of sale thereunder and/or acceptance by the Lender of a deed to the Collateral in lieu of foreclosure, and (2) the exhaustion of the exercise of any and all remedies available to the Lender against the Borrower, including, without limitation, realizing upon the assets of the Borrower other than the Collateral against which the Lender may have recourse), an amount equal to the excess, if any, of the Guaranteed Amount set forth on Exhibit B over the Lender Proceeds (as hereinafter defined) (which excess is referred to as the “Aggregate Guarantee Liability”). The amounts payable by each Guarantor in respect of the guarantee obligations hereunder shall be in the same proportion as the dollar amounts listed next to such Guarantor’s name on Exhibit A attached hereto bears to the total Guaranteed Amount set forth on Exhibit A, provided that, notwithstanding anything to the contrary contained in this Guarantee, each Guarantor’s aggregate obligation under this Guarantee shall be limited to the dollar amount set forth on Exhibit A attached hereto next to such Guarantor’s name. The Guarantors’ obligations as set forth in this paragraph 1(a) are hereinafter referred to as the “Guaranteed Obligations.”

     (b) For the purposes of this Guarantee, the term “Lender Proceeds” shall mean the aggregate of (i) the Foreclosure Proceeds (as hereinafter defined) plus (ii) all amounts collected by the Lender from the Borrower (other than payments of principal, interest or other amounts required to be paid by the Borrower to Lender under the terms of the Note that are paid by the Borrower to the Lender at a time when no default has occurred under the Note and is continuing) or realized by the Lender from the sale of assets of the Borrower other than the Collateral.

     (c) For the purposes of this Guarantee, the term “Foreclosure Proceeds” shall have the applicable meaning set forth below with respect to the Collateral:

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     1. If at least one bona fide third party unrelated to the Lender (and including, without limitation, any of the Guarantors) bids for such Collateral at a sale thereof, conducted upon foreclosure of the related Deed of Trust or exercise of the power of sale thereunder, Foreclosure Proceeds shall mean the highest amount bid for such Collateral by the party that acquires title thereto (directly or through a nominee) at or pursuant to such sale. For the proposes of determining such highest bid, amounts bid for the Collateral by the Lender shall be taken into account notwithstanding the fact that such bids may constitute credit bids which offset against the amount due to the Lender under the Note.

     2. If there is no such unrelated third-party at such sale of the Collateral so that the only bidder at such sale is the Lender or its designee, the Foreclosure Proceeds shall be deemed to be fair market value (the “Fair Market Value”) of the Collateral as of the date of the foreclosure sale, as such Fair Market Value shall be mutually agreed upon by the Lender and the Guarantor or determined pursuant to subparagraph 1(d).

     3. If the Lender receives and accepts a deed to the Collateral in lieu of foreclosure in partial satisfaction of the Borrower’s obligations under the Note, the Foreclosure Proceeds shall be deemed to be the Fair Market Value of such Collateral as of the date of delivery of the deed-in-lieu of foreclosure, as such Fair Market Value shall be mutually agreed upon by the Lender and the Guarantor or determined pursuant to subparagraph 1(d).

     (d) Fair Market Value of the Collateral (or any item thereof) shall be the price at which a willing seller not compelled to sell would sell such Collateral, and a willing buyer not compelled to buy would purchase such Collateral, free and clear of all mortgages but subject to all leases and reciprocal easements and operating agreements. If the Lender and the Guarantor are unable to agree upon the Fair Market Value of any Collateral in accordance with subparagraphs 1(c) 2. or 3. above, as applicable, within twenty (20) days after the date of the foreclosure sale or the delivery of the deed-in-lieu of foreclosure, as applicable, relating to such Collateral, either party may have the Fair Market Value of such Collateral determined by appraisal by appointing an appraiser having the qualifications set forth below to determine the same and by notifying the other party of such appointment within twenty (20) days after the expiration of such twenty (20) day period. If the other party shall fail to notify the first party, within twenty (20) days after its receipt of notice of the appointment by the first party, of the appointment by the other party of an appraiser having the qualifications set forth below, the appraiser appointed by the first party shall alone make the determination of such Fair Market Value. Appraisers appointed by the parties shall be members of the Appraisal Institute (MAI) and shall have at least ten years’ experience in the valuation of properties similar to the Collateral being valued in the greater metropolitan area in which such Collateral is located. If each party shall appoint an appraiser having the aforesaid qualifications and if such appraisers cannot, within thirty (30) days after the appointment of the second

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appraiser, agree upon the determination hereinabove required, then they shall select a third appraiser which third appraiser shall have the aforesaid qualifications, and if they fail so to do within forty (40) days after the appointment of the second appraiser they shall notify the parties hereto, and either party shall thereafter have the right, on notice to the other, to apply for the appointment of a third appraiser to the chapter of the American Arbitration Association or its successor organization located in the metropolitan area in which the Collateral is located or to which the Collateral is proximate or if no such chapter is located in such metropolitan area, in the metropolitan area closest to the Collateral in which such a chapter is located. Each appraiser shall render its decision as to the Fair Market Value of the Collateral in question within thirty (30) days after the appointment of the third appraiser and shall furnish a copy thereof to the Lender and the Guarantor. The Fair Market Value of the Collateral shall then be calculated as the average of (i) the Fair Market Value determined by the third appraiser and (ii) whichever of the Fair Market Values determined by the first two appraisers is closer to the Fair Market Value determined by the third appraiser; provided, however, that if the Fair Market Value determined by the third appraiser is higher or lower than both Fair Market Values determined by the first two appraisers, such Fair Market Value determined by the third appraiser shall be disregarded and the Fair Market Value of the Collateral shall then be calculated as the average of the Fair Market Value determined by the first two appraisers. The Fair Market Value of a Property, as so determined, shall be binding and conclusive upon the Lender and the Guarantors. Guarantors shall bear the cost of its own appraiser and, subject to subparagraph 1(e), shall bear all reasonable costs of appointing, and the expenses of, any other appraiser appointed pursuant to this subparagraph (1)(d).

     (e) Notwithstanding anything in the preceding subparagraphs of this paragraph 1, (i) in no event shall the aggregate amount required to be paid pursuant to this Guarantee by the Guarantors as a group with respect to all defaults under the Note and the Deed of Trust securing the obligations thereunder exceed the Guaranteed Amount set forth on Exhibit B hereto, and (ii) the aggregate obligation of each Guarantor hereunder with respect to the Guaranteed Obligation shall be limited to the lesser of (I) the product of (w) the Individual Guarantee Percentage for such Guarantor set forth on Exhibit A hereto multiplied by (x) the Guaranteed Amount, or (II) the product of (y) such Guarantor’s Individual Guarantee Percentage multiplied by (z) the Aggregate Guarantee Liability.

     (f) In confirmation of the foregoing, and without limitation, the Lender must first exhaust all of its rights and remedies against all property of the Borrower as to which the Lender has (or may have) a right of recourse, including, without limitation, the institution and prosecution to completion of appropriate foreclosure proceedings under the Deed of Trust, before exercising any right or remedy or making any claim, under this Guarantee.

     (g) The obligations under this Guarantee shall be personal to each Guarantor and shall not be affected by any transfer of all or any part of a Guarantor’s interests in the Partnership; provided, however, that if a Guarantor has disposed of all of its equity

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interests in the Partnership, the obligations of such Guarantor under this Guarantee shall terminate 12 months after the date of such disposition (the “Termination Date”) provided (i) the Guarantor notifies the Lender that it is terminating its obligations under this Guarantee as of the Termination Date and (ii) the fair market value of the Collateral exceeds the outstanding balance of the Note, including accrued and unpaid interest, as of the Termination Date. Further, no Guarantor shall have the right to recover from the Borrower any amounts such Guarantor pays pursuant to this Guarantee (except and only to the extent that the amount paid to the Lender by such Guarantor exceeds the amount required to be paid by such Guarantor under the terms of this Guarantee).

     (h) The obligations of any Guarantor who is an individual as a Guarantor hereunder shall terminate with respect to such Guarantor one week after the death of such Guarantor if, as a result of the death of such Guarantor, all property held by the Guarantor on the date of death would have a basis for federal income tax purposes equal to the fair market value of such property on such date (unless a later date were to be elected by the executor of the Guarantor’s estate in accordance with the applicable provisions of the Internal Revenue Code).

     2. Intent to Benefit Lender. This Guarantee is expressly for the benefit of the Lender. The Guarantors intend that the Lender shall have the right to enforce the obligations of the Guarantors hereunder separately and independently of the Borrower, subject to the provisions of paragraph 1 hereof, without any requirement whatsoever of resort by the Lender to any other party. The Lender’s rights to enforce the obligations of the Guarantors hereunder are material elements of this Guarantee. This Guarantee shall not be modified, amended or terminated (other than as specifically provided herein) without the written consent of the Lender. The Borrower shall furnish a copy of this Guarantee to the Lender contemporaneously with its execution.

     3. Waivers. Each Guarantor intends to bear the ultimate economic responsibility for the payment hereof of the Guaranteed Obligations to the extent set forth in Paragraph 1 above. Pursuant to such intent:

     (a) Except as expressly set forth in Paragraph 1 above, each Guarantor expressly waives any right (pursuant to any law, rule, arrangement or relationship) to compel the Lender, or any subsequent holder of the Note or any beneficiary of the Deed of Trust to sue or enforce payment thereof or pursue any other remedy in the power of the Borrower, the Lender or any subsequent holder of the Note or any beneficiary of the Deed of Trust whatsoever, and failure of the Borrower or the Lender or any subsequent holder of the Note or any beneficiary of the Deed of Trust to do so shall not exonerate, release or discharge a Guarantor from its absolute unconditional obligations under this Guarantee. Each Guarantor hereby binds and obligates itself, and its permitted successors and assignees, for performance of the Guaranteed Obligations according to the terms hereof, whether or not the Guaranteed Obligations or any portion thereof are valid now or hereafter enforceable against the Borrower or shall have been incurred in compliance with any of the conditions applicable thereto, subject, however, in all respects to the Guarantee Limit and the other limitations set forth in paragraph 1.

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     (b) Each Guarantor expressly waives any right (pursuant to any law, rule, arrangement, or relationship) to compel any other person (including, but not limited to, the Borrower, the Partnership, any subsidiary of the Partnership or the Borrower, or any other partner or affiliate of the Partnership or the Borrower) to reimburse or indemnify such Guarantor for all or any portion of amounts paid by such Guarantor pursuant to this Guarantee to the extent such amounts do not exceed the amounts required to be paid by such Guarantor pursuant to paragraph 1 hereof (taking into account the limitations set forth therein).

     (c) Except as expressly set forth in Paragraph 1 above, if and only to the extent that the Borrower has made similar waivers under the Note or the Deed of Trust, each Guarantor expressly waives: (i) the defense of the statute of limitations in any action hereunder or for the collection or performance of the Note or the Deed of Trust; (ii) any defense that may arise by reason o£ the incapacity, or lack of authority of the Borrower, the revocation or repudiation hereof by such Guarantor, the revocation or repudiation of the Note or the Deed of Trust by the Borrower, the failure of the Lender to file or enforce a claim against the estate (either in administration, bankruptcy or any other proceeding) of the Borrower; the unenforceability in whole or in part of the Note, the Deed of Trust or any other document or instrument related thereto; the Lender’s election, in any proceeding by or against the Borrower under the federal Bankruptcy Code, of the application of Section 1111(b)(2) of the federal Bankruptcy Code; or any borrowing or grant of a security interest under Section 364 of the federal Bankruptcy Code; (iii) presentment, demand for payment, protest, notice of discharge, notice of acceptance of this Guarantee or occurrence of, or any default in connection with, the Note or the Deed of Trust, and indulgences and notices of any other kind whatsoever, including, without limitation, notice of the disposition of any collateral for the Note; (iv) any defense based upon an election of remedies (including, if available, an election to proceed by non-judicial foreclosure) or other action or omission by the Lender or any other person or entity which destroys or otherwise impairs any indemnification, contribution or subrogation rights of such Guarantor or the right of such Guarantor, if any, to proceed against the Borrower for reimbursement, or any combination thereof; (v) subject to Paragraph 4 below, any defense based upon any taking, modification or release of any collateral or guarantees for the Note, or any failure to create or perfect any security interest in, or the taking of or failure to take any other action with respect to any collateral securing payment or performance of the Note; (vi) any rights or defenses based upon any right to offset or claimed offset by such Guarantor against any indebtedness or obligation now or hereafter owed to such Guarantor by the Borrower; or (vii) any rights or defenses based upon any rights or defenses of the Borrower to the Note or the Deed of Trust (including, without limitation, the failure or value of consideration, any statute of limitations, accord and satisfaction, and the insolvency of the Borrower); it being intended, except as expressly set forth in Paragraph 1 above, that such Guarantor shall remain liable hereunder, to the extent set forth herein, notwithstanding any act, omission or thing which might otherwise operate as a legal or equitable discharge of any of such Guarantor or of the Borrower.

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     4. Amendment of Note and Deed of Trust. Without in any manner limiting the generality of the foregoing, the Lender or any subsequent holder of the Note or beneficiary of the Deed of Trust may, from time to time, without notice to or consent of the Guarantors, agree to any amendment, waiver, modification or alteration of the Note or the Deed of Trust relating to the Borrower and its rights and obligations thereunder (including, without limitation, renewal, waiver or variation of the maturity of the indebtedness evidenced by the Note, increase or reduction of the rate of interest payable under the Note, release, substitution or addition of any Guarantor or endorser and acceptance or release of any security for the Note), it being understood and agreed by the Lender, however, that the Guarantor’s obligations hereunder are subject, in all events, to the limitations set forth in Paragraph 1;

provided that (i) in the event that the Lender consents to the release of any Collateral securing the Note pursuant to the Deed of Trust, the Guaranteed Amount shall be reduced by the Fair Market Value of such Collateral on the date of such release (determined as set forth in Section 1(d)); and (ii) upon any material change to the Note or the Deed of Trust, including, without limitation, the maturity date or the interest rate of the Note, or upon any release or substitution of any Collateral securing the Note, within thirty (30) days of any Guarantor’s receipt of actual notice of such event, subject to the following sentence, such Guarantor may elect to terminate such Guarantor’s obligations under this Guarantee by written notice to the Lender. Such termination shall take effect on the 31st day following such actual notice, provided that no default under the Guaranteed Obligation has occurred and is then continuing.

     5. Termination of Guarantee. Subject to Paragraph 4, this Guarantee is irrevocable as to any and all of the Guaranteed Obligations.

     6. Independent Obligations. Except as expressly set forth in Paragraph 1, the obligations of each Guarantor hereunder are independent of the obligations of the Borrower, and a separate action or actions may be brought by a Lender against the Guarantors, whether or not actions are brought against the Borrower. Each Guarantor expressly waives any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution or any other claim which such Guarantor may now or hereafter have against the Borrower, or any other person directly or contingently liable for the payment or performance of the Note and the Deed of Trust arising from the existence or performance of this Guarantee (including, but not limited to, the Partnership, Campus Crest Communities, Inc., or any other partner of the Partnership) (except and only to the extent that a Guarantor makes a payment to the Lender in excess of the amount required to be paid under paragraph 1 and the limitations set forth therein).

     7. Understanding With Respect to Waivers. Each Guarantor warrants and represents that each of the waivers set forth above are made with full knowledge of their significance and consequences, and that under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any of said waivers are determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the maximum extent permitted by law.

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     8. No Assignment. No Guarantor shall be entitled to assign his or her rights or obligations under this Guarantee to any other person without the written consent of the Lender.

     9. Entire Agreement. The parties agree that this Guarantee contains the entire understanding and agreement between them with respect to the subject matter hereof and cannot be amended, modified or superseded, except by an agreement in writing signed by the parties.

     10. Notices. Any notice given pursuant to this Guarantee shall be in writing and shall be deemed given when delivered personally, or sent by registered or certified mail, postage prepaid, as follows:

     If to the Partnership:

Campus Crest Communities Operating Partnership, L.P.
Campus Crest Communities, Inc.
2100 Rexford Road, Suite 414
Charlotte, NC 28211
Attention: Chief Financial Officer
Facsimile: (704) 937-0965

or to such other address with respect to which notice is subsequently provided in the manner set forth above; and

     If to a Guarantor, to the address set forth on Exhibit A hereto, or to such other address with respect to which notice is subsequently provided in the manner set forth above.

     11. Applicable Law. This Guarantee shall be governed by, interpreted under and construed in accordance with the laws of the State of Delaware without reference to its choice of law provisions.

     12. Consent to Jurisdiction: Enforceability

     (a) This Guarantee and the duties and obligations of the parties hereto shall be enforceable against each Guarantor in the courts of the State of Delaware. For such purpose, each Guarantor hereby irrevocably submits to the nonexclusive jurisdiction of such courts and agrees that all claims in respect of this Guarantee may be heard and determined in any of such courts.

     (b) Each Guarantor hereby irrevocably agrees that a final judgment of any of the courts specified above in any action or proceeding relating to this Guarantee shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

     13. Condition of Borrower. Each Guarantor is fully aware of the financial condition of the Borrower and is executing and delivering this Guarantee based solely upon its own

8

independent investigation of all matters pertinent hereto and is not relying in any manner upon any representation or statement of the Lender or the Borrower. Each Guarantor represents and warrants that it is in a position to obtain, and hereby assumes full responsibility for obtaining, any additional information concerning the Borrower’s financial conditions and any other matter pertinent hereto as it may desire, and it is not relying upon or expecting the Lender to furnish to it any information now or hereafter in the Lender’s possession concerning the same. By executing this Guarantee, each Guarantor knowingly accepts the full range of risks encompassed within a contract of this type, which risks it acknowledges.

     14. Expenses. Each Guarantor agrees that, promptly after receiving Lender’s notice therefor, such Guarantor shall reimburse Lender, subject to the limitation set forth in subparagraph 1(e) and to the extent that such reimbursement is not made by Borrower, for all reasonable expenses (including, without limitation, reasonable attorneys fees and disbursements) incurred by Lender in connection with the collection of the Guaranteed Obligations or any portion thereof or with the enforcement of this Guarantee.

     IN WITNESS WHEREOF, the undersigned Guarantors set forth on Exhibit A hereto have executed this Guarantee as of the date first set forth above.

GUARANTORS SET FORTH ON EXHIBIT A HERETO:

By:

By:

By:

By:

By:

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Exhibit A to Guarantee

	Guaranteed
Name and Address of Partner Guarantors	Amount
Guarantors, as a group	$
Individual Guarantors:		Individual
		Guarantee
		Percentage

10

Exhibit B to Guarantee

		Date of and	Debt Balance as
	Name of	Principal Amount	of	Guaranteed
Name of Lender	Borrower	of Loan	__/ __/______	Amount

11

Exhibit C to Guarantee
Summary of Principal Terms of Note [or attach copy of Note]

12

Exhibit D to Guarantee
Identification of Deed of Trust and
Brief Summary Description of Collateral

13

SCHEDULE 5

Property Subject to Traditional Allocation Method
Under Treasury Regulations Section 1.704-3(b)

Property

1. The Grove at Asheville

2. The Grove at Carrollton

3. The Grove at Cheney

4. The Grove at Ellensburg

5. The Grove at Jonesboro

6. The Grove at Las Cruces

7. The Grove at Lubbock

8. The Grove at Mobile

9. The Grove at Mobile Phase II

10. The Grove at Murfreesboro

11. The Grove at Nacogdoches

12. The Grove at Stephenville

13. The Grove at Troy

14. The Grove at Waco

15. The Grove at Wichita

16. The Grove at Wichita Falls

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EX-10.18

Exhibit 10.18

$125,000,000

CREDIT AGREEMENT

Dated as of [_________], 2010

among

CAMPUS CREST COMMUNITIES OPERATING PARTNERSHIP, LP,

as Borrower,

CAMPUS CREST COMMUNITIES, INC.,

as Parent Guarantor,

THE GUARANTORS NAMED HEREIN,

as Guarantors,

THE INITIAL LENDERS, INITIAL ISSUING BANK AND
SWING LINE BANK NAMED HEREIN,

as Initial Lenders, Initial Issuing Bank and Swing Line Bank, and

CITIBANK, N.A.,

as Administrative Agent and as Collateral Agent.

RAYMOND JAMES BANK FSB

Syndication Agent

RBC CAPITAL MARKETS BARCLAYS CAPITAL INC. GOLDMAN SACHS BANK USA

Co-Documentation Agents

CITIGROUP GLOBAL MARKETS INC.           RAYMOND JAMES BANK FSB

Joint Lead Arrangers and Joint Book Running Managers

T A B L E  OF  C O N T E N T S

Section	Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms		1
SECTION 1.02. Computation of Time Periods; Other Definitional Provisions		34
SECTION 1.03. Accounting Terms		34
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances and the Letters of Credit		34
SECTION 2.02. Making the Advances		36
SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit		38
SECTION 2.04. Repayment of Advances		41
SECTION 2.05. Termination or Reduction of the Commitments		42
SECTION 2.06. Prepayments		43
SECTION 2.07. Interest		44
SECTION 2.08. Fees		45
SECTION 2.09. Conversion of Advances		46
SECTION 2.10. Increased Costs, Etc.		47
SECTION 2.11. Payments and Computations		48
SECTION 2.12. Taxes		51
SECTION 2.13. Sharing of Payments, Etc.		54
SECTION 2.14. Use of Proceeds		54
SECTION 2.15. Evidence of Debt		55
SECTION 2.16. Extension of Termination Date		55
SECTION 2.17. Increase in the Aggregate Commitments		56
ARTICLE III
CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF CREDIT
SECTION 3.01. Conditions Precedent to the Effectiveness of this Agreement		58
SECTION 3.02. Conditions Precedent to Each Borrowing, Issuance, Renewal, Extension and Increase		66
SECTION 3.03. Determinations Under Section 3.01 and 3.02		67
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Loan Parties		67

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Section	Page
ARTICLE V
COVENANTS OF THE LOAN PARTIES
SECTION 5.01. Affirmative Covenants		79
SECTION 5.02. Negative Covenants		85
SECTION 5.03. Reporting Requirements		95
SECTION 5.04. Financial Covenants		99
SECTION 5.05. Ground Lease Covenants		101
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default		103
SECTION 6.02. Actions in Respect of the Letters of Credit upon Default		106
ARTICLE VII
GUARANTY
SECTION 7.01. Guaranty; Limitation of Liability		106
SECTION 7.02. Guaranty Absolute		107
SECTION 7.03. Waivers and Acknowledgments		108
SECTION 7.04. Subrogation		109
SECTION 7.05. Guaranty Supplements		110
SECTION 7.06. Indemnification by Guarantors		110
SECTION 7.07. Subordination		110
SECTION 7.08. Continuing Guaranty		111
ARTICLE VIII
THE AGENTS
SECTION 8.01. Authorization and Action; Appointment of Supplemental Collateral Agents		112
SECTION 8.02. Agents’ Reliance, Etc.		113
SECTION 8.03. Citibank and Affiliates		113
SECTION 8.04. Lender Party Credit Decision		114
SECTION 8.05. Indemnification by Lender Parties		114
SECTION 8.06. Successor Agents		115
SECTION 8.07. Relationship of Agents and Lenders		116
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc.		116
SECTION 9.02. Notices, Etc.		117
SECTION 9.03. No Waiver; Remedies		120
SECTION 9.04. Costs and Expenses		120
SECTION 9.05. Right of Set-off		121
SECTION 9.06. Binding Effect		122
SECTION 9.07. Assignments and Participations; Replacement Notes		122

ii

Section	Page
SECTION 9.08. Execution in Counterparts		126
SECTION 9.09. No Liability of the Issuing Banks		126
SECTION 9.10. Confidentiality		126
SECTION 9.11. Release of Collateral		129
SECTION 9.12. Patriot Act Notification		130
SECTION 9.13. Jurisdiction, Etc.		130
SECTION 9.14. Governing Law		130
SECTION 9.15. WAIVER OF JURY TRIAL		130

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SCHEDULES
Schedule I		Commitments and Applicable Lending Offices
Schedule II	–	Borrowing Base Assets
Schedule III	–	Excluded Recourse Properties
Schedule IV	–	Ground Leases
Schedule 4.01(b)	–	Subsidiaries
Schedule 4.01(f)	–	Material Litigation
Schedule 4.01(n)	–	Existing Debt
Schedule 4.01(o)	–	Surviving Debt
Schedule 4.01(p)	–	Existing Liens
Schedule 4.01(q)
Part I	–	Real Property
Part II	–	Management Agreements
Schedule 4.01(r)	–	Environmental Concerns
Part I	–	Non-compliance with Law
Part II	–	Storage Tanks, Asbestos, etc.
Part III	–	Remedial Action, etc.
Part IV	–	Site Assessments, etc.
Schedule 4.01(x)	–	Plans and Welfare Plans
EXHIBITS
Exhibit A	–	Form of Note
Exhibit B	–	Form of Notice of Borrowing
Exhibit C	–	Form of Guaranty Supplement
Exhibit D	–	Form of Assignment and Acceptance
Exhibit E-1	–	Form of Opinion of Greenberg Traurig LLP
Exhibit E-2	–	Form of Opinion of Bradley Arant Boult Cummings LLP
Exhibit E-3	–	Form of Opinion of Saul Ewing LLP
Exhibit E-4	–	Form of Opinion of Local Counsel for the Loan Parties
Exhibit F	–	Form of Security Agreement
Exhibit G	–	Form of Mortgage
Exhibit H	–	Form of Assignment of Leases
Exhibit I	–	Form of Borrowing Base Certificate
Exhibit J	–	Form of Hazardous Indemnity Agreement
Exhibit K	–	Form of Manager's Subordination
Exhibit L	–	Form of Pledge Agreement

iv

CREDIT AGREEMENT

          CREDIT AGREEMENT dated as of [_____________], 2010 (this “Agreement”) among Campus Crest Communities Operating Partnership, LP, a Delaware limited partnership (the “Borrower”), Campus Crest Communities, Inc., a Maryland corporation (the “Parent Guarantor”), the entities listed on the signature pages hereof as the subsidiary guarantors (together with any Additional Guarantors (as hereinafter defined) acceding hereto pursuant to Section 5.01(j) or 7.05, the “Subsidiary Guarantors” and, together with the Parent Guarantor, the “Guarantors”), the banks, financial institutions and other institutional lenders listed on the signature pages hereof as the initial lenders (the “Initial Lenders”), the Swing Line Bank (as hereinafter defined), CITIBANK, N.A. (“Citibank”), as the initial issuer of Letters of Credit (as hereinafter defined) (the “Initial Issuing Bank”), CITIBANK, as administrative agent (together with any successor administrative agent appointed pursuant to Article VIII, the “Administrative Agent”) for the Lender Parties (as hereinafter defined), and CITIBANK, as collateral agent (together with any successor collateral agent appointed pursuant to Article VIII, the “Collateral Agent”, and together with the Administrative Agent, the “Agents”) for the Secured Parties (as hereinafter defined).

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

          SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

     “Acceding Lender” has the meaning specified in Section 2.17(d).

     “Accession Agreement” has the meaning specified in Section 2.17(d)(i).

     “Additional Guarantor” has the meaning specified in Section 7.05.

     “Adjusted EBITDA” means (a) EBITDA for the consecutive four fiscal quarters of the Parent Guarantor most recently ended for which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be, less (b) the Capital Expenditure Reserve for all Assets for such four fiscal quarters, provided that calculations which pertain to the fiscal quarters of the Parent Guarantor ending on or prior to September 30, 2010 shall be made on a pro forma basis, including to give effect to the IPO and the Formation Transactions.

     “Adjusted Net Operating Income” means, with respect to any Borrowing Base Asset, (a) the Net Operating Income attributable to such Borrowing Base Asset less (b) the Capital Expenditure Reserve for such Borrowing Base Asset, less (c) the Management Fee Adjustment for such Borrowing Base Asset, in each case for the consecutive four fiscal quarters most recently ended for which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be.

     “Administrative Agent” has the meaning specified in the recital of parties to this Agreement.

     “Administrative Agent’s Account” means the account of the Administrative Agent maintained by the Administrative Agent with Citibank, N.A., at its office at 1615 Brett Road, New Castle, Delaware 19720, ABA No. 021000089, Account No. 36852248, Account Name: Agency/Medium Term Finance, Reference: Campus Crest Revolving Credit Facility, Attention: Global Loans/Agency, or such other account as the Administrative Agent shall specify in writing to the Lender Parties.

     “Advance” means a Revolving Credit Advance, a Swing Line Advance or a Letter of Credit Advance.

     “Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) of a Person means the possession, direct or indirect, of the power to vote 15% or more of the Voting Interests of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Interests, by contract or otherwise.

     “Affiliate Ground Lease” means a Ground Lease with respect to which the ground lessor and ground lessee are Loan Parties.

     “Agents” has the meaning specified in the recital of parties to this Agreement.

     “Agreement” has the meaning specified in the recital of parties to this Agreement.

     “Agreement Value” means, for each Hedge Agreement, on any date of determination, an amount determined by the Administrative Agent equal to: (a) in the case of a Hedge Agreement documented pursuant to the Master Agreement (Multicurrency-Cross Border) published by the International Swap and Derivatives Association, Inc. (the “Master Agreement”), the amount, if any, that would be payable by any Loan Party or any of its Subsidiaries to its counterparty to such Hedge Agreement, as if (i) such Hedge Agreement was being terminated early on such date of determination, (ii) such Loan Party or Subsidiary was the sole “Affected Party”, and (iii) the Administrative Agent was the sole party determining such payment amount (with the Administrative Agent making such determination pursuant to the provisions of the form of Master Agreement); or (b) in the case of a Hedge Agreement traded on an exchange, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party or Subsidiary of a Loan Party to such Hedge Agreement determined by the Administrative Agent based on the settlement price of such Hedge Agreement on such date of determination; or (c) in all other cases, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party or Subsidiary of a Loan Party to such Hedge Agreement determined by the Administrative Agent as the amount, if any, by which (i) the present

2

value of the future cash flows to be paid by such Loan Party or Subsidiary exceeds (ii) the present value of the future cash flows to be received by such Loan Party or Subsidiary pursuant to such Hedge Agreement; capitalized terms used and not otherwise defined in this definition shall have the respective meanings set forth in the above described Master Agreement.

     “Applicable Lending Office” means, with respect to each Lender Party, such Lender Party’s Domestic Lending Office in the case of a Base Rate Advance and such Lender Party’s Eurodollar Lending Office in the case of a Eurodollar Rate Advance.

     “Applicable Margin” means, at any date of determination, a percentage per annum determined by reference to the Leverage Ratio as set forth below:

		Applicable Margin	Applicable Margin
Pricing		for Base Rate	for Eurodollar
Level	Leverage Ratio	Advances	Rate Advances
I	> 55%	2.50%	3.50%
II	> 50% but < 55%	2.25%	3.25%
III	> 45% but < 50%	2.00%	3.00%
IV	< 45%	1.75%	2.75%

The Applicable Margin for each Base Rate Advance shall be determined by reference to the Leverage Ratio in effect from time to time, and the Applicable Margin for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing shall be determined by reference to the Leverage Ratio in effect on the first day of such Interest Period; provided, however, that (a) the Applicable Margin shall initially be at Pricing Level [__] on the Closing Date, (b) no change in the Applicable Margin resulting from the Leverage Ratio shall be effective until three Business Days after the date on which the Administrative Agent receives (i) the financial statements required to be delivered pursuant to Section 5.03(b) or (c), as the case may be, and (ii) a certificate of the Chief Financial Officer (or other Responsible Officer performing similar functions) of the Borrower demonstrating the Leverage Ratio, and (c) the Applicable Margin shall be at Pricing Level I for so long as the Borrower has not submitted to the Administrative Agent as and when required under Section 5.03(b) or (c), as applicable, the information described in clause (b) of this proviso.

     “Appraisal” means an appraisal complying with the requirements of the Federal Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended from time to time, commissioned by and prepared for the account of the Administrative Agent (for the benefit of the Lenders) by a MAI appraiser selected by the Administrative Agent in consultation with the Borrower, and otherwise in scope, form and substance satisfactory to the Collateral Agent.

     “Appraised Value” means, as of any date of determination with respect to any Borrowing Base Asset, the appraised value of such Borrowing Base Asset on an “as-is”

3

basis, in each case as set forth in the most recent Appraisal of such Borrowing Base Asset delivered to the Administrative Agent on or before such date of determination.

     “Approved Electronic Communications” means each Communication that any Loan Party is obligated to, or otherwise chooses to, provide to the Administrative Agent pursuant to any Loan Document or the transactions contemplated therein, including any financial statement, financial and other report, notice, request, certificate and other information materials required to be delivered pursuant to Sections 5.03(b), (c), (e), (g), and (k); provided, however, that solely with respect to delivery of any such Communication by any Loan Party to the Administrative Agent and without limiting or otherwise affecting either the Administrative Agent’s right to effect delivery of such Communication by posting such Communication to the Approved Electronic Platform or the protections afforded hereby to the Administrative Agent in connection with any such posting, “Approved Electronic Communication” shall exclude (i) any notice of borrowing, letter of credit request, swing loan request, notice of conversion or continuation, and any other notice, demand, communication, information, document and other material relating to a request for a new, or a conversion of an existing, Borrowing, (ii) any notice pursuant to Section 2.06(a) and any other notice relating to the payment of any principal or other amount due under any Loan Document prior to the scheduled date therefor, (iii) all notices of any Default or Event of Default and (iv) any notice, demand, communication, information, document and other material required to be delivered to satisfy any of the conditions set forth in Article III or any other condition to any Borrowing or other extension of credit hereunder or any condition precedent to the effectiveness of this Agreement.

     “Approved Electronic Platform” has the meaning specified in Section 9.02(c).

     “Approved Manager” means with respect to any Campus Housing Asset (i) an affiliate of the Parent Guarantor, or (ii) a nationally recognized campus housing manager (a) with (or controlled by a Person or Persons with) at least ten years of experience in the campus housing management industry, (b) that is engaged pursuant to a written management agreement in form and substance reasonably satisfactory to the Administrative Agent and (c) that has entered into a subordination agreement in form and substance reasonably satisfactory to the Administrative Agent. The Administrative Agent confirms that as of the Closing Date the existing manager of the Campus Housing Assets shown on Part III of Schedule 4.01(q) hereto is satisfactory to the Administrative Agent. For purposes of this definition, the term “control” (including the term “controlled by”) of a Person means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Interests, by contract or otherwise.

     “Arrangers” means, collectively, CGMI and Raymond James Bank FSB, each as joint lead arranger and joint book running manager.

     “Assets” means Campus Housing Assets, Development Assets and Joint Venture Assets.

4

     “Asset Value” means, at any date of determination, (a) in the case of any Campus Housing Asset where the related certificate of occupancy was issued twelve or more months prior to such date of determination, (i) the Net Operating Income attributable to such Asset less the Management Fee Adjustment for such Asset, in each case for the consecutive four fiscal quarters most recently ended for which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be divided by (ii) 8.25%, (b) in the case of any Development Asset and any Campus Housing Asset where the related certificate of occupancy was issued less than twelve months prior to such date of determination, the book value of such Development Asset or such Campus Housing Asset as determined in accordance with GAAP (but excluding any deduction for accumulated depreciation on such Assets), (c) in the case of any Joint Venture Asset that, but for such Asset being owned by a Joint Venture, would qualify as a Campus Housing Asset under the definition thereof where the related certificate of occupancy was issued twelve or more months prior to such date of determination, the JV Pro Rata Share of (i) the Net Operating Income attributable to such Asset less the Management Fee Adjustment for such Asset, in each case for the consecutive four fiscal quarters most recently ended for which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be divided by (ii) 8.25% and (d) in the case of any other Joint Venture Asset, the JV Pro Rata Share of the book value of such Joint Venture Asset as determined in accordance with GAAP (but excluding any deduction for accumulated depreciation on such Assets).

     “Assignment and Acceptance” means an assignment and acceptance entered into by a Lender Party and an Eligible Assignee, and accepted by the Administrative Agent, in accordance with Section 9.07 and in substantially the form of Exhibit D hereto.

     “Assignments of Leases” has the meaning specified in Section 3.01(a)(iii).

     “Available Amount” of any Letter of Credit means, at any time, the maximum amount available to be drawn under such Letter of Credit at such time (assuming compliance at such time with all conditions to drawing).

     “Bankruptcy Law” means any applicable law governing a proceeding of the type referred to in Section 6.01(f) or Title 11, U.S. Code, or any similar foreign, federal or state law for the relief of debtors.

     “Base Rate” means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of (a) the rate of interest announced publicly by Citibank, N.A. in New York, New York, from time to time, as Citibank, N.A.’s base rate, (b) ¹/2 of 1% per annum above the Federal Funds Rate and (c) the one-month Eurodollar Rate plus 1% per annum.

     “Base Rate Advance” means an Advance that bears interest as provided in Section 2.07(a)(i).

5

     “BBA Proposal Package” means, with respect to any Proposed Borrowing Base Asset, the following items, each in form and substance satisfactory to the Administrative Agent and in sufficient copies for each Lender:

     (a) a description of such Asset in detail satisfactory to the Administrative Agent,

     (b) a projected cash flow analysis of such Asset prepared in a form reasonably acceptable to the Administrative Agent,

     (c) a statement of operating expenses for such Asset for the immediately preceding 36 consecutive calendar months (or, if not in operation for 36 consecutive calendar months, the total period of operations),

     (d) an operating expense and capital expenditures budget for such Asset for the next succeeding 12 consecutive months,

     (e) a current rent roll, and

     (f) if such Asset is then the subject of an acquisition transaction, a copy of the purchase agreement with respect thereto and a schedule of the proposed sources and uses of funds for such transaction.

     “Borrower” has the meaning specified in the recital of parties to this Agreement.

     “Borrower’s Account” means the account of the Borrower maintained by the Borrower with [_____________] at its office at [_____________], ABA No. [_____________], Account No. [_____________] or such other account as the Borrower shall specify in writing to the Administrative Agent.

     “Borrowing” means a borrowing consisting of simultaneous Revolving Credit Advances of the same Type made by the Lenders or a Swing Line Borrowing.

     “Borrowing Base Assets” means (a) those Campus Housing Assets for which the applicable conditions (as may be determined by the Administrative Agent in its sole discretion) in Section 3.01 and, if applicable, Section 5.01(k) have been satisfied and as the Administrative Agent and the Required Lenders, in their sole discretion, shall have elected to treat as Borrowing Base Assets for purposes of this Agreement, and (b) the Campus Housing Assets listed on Schedule II hereto on the Closing Date.

     “Borrowing Base Certificate” means a certificate in substantially the form of Exhibit I hereto, duly certified by the Chief Financial Officer (or other Responsible Officer performing similar functions) of the Parent Guarantor.

     “Borrowing Base Conditions” means, with respect to any Proposed Borrowing Base Asset, that such Proposed Borrowing Base Asset

6

     (a) is a Campus Housing Asset located in one of the 48 contiguous states of the United States of America or the District of Columbia that has been in operation for at least one year;

     (b) is wholly-owned directly or indirectly by the Borrower either in fee simple absolute or subject to a Qualifying Ground Lease;

     (c) is fully operating and not under significant development or redevelopment;

     (d) is free of all material structural defects or architectural deficiencies, title defects, environmental or other material matters (including a casualty event or condemnation) that could reasonably be expected to have a material adverse effect on the value, use or ability to sell or refinance such Asset;

     (e) is operated by an Approved Manager or any other property manager approved by the Administrative Agent;

     (f) is not subject to mezzanine Debt financing;

     (g) is not, and no interest of the Borrower or any of its Subsidiaries therein is, subject to any Lien (other than Permitted Liens) or any Negative Pledge; and

     (h) is 100% owned by a Loan Party that is a single-purpose Subsidiary of the Borrower and (1) none of the Borrower’s or the Parent Guarantor’s direct or indirect Equity Interests in such Subsidiary is subject to any Lien (other than Permitted Liens) or any Negative Pledge and (2)(x) on or prior to the date such Asset is added to the Collateral, such Subsidiary shall have become a Guarantor hereunder, and (y) the Borrower directly, or indirectly through a Subsidiary, has the right to take the following actions without the need to obtain the consent of any Person: (i) to create Liens on such Asset and on the Equity Interests in such Subsidiary as security for Debt of the Borrower or such Subsidiary, as applicable, and (ii) to sell, transfer or otherwise dispose of such Asset.

     “Borrowing Base Debt Service Coverage Ratio” means, at any date of determination, the ratio of (a) the aggregate Adjusted Net Operating Income for all Borrowing Base Assets to (b) the payments that would be required to be made over a twelve month period on an assumed Debt in an aggregate principal amount equal to the Facility Exposure at such date, assuming a thirty year amortization schedule, level payments of interest and applying an interest rate equal to the greater of (i) 7.50% per annum and (ii) the rate per annum at such date for 10-year United States Treasury Securities plus the Applicable Margin in respect of Eurodollar Rate Advances.

     “Borrowing Base Value” means, with respect to any Borrowing Base Asset, an amount equal to 60% of the Appraised Value of such Borrowing Base Asset.

     “Business Day” means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable Business Day relates

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to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market.

     “Campus Housing Asset” means Real Property that operates or is intended to be operated as student housing, but excluding any Joint Venture Asset.

     “Capital Expenditure Reserve” means, with respect to any Campus Housing Asset at any date of determination, $125 times the number of beds comprising such Asset.

     “Capitalized Leases” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

     “Cash” means coin or currency of the United States of America or immediately available federal funds, including such funds delivered by wire transfer.

     “Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Administrative Agent and the Issuing Bank (as applicable), as collateral for the Available Amount of any Letter of Credit, cash or deposit account balances or, if the Issuing Bank benefitting from such collateral shall agree in its sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to (a) the Administrative Agent and (b) the Issuing Bank. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

     “Cash Equivalents” means any of the following, to the extent owned by the applicable Loan Party or any of its Subsidiaries free and clear of all Liens (other than Liens created under the Collateral Documents) and having a maturity of not greater than 90 days from the date of issuance thereof: (a) readily marketable direct obligations of the Government of the United States or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the Government of the United States, (b) certificates of deposit of or time deposits with any commercial bank that is a Lender Party or a member of the Federal Reserve System, issues (or the parent of which issues) commercial paper rated as described in clause (c) below, is organized under the laws of the United States or any State thereof and has combined capital and surplus of at least $1,000,000,000 or (c) commercial paper in an aggregate amount of not more than $50,000,000 per issuer outstanding at any time, issued by any corporation organized under the laws of any State of the United States and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or “A-1” (or the then equivalent grade) by S&P.

     “CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time.

     “CERCLIS” means the Comprehensive Environmental Response, Compensation and Liability Information System maintained by the U.S. Environmental Protection Agency.

     “CGMI” means Citigroup Global Markets Inc.

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     “Change of Control” means the occurrence of any of the following (after giving effect to the consummation of the IPO and the Formation Transactions):

     (a) any Person or two or more Persons acting in concert shall have acquired and shall continue to have following the date hereof beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Interests of the Parent Guarantor (or other securities convertible into such Voting Interests) representing 35% or more of the combined voting power of all Voting Interests of the Parent Guarantor; or

     (b) there is a change in the composition of the Parent Guarantor’s Board of Directors over a period of 24 consecutive months (or less) such that a majority of Board members (rounded up to the nearest whole number) ceases, by reason of one or more proxy contests for the election of Board members, to be comprised of individuals who either (i) have been Board members continuously since the beginning of such period or (ii) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (i) who were still in office at the time such election or nomination was approved by the Board; or

     (c) any Person or two or more Persons acting in concert shall have acquired and shall continue to have following the date hereof, by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation will result in its or their acquisition of the power to direct, directly or indirectly, the management or policies of the Parent Guarantor; or

     (d) the Parent Guarantor ceases to be (i) the indirect legal and beneficial owner of all of the general partnership interests in the Borrower, (ii) the direct legal and beneficial owner of all of the membership interests in Campus Crest Communities GP, LLC or (iii) the direct or indirect legal and beneficial owner of not less than 75% of the limited partnership interests in the Borrower; or

     (e) Campus Crest Communities GP, LLC ceases to be the general partner of the Borrower; or

     (f) the Parent Guarantor or Campus Crest Communities GP, LLC shall create, incur, assume or suffer to exist any Lien on the Equity Interests in Campus Crest Communities GP, LLC or the Borrower owned by it; or

     (g) the Borrower ceases to be the direct or indirect legal and beneficial owner of all of the Equity Interests in each direct and indirect Subsidiary that owns or leases a Borrowing Base Asset.

     “Citibank” has the meaning specified in the recital of the parties to this Agreement.

     “Closing Date” means [_________] or such other date as may be agreed upon by the Borrower and the Administrative Agent.

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     “Collateral” means all “Collateral” and all “Mortgaged Property” referred to in the Collateral Documents and all other property that is or is intended to be subject to any Lien in favor of the Collateral Agent for the benefit of the Secured Parties and includes, without limitation, all Borrowing Base Assets.

     “Collateral Agent” has the meaning specified in the recital of parties to this Agreement.

     “Collateral Documents” means the Security Agreement, the Pledge Agreement, the Mortgages, the Assignments of Leases and any other agreement entered into by a Loan Party that creates or purports to create a Lien in favor of the Collateral Agent for the benefit of the Secured Parties.

     “Collateral Deliverables” means, with respect to any Proposed Borrowing Base Asset, the following items, each in form and substance satisfactory to the Administrative Agent (unless otherwise specified) and in sufficient copies for each Lender:

     (i) A certificate of the Chief Financial Officer (or other Responsible Officer) of the Borrower, dated the date of the addition of such Proposed Borrowing Base Asset to the Collateral as a Borrowing Base Asset, confirming that (A) the Proposed Borrowing Base Asset satisfies all Borrowing Base Conditions, (B) no Default or Event of Default has occurred or is continuing, and the addition of such Proposed Borrowing Base Asset as a Borrowing Base Asset shall not cause or result in a Default or Event of Default, (C) the representations and warranties contained in the Loan Documents are true and correct in all material respects (or, if qualified as to materiality, in all respects) on and as of such date (except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date), and (D) the Loan Parties are in compliance with the covenants contained in Section 5.04 (both immediately before and on a pro forma basis immediately after the addition of such Proposed Borrowing Base Property as a Borrowing Base Asset), together with supporting information demonstrating such compliance;

     (ii) A Borrowing Base Certificate demonstrating that the Total Borrowing Base Value (calculated on a pro forma basis after giving effect to the addition of such Proposed Borrowing Base Asset to the Collateral as a Borrowing Base Asset and to any Advances made at the time thereof) will be greater than or equal to the Facility Exposure;

     (iii) each of the items set forth in Sections 3.01(a)(ii), (iii), (v), (vi), (vii), (viii), (ix), (xi), (xiii), (xv) and, to the extent applicable, 5.01(j), mutatis mutandis, in each case in respect of such Proposed Borrowing Base Asset or the Loan Party or proposed Loan Party which owns such Proposed Borrowing Base Asset;

     (iv) An Appraisal of such Proposed Borrowing Base Asset;

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     (v) Reports supplementing Schedules II, 4.01(b), 4.01(q) and 4.01(r) hereto, including descriptions of such changes in the information included in such Schedules as may be necessary for such Schedules to be accurate and complete, certified as correct and complete by a Responsible Officer of the Borrower, provided that for purposes of the definition of the term Borrowing Base Assets, the supplement to Schedule II shall become effective only upon (A) delivery of all Collateral Deliverables and approval thereof by the Administrative Agent, and (B) approval of the Proposed Borrowing Base Asset as a Borrowing Base Asset pursuant to the definition of “Borrowing Base Assets”; and

     (vi) Such other approvals, opinions or documents as any Lender Party through the Administrative Agent may reasonably request.

     “Commitment” means a Revolving Credit Commitment, a Swing Line Commitment or a Letter of Credit Commitment.

     “Commitment Date” has the meaning specified in Section 2.17(b).

     “Commitment Increase” has the meaning specified in Section 2.17(a).

     “Communications” means each notice, demand, communication, information, document and other material provided for hereunder or under any other Loan Document or otherwise transmitted between the parties hereto relating to this Agreement, the other Loan Documents, any Loan Party or its Affiliates, or the transactions contemplated by this Agreement or the other Loan Documents including, without limitation, all Approved Electronic Communications.

     “Conditional Approval Notice” has the meaning specified in Section 5.01(k).

     “Consolidated” refers to the consolidation of accounts in accordance with GAAP.

     “Contingent Obligation” means, with respect to any Person, any Obligation or arrangement of such Person to guarantee or intended to guarantee any Debt, leases, dividends or other payment Obligations (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, (a) the direct or indirect guarantee, endorsement (other than for collection or deposit in the ordinary course of business), co making, discounting with recourse or sale with recourse by such Person of the Obligation of a primary obligor, (b) the Obligation to make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement or (c) any Obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, assets, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof. The

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amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder), as determined by such Person in good faith.

     “Conversion”, “Convert” and “Converted” each refer to a conversion of Advances of one Type into Advances of the other Type pursuant to Section 2.07(d), 2.09 or 2.10.

     “Current Party” has the meaning specified in Section 9.07(k).

     “Customary Carve-Out Agreement” has the meaning specified in the definition of Non-Recourse Debt.

     “Debt” of any Person means, without duplication for purposes of calculating financial ratios, (a) all Debt for Borrowed Money of such Person, (b) all Obligations of such Person for the deferred purchase price of property or services other than trade payables incurred in the ordinary course of business and not overdue by more than 60 days, (c) all Obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all Obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Obligations of such Person as lessee under Capitalized Leases, (f) all Obligations of such Person under acceptance, letter of credit or similar facilities, (g) all Obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interests in such Person or any other Person (other than Preferred Interests that are issued by any Loan Party or Subsidiary thereof and classified as either equity or minority interests pursuant to GAAP) or any warrants, rights or options to acquire such Equity Interests, (h) all Obligations of such Person in respect of Hedge Agreements, valued at the Agreement Value thereof, (i) all Contingent Obligations of such Person and (j) all indebtedness and other payment Obligations referred to in clauses (a) through (i) above of another Person secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness or other payment Obligations; provided, however, that in the case of the Parent Guarantor and its Subsidiaries, “Debt” shall also include, without duplication, the JV Pro Rata Share of Debt for each Joint Venture.

     “Debt for Borrowed Money” of any Person means all items that, in accordance with GAAP, would be classified as indebtedness on a Consolidated balance sheet of such Person; provided, however, that in the case of the Parent Guarantor and its Subsidiaries “Debt for Borrowed Money” shall also include, without duplication, the JV Pro Rata

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Share of Debt for Borrowed Money for each Joint Venture; provided further that as used in the definition of “Fixed Charge Coverage Ratio”, in the case of any acquisition or disposition of any direct or indirect interest in any Asset (including through the acquisition or disposition of Equity Interests) by the Parent Guarantor or any of its Subsidiaries during the consecutive four fiscal quarters of the Parent Guarantor most recently ended for which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be, the term “Debt for Borrowed Money” (a) shall include, in the case of an acquisition, any Debt for Borrowed Money directly relating to such Asset existing immediately following such acquisition computed as if such indebtedness also existed for the portion of such period that such Asset was not owned by the Parent Guarantor or such Subsidiary, and (b) shall exclude, in the case of a disposition, for such period any Debt for Borrowed Money to which such Asset was subject to the extent such Debt for Borrowed Money was repaid or otherwise terminated upon the disposition of such Asset.

     “Default” means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

     “Development Assets” means all Real Property acquired for development into Campus Housing Assets that, in accordance with GAAP, would be classified as development property on a Consolidated balance sheet of the Parent Guarantor and its Subsidiaries.

     “Dividend Payout Ratio” means, at any date of determination, the ratio, expressed as a percentage, of (a) the sum, without duplication, of all dividends paid by the Parent Guarantor on account of any common stock or preferred stock of Parent Guarantor, except dividends payable solely in additional Equity Interests of the same class, to (b) Funds From Operations, in each case for the four consecutive fiscal quarters of the Parent Guarantor most recently ended (or, in the case of the first, second or third fiscal quarter of the Parent Guarantor for which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be, one, two or three consecutive fiscal quarters, respectively).

     “Domestic Lending Office” means, with respect to any Lender Party, the office of such Lender Party specified as its “Domestic Lending Office” opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender Party, as the case may be, or such other office of such Lender Party as such Lender Party may from time to time specify to the Borrower and the Administrative Agent.

     “EBITDA” means, at any date of determination, the sum of the following items, in each case for the four consecutive fiscal quarters of the Parent Guarantor most recently ended: (a) the sum of (i) net income (or net loss) (excluding gains (or losses) from extraordinary, infrequent, and unusual items), (ii) interest expense, (iii) income tax expense, (iv) depreciation expense, (v) amortization expense, and (vi) to the extent subtracted in computing net income, expenses incurred in connection with the Formation Transactions and the IPO and other non-recurring items, in each case of the Parent

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Guarantor and its Subsidiaries determined on a Consolidated basis and in accordance with GAAP for such four fiscal quarter period, less, to the extent not already deducted, all rentals payable under leases of real or personal (or mixed) property, in each case, of or by the Parent Guarantor and its Subsidiaries for the consecutive four fiscal quarters of the Parent Guarantor most recently ended for which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be, plus (b) with respect to each Joint Venture, the JV Pro Rata Share of the sum of (i) net income (or net loss) (excluding gains (or losses) from extraordinary and unusual items), (ii) interest expense, (iii) income tax expense, (iv) depreciation expense, (v) amortization expense, and (vi) to the extent subtracted in computing net income of such Joint Venture, non-recurring items, in each case of such Joint Venture determined on a Consolidated basis and in accordance with GAAP for such four fiscal quarter period, less, to the extent not already deducted, all rentals payable under leases of real or personal (or mixed) property, in each case, of or by the Parent Guarantor and its Subsidiaries for the consecutive four fiscal quarters of the Parent Guarantor most recently ended for which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be; provided, however, that for purposes of this definition, in the case of any acquisition or disposition of any direct or indirect interest in any Asset (including through the acquisition or disposition of Equity Interests) by the Parent Guarantor or any of its Subsidiaries during such four fiscal quarter period, EBITDA will be adjusted (1) in the case of an acquisition, by adding thereto an amount equal to the acquired Asset’s actual EBITDA (computed as if such Asset was owned by the Parent Guarantor or one of its Subsidiaries for the entire four fiscal quarter period) generated during the portion of such four fiscal quarter period that such Asset was not owned by the Parent Guarantor or such Subsidiary, and (2) in the case of a disposition, by subtracting therefrom an amount equal to the actual EBITDA generated by the Asset so disposed of during such four fiscal quarter period; provided further that calculations which pertain to the fiscal quarters of the Parent Guarantor ending on or prior to September 30, 2010 shall be made on a pro forma basis, including to give effect to the IPO and the Formation Transactions.

     “Effective Date” means the first date on which the conditions set forth in Article III shall be satisfied.

     “Eligible Assignee” means (a) with respect to the Revolving Credit Facility, (i) a Lender; (ii) an Affiliate or Fund Affiliate of a Lender; (iii) if at the time an assignment is effected pursuant to Section 9.07 a Default has occurred and is continuing, then any of (A) a commercial bank organized under the laws of the United States, or any State thereof, respectively, and having total assets in excess of $500,000,000; (B) a savings and loan association or savings bank organized under the laws of the United States or any State thereof, and having total assets in excess of $500,000,000; (C) a commercial bank organized under the laws of any other country that is a member of the OECD or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow, or a political subdivision of any such country, and having total assets in excess of $500,000,000, so long as such bank is acting through a branch or agency located in the United States; (D) the central bank of any country that is a member of the OECD; or (E) a finance company, insurance company or other

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financial institution or fund (whether a corporation, partnership, trust or other entity) that is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and having total assets in excess of $500,000,000; and (iv) any other Person approved by the Administrative Agent, and, unless a Default has occurred and is continuing at the time any assignment is effected pursuant to Section 9.07, approved by the Borrower, each such approval not to be unreasonably withheld or delayed, and (b) with respect to the Letter of Credit Facility, a Person of the type described under subclause (iii)(A) or (C) of this definition that is approved by the Administrative Agent and, unless a Default has occurred and is continuing at the time any assignment is effected pursuant to Section 9.07, approved by the Borrower, each such approval not to be unreasonably withheld or delayed; provided, however, that neither any Loan Party nor any Affiliate of a Loan Party shall qualify as an Eligible Assignee under this definition; and provided further that if Borrower does not disapprove a potential Eligible Assignee in writing within five (5) Business Days after such request for approval, then Borrower’s approval hereunder shall be deemed given.

     “Environmental Action” means any enforcement action, suit, demand, demand letter, claim of liability, notice of non-compliance or violation, notice of liability or potential liability, investigation, enforcement proceeding, consent order or consent agreement relating in any way to any Environmental Law, any Environmental Permit or Hazardous Material or arising from alleged injury or threat to health, safety or the environment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief.

     “Environmental Law” means any Federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, writ, judgment, injunction, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials.

     “Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

     “E013224” has the meaning specified in Section 4.01(aa).

     “Equity Interests” means, with respect to any Person, shares of capital stock of (or other ownership or profit interests in) such Person, warrants, options or other rights for the purchase or other acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person of such shares (or such other interests), and other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein),

15

whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

     “ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a member of the controlled group of any Loan Party, or under common control with any Loan Party, within the meaning of Section 414 of the Internal Revenue Code.

     “ERISA Event” means (a)(i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30 day notice requirement with respect to such event has been waived by the PBGC or (ii) the requirements of Section 4043(b) of ERISA apply with respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30 days; (b) the application for a minimum funding waiver with respect to a Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of any Loan Party or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by any Loan Party or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for imposition of a lien under Section 303(k) of ERISA shall have been met with respect to any Plan; or (g) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, such Plan.

     “Eurocurrency Liabilities” has the meaning specified in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

     “Eurodollar Lending Office” means, with respect to any Lender Party, the office of such Lender Party specified as its “Eurodollar Lending Office” opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender Party (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender Party as such Lender Party may from time to time specify to the Borrower and the Administrative Agent.

     “Eurodollar Rate” means, for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing, an interest rate per annum equal to the rate per annum obtained by dividing (a) the rate per annum (rounded upward, if necessary, to the nearest 1/100 of 1%) determined by the Administrative Agent to be the offered rate that appears on the Reuters Screen LIBOR01 Page (or any successor thereto)

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as the British Bankers Association London interbank offered rate for deposits in U.S. Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period, or, if for any reason such rate is not available, the average (rounded upward, if necessary, to the nearest 1/100 of 1%, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars are offered by the principal office of the Reference Bank in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to such Reference Bank’s Eurodollar Rate Advance comprising part of such Borrowing to be outstanding during such Interest Period (or, if such Reference Bank shall not have such a Eurodollar Rate Advance, $1,000,000) and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period.

     “Eurodollar Rate Advance” means an Advance that bears interest as provided in Section 2.07(a)(ii).

     “Eurodollar Rate Reserve Percentage” means, for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing, the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Rate Advances is determined) having a term equal to such Interest Period.

     “Events of Default” has the meaning specified in Section 6.01.

     “Existing Debt” means Debt of each Loan Party and its Subsidiaries outstanding immediately before giving effect to the Formation Transactions.

     “Excluded Recourse Properties” means the Real Property listed on Schedule III hereto on the Closing Date.

     “Extension Date” has the meaning specified in Section 2.16.

     “Facility” means the Revolving Credit Facility, the Swing Line Facility or the Letter of Credit Facility.

     “Facility Exposure” means, at any date of determination, the sum of (a) the aggregate principal amount of all outstanding Advances, plus (b) the amount (not less than zero) equal to the Available Amount under all outstanding Letters of Credit less all amounts then on deposit in the L/C Cash Collateral Account, plus (c) all Obligations of

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the Loan Parties in respect of Secured Hedge Agreements, valued at the Agreement Value thereof.

     “Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

     “Fee Letter” means the fee letter dated as of August 2, 2010 among Borrower, Parent Guarantor, Campus Crest Group, LLC, the Subsidiary Guarantors and CGMI, as the same may be amended from time to time.

     “Fiscal Year” means a fiscal year of the Parent Guarantor and its Consolidated Subsidiaries ending on December 31 in any calendar year.

     “Fixed Charge Coverage Ratio” means, at any date of determination, the ratio of (a) Adjusted EBITDA to (b) the sum of (i) interest (including capitalized interest (but excluding capitalized interest with respect to construction financing of Real Property prior to the issuance of the related certificate of occupancy)) payable on, and amortization of debt discount in respect of, all Debt for Borrowed Money plus (ii) scheduled amortization of principal amounts of all Debt for Borrowed Money payable (excluding maturities) plus (iii) cash dividends payable on any Preferred Interests; provided, however, that calculations which pertain to the fiscal quarters of the Parent Guarantor ending on or prior to September 30, 2010 shall be made on a pro forma basis, including to give effect to the IPO and the Formation Transactions.

     “Formation Transactions” means the “formation transactions” all as more fully described in the Registration Statement and otherwise on terms reasonably satisfactory to the Administrative Agent.

     “Fund Affiliate” means, with respect to any Lender that is a fund that invests in bank loans, any other fund that invests in bank loans and is advised or managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

     “Funds From Operations” means, with respect to the Parent Guarantor, net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property and extraordinary and unusual items, plus depreciation and amortization, and after adjustments for unconsolidated Joint Ventures, provided that any determination of Funds From Operations which pertains to the fiscal quarters of the Parent Guarantor ending on or prior to September 30, 2010 shall be made on a pro forma basis, including to give effect to the IPO and the Formation Transactions. Adjustments for unconsolidated Joint Ventures will be calculated to reflect funds from operations on the same basis.

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     “GAAP” has the meaning specified in Section 1.03.

     “Good Faith Contest” means the contest of an item as to which: (a) such item is contested in good faith, by appropriate proceedings, (b) reserves that are adequate are established with respect to such contested item in accordance with GAAP or such contested item is bonded over in accordance with statutory lien bonding procedures and (c) the failure to pay or comply with such contested item during the period of such contest could not reasonably be expected to result in a Material Adverse Effect.

     “Ground Lease” means each Affiliate Ground Lease, the Ground Lease (Mobile) and any other Qualifying Ground Lease with respect to a Proposed Borrowing Base Asset that becomes part of the Collateral, and “Ground Leases” means each Affiliate Ground Lease, Ground Lease (Mobile) and the such other ground leases, collectively. As of the Closing Date, all Ground Leases are as set forth on Schedule IV.

     “Ground Lease (Mobile)” means, collectively, (i) that certain Ground Lease Agreement, dated as of September 8, 2006, between the University of South Alabama, as landlord and master lessor, and USA Research and Technology Corporation, as master lessee, recorded in the public records of Mobile County, Alabama on September 6, 2006 in Book 6040, Page 661, as amended by that certain First Amendatory Ground Lease, between the same parties, dated October 3, 2007, recorded in the Mobile Records on October 24, 2007 in Book 6278, Page 1536 and (ii) that certain Ground Lease, dated March 14, 2008, between USA Research and Technology Corporation, as sub-landlord and sub-ground lessor, and Campus Crest at Mobile Phase II, LLC, as sub-ground lessee, as amended by that certain First Amendment to Ground Lease dated on or about the date hereof, as evidenced by that certain Memorandum of Ground Lease, dated March 18, 2008, recorded in the public records of Mobile County, Alabama on March 31, 2008 in Book 6355, Page 1270, and that certain First Amendment to Memorandum of Ground Lease dated on or about the date hereof, to be recorded in said public records.

     “Ground Lease (Mobile) Default” has the meaning specified in Section 4.01(z)(iv).

     “Ground Leased Property (Mobile)” means the Campus Housing Asset located at the University of South Alabama, Mobile, Alabama, which property is subject to the Ground Lease (Mobile).

     “Ground Lease Payments” means all ground rents, square footage rents and percentage rents and any other payments or rents owing under a Ground Lease.

     “Ground Lessor (Mobile)” means, with respect to the master ground lease, the University of South Alabama, and, with respect to the sub-ground lease, USA Research and Technology Corporation, together with each of its respective successors and assigns, as master ground lessor and sub-ground lessor, respectively, under the Ground Lease (Mobile).

     “Guaranteed Obligations” has the meaning specified in Section 7.01.

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     “Guarantor Deliverables” means each of the items set forth in Section 5.01(j).

     “Guarantors” has the meaning specified in the recital of parties to this Agreement.

     “Guaranty” means the Guaranty by the Guarantors pursuant to Article VII, together with any and all Guaranty Supplements required to be delivered pursuant to Section 5.01(j) or Section 7.05.

     “Guaranty Supplement” means a supplement entered into by an Additional Guarantor in substantially the form of Exhibit C hereto.

     “Hazardous Indemnity Agreement” means each of the Environmental Indemnity Agreements regarding Hazardous Materials now or hereafter made by the Borrower, Parent Guarantor and Guarantors owning Borrowing Base Assets in favor of the Administrative Agent and the Lenders, in substantially the form of Exhibit J hereto, as the same may be modified, amended or ratified, pursuant to which the Borrower, Parent Guarantor and such Subsidiary Guarantor agree to indemnify the Administrative Agent and the Lenders with respect to Hazardous Materials and Environmental Laws.

     “Hazardous Materials” means (a) petroleum or petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls, radon gas and mold and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law.

     “Hedge Agreements” means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other hedging agreements.

     “Hedge Bank” means any Lender Party or an Affiliate of a Lender Party in its capacity as a party to a Secured Hedge Agreement.

     “Increase Date” has the meaning specified in Section 2.17(a).

     “Increasing Lender” has the meaning specified in Section 2.17(b).

     “Indemnified Costs” has the meaning specified in Section 8.05(a).

     “Indemnified Party” has the meaning specified in Section 7.06(a).

     “Information” has the meaning specified in Section 9.10.

     “Initial Extension of Credit” means the earlier to occur of the initial Borrowing and the initial issuance of a Letter of Credit hereunder.

     “Initial Issuing Bank” has the meaning specified in the recital of parties to this Agreement.

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     “Initial Lenders” has the meaning specified in the recital of parties to this Agreement.

     “Insufficiency” means, with respect to any Plan, the amount, if any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.

     “Interest Period” means, for each Eurodollar Rate Advance comprising part of the same Borrowing, the period commencing on the date of such Eurodollar Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance, and ending on the last day of the period selected by the Borrower pursuant to Section 2.07(c) and in conformity with the provisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months, as the Borrower may select; provided, however, that:

     (a) the Borrower may not select any Interest Period with respect to any Eurodollar Rate Advance that ends after the Termination Date;

     (b) Interest Periods commencing on the same date for Eurodollar Rate Advances comprising part of the same Borrowing shall be of the same duration;

     (c) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day; provided, however, that if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and

     (d) whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

     “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

     “Investment” means (a) any loan or advance to any Person, any purchase or other acquisition of any Equity Interests or Debt or the assets comprising a division or business unit or a substantial part or all of the business of any Person, any capital contribution to any Person or any other direct or indirect investment in any Person, including, without limitation, any acquisition by way of a merger or consolidation and any arrangement pursuant to which the investor incurs Debt of the types referred to in clause (i) or (j) of the definition of “Debt” in respect of any Person, and (b) the purchase or other acquisition of any real property.

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     “IPO” means the initial public offering of common stock in the Parent Guarantor and its registration as a public company with the Securities and Exchange Commission.

     “Issuing Bank” means the Initial Issuing Bank and any other Lender approved as an Issuing Bank by the Administrative Agent and the Borrower and any Eligible Assignee to which a Letter of Credit Commitment hereunder has been assigned pursuant to Section 9.07 so long as each such Lender or each such Eligible Assignee expressly agrees to perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as an Issuing Bank and notifies the Administrative Agent of its Applicable Lending Office and the amount of its Letter of Credit Commitment (which information shall be recorded by the Administrative Agent in the Register) for so long as such Initial Issuing Bank, Lender or Eligible Assignee, as the case may be, shall have a Letter of Credit Commitment.

     “Joint Venture” means any joint venture (a) in which the Parent Guarantor or any of its Subsidiaries holds any Equity Interest, (b) that is not a Subsidiary of the Parent Guarantor or any of its Subsidiaries and (c) the accounts of which would not appear on the Consolidated financial statements of the Parent Guarantor.

     “Joint Venture Assets” means, with respect to any Joint Venture at any time, the assets owned by such Joint Venture at such time.

     “JV Pro Rata Share” means, with respect to any Joint Venture at any time, the fraction, expressed as a percentage, obtained by dividing (a) the total book value of all Equity Interests in such Joint Venture held by the Parent Guarantor and any of its Subsidiaries by (b) the total book value of all outstanding Equity Interests in such Joint Venture at such time.

     “L/C Cash Collateral Account” means an account of the Borrower to be maintained with the Administrative Agent, in the name of the Administrative Agent and under the sole control and dominion of the Administrative Agent and subject to the terms of this Agreement.

     “L/C Related Documents” has the meaning specified in Section 2.04(c)(ii)(A).

     “L/C Termination Date Exposure” means the Available Amount under any Letter of Credit with an expiration date later than 30 days before the Termination Date.

     “Lender Default” has the meaning specified in Section 9.07(k).

     “Lender Party” means any Lender, the Swing Line Bank or any Issuing Bank.

     “Lenders” means the Initial Lenders, each Acceding Lender that shall become a party hereto pursuant to Section 2.17 and each Person that shall become a Lender hereunder pursuant to Section 9.07 for so long as such Initial Lender or Person, as the case may be, shall be a party to this Agreement.

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     “Letter of Credit Advance” means an advance made by any Issuing Bank or any Lender pursuant to Section 2.03(c).

     “Letter of Credit Agreement” has the meaning specified in Section 2.03(a).

     “Letter of Credit Commitment” means, with respect to any Issuing Bank at any time, the amount set forth opposite such Issuing Bank’s name on Schedule I hereto under the caption “Letter of Credit Commitment” or, if such Issuing Bank has entered into one or more Assignment and Acceptances, set forth for such Issuing Bank in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Issuing Bank’s “Letter of Credit Commitment”, as such amount may be reduced at or prior to such time pursuant to Section 2.05.

     “Letter of Credit Facility” means, at any time, an amount equal to the lesser of (a) the aggregate amount of the Issuing Banks’ Letter of Credit Commitments at such time, and (b) $15,000,000, as such amount may be reduced at or prior to such time pursuant to Section 2.05.

     “Letters of Credit” has the meaning specified in Section 2.01(b).

     “Leverage Ratio” means, at any date of determination, the ratio of Total Debt (but excluding, in all cases, any Contingent Obligations associated with the Excluded Recourse Properties) to Total Asset Value as at the end of the most recently ended fiscal quarter of the Parent Guarantor for which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be.

     “Lien” means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property.

     “Loan Documents” means (a) this Agreement, (b) the Notes, (c) the Fee Letter, (d) each Letter of Credit Agreement, (e) each Guaranty Supplement, (f) the Collateral Documents, (g) each Hazardous Indemnity Agreement, (h) each Manager’s Subordination and (i) each Secured Hedge Agreement, in each case, as amended.

     “Loan Parties” means the Borrower and the Guarantors.

     “Management Agreements” means (a) the Management Agreements set forth on Part III of Schedule 4.01(q) hereto (as amended or supplemented from time to time in accordance with the provisions hereof), and (b) any Management Agreement in respect of a Borrowing Base Asset entered into in compliance with Section 5.01(p).

     “Management Fee Adjustment” means, with respect to any Asset for any fiscal period, the greater of (i) an amount equal to 4.0% of the total revenues generated from the operation of such Asset for such fiscal period and (ii) all actual management fees payable in respect of such Asset during such fiscal period.

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     “Manager’s Subordination” means each of the Manager’s Consent and Subordination of Management Agreements, now or hereafter made by an Approved Manager, the Borrower and the Administrative Agent, in substantially the form of Exhibit K hereto, as the same may be modified, amended or ratified.

     “Margin Stock” has the meaning specified in Regulation U.

     “Material Adverse Change” means a material adverse change in the business, condition (financial or otherwise), results of operations or prospects of the Borrower or the Borrower and its Subsidiaries, taken as a whole.

     “Material Adverse Effect” means a material adverse effect on (a) the business, condition (financial or otherwise), operations or prospects of the Borrower and its Subsidiaries, taken as a whole, (b) the rights and remedies of any Agent or any Lender Party under any Loan Document, (c) the ability of any Loan Party to perform its Obligations under any Loan Document to which it is or is to be a party, (d) the value of the Collateral or (e) the value, use or ability to sell or refinance any Borrowing Base Asset.

     “Material Contract” means each contract to which the Borrower or any of its Subsidiaries is a party involving aggregate consideration payable to or by the Borrower or such Subsidiary in an amount of $5,000,000 or more per annum or otherwise material to the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower and its Subsidiaries, taken as a whole. Without limitation of the foregoing, the Management Agreements shall be deemed to comprise Material Contracts hereunder.

     “Material Debt” means (a) Recourse Debt of Borrower that is outstanding in a principal amount (or, in the case of any Hedge Agreement, an Agreement Value) of $10,000,000 or more, either individually or in the aggregate or (b) any other Debt of any Loan Party or any Subsidiary of a Loan Party that is outstanding in a principal amount (or, in the case of any Hedge Agreement, an Agreement Value) of $25,000,000 or more, either individually or in the aggregate; in each case (i) whether or not the primary obligation of the applicable obligor, (ii) whether the subject of one or more separate debt instruments or agreements, and (iii) exclusive of Debt outstanding under this Agreement. For the avoidance of doubt, Material Debt may include Refinancing Debt to the extent comprising Material Debt as defined herein.

     “Material Litigation” has the meaning specified in Section 3.01(f).

     “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

     “Mortgage Policies” has the meaning specified in Section 3.01(a)(iii)(B).

     “Mortgages” has the meaning specified in Section 3.01(a)(iii).

     “Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making

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or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions.

     “Multiple Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or any ERISA Affiliate and at least one Person other than the Loan Parties and the ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.

     “Negative Pledge” means, with respect to any asset, any provision of a document, instrument or agreement (other than a Loan Document) which prohibits or purports to prohibit the creation or assumption of any Lien on such asset as security for Debt of the Person owning such asset or any other Person.

     “Net Operating Income” means, with respect to any Borrowing Base Asset for any applicable measurement period, (a) the total rental and other revenue from the operation of such Borrowing Base Asset for such period, minus (b) all expenses and other proper charges incurred in connection with the operation and maintenance of such Borrowing Base Asset for such period (including, without limitation, management fees, repairs, real estate and chattel taxes, bad debt expenses and all rentals payable under leases of real or personal (or mixed) property, in each case, with respect to such Borrowing Base Asset for such period), but before payment or provision for debt service charges, income taxes and depreciation, amortization and other non-cash expenses, all as determined in accordance with GAAP and in each case for consecutive four fiscal quarters of the Parent Guarantor most recently ended.

     “Non-Recourse Debt” means Debt for Borrowed Money with respect to which recourse for payment is limited to (a) any building(s) or parcel(s) of real property and any related assets encumbered by a Lien securing such Debt for Borrowed Money and/or (b) (i) the general credit of the Property-Level Subsidiary that has incurred such Debt for Borrowed Money, and/or the direct Equity Interests therein and/or (ii) the general credit of the immediate parent entity of such Property-Level Subsidiary, provided that such parent entity’s assets consist solely of Equity Interests in such Property-Level Subsidiary, it being understood that the instruments governing such Debt may include customary carve-outs to such limited recourse (any such customary carve-outs or agreements limited to such customary carve-outs, being a “Customary Carve-Out Agreement”) such as, for example, personal recourse to the Parent Guarantor or any Subsidiary of the Parent Guarantor for fraud, misrepresentation, misapplication or misappropriation of cash, waste, environmental claims, damage to properties, non-payment of taxes or other liens despite the existence of sufficient cash flow, interference with the enforcement of loan documents upon maturity or acceleration, voluntary or involuntary bankruptcy filings, violation of loan document prohibitions against transfer of properties or ownership interests therein and liabilities and other circumstances customarily excluded by lenders from exculpation provisions and/or included in separate indemnification and/or guaranty agreements in non-recourse financings of real estate.

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     “Note” means a promissory note of the Borrower payable to the order of any Lender, in substantially the form of Exhibit A hereto, evidencing the aggregate indebtedness of the Borrower to such Lender resulting from the Revolving Credit Advances, Swing Line Advances and Letter of Credit Advances made by such Lender.

     “Notice of Borrowing” has the meaning specified in Section 2.02(a).

     “Notice of Issuance” has the meaning specified in Section 2.03(a).

     “Notice of Renewal” has the meaning specified in Section 2.01(b).

     “Notice of Swing Line Borrowing” has the meaning specified in Section 2.02(b).

     “Notice of Termination” has the meaning specified in Section 2.01(b).

     “NPL” means the National Priorities List under CERCLA.

     “Obligation” means, with respect to any Person, any payment, performance or other obligation of such Person of any kind, including, without limitation, any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding referred to in Section 6.01(f). Without limiting the generality of the foregoing, the Obligations of any Loan Party under the Loan Documents include (a) the obligation to pay principal, interest, Letter of Credit commissions, charges, expenses, fees, attorneys’ fees and disbursements, indemnities and other amounts payable by such Loan Party under any Loan Document and (b) the obligation of such Loan Party to reimburse any amount in respect of any of the foregoing that any Lender Party, in its sole discretion, may elect to pay or advance on behalf of such Loan Party.

     “OECD” means the Organization for Economic Cooperation and Development.

     “OFAC” has the meaning specified in Section 4.01(aa).

     “Other Taxes” has the meaning specified in Section 2.12(b).

     “Parent Guarantor” has the meaning specified in the recital of parties to this Agreement.

     “Participant” has the meaning specified in Section 2.03(c)(i).

     “Patriot Act” has the meaning specified in Section 9.12.

     “PBGC” means the Pension Benefit Guaranty Corporation (or any successor).

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     “Permitted Liens” means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced (except as expressly permitted under this definition of “Permitted Liens”):

     (a) Liens for taxes, assessments and governmental charges or levies the payment of which is not, at the time, required by Section 5.01(b);

     (b) statutory Liens of banks and rights of set off and other Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens arising in the ordinary course of business securing obligations, in each case, that (i) are not overdue for a period of more than 30 days and (ii) individually or together with all other Permitted Liens outstanding on any date of determination do not materially adversely affect the use of the property to which they relate unless, in the case of (i) or (ii) above, such Liens are the subject of a Good Faith Contest;

     (c) pledges or deposits to secure obligations under workers’ compensation or unemployment laws or similar legislation or to secure public or statutory obligations;

     (d) easements, zoning restrictions, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use or value of such property for its present purposes;

     (e) Tenancy Leases;

     (f) Permitted Encumbrances (as defined in each of the Mortgages);

     (g) all Liens and other matters disclosed in the Mortgage Policies and such other title and survey exceptions as the Administrative Agent has approved or may approve in writing in its reasonable discretion;

     (h) Liens incurred or deposits made in the ordinary course of business to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money), so long as no foreclosure, sale or similar proceedings have been commenced with respect to any portion of the Collateral on account thereof;

     (i) any attachment or judgment Lien not constituting an Event of Default and not with respect to any portion of the Collateral; or

     (j) Liens granted to the Administrative Agent for the benefit of the Lender Parties to secure the Debt under the Loan Documents.

     “Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.

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     “Plan” means a Single Employer Plan or a Multiple Employer Plan.

     “Pledge Agreement” means the Pledge Agreement, made by the pledgors named therein in favor of the Administrative Agent and the Lenders, in substantially the form of Exhibit L hereto, as the same may be modified, amended or ratified.

     “Post Petition Interest” has the meaning specified in Section 7.07(b).

     “Potential Assignment Event Date” has the meaning specified in Section 9.01(b).

     “Potential Assignor Lender” has the meaning specified in Section 9.01(b).

     “Preferred Interests” means, with respect to any Person, Equity Interests issued by such Person that are entitled to a preference or priority over any other Equity Interests issued by such Person upon any distribution of such Person’s property and assets, whether by dividend or upon liquidation.

     “Prohibited Person” has the meaning specified in Section 4.01(aa).

     “Property-Level Subsidiary” means any Subsidiary of the Borrower or any Joint Venture that holds a direct fee or leasehold interest in any single building (or group of related buildings, including, without limitation, buildings pooled for purposes of a Non-Recourse Debt financing) or parcel (or group of related parcels, including, without limitation, parcels pooled for purposes of a Non-Recourse Debt financing) of real property and related assets and not in any other building or parcel of real property.

     “Proposed Borrowing Base Asset” has the meaning specified in Section 5.01(k).

     “Proposed Increased Commitment” has the meaning specified in Section 2.17(b).

     “Pro Rata Share” of any amount means, with respect to any Lender at any time, the product of such amount times a fraction the numerator of which is the amount of such Lender’s Revolving Credit Commitment at such time (or, if the Commitments shall have been terminated pursuant to Section 2.05 or 6.01, such Lender’s Revolving Credit Commitment as in effect immediately prior to such termination) and the denominator of which is the Revolving Credit Facility at such time (or, if the Commitments shall have been terminated pursuant to Section 2.05 or 6.01, the Revolving Credit Facility as in effect immediately prior to such termination).

     “Purchasing Lender” has the meaning specified in Section 2.17(e).

     “Qualifying Ground Lease” means a ground lease of Real Property containing the following terms and conditions: (a) a remaining term (exclusive of any unexercised extension options that are subject to terms or conditions not yet agreed upon and specified in such ground lease or an amendment thereto, other than a condition that the lessee not be in default under such ground lease) of 30 years or more from the Closing Date; (b) the right of the lessee to mortgage and encumber its interest in the leased

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property without the consent of the lessor; (c) the obligation of the lessor to give the holder of any mortgage Lien on such leased property written notice of any defaults on the part of the lessee and agreement of such lessor that such lease will not be terminated until such holder has had a reasonable opportunity to cure or complete foreclosures, and fails to do so; (d) reasonable transferability of the lessee’s interest under such lease, including the ability to sublease; and (e) such other rights customarily required by mortgagees making a loan secured by the interest of the holder of a leasehold estate demised pursuant to a ground lease.

     “Real Property” means all right, title and interest of the Borrower and each of its Subsidiaries in and to any land and any improvements located thereon, together with all equipment, furniture, materials, supplies, personal property and all other rights and property within the scope of the definition of Mortgaged Property (as defined in the Form of Mortgage attached hereto as Exhibit G) in which such Person has an interest now or hereafter located on or used in connection with such land and improvements, and all appurtenances, additions, improvements, renewals, substitutions and replacements thereof now or hereafter acquired by such Person.

     “Recourse Debt” means Debt for which the Borrower or any of its Subsidiaries has personal or recourse liability in whole or in part, exclusive of any such Debt for which such personal or recourse liability is limited to obligations under Customary Carve-Out Agreements.

     “Reference Bank” means Citibank, N.A.

     “Refinancing Debt” means, with respect to any Debt, any Debt extending the maturity of, or refunding or refinancing, in whole or in part, such Debt, provided that (a) the terms of any Refinancing Debt, and of any agreement entered into and of any instrument issued in connection therewith, (i) do not provide for any Lien on any Borrowing Base Assets, and (ii) are not otherwise prohibited by the Loan Documents and (b) the principal amount of such Debt shall not exceed the original principal amount of the Debt (as such Debt may have been increased from time to time) being extended, refunded or refinanced plus the amount of any applicable premium and expenses.

     “Register” has the meaning specified in Section 9.07(d).

     “Registration Statement” means the Parent Guarantor’s Form S-11 Registration Statement filed with the Securities and Exchange Commission in connection with the IPO, as amended.

     “Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time.

     “REIT” means a Person that is qualified to be treated for tax purposes as a real estate investment trust under Sections 856-860 of the Internal Revenue Code.

     “Replacement Lender” has the meaning specified in Section 9.01(b).

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     “Required Lenders” means, at any time, Lenders owed or holding greater than 66.67% of the sum of (a) the aggregate principal amount of the Advances outstanding at such time, (b) the aggregate Available Amount of all Letters of Credit outstanding at such time and (c) the aggregate Unused Revolving Credit Commitments at such time. For purposes of this definition, the aggregate principal amount of Swing Line Advances owing to the Swing Line Bank and of Letter of Credit Advances owing to any Issuing Bank and the Available Amount of each Letter of Credit shall be considered to be owed to the Revolving Lenders ratably in accordance with their respective Revolving Credit Commitments.

     “Responsible Officer” means, with respect to any Loan Party, any officer of, or any officer of any general partner or managing member of, such Loan Party, which Officer has (a) responsibility for performing the underlying function that is the subject of the action required of such officer hereunder, or (b) supervisory responsibility for such an officer.

     “Restricted Payments” has the meaning specified in Section 5.02(g).

     “Revolving Credit Advance” has the meaning specified in Section 2.01(a).

     “Revolving Credit Commitment” means, (a) with respect to any Lender at any time, the amount set forth opposite such Lender’s name on Schedule I hereto under the caption “Revolving Credit Commitment” or (b) if such Lender has entered into one or more Assignment and Acceptances, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Lender’s “Revolving Credit Commitment”, as such amount may be reduced at or prior to such time pursuant to Section 2.05.

     “Revolving Credit Facility” means, at any time, the aggregate amount of the Lenders’ Revolving Credit Commitments at such time.

     “S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc., and any successor thereto.

     “Sale and Leaseback Transaction” shall mean any arrangement with any Person providing for the leasing by the Parent Guarantor or any of its Subsidiaries of any Real Property that has been sold or transferred or is to be sold or transferred by the Parent Guarantor or such Subsidiary, as the case may be, to such Person.

     “Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002, as amended.

     “Secured Hedge Agreement” means any Hedge Agreement required or permitted under Article V that is entered into by and between any Loan Party and any Hedge Bank and that is secured by the Collateral Documents.

     “Secured Obligations” means, collectively, the “Secured Obligations” as defined in the Security Agreement and the “Obligations” as defined in the Mortgages.

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     “Secured Parties” means the Agents, the Lender Parties and the Hedge Banks.

     “Secured Recourse Debt Ratio” means, at any date of determination, the ratio, expressed as a percentage, of (a) all Debt for which the Borrower and the Guarantors have personal or recourse liability in whole or in part (exclusive of any such Debt for which such personal or recourse liability is limited to obligations under Customary Carve-Out Agreements), plus, without duplication, Contingent Obligations of the Borrower and the Guarantors, but excluding, in all cases, any such Debt and Contingent Obligations associated with the Excluded Recourse Properties to (b) Total Asset Value, in each case as at the end of the most recently ended fiscal quarter of the Parent Guarantor for which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c) as the case may be.

     “Securities Act” means the Securities Act of 1933, as amended to the date hereof and from time to time hereafter, and any successor statute.

     “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended to the date hereof and from time to time hereafter, and any successor statute.

     “Security Agreement” has the meaning specified in Section 3.01(a)(ii).

     “Selling Lender” has the meaning specified in Section 2.17(e).

     “Single Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or any ERISA Affiliate and no Person other than the Loan Parties and the ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated.

     “Solvent” means, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person, on a going-concern basis, is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person, on a going-concern basis, is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time (including, without limitation, after taking into account appropriate discount factors for the present value of future contingent liabilities), represents the amount that can reasonably be expected to become an actual or matured liability.

     “Standby Letter of Credit” means any Letter of Credit issued under the Letter of Credit Facility, other than a Trade Letter of Credit.

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     “Subordinated Obligations” has the meaning specified in Section 7.07.

     “Subsidiary” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) 50% or more of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate, in each case, is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

     “Subsidiary Guarantor” has the meaning specified in the recital of parties to this Agreement.

     “Supplemental Collateral Agent” has the meaning specified in Section 8.01(b).

     “Surviving Debt” means Debt of each Loan Party and its Subsidiaries outstanding immediately before and after giving effect to the IPO, the Formation Transactions and the Initial Extension of Credit.

     “Swing Line Advance” means an advance made by (a) the Swing Line Bank pursuant to Section 2.01(c) or (b) any Lender pursuant to Section 2.02(b).

     “Swing Line Bank” means Citibank, in its capacity as the Lender of Swing Line Advances, and its successors and permitted assigns in such capacity.

     “Swing Line Borrowing” means a borrowing consisting of a Swing Line Advance made by the Swing Line Bank pursuant to Section 2.01(c) or the Lenders pursuant to Section 2.02(b).

     “Swing Line Commitment” means, with respect to the Swing Line Bank, the amount of the Swing Line Facility set forth in Section 2.01(c), as such amount may be reduced at or prior to such time pursuant to Section 2.05.

     “Swing Line Facility” has the meaning specified in Section 2.01(c).

     “Taxes” has the meaning specified in Section 2.12(a).

     “Tenancy Leases” means operating leases, subleases, licenses, occupancy agreements and rights-of-use entered into by the Borrower or any of its Subsidiaries in its capacity as a lessor or a similar capacity in the ordinary course of business that do not materially and adversely affect the use of the Real Property encumbered thereby for its intended purpose (excluding any lease entered into in connection with a Sale and Leaseback Transaction).

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     “Termination Date” means the earlier of (a) the third anniversary of the Closing Date, subject to the extension thereof pursuant to Section 2.16 and (b) the date of termination in whole of the Revolving Credit Commitments, the Swing Line Commitment and the Letter of Credit Commitments pursuant to Section 2.05 or 6.01.

     “Test Date” means (a) the last day of each fiscal quarter of the Parent Guarantor for which financial statements are required to be delivered pursuant to Sections 5.03(b) or (c), as the case may be, (b) the date of each Advance or the issuance or renewal of any Letter of Credit, (c) the date of the addition of any Proposed Borrowing Base Asset to the Collateral pursuant to Section 5.01(k), (d) the effective date of any merger permitted under Section 5.02(d), (e) the effective date of any Transfer permitted under Section 5.02(e)(ii)(C), (f) with respect to an extension of the Maturity Date pursuant to Section 2.16, the date of delivery of financial statements of the Borrower thereunder, and (g) the date of the release of Liens with respect to any Borrowing Base Asset.

     “Total Asset Value” means, at any date of determination, the sum of the Asset Values for all Assets at such date plus unrestricted Cash and Cash Equivalents.

     “Total Borrowing Base Value” means, at any date of determination, the sum of the Borrowing Base Values of all Borrowing Base Assets.

     “Total Debt” means, at any date of determination, all Debt of the Parent Guarantor and its Subsidiaries as at the end of the most recently ended fiscal quarter of the Parent Guarantor for which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be.

     “Trade Letter of Credit” means any Letter of Credit that is issued under the Letter of Credit Facility for the benefit of a supplier of inventory to the Borrower or any of its Subsidiaries to effect payment for such inventory.

     “Transfer” has the meaning specified in Section 5.02(e)(i).

     “Type” refers to the distinction between Advances bearing interest at the Base Rate and Advances bearing interest at the Eurodollar Rate.

     “Unused Fee” has the meaning specified in Section 2.08(a).

     “Unused Revolving Credit Commitment” means, with respect to any Lender at any date of determination, (a) such Lender’s Revolving Credit Commitment at such time minus (b) the sum of (i) the aggregate principal amount of all Revolving Credit Advances, Swing Line Advances and Letter of Credit Advances made by such Lender (in its capacity as a Lender) and outstanding at such time plus (ii) such Lender’s Pro Rata Share of (A) the aggregate Available Amount of all Letters of Credit outstanding at such time, (B) the aggregate principal amount of all Letter of Credit Advances made by the Issuing Banks pursuant to Section 2.03(c) and outstanding at such time and (C) the aggregate principal amount of all Swing Line Advances made by the Swing Line Bank pursuant to Section 2.01(c) and outstanding at such time.

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     “Voting Interests” means shares of capital stock issued by a corporation, or equivalent Equity Interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or the election or appointment of persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.

     “Welfare Plan” means a welfare plan, as defined in Section 3(1) of ERISA, that is maintained for employees of any Loan Party or in respect of which any Loan Party could have liability under applicable law.

     “Withdrawal Liability” has the meaning specified in Part I of Subtitle E of Title IV of ERISA.

          SECTION 1.02. Computation of Time Periods; Other Definitional Provisions. In this Agreement and the other Loan Documents in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”. References in the Loan Documents to any agreement or contract “as amended” shall mean and be a reference to such agreement or contract as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with its terms.

          SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(g) (“GAAP”).

ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT

          SECTION 2.01. The Advances and the Letters of Credit. (a) The Revolving Credit Advances. Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make advances (each, a “Revolving Credit Advance”) to the Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date in an amount for each such Advance not to exceed such Lender’s Unused Revolving Credit Commitment at such time. Each Borrowing shall be in an aggregate amount of $1,000,000 or an integral multiple of $500,000 in excess thereof and shall consist of Revolving Credit Advances made simultaneously by the Lenders ratably according to their Revolving Credit Commitments. Within the limits of each Lender’s Unused Revolving Credit Commitment in effect from time to time and prior to the Termination Date, the Borrower may borrow under this Section 2.01(a), prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(a).

          (b) Letters of Credit. Each Issuing Bank severally agrees, on the terms and conditions hereinafter set forth, to issue (or cause its Affiliate that is a commercial bank to issue on its behalf) letters of credit (the “Letters of Credit”), for the account of the Borrower from time to time on any Business Day during the period from the date hereof until 30 days before the Termination Date in an aggregate Available Amount (i) for all Letters of Credit not to exceed at any time the Letter of Credit Facility at such time, (ii) for all Letters of Credit issued by such

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Issuing Bank not to exceed such Issuing Bank’s Letter of Credit Commitment at such time, and (iii) for each such Letter of Credit not to exceed the Unused Revolving Credit Commitments of the Lenders at such time. No Letter of Credit shall have an expiration date (including all rights of the Borrower or the beneficiary to require renewal) later than the earlier of 30 days before the Termination Date (provided such Letter of Credit may have an expiration date after the date that is 30 days before the Termination Date, but not after the Termination Date, so long as such Letter of Credit obligates the Borrower to Cash Collateralize such Letter of Credit in accordance with Section 2.03(e)) and (A) in the case of a Standby Letter of Credit one year after the date of issuance thereof, but may by its terms be renewable annually upon notice (a “Notice of Renewal”) given to the Issuing Bank that issued such Standby Letter of Credit and the Administrative Agent on or prior to any date for notice of renewal set forth in such Letter of Credit but in any event at least three Business Days prior to the date of the proposed renewal of such Standby Letter of Credit and upon fulfillment of the applicable conditions set forth in Article III unless such Issuing Bank has notified the Borrower (with a copy to the Administrative Agent) on or prior to the date for notice of termination set forth in such Letter of Credit but in any event at least 30 Business Days prior to the date of automatic renewal of its election not to renew such Standby Letter of Credit (a “Notice of Termination”) and (B) in the case of a Trade Letter of Credit, 180 days after the date of issuance thereof; provided, however, that the terms of each Standby Letter of Credit that is automatically renewable annually shall (x) require the Issuing Bank that issued such Standby Letter of Credit to give the beneficiary named in such Standby Letter of Credit notice of any Notice of Termination, (y) permit such beneficiary, upon receipt of such notice, to draw under such Standby Letter of Credit prior to the date such Standby Letter of Credit otherwise would have been automatically renewed and (z) not permit the expiration date (after giving effect to any renewal) of such Standby Letter of Credit in any event to be extended to a date later than 30 days before the Termination Date (provided such Letter of Credit may have an expiration date after the date that is 30 days before the Termination Date, but not after the Termination Date, so long as such Letter of Credit obligates the Borrower to Cash Collateralize such Letter of Credit in accordance with Section 2.03(e)). If either a Notice of Renewal is not given by the Borrower or a Notice of Termination is given by the relevant Issuing Bank pursuant to the immediately preceding sentence, such Standby Letter of Credit shall expire on the date on which it otherwise would have been automatically renewed; provided, however, that even in the absence of receipt of a Notice of Renewal the relevant Issuing Bank may in its discretion, unless instructed to the contrary by the Administrative Agent or the Borrower, deem that a Notice of Renewal had been timely delivered and in such case, a Notice of Renewal shall be deemed to have been so delivered for all purposes under this Agreement. Within the limits of the Letter of Credit Facility, and subject to the limits referred to above, the Borrower may request the issuance of Letters of Credit under this Section 2.01(b), repay any Letter of Credit Advances resulting from drawings thereunder pursuant to Section 2.04(c) and request the issuance of additional Letters of Credit under this Section 2.01(b).

          (c) Swing Line Advances. The Borrower may request the Swing Line Bank to make, and the Swing Line Bank agrees to make, on the terms and conditions hereinafter set forth, Swing Line Advances to the Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date (i) in an aggregate amount not to exceed at any time outstanding $10,000,000 (the “Swing Line Facility”) and (ii) in an amount for each such Swing Line Borrowing not to exceed the aggregate of the Unused Revolving Credit Commitments of the Lenders at such time. No Swing Line Advance shall be used for the

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purpose of funding the payment of principal of any other Swing Line Advance. Each Swing Line Borrowing shall be in an amount of $250,000 or an integral multiple of $250,000 in excess thereof and shall be made as a Base Rate Advance. Within the limits of the Swing Line Facility and within the limits referred to in clause (ii) above, the Borrower may borrow under this Section 2.01(c), repay pursuant to Section 2.04(b) or prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(c).

          SECTION 2.02. Making the Advances. (a) Except as otherwise provided in Section 2.03, each Borrowing (other than a Swing Line Borrowing) shall be made on notice, given not later than 12:00 Noon (New York City time) on the third Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurodollar Rate Advances, or not later than 12:00 Noon (New York City time) on the date of the proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances, by the Borrower to the Administrative Agent, which shall give to each Lender prompt notice thereof by telex or telecopier. Each such notice of a Borrowing (a “Notice of Borrowing”) shall be by telephone, confirmed immediately in writing, or telex or telecopier or e-mail, in each case in substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such Borrowing, (ii) Type of Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing and (iv) in the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each such Advance. Each Lender shall, before 12:00 Noon (New York City time) on the date of such Borrowing in the case of a Borrowing consisting of Eurodollar Rate Advances and 1:00 P.M. (New York City time) on the date of such Borrowing in the case of a Borrowing consisting of Base Rate Advances, make available for the account of its Applicable Lending Office to the Administrative Agent at the Administrative Agent’s Account, in same day funds, such Lender’s ratable portion of such Borrowing in accordance with the respective Commitments of such Lender and the other Lenders. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower by crediting the Borrower’s Account; provided, however, that the Administrative Agent shall first make a portion of such funds equal to the aggregate principal amount of any Swing Line Advances and Letter of Credit Advances made by the Swing Line Bank or any Issuing Bank, as the case may be, and by any other Lender and outstanding on the date of such Borrowing, plus interest accrued and unpaid thereon to and as of such date, available to the Swing Line Bank or such Issuing Bank, as the case may be, and such other Lenders for repayment of such Swing Line Advances and Letter of Credit Advances.

          (b) Each Swing Line Borrowing shall be made on notice, given not later than 12:00 Noon (New York City time) on the date of the proposed Swing Line Borrowing, by the Borrower to the Swing Line Bank and the Administrative Agent. Each such notice of a Swing Line Borrowing (a “Notice of Swing Line Borrowing”) shall be by telephone, confirmed immediately in writing or by telecopier or e-mail, in each case in substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such Borrowing, (ii) amount of such Borrowing and (iii) maturity of such Borrowing (which maturity shall be no later than the earlier of (A) the fifteenth day after the requested date of such Borrowing and (B) the Termination Date). The Swing Line Bank shall, before 1:00 P.M. (New York City time) on the date of such Swing Line Borrowing, make the amount thereof available to the Administrative Agent at the Administrative Agent’s Account, in same day funds. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the

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Administrative Agent will make such funds available to the Borrower by crediting the Borrower’s Account. Upon written demand by the Swing Line Bank, with a copy of such demand to the Administrative Agent, each other Lender shall purchase from the Swing Line Bank, and the Swing Line Bank shall sell and assign to each such other Lender, such other Lender’s Pro Rata Share of such outstanding Swing Line Advance as of the date of such demand, by making available for the account of its Applicable Lending Office to the Administrative Agent for the account of the Swing Line Bank, by deposit to the Administrative Agent’s Account, in same day funds, an amount equal to the portion of the outstanding principal amount of such Swing Line Advance to be purchased by such Lender. The Borrower hereby agrees to each such sale and assignment. Each Lender agrees to purchase its Pro Rata Share of an outstanding Swing Line Advance on (i) the Business Day on which demand therefor is made by the Swing Line Bank, provided that notice of such demand is given not later than 12:00 Noon (New York City time) on such Business Day or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time. Upon any such assignment by the Swing Line Bank to any other Lender of a portion of a Swing Line Advance, the Swing Line Bank represents and warrants to such other Lender that the Swing Line Bank is the legal and beneficial owner of such interest being assigned by it, but makes no other representation or warranty and assumes no responsibility with respect to such Swing Line Advance, the Loan Documents or any Loan Party. If and to the extent that any Lender shall not have so made the amount of such Swing Line Advance available to the Administrative Agent, such Lender agrees to pay to the Administrative Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Swing Line Bank until the date such amount is paid to the Administrative Agent, at the Federal Funds Rate. If such Lender shall pay to the Administrative Agent such amount for the account of the Swing Line Bank on any Business Day, such amount so paid in respect of principal shall constitute a Swing Line Advance made by such Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Swing Line Advance made by the Swing Line Bank shall be reduced by such amount on such Business Day.

          (c) Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for the initial Borrowing hereunder or for any Borrowing if the aggregate amount of such Borrowing is less than $1,000,000 or if the obligation of the Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.07(d)(ii), 2.09 or 2.10 and (ii) there may not be more than six separate Interest Periods in effect hereunder at any time.

          (d) Each Notice of Borrowing and Notice of Swing Line Borrowing shall be irrevocable and binding on the Borrower. In the case of any Borrowing that the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure, is not made on such date.

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          (e) Unless the Administrative Agent shall have received notice from a Lender prior to (x) the date of any Borrowing consisting of Eurodollar Rate Advances or (y) 12:00 Noon (New York City time) on the date of any Borrowing consisting of Base Rate Advances that such Lender will not make available to the Administrative Agent such Lender’s ratable portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with subsection (a) of this Section 2.02 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Administrative Agent, such Lender and the Borrower severally agree to repay or pay to the Administrative Agent forthwith on demand such corresponding amount and to pay interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid or paid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at such time under Section 2.07 to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender shall pay to the Administrative Agent such corresponding amount, such amount so paid shall constitute such Lender’s Advance as part of such Borrowing for all purposes.

          (f) The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing.

          SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit. (a) Request for Issuance. Each Letter of Credit shall be issued upon notice, given not later than 12:00 Noon (New York City time) on the fifth Business Day prior to the date of the proposed issuance of such Letter of Credit, by the Borrower to any Issuing Bank, which shall give to the Administrative Agent and each Lender prompt notice thereof by telex, telecopier or e mail or by means of the Approved Electronic Platform. Each such notice of issuance of a Letter of Credit (a “Notice of Issuance”) shall be by telephone, confirmed immediately in writing, telex, telecopier or e-mail, in each case specifying therein the requested (i) date of such issuance (which shall be a Business Day), (ii) Available Amount of such Letter of Credit, (iii) expiration date of such Letter of Credit, (iv) name and address of the beneficiary of such Letter of Credit and (v) form of such Letter of Credit, and shall be accompanied by such application and agreement for letter of credit as such Issuing Bank may specify to the Borrower for use in connection with such requested Letter of Credit (a “Letter of Credit Agreement”). If the requested form of such Letter of Credit is acceptable to such Issuing Bank in its sole discretion, such Issuing Bank will, upon fulfillment of the applicable conditions set forth in Article III, make such Letter of Credit available to the Borrower at its office referred to in Section 9.02 or as otherwise agreed with the Borrower in connection with such issuance. In the event and to the extent that the provisions of any Letter of Credit Agreement shall conflict with this Agreement, the provisions of this Agreement shall govern.

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          (b) Letter of Credit Reports. Each Issuing Bank shall furnish (i) to each Lender and the Borrower on the first Business Day of each month a written report summarizing issuance and expiration dates of Letters of Credit issued by such Issuing Bank during the preceding month and drawings during such month under all Letters of Credit issued by such Issuing Bank and (ii) to the Administrative Agent and each Lender and the Borrower on the first Business Day of each calendar quarter a written report setting forth the average daily aggregate Available Amount during the preceding calendar quarter of all Letters of Credit issued by such Issuing Bank.

          (c) Letter of Credit Participations; Drawing and Reimbursement. (i) Immediately upon the issuance by the Issuing Bank of any Letter of Credit, the Issuing Bank shall be deemed to have sold and transferred to each Lender, and each Lender (in its capacity under this Section 2.03(c), a “Participant”) shall be deemed irrevocably and unconditionally to have purchased and received from the Issuing Bank, without recourse or warranty, an undivided interest and participation in such Letter of Credit, to the extent of such Participant’s Pro Rata Share of the Available Amount of such Letter of Credit, each drawing or payment made thereunder and the obligations of the Borrower under this Agreement with respect thereto, and any security therefor or guaranty pertaining thereto. Upon any change in the Revolving Credit Commitments or the Lenders’ respective Pro Rata Shares pursuant to Section 9.07, it is hereby agreed that, with respect to all outstanding Letters of Credit and unpaid drawings relating thereto, there shall be an automatic adjustment to the participations pursuant to this Section 2.03(c) to reflect the new Pro Rata Shares of the assignor and assignee Lenders, as the case may be.

     (ii) In determining whether to pay under any Letter of Credit, the Issuing Bank shall not have any obligation with respect to the other Revolving Credit Lenders other than to confirm that any documents required to be delivered under such Letter of Credit appear to have been delivered and that they appear to substantially comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by the Issuing Bank under or in connection with any Letter of Credit issued by it shall not create for the Issuing Bank any resulting liability to the Borrower, any other Loan Party, any Revolving Credit Lender or any other Person unless such action is taken or omitted to be taken with gross negligence or willful misconduct on the part of the Issuing Bank (as determined by a court of competent jurisdiction in a final non-appealable judgment).

     (iii) The payment by any Issuing Bank of a draft drawn under any Letter of Credit shall constitute for all purposes of this Agreement the making by such Issuing Bank of a Letter of Credit Advance, which shall be a Base Rate Advance, in the amount of such draft. In the event that the Issuing Bank makes any payment under any Letter of Credit issued by it and the Borrower shall not have reimbursed such amount in full to the Issuing Bank pursuant to Section 2.04(c), the Issuing Bank shall promptly notify the Administrative Agent, which shall promptly notify each Participant of such failure, and each Participant shall promptly and unconditionally pay to the Administrative Agent for the account of the Issuing Bank the amount of such Participant’s Pro Rata Share of such unreimbursed payment in U.S. dollars and in same day funds. Upon such notification by the Administrative Agent to any Participant required to fund a payment under a Letter of Credit, such Participant shall make available to the Administrative Agent for the account

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of the Issuing Bank its Pro Rata Share of an outstanding Letter of Credit Advance on (i) the Business Day on which demand therefor is made by the Issuing Bank which made such Advance, provided that notice of such demand is given not later than 11:00 A.M. (New York City time) on such Business Day, or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time. If such Lender shall pay to the Administrative Agent such amount for the account of such Issuing Bank on any Business Day, such amount so paid in respect of principal shall constitute a Letter of Credit Advance made by such Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Letter of Credit Advance made by such Issuing Bank shall be reduced by such amount on such Business Day. If and to the extent that any Lender shall not have so made the amount of such Letter of Credit Advance available to the Administrative Agent, such Lender agrees to pay to the Administrative Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by such Issuing Bank until the date such amount is paid to the Administrative Agent, at the Federal Funds Rate for its account or the account of such Issuing Bank, as applicable.

     (iv) Whenever the Issuing Bank receives a payment of a reimbursement obligation as to which it has received any payments from the Participants pursuant to clause (iii) above, the Issuing Bank shall pay to the Administrative Agent for the account of each such Participant that has paid its Pro Rata Share thereof, in same day funds, an amount equal to such Participant’s share (based upon the proportionate aggregate amount originally funded by such Participant to the aggregate amount funded by all Participants) of the principal amount of such reimbursement obligation and interest thereon accruing after the purchase of the respective participations.

          (d) Failure to Make Letter of Credit Advances. The failure of any Lender to make the Letter of Credit Advance to be made by it on the date specified in Section 2.03(c) shall not relieve any other Lender of its obligation hereunder to make its Letter of Credit Advance on such date, but no Lender shall be responsible for the failure of any other Lender to make the Letter of Credit Advance to be made by such other Lender on such date.

          (e) Cash Collateral.

     (i) If the expiration date of any Letter of Credit would be later than 30 days before the Termination Date, then, any such Letter of Credit shall expressly provide, as a condition to the Issuing Bank’s issuance of such Letter of Credit, that Borrower shall be required, commencing on the date that is 30 days before the Termination Date and at all times thereafter, to Cash Collateralize such Letter of Credit by delivering to Administrative Agent Cash Collateral in an amount sufficient to cover all L/C Termination Date Exposure. Borrower shall comply with the terms and conditions of any such Letter of Credit requiring Cash Collateralization.

     (ii) All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing deposit accounts at the Administrative Agent. The Borrower hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent and the Issuing

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Bank, and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.03(e). If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent as herein provided, or that the total amount of such Cash Collateral is less than the applicable L/C Termination Date Exposure and other obligations secured thereby, the Borrower will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency.

     (iii) Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 2.03(e) in respect of Letters of Credit shall be held and applied to the satisfaction of the specific Available Amount of such Letters of Credit and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may be provided for herein.

     (iv) Cash Collateral (or the appropriate portion thereof) provided to reduce L/C Termination Date Exposure or other obligations shall be released promptly following (i) the elimination of the applicable L/C Termination Date Exposure or other obligations giving rise thereto or (ii) the Administrative Agent’s good faith determination that there exists excess Cash Collateral; provided, however, that the Person providing Cash Collateral and the Issuing Bank may agree that Cash Collateral shall not be released but instead held to support future anticipated L/C Termination Date Exposure or other obligations.

          SECTION 2.04. Repayment of Advances. (a) Revolving Credit Advances. The Borrower shall repay to the Administrative Agent for the ratable account of the Lenders on the Termination Date the aggregate outstanding principal amount of the Revolving Credit Advances then outstanding.

          (b) Swing Line Advances. The Borrower shall repay to the Administrative Agent for the account of (i) the Swing Line Bank and (ii) each other Lender that has made a Swing Line Advance by purchase from the Swing Line Bank pursuant to Section 2.02(b), the outstanding principal amount of each Swing Line Advance made by each of them on the earlier of the maturity date specified in the applicable Notice of Swing Line Borrowing (which maturity shall be no later than the fifteenth day after the requested date of such Swing Line Borrowing) and the Termination Date.

          (c) Letter of Credit Advances. (i) The Borrower shall repay to the Administrative Agent for the account of each Issuing Bank and each other Lender that has made a Letter of Credit Advance on the same day on which such Advance was made the outstanding principal amount of each Letter of Credit Advance made by each of them.

     (ii) The Obligations of the Borrower under this Agreement, any Letter of Credit Agreement and any other agreement or instrument relating to any Letter of Credit (and the obligations of each Lender to reimburse the Issuing Bank with respect thereto)

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shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement, such Letter of Credit Agreement and such other agreement or instrument under all circumstances, including, without limitation, the following circumstances:

     (A) any lack of validity or enforceability of any Loan Document, any Letter of Credit Agreement, any Letter of Credit or any other agreement or instrument relating thereto (all of the foregoing being, collectively, the “L/C Related Documents”);

     (B) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations of the Borrower in respect of any L/C Related Document or any other amendment or waiver of or any consent to departure from all or any of the L/C Related Documents;

     (C) the existence of any claim, set off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of a Letter of Credit (or any Persons for which any such beneficiary or any such transferee may be acting), any Issuing Bank or any other Person, whether in connection with the transactions contemplated by the L/C Related Documents or any unrelated transaction;

     (D) any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

     (E) payment by any Issuing Bank under a Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit;

     (F) any exchange, release or non-perfection of any Collateral or other collateral, or any release or amendment or waiver of or consent to departure from the Guaranties or any other guarantee, for all or any of the Obligations of the Borrower in respect of the L/C Related Documents; or

     (G) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or a guarantor.

          SECTION 2.05. Termination or Reduction of the Commitments. (a) Optional. The Borrower may, upon at least three Business Days’ notice to the Administrative Agent, terminate in whole or reduce in part the unused portions of the Swing Line Facility, the Letter of Credit Facility and the Unused Revolving Credit Commitments; provided, however, that each partial reduction of a Facility (i) shall be in an aggregate amount of $1,000,000 (or, in the case of the Swing Line Facility, $250,000) or an integral multiple of $250,000 in excess thereof and (ii) shall be made ratably among the Lenders in accordance with their Commitments with respect to such Facility.

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          (b) Mandatory. (i) The Letter of Credit Facility shall be permanently reduced from time to time on the date of each reduction in the Revolving Credit Facility by the amount, if any, by which the amount of the Letter of Credit Facility exceeds the Revolving Credit Facility after giving effect to such reduction of the Revolving Credit Facility.

     (ii) The Swing Line Facility shall be permanently reduced from time to time on the date of each reduction in the Revolving Credit Facility by the amount, if any, by which the amount of the Swing Line Facility exceeds the Revolving Credit Facility after giving effect to such reduction of the Revolving Credit Facility.

          SECTION 2.06. Prepayments. (a) Optional. The Borrower may, upon same day notice in the case of Base Rate Advances and two Business Days’ notice in the case of Eurodollar Rate Advances, in each case to the Administrative Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding aggregate principal amount of the Advances comprising part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the aggregate principal amount prepaid; provided, however, that (i) each partial prepayment shall be in an aggregate principal amount of $1,000,000 or an integral multiple of $250,000 in excess thereof or, if less, the amount of the Advances outstanding and (ii) if any prepayment of a Eurodollar Rate Advance is made on a date other than the last day of an Interest Period for such Advance, the Borrower shall also pay any amounts owing pursuant to Section 9.04(c).

          (b) Mandatory. (i) The Borrower shall, on each Business Day, prepay an aggregate principal amount of the Revolving Credit Advances comprising part of the same Borrowings, the Swing Line Advances and the Letter of Credit Advances and, to the extent all Advances have been prepaid, make a deposit in the L/C Cash Collateral Account in an amount sufficient to cause (A) the Facility Exposure not to exceed the lesser of the Revolving Credit Facility and the Total Borrowing Base Value on such Business Day, (B) the Leverage Ratio not to exceed the applicable maximum Leverage Ratio set forth in Section 5.04(a)(i) on such Business Day, and (C) the Facility Exposure not to exceed the Total Borrowing Base Value as set forth in Section 5.04(b)(i) on such Business Day.

     (ii) The Borrower shall, on each Business Day, pay to the Administrative Agent for deposit in the L/C Cash Collateral Account an amount sufficient to cause the aggregate amount on deposit in the L/C Cash Collateral Account to equal the amount by which the aggregate Available Amount of all Letters of Credit then outstanding exceeds the Letter of Credit Facility on such Business Day. To the extent the funds on deposit in the L/C Cash Collateral Account shall at any time exceed the total amount required to be deposited therein pursuant to the terms of this Agreement, the Administrative Agent shall, promptly upon request by the Borrower and provided that no Default or Event of Default shall then have occurred or be continuing or would result therefrom, return such excess amount to the Borrower.

     (iii) Prepayments of the Revolving Credit Facility made pursuant to clause (i) above shall be first applied to prepay Letter of Credit Advances then outstanding until such Advances are paid in full, second applied to prepay Swing Line Advances then

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outstanding until such Advances are paid in full, third applied to prepay Revolving Credit Advances then outstanding comprising part of the same Borrowings until such Advances are paid in full and fourth deposited in the L/C Cash Collateral Account to cash collateralize 100% of the Available Amount of the Letters of Credit then outstanding. Upon the drawing of any Letter of Credit for which funds are on deposit in the L/C Cash Collateral Account, such funds shall be applied to reimburse the relevant Issuing Bank or Lenders, as applicable.

     (iv) All prepayments under this subsection (b) shall be made together with accrued interest to the date of such prepayment on the principal amount prepaid.

          SECTION 2.07. Interest. (a) Scheduled Interest. The Borrower shall pay interest on the unpaid principal amount of each Advance owing to each Lender from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum:

     (i) Base Rate Advances. During such periods as such Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of (A) the Base Rate in effect from time to time plus (B) the Applicable Margin in respect of Base Rate Advances in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December during such periods and on the date such Base Rate Advance shall be Converted or paid in full.

     (ii) Eurodollar Rate Advances. During such periods as such Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of (A) the Eurodollar Rate for such Interest Period for such Advance plus (B) the Applicable Margin in respect of Eurodollar Rate Advances in effect on the first day of such Interest Period, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in full.

          (b) Default Interest. Upon the occurrence and during the continuance of any Event of Default, the Borrower shall pay interest on (i) the unpaid principal amount of each Advance owing to each Lender, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the fullest extent permitted by law, the amount of any interest, fee or other amount payable under the Loan Documents that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid, in the case of interest, on the Type of Advance on which such interest has accrued pursuant to clause (a)(i) or (a)(ii) above and, in all other cases, on Base Rate Advances pursuant to clause (a)(i) above.

          (c) Notice of Interest Period and Interest Rate. Each continuation of a Eurodollar Rate Advance shall be made upon the Borrower’s irrevocable notice received by the

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Administrative Agent, which may be given by telephone, including a specification of the duration of the Interest Period with respect thereto. Each such notice must be received by the Administrative Agent not later than 12:00 Noon (New York City time) three Business Days prior to the first day of the subsequent Interest Period for the continuation of such Eurodollar Rate Advance. Each telephonic notice by the Borrower pursuant to this Section 2.07(c) must be confirmed promptly by delivery to the Administrative Agent of a written notice, appropriately completed and signed by a Responsible Officer of the Borrower. Promptly after receipt of a Notice of Borrowing pursuant to Section 2.02(a), a notice of Conversion pursuant to Section 2.09, a notice of continuation of a Eurodollar Rate Advance pursuant to this subsection (c) or a notice of selection of an Interest Period pursuant to the definition of “Interest Period”, the Administrative Agent shall give notice to the Borrower and each Lender of the applicable Interest Period and the applicable interest rate determined by the Administrative Agent for purposes of clause (a)(i) or (a)(ii) above, and the applicable rate, if any, furnished by each Reference Bank for the purpose of determining the applicable interest rate under clause (a)(ii) above.

          (d) Interest Rate Determination. (i) The Reference Bank agrees to furnish to the Administrative Agent timely information for the purpose of determining each Eurodollar Rate. If the Reference Bank shall not furnish such timely information to the Administrative Agent for the purpose of determining any such interest rate, the Administrative Agent shall determine such interest rate on the basis of timely information obtained by the Administrative Agent in its sole reasonable discretion.

     (ii) If the Reuters Screen LIBOR01 Page (or a successor page) is unavailable and the Administrative Agent is unable to determine the Eurodollar Rate for any Eurodollar Rate Advances,

     (A) the Administrative Agent shall forthwith notify the Borrower and the Lenders that the interest rate cannot be determined for such Eurodollar Rate Advances,

     (B) each such Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance (or if such Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and

     (C) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist.

          SECTION 2.08. Fees. (a) Unused Fee. The Borrower shall pay to the Administrative Agent for the account of the Lenders an unused commitment fee (the “Unused Fee”), from the date hereof in the case of each Initial Lender and from the effective date specified in the Assignment and Acceptance or the Accession Agreement, as the case may be, pursuant to which it became a Lender in the case of each other Lender until the Termination Date, payable in arrears quarterly on the last day of each March, June, September and December,

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commencing September 30, 2010, and on the Termination Date. The Unused Fee payable for the account of each Lender shall be calculated for each period for which the Unused Fee is payable on the average daily Unused Revolving Credit Commitment of such Lender during such period at the rate of 0.40% per annum.

          (b) Letter of Credit Fees, Etc. (i) The Borrower shall pay to the Administrative Agent for the account of each Lender a commission, payable in arrears, (a) quarterly on the last day of each March, June, September and December commencing September 30, 2010, (b) on the earliest to occur of the full drawing, expiration, termination or cancellation of any Letter of Credit, and (c) on the Termination Date, on such Lender’s Pro Rata Share of the average daily aggregate Available Amount during such quarter of all Letters of Credit outstanding from time to time for the applicable period at the rate per annum equal to the Applicable Margin for Eurodollar Rate Advances in effect from time to time.

     (ii) The Borrower shall pay to each Issuing Bank, for its own account, (A) a fronting fee for each Letter of Credit issued by such Issuing Bank in an amount equal to 0.125% of the Available Amount of such Letter of Credit on the date of issuance of such Letter of Credit, payable on such date and (B) such other commissions, issuance fees, transfer fees and other fees and charges in connection with the issuance or administration of each Letter of Credit as the Borrower and such Issuing Bank shall agree.

          (c) Other Fees. The Borrower shall pay to each of Agent and Arranger for its own account the fees, in the amounts and on the dates, set forth in the Fee Letter and such other fees as may from time to time be agreed between the Borrower and Agent or Arranger.

          (d) Extension Fee. The Borrower shall pay to the Administrative Agent on the Extension Date, for the account of each Lender, a Facility extension fee, in an amount equal to 0.50% of each Lender’s Revolving Credit Commitment then outstanding.

          SECTION 2.09. Conversion of Advances. (a) Optional. The Borrower may on any Business Day, upon notice given to the Administrative Agent not later than 12:00 Noon (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.07 and 2.10, Convert all or any portion of the Advances of one Type comprising the same Borrowing into Advances of the other Type; provided, however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made only on the last day of an Interest Period for such Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(c), no Conversion of any Advances shall result in more separate Borrowings than permitted under Section 2.02(c) and each Conversion of Advances comprising part of the same Borrowing under any Facility shall be made ratably among the Lenders in accordance with their Commitments under such Facility. Each such notice of Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Advances to be Converted and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for such Advances. Each notice of Conversion shall be irrevocable and binding on the Borrower.

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          (b) Mandatory. (a) On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $1,000,000, such Advances shall automatically Convert into Base Rate Advances.

     (i) If the Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01, the Administrative Agent will forthwith so notify the Borrower and the Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance.

     (ii) Upon the occurrence and during the continuance of any Event of Default, (y) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (z) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended.

          SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Lender Party of agreeing to make or of making, funding or maintaining Eurodollar Rate Advances or of agreeing to issue or of issuing or maintaining or participating in Letters of Credit or of agreeing to make or of making or maintaining Letter of Credit Advances (excluding, for purposes of this Section 2.10, any such increased costs resulting from (y) Taxes or Other Taxes (as to which Section 2.12 shall govern) and (z) changes in the basis of taxation of overall net income or overall gross income by the United States or by the foreign jurisdiction or state under the laws of which such Lender Party is organized or has its Applicable Lending Office or any political subdivision thereof), then the Borrower shall from time to time, upon demand by such Lender Party (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender Party additional amounts sufficient to compensate such Lender Party for such increased cost; provided, however, that a Lender Party claiming additional amounts under this Section 2.10(a) agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Applicable Lending Office if the making of such a designation would avoid the need for, or reduce the amount of, such increased cost that may thereafter accrue and would not, in the reasonable judgment of such Lender Party, be otherwise disadvantageous to such Lender Party. A certificate as to the amount of such increased cost, submitted to the Borrower by such Lender Party, shall be conclusive and binding for all purposes, absent manifest error.

          (b) If any Lender Party determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender Party or any corporation controlling such Lender Party and that the amount of such capital is increased by or based upon the existence of such Lender Party’s commitment to lend or to issue or participate in Letters of Credit hereunder and other

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commitments of such type or the issuance or maintenance of or participation in the Letters of Credit (or similar contingent obligations), then, upon demand by such Lender Party or such corporation (with a copy of such demand to the Administrative Agent), the Borrower shall pay to the Administrative Agent for the account of such Lender Party, from time to time as specified by such Lender Party, additional amounts sufficient to compensate such Lender Party in the light of such circumstances, to the extent that such Lender Party reasonably determines such increase in capital to be allocable to the existence of such Lender Party’s commitment to lend or to issue or participate in Letters of Credit hereunder or to the issuance or maintenance of or participation in any Letters of Credit. A certificate as to such amounts submitted to the Borrower by such Lender Party shall be conclusive and binding for all purposes, absent manifest error.

          (c) If, with respect to any Eurodollar Rate Advances, the Required Lenders notify the Administrative Agent that the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Lenders of making, funding or maintaining their Eurodollar Rate Advances for such Interest Period, the Administrative Agent shall forthwith so notify the Borrower and the Lenders, whereupon (i) each such Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower that such Lenders have determined that the circumstances causing such suspension no longer exist.

          (d) Notwithstanding any other provision of this Agreement, if the introduction of or any change in or in the interpretation of any law or regulation shall make it unlawful, or any central bank or other governmental authority shall assert that it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder, then, on notice thereof and demand therefor by such Lender to the Borrower through the Administrative Agent, (i) each Eurodollar Rate Advance will automatically, upon such demand, Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower that such Lender has determined that the circumstances causing such suspension no longer exist; provided, however, that, before making any such demand, such Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Eurodollar Lending Office if the making of such a designation would allow such Lender or its Eurodollar Lending Office to continue to perform its obligations to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate Advances and would not, in the judgment of such Lender, be otherwise disadvantageous to such Lender.

          SECTION 2.11. Payments and Computations. (a) The Borrower shall make each payment hereunder and under the Notes, irrespective of any right of counterclaim or set-off (except as otherwise provided in Section 2.13), not later than 12:00 Noon (New York City time) on the day when due in U.S. dollars to the Administrative Agent at the Administrative Agent’s Account in same day funds, with payments being received by the Administrative Agent after such time being deemed to have been received on the next succeeding Business Day. The Administrative Agent shall promptly thereafter cause like funds to be distributed (i) if such payment by the Borrower is in respect of principal, interest, commitment fees or any other

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Obligation then payable hereunder and under the Notes to more than one Lender Party, to such Lender Parties for the account of their respective Applicable Lending Offices ratably in accordance with the amounts of such respective Obligations then payable to such Lender Parties and (ii) if such payment by the Borrower is in respect of any Obligation then payable hereunder to one Lender Party, to such Lender Party for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon any Acceding Lender becoming a Lender hereunder as a result of a Commitment Increase pursuant to Section 2.17 and upon the Administrative Agent’s receipt of such Lender’s Accession Agreement and recording of information contained therein in the Register, from and after the applicable Increase Date, the Administrative Agent shall make all payments hereunder and under any Notes issued in connection therewith in respect of the interest assumed thereby to such Acceding Lender. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 9.07(d), from and after the effective date of such Assignment and Acceptance, the Administrative Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender Party assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

          (b) The Borrower hereby authorizes each Lender Party and each of its Affiliates, if and to the extent payment owed to such Lender Party is not made when due hereunder or, in the case of a Lender, under the Note held by such Lender, to charge from time to time, to the fullest extent permitted by law, against any or all of the Borrower’s accounts with such Lender Party any amount so due.

          (c) All computations of interest based on the Base Rate shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate or the Federal Funds Rate and of fees and Letter of Credit commissions shall be made by the Administrative Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, fees or commissions are payable. Each determination by the Administrative Agent of an interest rate, fee or commission hereunder shall be conclusive and binding for all purposes, absent manifest error.

          (d) Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commitment fee, as the case may be; provided, however, that if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

          (e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to any Lender Party hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each

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such Lender Party on such due date an amount equal to the amount then due such Lender Party. If and to the extent the Borrower shall not have so made such payment in full to the Administrative Agent, each such Lender Party shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender Party together with interest thereon, for each day from the date such amount is distributed to such Lender Party until the date such Lender Party repays such amount to the Administrative Agent, at the Federal Funds Rate.

          (f) Whenever any payment received by the Administrative Agent under this Agreement or any of the other Loan Documents is insufficient to pay in full all amounts due and payable to the Agents and the Lender Parties under or in respect of this Agreement and the other Loan Documents on any date, such payment shall be distributed by the Administrative Agent and applied by the Agents and the Lender Parties in the following order of priority:

     (i) first, to the payment of all of the fees, indemnification payments, costs and expenses that are due and payable to the Agents (solely in their respective capacities as Agents) under or in respect of this Agreement and the other Loan Documents on such date, ratably based upon the respective aggregate amounts of all such fees, indemnification payments, costs and expenses owing to the Agents on such date;

     (ii) second, to the payment of all of the fees, indemnification payments, costs and expenses that are due and payable to the Issuing Banks (solely in their respective capacities as such) under or in respect of this Agreement and the other Loan Documents on such date, ratably based upon the respective aggregate amounts of all such fees, indemnification payments, costs and expenses owing to the Issuing Banks on such date;

     (iii) third, to the payment of all of the indemnification payments, costs and expenses that are due and payable to the Lenders under Section 9.04, Section 21 of the Security Agreement and any similar section of any of the other Loan Documents on such date, ratably based upon the respective aggregate amounts of all such indemnification payments, costs and expenses owing to the Lenders on such date;

     (iv) fourth, to the payment of all of the amounts that are due and payable to the Administrative Agent and the Lender Parties under Sections 2.10 and 2.12 on such date, ratably based upon the respective aggregate amounts thereof owing to the Administrative Agent and the Lender Parties on such date;

     (v) fifth, to the payment of all of the fees that are due and payable to the Lenders under Section 2.08(a), (b)(i) and (e) on such date, ratably based upon the respective aggregate Commitments of the Lenders under the Facilities on such date;

     (vi) sixth, to the payment of all of the accrued and unpaid interest on the Obligations of the Borrower under or in respect of the Loan Documents that is due and payable to the Administrative Agent and the Lender Parties under Section 2.07(b) on such date, ratably based upon the respective aggregate amounts of all such interest owing to the Administrative Agent and the Lender Parties on such date;

     (vii) seventh, to the payment of all of the accrued and unpaid interest on the Advances that is due and payable to the Administrative Agent and the Lender Parties

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under Section 2.07(a) on such date, ratably based upon the respective aggregate amounts of all such interest owing to the Administrative Agent and the Lender Parties on such date;

     (viii) eighth, to the payment of any other accrued and unpaid interest comprising Obligations that is due and payable to the Administrative Agent and the Lender Parties on such date, ratably based upon the respective aggregate amounts of all such interest owing to the Administrative Agent and the Lender Parties on such date;

     (ix) ninth, to the payment of the principal amount of all of the outstanding Advances that are due and payable to the Administrative Agent and the Lender Parties on such date, ratably based upon the respective aggregate amounts of all such principal and reimbursement obligations owing to the Administrative Agent and the Lender Parties on such date, and to deposit into the L/C Cash Collateral Account any contingent reimbursement obligations in respect of outstanding Letters of Credit to the extent required by Section 6.02; and

     (x) tenth, to the payment of all other Obligations of the Loan Parties owing under or in respect of the Loan Documents that are due and payable to the Administrative Agent and the other Secured Parties on such date, ratably based upon the respective aggregate amounts of all such Obligations owing to the Administrative Agent and the other Secured Parties on such date.

          SECTION 2.12. Taxes. (a) Any and all payments by any Loan Party to or for the account of any Lender Party or any Agent hereunder or under any other Loan Document shall be made, in accordance with Section 2.11 or the applicable provisions of such other Loan Document, if any, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender Party and each Agent, taxes that are imposed on its overall net income by the United States and taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction under the laws of which such Lender Party or such Agent, as the case may be, is organized or any political subdivision thereof and, in the case of each Lender Party, taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction of such Lender Party’s Applicable Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under any other Loan Document being hereinafter referred to as “Taxes”). If any Loan Party shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any other Loan Document to any Lender Party or any Agent, and unless such requirement arises from the failure of a Lender to furnish the documentation described in Section 2.12(e), (i) the sum payable by such Loan Party shall be increased as may be necessary so that after such Loan Party and any Agent have made all required deductions (including deductions applicable to additional sums payable under this Section 2.12) such Lender Party or such Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Loan Party shall make all such deductions and (iii) such Loan Party shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.

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          (b) In addition, each Loan Party shall pay any present or future stamp, documentary, excise, property, intangible, mortgage recording or similar taxes, charges or levies that arise from any payment made by such Loan Party hereunder or under any other Loan Documents or from the execution, delivery or registration of, performance under, or otherwise with respect to, this Agreement, or the other Loan Documents (hereinafter referred to as “Other Taxes”).

          (c) The Loan Parties shall indemnify each Lender Party and each Agent for and hold them harmless against the full amount of Taxes and Other Taxes, and for the full amount of taxes of any kind imposed or asserted by any jurisdiction on amounts payable by the Loan Parties under this Section 2.12, imposed on or paid by such Lender Party or such Agent (as the case may be) and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date such Lender Party or such Agent (as the case may be) makes written demand therefor.

          (d) Within 30 days after the date of any payment of Taxes, the appropriate Loan Party shall furnish to the Administrative Agent, at its address referred to in Section 9.02, the original or a certified copy of a receipt evidencing such payment, to the extent such receipt is issued therefor, or other evidence of payment thereof reasonably satisfactory to the Administrative Agent. In the case of any payment hereunder or under the other Loan Documents by or on behalf of a Loan Party through an account or branch outside the United States or by or on behalf of a Loan Party by a payor that is not a United States person, if such Loan Party determines that no Taxes are payable in respect thereof, such Loan Party shall furnish, or shall cause such payor to furnish, to the Administrative Agent, at such address, an opinion of counsel acceptable to the Administrative Agent stating that such payment is exempt from Taxes. For purposes of subsections (d) and (e) of this Section 2.12, the terms “United States” and “United States person” shall have the meanings specified in Section 7701 of the Internal Revenue Code.

          (e) Each Lender Party organized under the laws of a jurisdiction outside the United States shall, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender Party, and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender Party in the case of each other Lender Party, and from time to time thereafter as reasonably requested in writing by the Borrower (but only so long thereafter as such Lender Party remains lawfully able to do so), provide each of the Administrative Agent and the Borrower with two original Internal Revenue Service Forms W-8BEN or W-8EC1, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Lender Party is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement or any other Loan Document. If the forms provided by a Lender Party at the time such Lender Party first becomes a party to this Agreement indicate a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Lender Party provides the appropriate forms certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such forms; provided, however, that if, at the effective date of the Assignment and Acceptance pursuant to which a Lender Party becomes a party to this Agreement, the Lender Party assignor was entitled to payments under subsection (a) of this Section 2.12 in respect of United States

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withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Lender Party assignee on such date. If any form or document referred to in this subsection (e) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date hereof by Internal Revenue Service form W-8BEN or W-8EC1, that the applicable Lender Party reasonably considers to be confidential, such Lender Party shall give notice thereof to the Borrower and shall not be obligated to include in such form or document such confidential information. Upon the request of the Borrower, any Lender that is a United States person and is not an exempt recipient for U.S. backup withholding purposes shall deliver to the Borrower two copies of Internal Revenue Service form W-9 (or any successor form).

          (f) For any period with respect to which a Lender Party has failed to provide the Borrower with the appropriate form or other document described in subsection (e) above (other than if such failure is due to a change in law, or in the interpretation or application thereof, occurring after the date on which a form or other document originally was required to be provided or if such form or other document otherwise is not required under subsection (e) above), such Lender Party shall not be entitled to indemnification under subsection (a) or (c) of this Section 2.12 with respect to Taxes imposed by the United States by reason of such failure; provided, however, that should a Lender Party become subject to Taxes because of its failure to deliver a form or other document required hereunder, the Loan Parties shall take such steps as such Lender Party shall reasonably request to assist such Lender Party to recover such Taxes.

          (g) Any Lender Party claiming any additional amounts payable pursuant to this Section 2.12 agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Eurodollar Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Lender Party, be otherwise disadvantageous to such Lender Party.

          (h) In the event that an additional payment is made under Section 2.12(a) or (c) for the account of any Lender Party and such Lender Party, in its sole discretion, determines that it has finally and irrevocably received or been granted a credit against or release or remission for, or repayment of, any tax paid or payable by it in respect of or calculated with reference to the deduction or withholding giving rise to such payment, such Lender Party shall, to the extent that it determines that it can do so without prejudice to the retention of the amount of such credit, relief, remission or repayment, pay to the applicable Loan Party such amount as such Lender Party shall, in its sole discretion, have determined to be attributable to such deduction or withholding and which will leave such Lender Party (after such payment) in no worse position than it would have been in if the applicable Loan Party had not been required to make such deduction or withholding. Nothing herein contained shall interfere with the right of a Lender Party to arrange its tax affairs in whatever manner it thinks fit nor oblige any Lender Party to claim any tax credit or to disclose any information relating to its affairs or any computations in respect thereof, and no Loan Party shall be entitled to review the tax records of any Lender Party or the Administrative Agent, or require any Lender Party to do anything that would prejudice its

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ability to benefit from any other credits, reliefs, remissions or repayments to which it may be entitled.

          SECTION 2.13. Sharing of Payments, Etc. Subject to the provisions of Section 2.11(f), if any Lender Party shall obtain at any time any payment (whether voluntary, involuntary, through the exercise of any right of set off, or otherwise, other than as a result of an assignment pursuant to Section 9.07) (a) on account of Obligations due and payable to such Lender Party hereunder and under the Notes at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender Party at such time to (ii) the aggregate amount of the Obligations due and payable to all Lender Parties hereunder and under the Notes at such time) of payments on account of the Obligations due and payable to all Lender Parties hereunder and under the Notes at such time obtained by all the Lender Parties at such time or (b) on account of Obligations owing (but not due and payable) to such Lender Party hereunder and under the Notes at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing to such Lender Party at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lender Parties hereunder and under the Notes at such time) of payments on account of the Obligations owing (but not due and payable) to all Lender Parties hereunder and under the Notes at such time obtained by all of the Lender Parties at such time, such Lender Party shall forthwith purchase from the other Lender Parties such interests or participating interests in the Obligations due and payable or owing to them, as the case may be, as shall be necessary to cause such purchasing Lender Party to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender Party, such purchase from each other Lender Party shall be rescinded and such other Lender Party shall repay to the purchasing Lender Party the purchase price to the extent of such Lender Party’s ratable share (according to the proportion of (i) the purchase price paid to such Lender Party to (ii) the aggregate purchase price paid to all Lender Parties) of such recovery together with an amount equal to such Lender Party’s ratable share (according to the proportion of (i) the amount of such other Lender Party’s required repayment to (ii) the total amount so recovered from the purchasing Lender Party) of any interest or other amount paid or payable by the purchasing Lender Party in respect of the total amount so recovered. The Borrower agrees that any Lender Party so purchasing an interest or participating interest from another Lender Party pursuant to this Section 2.13 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such interest or participating interest, as the case may be, as fully as if such Lender Party were the direct creditor of the Borrower in the amount of such interest or participating interest, as the case may be.

          SECTION 2.14. Use of Proceeds. The proceeds of the Advances and issuances of Letters of Credit shall be available (and the Borrower agrees that it shall use such proceeds and Letters of Credit) solely for (i) general corporate purposes of the Borrower and its Subsidiaries, (ii) the development of new, and the renovation and expansion of existing, Campus Housing Assets and the acquisition of such other assets and the making of such other Investments as are permitted by this Agreement, (iii) the acquisition of land and/or improvements for the sole purpose of converting such properties into Campus Housing Assets, (iv) the repayment in full (or refinancing) of existing mortgage loans affecting Borrowing Base Assets, (v) the payment of fees and expenses related to the Facilities and the other transactions

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contemplated by the Loan Documents and (vi) the payment of fees and expenses related to the IPO and the Formation Transactions.

          SECTION 2.15. Evidence of Debt. (a) Each Lender Party shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender Party resulting from each Advance owing to such Lender Party from time to time, including the amounts of principal and interest payable and paid to such Lender Party from time to time hereunder. The Borrower agrees that upon notice by any Lender Party to the Borrower (with a copy of such notice to the Administrative Agent) to the effect that a promissory note or other evidence of indebtedness is required or appropriate in order for such Lender Party to evidence (whether for purposes of pledge, enforcement or otherwise) the Advances owing to, or to be made by, such Lender Party, the Borrower shall promptly execute and deliver to such Lender Party, with a copy to the Administrative Agent, a Note, in substantially the form of Exhibit A hereto, payable to the order of such Lender Party in a principal amount equal to the Revolving Credit Commitment of such Lender Party. All references to Notes in the Loan Documents shall mean Notes, if any, to the extent issued hereunder. To the extent no Note has been issued to a Lender Party, this Agreement shall be deemed to comprise conclusive evidence for all purposes of the indebtedness resulting from the Advances and extensions of credit hereunder.

          (b) The Register maintained by the Administrative Agent pursuant to Section 9.07(d) shall include a control account, and a subsidiary account for each Lender Party, in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, the Type of Advances comprising such Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender Party hereunder, and (iv) the amount of any sum received by the Administrative Agent from the Borrower hereunder and each Lender Party’s share thereof.

          (c) Entries made in good faith by the Administrative Agent in the Register pursuant to subsection (b) above, and by each Lender Party in its account or accounts pursuant to subsection (a) above, shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Borrower to, in the case of the Register, each Lender Party and, in the case of such account or accounts, such Lender Party, under this Agreement, absent manifest error; provided, however, that the failure of the Administrative Agent or such Lender Party to make an entry, or any finding that an entry is incorrect, in the Register or such account or accounts shall not limit or otherwise affect the obligations of the Borrower under this Agreement.

          SECTION 2.16. Extension of Termination Date. At least 30 days but not more than 60 days prior to the Termination Date, the Borrower, by written notice to the Administrative Agent, may request, with respect to the Commitments then outstanding, a single one-year extension of the Termination Date. The Administrative Agent shall promptly notify each Lender of such request and the Termination Date in effect at such time shall, effective as at the Termination Date (the “Extension Date”), be extended for an additional one year period, provided that (i) the Administrative Agent shall have received not later than 30 days prior to the

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Termination Date a new Appraisal of each Borrowing Base Asset, (ii) the Borrower shall have paid the Extension Fees as described in Section 2.08(d) and (iii) on the Extension Date the following statements shall be true and the Administrative Agent shall have received for the account of each Lender Party a certificate signed by a Responsible Officer of the Borrower, dated the Extension Date, stating that: (a) the representations and warranties contained in Section 4.01 are true and correct in all material respects on and as of the Extension Date (except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date), and (b) no Default or Event of Default has occurred and is continuing or would result from such extension. In the event that an extension is effected pursuant to this Section 2.16 (but subject to the provisions of Sections 2.05, 2.06 and 6.01), the aggregate principal amount of all Advances shall be repaid in full ratably to the Lenders on the Termination Date as so extended. As of the Extension Date, any and all references in this Agreement, the Notes, if any, or any of the other Loan Documents to the “Termination Date” shall refer to the Termination Date as so extended.

          SECTION 2.17. Increase in the Aggregate Commitments. (a) The Borrower may, at any time (but no more than twice in any consecutive 12-month period), by written notice to the Administrative Agent, request an increase in the aggregate amount of the Revolving Credit Commitments by not less than $5,000,000 (each such proposed increase, a “Commitment Increase”) to be effective as of a date that is at least 90 days prior to the scheduled Termination Date then in effect (the “Increase Date”) as specified in the related notice to the Administrative Agent; provided, however, that (i) in no event shall the aggregate amount of the Commitments at any time exceed $200,000,000 and (ii) on the date of any request by the Borrower for a Commitment Increase and on the related Increase Date, the applicable conditions set forth in Article III shall be satisfied.

          (b) The Administrative Agent shall promptly notify the Lenders of each request by the Borrower for a Commitment Increase, which notice shall include (i) the proposed amount of such requested Commitment Increase, (ii) the proposed Increase Date and (iii) the date by which Lenders wishing to participate in the Commitment Increase must commit to an increase in the amount of their respective Commitments (the “Commitment Date”). Each Lender that is willing to participate in such requested Commitment Increase (each, an “Increasing Lender”) shall, in its sole discretion, give written notice to the Administrative Agent on or prior to the Commitment Date of the amount by which it is willing to increase its Commitment (the “Proposed Increased Commitment”). If the Lenders notify the Administrative Agent that they are willing to increase the amount of their respective Commitments by an aggregate amount that exceeds the amount of the requested Commitment Increase, the requested Commitment Increase shall be allocated to each Lender willing to participate therein in an amount equal to the Commitment Increase multiplied by the ratio of each Lender’s Proposed Increased Commitment to the aggregate amount of Proposed Increased Commitments.

          (c) Promptly following each Commitment Date, the Administrative Agent shall notify the Borrower as to the amount, if any, by which the Lenders are willing to participate in the requested Commitment Increase. If the aggregate amount by which the Lenders are willing to participate in any requested Commitment Increase on any such Commitment Date is less than the requested Commitment Increase, then the Borrower may extend offers to one or more Eligible Assignees to participate in any portion of the requested Commitment Increase that

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has not been committed to by the Lenders as of the applicable Commitment Date; provided, however, that the Commitment of each such Eligible Assignee shall be in an amount of not less than $10,000,000.

          (d) On each Increase Date, each Eligible Assignee that accepts an offer to participate in a requested Commitment Increase in accordance with Section 2.17(c) (an “Acceding Lender”) shall become a Lender party to this Agreement as of such Increase Date and the Commitment of each Increasing Lender for such requested Commitment Increase shall be so increased by the amount of its Proposed Increased Commitment (or by the amount allocated to such Lender pursuant to the last sentence of Section 2.17(b)) as of such Increase Date; provided, however, that the Administrative Agent shall have received at or before 12:00 Noon (New York City time) on such Increase Date the following, each dated such date:

     (i) an accession agreement from each Acceding Lender, if any, in form and substance satisfactory to the Borrower and the Administrative Agent (each, an “Accession Agreement”), duly executed by such Acceding Lender, the Administrative Agent and the Borrower;

     (ii) confirmation from each Increasing Lender of the increase in the amount of its Commitment in a writing satisfactory to the Borrower and the Administrative Agent, together with an amended Schedule I hereto as may be necessary for such Schedule I to be accurate and complete, certified as correct and complete by a Responsible Officer of the Borrower; and

     (iii) such certificates or other information as may be required pursuant to Section 3.02.

On each Increase Date, upon fulfillment of the conditions set forth in the immediately preceding sentence of this Section 2.17(d), the Administrative Agent shall notify the Lenders (including, without limitation, each Acceding Lender) and the Borrower, at or before 1:00 P.M. (New York City time), by telecopier or telex, of the occurrence of the Commitment Increase to be effected on such Increase Date and shall record in the Register the relevant information with respect to each Increasing Lender and each Acceding Lender on such date.

          (e) On the Increase Date, to the extent the Advances then outstanding and owed to any Lender immediately prior to the effectiveness of the Commitment Increase shall be less than such Lender’s Pro Rata Share (calculated immediately following the effectiveness of the Commitment Increase) of all Advances then outstanding and owed to all Lenders (each such Lender, including any Acceding Lender, a “Purchasing Lender”), then such Purchasing Lender, without executing an Assignment and Acceptance, shall be deemed to have purchased an assignment of a pro rata portion of the Advances then outstanding and owed to each Lender that is not a Purchasing Lender (a “Selling Lender”) in an amount sufficient such that following the effectiveness of all such assignments the Advances outstanding and owed to each Lender shall equal such Lender’s Pro Rata Share (calculated immediately following the effectiveness of the Commitment Increase on the Increase Date) of all Advances then outstanding and owed to all Lenders. The Administrative Agent shall calculate the net amount to be paid by each Purchasing Lender and received by each Selling Lender in connection with the assignments effected

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hereunder on the Increase Date. Each Purchasing Lender shall make the amount of its required payment available to the Administrative Agent, in same day funds, at the office of the Administrative Agent not later than 12:00 P.M. (New York time) on the Increase Date. The Administrative Agent shall distribute on the Increase Date the proceeds of such amount to each of the Selling Lenders entitled to receive such payments at its Applicable Lending Office. If in connection with the transactions described in this Section 2.17 any Lender shall incur any losses, costs or expenses of the type described in Section 9.04(c), then the Borrower shall, upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for such losses, costs or expenses incurred in connection therewith.

ARTICLE III
CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF CREDIT

          SECTION 3.01. Conditions Precedent to the Effectiveness of this Agreement. The obligation of the Administrative Agent and each Lender Party to execute and deliver this Agreement and the effectiveness of this Agreement is subject to the satisfaction of the following conditions precedent before or concurrently with the Closing Date:

     (a) The Administrative Agent shall have received on or before the Closing Date the following, each dated such day (unless otherwise specified), in form and substance satisfactory to the Administrative Agent (unless otherwise specified) and (except for the Notes, as to which one original of each shall be sufficient) in sufficient copies for each Lender Party:

     (i) A Note duly executed by the Borrower and payable to the order of each Lender.

     (ii) A security agreement in substantially the form of Exhibit F hereto (together with each other security agreement and security agreement supplement delivered pursuant to Section 5.01(j), in each case as amended, the “Security Agreement”), duly executed by each Loan Party that owns Borrowing Base Assets, together with:

     (A) copies of proper financing statements, to be duly filed under the Uniform Commercial Code of all jurisdictions that the Collateral Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Collateral Documents, covering the Collateral described therein,

     (B) completed requests for information dated a recent date, including UCC, judgment, tax, litigation and bankruptcy searches with respect to each applicable Loan Party, and, in the case of UCC searches, listing all effective financing statements filed in the jurisdictions referred to in clause (A) above and in such other jurisdictions specified by the Administrative Agent that name any Loan Party as debtor, together with copies of such financing statements,

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     (C) evidence of the completion of all other recordings and filings of or with respect to the Security Agreement that the Collateral Agent may deem necessary or desirable in order to perfect and protect the Liens created thereby,

     (D) certified copies of the Assigned Agreements referred to in the Security Agreement (which shall include, without limitation, the Management Agreement and all amendments thereto with respect to each Borrowing Base Asset), together with a consent to such assignment, in substantially the form of Exhibit C to the Security Agreement or otherwise in form and substance satisfactory to the Administrative Agent, duly executed by each party to such Assigned Agreements other than the Loan Parties;

     (E) a Manager’s Subordination executed and delivered by the manager of each Borrowing Base Asset,

     (F) a Hazardous Indemnity Agreement,

     (G) a Pledge Agreement, together with certificated Equity Interests in each Subsidiary that owns or leases a Borrowing Base Asset and stock powers and membership interest powers (as the case may be) with respect thereto executed in blank, all in form and substance acceptable to the Administrative Agent, and

     (H) evidence that all other action that the Collateral Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Security Agreement has been taken (including, without limitation, receipt of duly executed payoff letters, UCC termination statements and landlords’ and bailees’ waiver and consent agreements).

     (iii) Deeds of trust, trust deeds and mortgages in substantially the form of Exhibit G hereto (together with each other deed of trust, trust deed and mortgage delivered pursuant to Section 5.01(j), in each case as amended, the “Mortgages”) and assignments of leases and rents in substantially the form of Exhibit H hereto (together with each other assignment of leases and rents delivered pursuant to Section 5.01(j), in each case as amended, the “Assignments of Leases”) (in each case with such changes as may be required to account for local law matters and otherwise satisfactory in form and substance to the Collateral Agent) covering all Borrowing Base Assets, duly executed by the appropriate Loan Party, together with:

     (A) evidence that counterparts of the Mortgages and Assignments of Leases have been duly executed, acknowledged and delivered on or before the day of the Initial Extension of Credit and are in form suitable for filing or recording in all filing or recording offices that

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the Collateral Agent may deem necessary or desirable in order to create a valid first and subsisting Lien on the collateral described therein in favor of the Collateral Agent for the benefit of the Secured Parties and that all required affidavits, tax forms and filings pertaining to any applicable documentary stamp, intangible and mortgage recordation taxes have been executed and delivered by all appropriate parties and are in form suitable for filing with all applicable governmental authorities,

     (B) fully paid American Land Title Association Lender’s Extended Coverage title insurance policies (the “Mortgage Policies”) in form and substance, with endorsements (including zoning endorsements where available at reasonable cost) and in amount acceptable to the Collateral Agent, issued, and coinsured and reinsured (if required), by title insurers acceptable to the Collateral Agent, insuring the Mortgages to be valid first and subsisting Liens on the property described therein, free and clear of all defects (including, but not limited to, mechanics’ and materialmen’s Liens) and encumbrances, excepting only Permitted Encumbrances, and providing for such other affirmative insurance (including endorsements for future advances under the Loan Documents and for mechanics’ and materialmen’s Liens), and such coinsurance and direct access reinsurance (if required), as the Collateral Agent may deem necessary or desirable,

     (C) American Land Title Association/American Congress on Surveying and Mapping form surveys for which all necessary fees have been paid, dated no more than 45 days before the date of their delivery to the Collateral Agent, certified to the Administrative Agent, the Collateral Agent and the issuer of the Mortgage Policies in a manner satisfactory to the Collateral Agent by a land surveyor duly registered and licensed in the States in which the property described in such surveys is located and acceptable to the Collateral Agent, showing all buildings and other improvements, any off-site improvements, the location of any easements, parking spaces, rights of way, building set-back lines and other dimensional regulations and the absence of encroachments, either by such improvements or on to such property, and other defects, other than encroachments and other defects acceptable to the Collateral Agent,

     (D) engineering, soils, seismic, environmental and other similar reports as to the Borrowing Base Assets as may be reasonably required by the Collateral Agent, in form and substance and from professional firms acceptable to the Administrative Agent, together with a letter from each preparer thereof entitling the Administrative Agent and its successors and assigns to rely upon such reports,

     (E) estoppel and consent agreements, in form and substance satisfactory to the Administrative Agent, executed by each of the lessors of any Borrowing Base Assets subject to a Qualifying Ground Lease,

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along with (1) a memorandum of lease in recordable form (if not previously recorded) with respect to such leasehold interest, executed and acknowledged by the owner of the affected Borrowing Base Asset, as lessor, or (2) evidence that the applicable lease with respect to such leasehold interest or memorandum thereof has been recorded in all places necessary or desirable, in the Administrative Agent’s reasonable judgment, to give constructive notice to third-party purchasers of such leasehold interest or (3) if such leasehold interest was acquired or subleased from the holder of a recorded leasehold interest, the applicable assignment or sublease document, executed and acknowledged by such holder, in each case in form sufficient to give such constructive notice upon recordation and otherwise in form satisfactory to the Administrative Agent,

     (F) an Appraisal of each Borrowing Base Asset described in the Mortgages,

     (G) copies of all material licenses, permits and approvals for each Borrowing Base Asset, including, without limitation, a certificate of occupancy,

     (H) a zoning report for each Borrowing Base Asset issued by Planning and Zoning Resources Corp. or another professional firm acceptable to the Administrative Agent, together with a letter from each preparer thereof entitling the Administrative Agent and its successors and assigns to rely upon such reports,

     (I) certified copies of each Management Agreement, and all amendments thereto, entered into with respect to each of the Borrowing Base Assets,

     (J) certified copies of all Material Contracts relating to each of the Borrowing Base Assets,

     (K) copies of all Liens on each of the Borrowing Base Assets, including, without limitation, any reciprocal easement agreements, easements and other items of record,

     (L) if requested by the Administrative Agent, estoppel certificates from the counterparties to any reciprocal easement agreements affecting any Borrowing Base Asset,

     (M) estoppel certificates and subordination, non-disturbance and attornment agreements from retail tenants at each of the Borrowing Base Assets where the annual rent under the applicable Tenancy Lease exceeds $30,000 per annum,

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     (N) a flood zone determination of each Borrowing Base Asset, and

     (O) such other consents, agreements and confirmations of lessors and third parties as the Administrative Agent may deem necessary or desirable and evidence that all other action that the Collateral Agent may deem necessary or desirable in order to create valid first and subsisting Liens on the property described in the Mortgages has been taken.

     (iv) This Agreement, duly executed by the Loan Parties and the other parties thereto.

     (v) Certified copies of the resolutions of the Board of Directors of the Parent Guarantor on its behalf and on behalf of each Loan Party for which it is the ultimate signatory approving the transactions contemplated by the Loan Documents and each Loan Document to which it or such Loan Party is or is to be a party, and of all documents evidencing other necessary corporate action and governmental and other third party approvals and consents, if any, with respect to the transactions under the Loan Documents and each Loan Document to which it or such Loan Party is or is to be a party.

     (vi) A copy of a certificate of the Secretary of State (or equivalent authority) of the jurisdiction of incorporation, organization or formation of each Loan Party and of each general partner, manager or managing member (if any) of each Loan Party, dated reasonably near the Closing Date, certifying, if and to the extent such certification is generally available for entities of the type of such Loan Party, (A) as to a true and correct copy of the charter, certificate of limited partnership, limited liability company agreement or other organizational document of such Loan Party, general partner, manager or managing member, as the case may be, and each amendment thereto on file in such Secretary’s office, (B) that (1) such amendments are the only amendments to the charter, certificate of limited partnership, limited liability company agreement or other organizational document, as applicable, of such Loan Party, general partner, manager or managing member, as the case may be, on file in such Secretary’s office, (2) such Loan Party, general partner, manager or managing member, as the case may be, has paid all franchise taxes to the date of such certificate and (C) such Loan Party, general partner, manager or managing member, as the case may be, is duly incorporated, organized or formed and in good standing or presently subsisting under the laws of the jurisdiction of its incorporation, organization or formation.

     (vii) A copy of a certificate of the Secretary of State (or equivalent authority) of each jurisdiction in which any Loan Party or any general partner, manager or managing member of a Loan Party owns or leases property or in which the conduct of its business requires it to qualify or be licensed as a foreign corporation except where the failure to so qualify or be licensed could not

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reasonably be expected to result in a Material Adverse Effect, dated reasonably near (but prior to) the Closing Date, stating, with respect to each such Loan Party, general partner, manager or managing member, that such Loan Party, general partner, manager or managing member, as the case may be, is duly qualified and in good standing as a foreign corporation, limited partnership or limited liability company in such State and has filed all annual reports required to be filed to the date of such certificate.

     (viii) A certificate of each Loan Party and of each general partner, manager or managing member (if any) of each Loan Party, signed on behalf of such Loan Party, general partner, manager or managing member, as applicable, by its President or a Vice President and its Secretary or any Assistant Secretary (or those of its general partner or managing member, if applicable), dated the Closing Date (the statements made in which certificate shall be true on and as of the Closing Date), certifying as to (A) the absence of any amendments to the constitutive documents of such Loan Party, general partner, manager or managing member, as applicable, since the date of the certificate referred to in Section 3.01(a)(vi), (B) a true and correct copy of the bylaws, operating agreement, partnership agreement or other governing document of such Loan Party, general partner, manager or managing member, as applicable, as in effect on the date on which the resolutions referred to in Section 3.01(a)(v) were adopted and on the Closing Date, (C) the due incorporation, organization or formation and good standing or valid existence of such Loan Party, general partner, manager or managing member, as applicable, as a corporation, limited liability company or partnership organized under the laws of the jurisdiction of its incorporation, organization or formation and the absence of any proceeding for the dissolution or liquidation of such Loan Party, general partner, manager or managing member, as applicable, (D) the truth of the representations and warranties contained in the Loan Documents and (E) the absence of any event occurring and continuing, or resulting from the closing hereunder or the Advance made on the Closing Date, that constitutes a Default.

     (ix) A certificate of the Secretary or an Assistant Secretary of each Loan Party (or Responsible Officer of the general partner, manager or managing member of any Loan Party) and of each general partner, manager or managing member (if any) of each Loan Party certifying the names and true signatures of the officers of such Loan Party, or of the general partner, manager or managing member of such Loan Party, authorized to sign each Loan Document to which it is or is to be a party and the other documents to be delivered hereunder and thereunder.

     (x) Such financial, business and other information regarding each Loan Party and its Subsidiaries as the Lender Parties shall have requested, including, without limitation, information as to possible contingent liabilities, tax matters, environmental matters, obligations under Plans, Multiemployer Plans and Welfare Plans, collective bargaining agreements and other arrangements with employees, historical operating statements (if any), audited annual financial

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statements for the year ending December 31, 2009, interim financial statements dated the end of the most recent fiscal quarter for which financial statements are available (or, in the event the Lender Parties’ due diligence review reveals material changes since such financial statements, as of a later date within 45 days of the Closing Date) and financial projections for the Parent Guarantor’s consolidated operations.

     (xi) Evidence of insurance (which may consist of binders or certificates of insurance) naming the Administrative Agent as loss payee and/or additional insured, as applicable, with such responsible and reputable insurance companies or associations, and in such amounts and covering such risks, as is satisfactory to the Lender Parties, including, without limitation, the insurance required by the terms of the Security Agreement and the Mortgages.

     (xii) An opinion of Greenberg Traurig LLP, New York counsel for the Loan Parties, with respect to the matters (and in substantially the form) set forth in Exhibit E-1 hereto and as to such other matters as any Lender Party through the Administrative Agent may reasonably request.

     (xiii) An opinion of Bradley Arant Boult Cummings LLP, Delaware counsel for the Loan Parties, with respect to the matters (and in substantially the form) set forth in Exhibit E-2 hereto and as to such other matters as any Lender Party through the Administrative Agent may reasonably request.

     (xiv) An opinion of Saul Ewing LLP, Maryland counsel for the Loan Parties, with respect to the matters (and in substantially the form) set forth in Exhibit E-3 hereto and as to such other matters as any Lender Party through the Administrative Agent may reasonably request.

     (xv) An opinion of local counsel for the Loan Parties (A) in the states in which the Borrowing Base Assets are located, in substantially the form of Exhibit E-4 hereto, and (B) in the states in which the Loan Parties are organized or formed, in substantially the form of Exhibit E-4 hereto, in each case covering such other matters as any Lender Party through the Administrative Agent may reasonably request.

     (xvi) An opinion of Sidley Austin llp, counsel for the Administrative Agent, in form and substance satisfactory to the Administrative Agent.

     (xvii) A Notice of Borrowing or Notice of Issuance, as applicable, relating to the Initial Extension of Credit.

     (xviii) A certificate signed by a Responsible Officer of the Borrower, dated the Closing Date, stating that after giving effect to the Initial Extension of Credit and the Formation Transactions, the Parent Guarantor shall be in compliance with the covenants contained in Section 5.04 on a proforma basis as of the most recent fiscal quarter end, together with supporting information in form

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satisfactory to the Administrative Agent showing the computations used in determining compliance with such covenants.

     (b) The Lender Parties shall be satisfied with the corporate and legal structure and capitalization of each Loan Party and its Subsidiaries, including the terms and conditions of the charter and bylaws, operating agreement, partnership agreement or other governing document of each of them.

     (c) The Lender Parties shall be satisfied that all Existing Debt, other than Surviving Debt, has been (or will be at the time of the Initial Extension of Credit) prepaid, redeemed or defeased in full or otherwise satisfied and extinguished and that all Surviving Debt shall be on terms and conditions satisfactory to the Lender Parties.

     (d) (i) The Administrative Agent shall have determined that the Formation Transactions and the IPO shall have been, substantially concurrently with the execution of this Agreement, consummated in accordance with the Registration Statement, (ii) the Parent Guarantor shall have received gross cash proceeds from the IPO in an amount not less than $300,000,000, and (iii) the common shares of the Parent Guarantor shall have been listed on the New York Stock Exchange.

     (e) Before and after giving effect to the transactions contemplated by the Loan Documents, there shall have occurred no material adverse change in the business, condition (financial or otherwise), results of operations or prospects of the Loan Parties or any of the Borrowing Base Assets included in the Collateral on the Closing Date since December 31, 2009.

     (f) There shall exist no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries pending or threatened before any court, governmental agency or arbitrator that (i) could reasonably be expected to result in a Material Adverse Effect other than the matters described on Schedule 4.01(f) hereto (the “Material Litigation”) or (ii) purports to affect the legality, validity or enforceability of any Loan Document or the consummation of the transactions contemplated thereby, and there shall have been no adverse change in the status, or financial effect on any Loan Party or any of its Subsidiaries, of the Material Litigation from that described on Schedule 4.01(f) hereto.

     (g) All governmental and third party consents and approvals necessary in connection with the transactions contemplated by the Loan Documents shall have been obtained (without the imposition of any conditions that are not acceptable to the Lender Parties) and shall remain in effect, and no law or regulation shall be applicable in the reasonable judgment of the Lender Parties that restrains, prevents or imposes materially adverse conditions upon the transactions contemplated by the Loan Documents.

     (h) The Borrower shall have entered into the Hedge Agreements required under Section 5.01(o) to the extent any are required by such Section, and shall have provided satisfactory evidence of the same to the Administrative Agent.

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     (i) The Borrower shall have paid all accrued fees of the Agents and the Lender Parties required under this Agreement and all reasonable, out-of-pocket expenses of the Agents (including the reasonable fees and expenses of counsel to the Administrative Agent).

          SECTION 3.02. Conditions Precedent to Each Borrowing, Issuance, Renewal, Extension and Increase. The obligation of each Lender to make an Advance (other than a Letter of Credit Advance made by an Issuing Bank or a Lender pursuant to Section 2.03(c) and a Swing Line Advance made by a Lender pursuant to Section 2.02(b)) on the occasion of each Borrowing (including the initial Borrowing) and the obligation of each Issuing Bank to issue a Letter of Credit (including the initial issuance) or renew a Letter of Credit, the extension of Commitments pursuant to Section 2.16 and the right of the Borrower to request a Swing Line Borrowing or a Commitment Increase shall be subject to the satisfaction of the conditions set forth in Section 3.01 (to the extent not previously satisfied pursuant to that Section) and such further conditions precedent that on the date of such Borrowing, issuance, renewal, extension or increase (a) the following statements shall be true and the Administrative Agent shall have received for the account of such Lender, the Swing Line Bank or such Issuing Bank (w) a Notice of Borrowing or Notice of Issuance, as applicable, and a Borrowing Base Certificate, in each case dated the date of such Borrowing, issuance, renewal, extension or increase and, in the case of the Borrowing Base Certificate, demonstrating that the Facility Exposure that will be outstanding after giving effect to such Advance, issuance or renewal, respectively, will not exceed the lesser of (i) the Total Borrowing Base Value as of such date and (ii) the amount that would have a Borrowing Base Debt Service Coverage Ratio of not less than 1.50:1.00 (in each case calculated on a pro forma basis after giving effect to such Borrowing or issuance), (x) all Collateral Deliverables and all items described in the definition of “BBA Proposal Package” herein (to the extent not previously delivered with respect to each Borrowing Base Asset pursuant to Section 5.01(k) or this Section 3.02), (y) in the case of an addition of any Person as an Additional Guarantor, all Guarantor Deliverables (to the extent not previously delivered pursuant to Section 5.01(k) or this Section 3.02), and (z) a certificate signed by a Responsible Officer of the Borrower, dated the date of such Borrowing, issuance, renewal, extension or increase, stating that:

     (i) the representations and warranties contained in each Loan Document are true and correct in all material respects on and as of such date (except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date), before and after giving effect to (A) such Borrowing, issuance, renewal, extension or increase, and (B) in the case of any Borrowing or issuance or renewal, the application of the proceeds therefrom, as though made on and as of such date;

     (ii) no Default or Event of Default has occurred and is continuing, or would result from (A) such Borrowing, issuance, renewal, extension or increase or (B) in the case of any Borrowing or issuance or renewal, from the application of the proceeds therefrom; and

     (iii) for each Revolving Credit Advance, or Swing Line Advance made by the Swing Line Bank or issuance or renewal of any Letter of Credit, (A) the Facility

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Exposure that will be outstanding after giving effect to such Advance, issuance or renewal, respectively, will not exceed the lesser of (i) the Total Borrowing Base Value as of such date and (ii) the amount that would have a Borrowing Base Debt Service Coverage Ratio of not less than 1.50:1.00 and (B) before and after giving effect to such Advance, issuance or renewal, the Parent Guarantor shall be in compliance with the covenants contained in Section 5.04, together with supporting information in form satisfactory to the Administrative Agent showing the computations used in determining compliance with such covenants;

and (b) the Administrative Agent shall have received such other approvals, opinions or documents as any Lender Party through the Administrative Agent may reasonably request.

          SECTION 3.03. Determinations Under Section 3.01 and 3.02. For purposes of determining compliance with the conditions specified in Sections 3.01 and 3.02, each Lender Party shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lender Parties unless an officer of the Administrative Agent responsible for the transactions contemplated by the Loan Documents shall have received notice from such Lender Party prior to the Initial Extension of Credit, Borrowing, issuance, renewal, extension or increase, as applicable, specifying its objection thereto and, if the requested action consists of a Borrowing, such Lender Party shall not have made available to the Administrative Agent such Lender Party’s ratable portion of such Borrowing.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

          SECTION 4.01. Representations and Warranties of the Loan Parties. Each Loan Party represents and warrants as follows:

     (a) Organization and Powers; Qualifications and Good Standing. Each Loan Party and each of its Subsidiaries and each general partner, manager or managing member, if any, of each Loan Party (i) is a corporation, limited liability company or partnership duly incorporated, organized or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation, organization or formation, (ii) is duly qualified and in good standing as a foreign corporation, limited liability company or partnership in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where the failure to so qualify or be licensed could not reasonably be expected to result in a Material Adverse Effect and (iii) has all requisite corporate, limited liability company or partnership power and authority (including, without limitation, all governmental licenses, permits and other approvals) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. All of the outstanding Equity Interests in the Borrower have been validly issued, are fully paid and non-assessable. The Parent Guarantor directly or indirectly owns all of the general partnership interests in the Borrower. All Equity Interests in the Borrower that are directly or indirectly owned by the Parent Guarantor are owned free and clear of all Liens. The Parent Guarantor is organized in conformity with the requirements for qualification as a REIT under the

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Internal Revenue Code, and its proposed method of operation enables it to meet the requirements for qualification and taxation as a REIT under the Internal Revenue Code.

     (b) Subsidiaries. Set forth on Schedule 4.01(b) hereto is a complete and accurate list of all Subsidiaries of each Loan Party, showing as of the date hereof (as to each such Subsidiary) the jurisdiction of its incorporation, organization or formation, the number of shares (or the equivalent thereof) of each class of its Equity Interests authorized, and the number outstanding, on the date hereof and the percentage of each such class of its Equity Interests owned (directly or indirectly) by such Loan Party and the number of shares (or the equivalent thereof) covered by all outstanding options, warrants, rights of conversion or purchase and similar rights at the date hereof. All of the outstanding Equity Interests in each Loan Party’s Subsidiaries has been validly issued, are fully paid and non-assessable and to the extent owned by such Loan Party or one or more of its Subsidiaries, are owned by such Loan Party or Subsidiaries free and clear of all Liens (except as created by the Loan Documents).

     (c) Due Authorization; No Conflict. The execution and delivery by each Loan Party and each general partner, manager or managing member (if any) of each Loan Party of each Loan Document to which it is or is to be a party, and the performance of its obligations thereunder, and the consummation of the IPO, the Formation Transactions and the other transactions contemplated by the Loan Documents, are within the corporate, limited liability company or partnership powers of such Loan Party, general partner, manager or managing member, have been duly authorized by all necessary corporate, limited liability company or partnership action, and do not (i) contravene the charter or bylaws, operating agreement, partnership agreement or other governing document of such Loan Party, general partner, manager or managing member, (ii) violate any law, rule, regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award, (iii) conflict with or result in the breach of, or constitute a default or require any payment (except for payments that will be made at the time of consummation of the IPO and the Formation Transactions) to be made under, any Material Contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument binding on or affecting any Loan Party, any of its Subsidiaries or any of their properties, or any general partner, manager or managing member of any Loan Party or (iv) except for the Liens created under the Loan Documents, result in or require the creation or imposition of any Lien upon or with respect to any of the properties of any Loan Party or any of its Subsidiaries. No Loan Party or any of its Subsidiaries is in violation of any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or in breach of any such contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument, the violation or breach of which could reasonably be expected to result in a Material Adverse Effect.

     (d) Authorizations and Consents. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for (i) the due execution, delivery, recordation, filing or performance by any Loan Party or any general partner, manager or managing member of any Loan Party of any Loan Document to which it is or is to be a party or for the

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consummation of the IPO, the Formation Transactions or the other transactions contemplated by the Loan Documents, (ii) the grant by any Loan Party (or the general partner or managing member of such Loan Party) of the Liens granted by it pursuant to the Collateral Documents, (iii) the perfection or maintenance of the Liens created under the Collateral Documents (including the first priority nature thereof) or (iv) the exercise by any Agent, the Collateral Agent or any Lender Party of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents, except, in each case, for authorizations, approvals, actions, notices and filings which have been duly obtained, taken, given or made and are in full force and effect.

     (e) Binding Obligation. This Agreement has been, and each other Loan Document when delivered hereunder will have been, duly executed and delivered by each Loan Party and general partner, manager or managing member (if any) of each Loan Party party thereto. This Agreement is, and each other Loan Document when delivered hereunder will be, the legal, valid and binding obligation of each Loan Party and general partner, manager or managing member (if any) of each Loan Party party thereto, enforceable against such Loan Party, general partner, manager or managing member, as the case may be, in accordance with its terms.

     (f) Litigation. There is no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries or any general partner, manager or managing member (if any) of any Loan Party, including any Environmental Action, pending or threatened before any court, governmental agency or arbitrator that (i) could reasonably be expected to result in a Material Adverse Effect (other than the Material Litigation) or (ii) purports to affect the legality, validity or enforceability of any Loan Document or the consummation of the IPO, the Formation Transactions or the other transactions contemplated by the Loan Documents, and there has been no adverse change in the status, or financial effect on any Loan Party or any of its Subsidiaries or any general partner, manager or managing member (if any) of any Loan Party, of the Material Litigation from that described on Schedule 4.01(f) hereto.

     (g) Financial Condition. The Consolidated balance sheets of the Parent Guarantor and its Subsidiaries as of December 31, 2009 and the related Consolidated statements of income and Consolidated statements of cash flows of the Parent Guarantor and its Subsidiaries for the fiscal year then ended, accompanied by unqualified opinions of KPMG LLP, independent public accountants and the Consolidated balance sheets of the Parent Guarantor and its Subsidiaries as at June 30, 2010, and the related Consolidated statements of income and Consolidated statements of cash flows of the Parent Guarantor and its Subsidiaries for the six (6) months then ended, copies of which have been furnished to each Lender Party, fairly present, subject, in the case of such balance sheets as at June 30, 2010, and such statements of income and cash flows for the six (6) months then ended, to year end audit adjustments, the Consolidated financial condition of the Parent Guarantor and its Subsidiaries as at such dates and the Consolidated results of operations of the Parent Guarantor and its Subsidiaries for the periods ended on such dates, all in accordance with generally accepted accounting principles applied on a consistent basis. Since December 31, 2009, there has been

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(i) with respect to the period prior to the Closing Date, no material adverse change in the business, condition (financial or otherwise), results of operations or prospects of the Parent Guarantor and its Subsidiaries or any of the Borrowing Base Assets included in the Collateral on the Closing Date, and (ii) with respect to any period after the Closing Date, no Material Adverse Change.

     (h) Forecasts. The Consolidated forecasted balance sheets, statements of income and statements of cash flows of the Parent Guarantor and its Subsidiaries delivered to the Lender Parties pursuant to Section 3.01(a)(x) and 5.03 were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in light of the conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, the Parent Guarantor’s best estimate of its future financial performance.

     (i) Full Disclosure. No information, exhibit or report furnished by or on behalf of any Loan Party to any Agent or any Lender Party in connection with the negotiation and syndication of the Loan Documents or pursuant to the terms of the Loan Documents contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made therein not misleading. The Loan Parties have disclosed to the Administrative Agent, in writing, any and all existing facts known to the Loan Parties that have or may have (to the extent any of the Loan Parties can now reasonably foresee) a Material Adverse Effect.

     (j) Margin Regulations. No Loan Party owns any Margin Stock or is engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no proceeds of any Advance or drawings under any Letter of Credit will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock.

     (k) Certain Governmental Regulations. Neither any Loan Party nor any of its Subsidiaries nor any general partner, manager or managing member of any Loan Party, as applicable, is an “investment company”, or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended. Without limiting the generality of the foregoing, each Loan Party and each of its Subsidiaries and each general partner, manager or managing member of any Loan Party, as applicable: (i) is primarily engaged, directly or through a wholly-owned subsidiary or subsidiaries, in a business or businesses other than that of (A) investing, reinvesting, owning, holding or trading in securities or (B) issuing face-amount certificates of the installment type; (ii) is not engaged in, does not propose to engage in and does not hold itself out as being engaged in the business of (A) investing, reinvesting, owning, holding or trading in securities or (B) issuing face-amount certificates of the installment type; (iii) does not own or propose to acquire investment securities (as defined in the Investment Company Act of 1940, as amended) having a value exceeding forty percent (40%) of the value of such company’s total assets (exclusive of government securities and cash items) on an unconsolidated basis; (iv) has not in the past been engaged in the business of issuing face-amount certificates of the installment type; and (v) does not have any outstanding face-amount certificates of the

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installment type. Neither the making of any Advances, nor the issuance of any Letters of Credit, nor the application of the proceeds or repayment thereof by the Borrower, nor the consummation of the other transactions contemplated by the Loan Documents, will violate any provision of any such Act or any rule, regulation or order of the Securities and Exchange Commission thereunder.

     (l) Materially Adverse Agreements. Neither any Loan Party nor any of its Subsidiaries is a party to any indenture, loan or credit agreement or any lease or other agreement or instrument or subject to any charter, corporate, partnership, membership or other governing restriction that could reasonably be expected to result in a Material Adverse Effect.

     (m) Perfection and Priority of Security Interests. All filings and other actions necessary to perfect and protect the security interest in the Collateral created under the Collateral Documents have been duly made or taken and are in full force and effect, and the Collateral Documents create in favor of the Administrative Agent for the benefit of the Secured Parties a valid and, together with such filings and other actions, perfected first priority security interest in the Collateral (subject only to the Permitted Liens), securing the payment of the Secured Obligations, and all filings and other actions necessary or desirable to perfect and protect such security interest have been duly taken. The Loan Parties are the legal and beneficial owners of the Collateral free and clear of any Lien, except for Permitted Liens.

     (n) Existing Debt. Set forth on Schedule 4.01(n) hereto is a complete and accurate list of all Existing Debt (other than Surviving Debt), showing as of the date hereof the obligor and the principal amount outstanding thereunder immediately prior to the Closing Date.

     (o) Surviving Debt. Set forth on Schedule 4.01(o) hereto is a complete and accurate list of all Surviving Debt, showing as of the date hereof the obligor and the principal amount outstanding thereunder, the maturity date thereof and the amortization schedule therefor.

     (p) Liens. Set forth on Schedule 4.01(p) hereto is a complete and accurate list of (i) all Liens on the property or assets of any Loan Party or any of its Subsidiaries that directly or indirectly own any Borrowing Base Asset (other than Permitted Liens), and (ii) all Liens on the property or assets of any Loan Party or any of its Subsidiaries securing Debt for Borrowed Money (other than Permitted Liens); in each case showing as of the date hereof the lienholder thereof, the principal amount of the obligations secured thereby and the property or assets of such Loan Party or such Subsidiary subject thereto.

     (q) Real Property; Tenancy Leases. (i) Set forth on Part I of Schedule 4.01(q) hereto is a complete and accurate list of all Real Property owned in fee or as a leasehold estate by any Loan Party or any of its Subsidiaries, showing as of the date hereof, and as of each other date such Schedule 4.01(q) is required to be supplemented hereunder, the street address, state, record owner and book value thereof. Each such Loan Party or

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Subsidiary has good, marketable and insurable fee simple or leasehold title to such Real Property, free and clear of all Liens, other than Permitted Liens.

     (ii) The Borrower has delivered to the Administrative Agent a true, correct and complete copy of the current form of residential Tenancy Lease for each Borrowing Base Asset, and true, correct and complete copies of any non-residential Tenancy Leases and any amendments thereto relating to each Borrowing Base Asset as of the date hereof. An accurate and complete rent roll as of the date of inclusion of each Borrowing Base Asset in the Collateral with respect to all Tenancy Leases of any portion of the Borrowing Base Asset has been provided to the Administrative Agent. The Tenancy Leases described in the preceding sentence constitute as of the date thereof the sole agreements relating to leasing or licensing of space at such Borrowing Base Asset and in the buildings relating thereto. No tenant under any Tenancy Lease is entitled to any free rent, partial rent, rebate of rent payments, credit, offset or deduction in rent, including, without limitation, lease support payments or lease buy-outs, except as reflected in such Tenancy Leases or as disclosed to the Administrative Agent in writing by the Borrower. The Tenancy Leases reflected on the rent rolls delivered to the Administrative Agent are, as of the date of inclusion of the applicable Borrowing Base Asset in the Collateral, in full force and effect in accordance with their respective terms. There is no payment default or any other material default under such Tenancy Leases, nor, to Borrower’s knowledge, are there any defenses, counterclaims or offsets available to any tenant thereunder which in either case is reasonably likely to have a Material Adverse Effect. No property other than the Borrowing Base Asset which is the subject of the applicable Tenancy Lease (and any adjacent property burdened by insurable, permanent easements which may benefit the Borrowing Base Asset and are in full force and effect) is necessary to comply with the requirements (including, without limitation, parking requirements) contained in such Tenancy Lease.

     (iii) Each Borrowing Base Asset is operated and managed by an Approved Manager pursuant to a Management Agreement listed on Part II of Schedule 4.01(q).

     (iv) Each Borrowing Base Asset satisfies all Borrowing Base Conditions.

     (r) Environmental Matters. (i) Except as otherwise set forth on Part I of Schedule 4.01(r) hereto, the operations and properties of each Loan Party and each of its Subsidiaries comply in all material respects with all applicable Environmental Laws and Environmental Permits, all past material non-compliance with such Environmental Laws and Environmental Permits has been resolved without ongoing material obligations or costs, and, to the knowledge of each Loan Party and its Subsidiaries, no circumstances exist that could be reasonably likely to (A) form the basis of an Environmental Action against any Loan Party or any of its Subsidiaries or any of their properties that could have a Material Adverse Effect or (B) cause any such property to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law.

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     (ii) Except as otherwise set forth on Part II of Schedule 4.01(r) hereto, none of the properties currently or formerly owned or operated by any Loan Party or any of its Subsidiaries is listed or, to the knowledge of each Loan Party and its Subsidiaries, proposed for listing on the NPL or on the CERCLIS or any analogous foreign, state or local list or is adjacent to any such listed property; there are no underground or above ground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed on any property currently owned or operated by any Loan Party or any of its Subsidiaries; there is no asbestos or asbestos-containing material on any property currently owned or operated by any Loan Party or any of its Subsidiaries except for any non-friable asbestos-containing material that is being managed pursuant to, and in compliance with, an operations and maintenance plan and that does not currently require removal, remediation, abatement or encapsulation under Environmental Law; and, to the knowledge of each Loan Party and its Subsidiaries, Hazardous Materials have not been released, discharged or disposed of in any material amount or in violation of any Environmental Law or Environmental Permit on any property currently owned or operated by any Loan Party or any of its Subsidiaries or, to the knowledge of each Loan Party and its Subsidiaries, during the period of their ownership or operation thereof, on any property formerly owned or operated by any Loan Party or any of its Subsidiaries.

     (iii) Except as otherwise set forth on Part III of Schedule 4.01(r) hereto, neither any Loan Party nor any of its Subsidiaries is undertaking, nor has any Loan Party or any of its Subsidiaries completed, either individually or together with other potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any governmental or regulatory authority or the requirements of any Environmental Law; all Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries have been disposed of in a manner not reasonably expected to result in a Material Adverse Effect; and, with respect to any property formerly owned or operated by any Loan Party or any of its Subsidiaries, all Hazardous Materials generated, used, treated, handled, stored or transported by or, to the knowledge of each Loan Party and its Subsidiaries, on behalf of any Loan Party or any of its Subsidiaries have been disposed of in a manner that could not reasonably be expected to result in a Material Adverse Effect.

     (iv) Except as set forth on Part IV of Schedule 4.01(r), neither any Loan Party nor any of its Subsidiaries nor the Real Property is subject to any applicable Environmental Law requiring the performance of Hazardous Materials site assessments, or the removal or remediation of Hazardous Materials, or the giving of notice to any governmental agency or the recording or delivery to other Persons of an environmental disclosure document or statement in each case by virtue of the transactions set forth herein and contemplated hereby, or as a

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condition to the recording of the Mortgages or to the effectiveness of any other transactions contemplated hereby except for such matters that shall be complied with as of the Closing Date.

     (s) Compliance with Laws. Each Loan Party and each Subsidiary is in compliance with the requirements of all laws, rules and regulations (including, without limitation, the Securities Act and the Securities Exchange Act, and the applicable rules and regulations thereunder, state securities law and “Blue Sky” laws) applicable to it and its business, where the failure to so comply could reasonably be expected to result in a Material Adverse Effect.

     (t) Force Majeure. Neither the business nor the properties of any Loan Party or any of its Subsidiaries are currently affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that could reasonably be expected to result in a Material Adverse Effect.

     (u) Loan Parties’ Credit Decisions. Each Loan Party has, independently and without reliance upon the Administrative Agent or any other Lender Party and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement (and in the case of the Guarantors, to give the guaranty under this Agreement) and each other Loan Document to which it is or is to be a party, and each Loan Party has established adequate means of obtaining from each other Loan Party on a continuing basis information pertaining to, and is now and on a continuing basis will be completely familiar with, the business, condition (financial or otherwise), operations, performance, properties and prospects of such other Loan Party.

     (v) Solvency. Each Loan Party is, individually and together with its Subsidiaries, Solvent.

     (w) Sarbanes-Oxley. No Loan Party has made any extension of credit to any of its directors or executive officers in contravention of any applicable restrictions set forth in Section 402(a) of Sarbanes-Oxley.

     (x) ERISA Matters. (i) Set forth on Schedule 4.01(x) hereto is a complete and accurate list of all Plans and Welfare Plans.

     (ii) No ERISA Event has occurred within the preceding five plan years or is reasonably expected to occur with respect to any Plan that has resulted in or is reasonably expected to result in a material liability of any Loan Party or any ERISA Affiliate.

     (iii) Any Schedule B (Actuarial Information) to the most recent annual report (Form 5500 Series) for each Plan, copies of which have been filed with the Internal Revenue Service and furnished to the Lender Parties, is complete and accurate and fairly presents the funding status of such Plan as of the date of such Schedule B, and since the date of any such Schedule B there has been no material adverse change in such funding status.

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     (iv) Neither any Loan Party nor any ERISA Affiliate has incurred or is reasonably expected to incur any Withdrawal Liability to any Multiemployer Plan.

     (v) Neither any Loan Party nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and no such Multiemployer Plan is reasonably expected to be in reorganization or to be terminated, within the meaning of Title IV of ERISA.

     (y) Borrowing Base Assets.

     (i) Each of the Mortgages, when properly recorded in the appropriate records, creates a valid, perfected first lien on the respective Borrowing Base Asset, subject only to Permitted Liens. The Loan Parties are the legal and beneficial owners of the Borrowing Base Assets, free and clear of any Lien, except for Permitted Liens described in clauses (a), (b), (d), (e) and (f) of the definition of “Permitted Liens”. Each of the Borrowing Base Assets satisfies the requirements in this Agreement to being a Borrowing Base Asset. There are no proceedings in condemnation or eminent domain affecting any of the Borrowing Base Assets and, to the knowledge of each Loan Party, none is threatened. No Person has any option or other right to purchase all or any portion of any of the Borrowing Base Assets or any interest therein.

     (ii) To the knowledge of each Loan Party and except as may be disclosed in the zoning reports and property condition reports delivered to the Administrative Agent, (i) the Borrowing Base Assets and the use thereof comply in all material respects with all applicable zoning, subdivision and land use laws, regulations and ordinances, all applicable health, fire, building codes, parking laws and all other laws, statutes, codes, ordinances, rules and regulations applicable to the Borrowing Base Assets, or any of them, including without limitation the Americans with Disabilities Act; (ii) all permits, licenses and certificates for the lawful use, occupancy and operation of each component of each of the Borrowing Base Assets in the manner in which it is currently being used, occupied and operated, including, but not limited to certificates of occupancy, or the equivalent, have been obtained and are current and in full force and effect; (iii) no legal proceedings are pending or, to the knowledge of each Loan Party, threatened with respect to the zoning of any Borrowing Base Asset; and (iv) neither the zoning nor any other right to construct, use or operate any Borrowing Base Asset is in any way dependent upon or related to any real estate other than such Borrowing Base Asset in any way that has had or is reasonably likely to give rise to a materially adverse effect as to the value, use of or ability to sell or finance such Borrowing Base Asset.

     (iii) The Loan Parties have delivered to the Administrative Agent a true and complete copy of each of the Management Agreements and Material Contracts to which they are a party that will be in effect on the Closing Date, and

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such Management Agreements and Material Contracts have not been modified or amended except pursuant to amendments or modifications delivered to Administrative Agent. Such Management Agreements and Material Contracts are in full force and effect and no default by any of the Loan Parties or Approved Managers exists thereunder. Except for the rights of (x) each of the Approved Managers pursuant to any Management Agreements and (y) third-party vendors (including, without limitation, landscapers, ATM lessors, vending machine lessors and the like), no Person has any right or obligation to manage any of the Borrowing Base Assets or to receive compensation in connection with such management. Except for the parties to any leasing brokerage agreement that has been delivered to the Administrative Agent and community assistants who are paid a minimal referral fee for residential Tenancy Leases they obtain, no Person has any right or obligation to lease or solicit tenants for any of the Borrowing Base Assets, or (except for cooperating outside brokers) to receive compensation in connection with such leasing.

     (iv) To each Loan Party’s knowledge, all improvements on any Borrowing Base Asset, including without limitation the roof and all structural components, plumbing systems, HVAC systems, fire protection systems, electrical systems, equipment, elevators, exterior doors, parking facilities, sidewalks and landscaping, are in good condition and repair, subject to normal wear and tear and necessary repairs in the ordinary course of business. The Loan Parties are not aware of any latent or patent structural or other material defect in any of the Borrowing Base Assets and, to the Loan Parties’ knowledge, city water supply, storm and sanitary sewers, and electrical, gas (if applicable) and telephone facilities are available to each of the Borrowing Base Assets within the boundary lines of each of the Borrowing Base Assets (except in any way that has not had and is reasonably likely to not give rise to a materially adverse effect as to the value, use of or ability to sell or finance such Borrowing Base Asset), are fully connected to the improvements and are fully operational, are sufficient to meet the reasonable needs of each of the Borrowing Base Assets as now used or presently contemplated to be used, and no other utility facilities are necessary to meet the reasonable needs of any of the Borrowing Base Assets as now used or presently contemplated. Except in any way that has not had and is reasonably likely to not give rise to a materially adverse effect as to the value, use of or ability to sell or finance such Borrowing Base Asset, no part of any of the Borrowing Base Assets is within a flood plain and none of the improvements thereon create encroachments over, across or upon any of the Borrowing Base Assets’ boundary lines, rights of way or easements, and no building or other improvements on adjoining land create such an encroachment which could reasonably be expected to have a Material Adverse Effect. All public roads and streets necessary for service of and access to each of the Borrowing Base Assets for the current and contemplated uses thereof have been completed and are serviceable and are physically and legally open for use by the public. To the Loan Parties’ knowledge after due inquiry, any septic system located at any of the Borrowing Base Assets is in good and safe condition and repair and in compliance with all applicable law in all material respects.

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     (v) Each of the Borrowing Base Assets is comprised of one (1) or more parcels which constitute separate tax lots. No part of any of the Borrowing Base Assets is included or assessed under or as part of another tax lot or parcel, and no part of any other property is included or assessed under or as part of the tax lots or parcels comprising any of the Borrowing Base Assets.

     (vi) Neither the Borrower nor any of the Guarantors has received any outstanding notice from any insurer or its agent requiring performance of any work with respect to any of the Borrowing Base Assets or canceling or threatening to cancel any policy of insurance, and each of the Borrowing Base Assets complies with the material requirements of all of the Borrower’s and the Guarantor’s insurance carriers.

     (z) Ground Lease (Mobile). (i) The Ground Lease (Mobile) contains the entire agreement of the Ground Lessor (Mobile) and the applicable Loan Party pertaining to the Ground Leased Property (Mobile) covered thereby. The Loan Parties have no estate, right, title or interest in or to the Ground Leased Property (Mobile) except under and pursuant to the Ground Lease (Mobile). The Loan Parties have delivered a true and correct copy of the Ground Lease (Mobile) to the Administrative Agent and the Ground Lease (Mobile) has not been modified, amended or assigned (except as referenced in the definition of Ground Lease (Mobile)) and except as assigned as collateral for the Existing Debt secured by the Ground Leased Property (Mobile) which is being repaid.

     (ii) To the knowledge of each Loan Party, the party identified as the master lessor and landlord in the definition of Ground Lessor (Mobile) is the exclusive fee simple owner of the Ground Leased Property (Mobile), subject only to the Ground Lease (Mobile) and Liens and other matters disclosed in the applicable Mortgage Policy for the Campus Housing Asset subject to the Ground Lease (Mobile). To the knowledge of each Loan Party, the party identified as the master lessor and landlord in the definition of Ground Lessor (Mobile) is the sole owner of the master lessor’s interest in the Ground Lease (Mobile) and the party identified as sub-ground lessor in the definition of Ground Lease (Mobile) is the sole owner of the sub-ground lessor’s interest in the Ground Lease (Mobile).

     (iii) There are no rights to terminate the Ground Lease (Mobile) other than the rights expressly set forth in the Ground Lease (Mobile).

     (iv) The Ground Lease (Mobile) is in full force and effect and, to the knowledge of each Loan Party, no breach or default or event that with the giving of notice or passage of time would constitute a breach or default under the Ground Lease (Mobile) (a “Ground Lease (Mobile) Default”) exists on the part of the Loan Parties or on the part of the Ground Lessor (Mobile) under the Ground Lease (Mobile). All base rent and additional rent due and payable under the Ground Lease (Mobile) has been paid through the date hereof and the Loan Parties are not required to pay any deferred or accrued rent after the date hereof under the Ground Lease (Mobile). The Loan Parties have not received any written notice that a Ground Lease Default (Mobile) has occurred or exists

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(except for matters which have been resolved to the mutual satisfaction of the parties to the Ground Lease (Mobile)).

     (v) Campus Crest at Mobile Phase II, LLC is the exclusive owner of the sub-ground lessee’s interest under and pursuant to the Ground Lease (Mobile) and has not assigned, transferred or encumbered its interest in, to, or under the Ground Lease (Mobile) (except as collateral for the Existing Debt secured by the Ground Leased Property (Mobile) which has been repaid).

     (aa) No Prohibited Persons. Neither any Loan Party nor any of their respective officers, directors, partners, members, Affiliates or, to the knowledge of the Loan Parties, shareholders is an entity or person: (i) that is listed in the Annex to, or is otherwise subject to the provisions of Executive Order 13224 issued on September 24, 2001 (“EO13224”); (ii) whose name appears on the United States Treasury Department’s Office of Foreign Assets Control (“OFAC”) most current list of “Specifically Designated National and Blocked Persons” (which list may be published from time to time in various mediums including, but not limited to, the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits, threatens to commit or supports “terrorism”, as that term is defined in EO 13224; or (iv) who is otherwise affiliated with any entity or person listed above (any and all parties or persons described in clauses (i) through (iv) above are herein referred to as a “Prohibited Person”).

     (bb) Setoff, Etc. The Collateral and the rights of the Administrative Agent and the Lenders with respect to the Collateral are not subject to any setoff, claims, withholdings or other defenses by the Guarantors, Borrower or any of its Subsidiaries or Affiliates or, to the best knowledge of Borrower, any other Person other than Permitted Liens.

     (cc) Franchises, Patents, Copyrights, Etc. The Borrower, the Guarantors and their respective Subsidiaries possess all franchises, patents, copyrights, trademarks, trade names, service marks, licenses and permits, and rights in respect of the foregoing, adequate for the conduct of their business substantially as now conducted without known conflict with any rights of others except with respect to Subsidiaries of Borrower that are not the owners of the Borrowing Base Assets where such failure individually or in the aggregate has not had and could not reasonably be expected to have a Material Adverse Effect.

     (dd) Affiliate Ground Leases. With respect to each Affiliate Ground Lease, (a) the Affiliate Ground Lease or a memorandum thereof has been duly recorded, the Affiliate Ground Lease permits the interest of the lessee thereunder to be encumbered by the Mortgage, there has not been a change in the terms of the Affiliate Ground Lease since its recordation, except for written modifications delivered to Administrative Agent, and Borrower has delivered to Administrative Agent a true, accurate and complete copy of the Affiliate Ground Lease; (b) except for the Permitted Encumbrances (as defined in the Mortgage) and Permitted Liens, the Subsidiary Guarantor’s interest in the Affiliate Ground Lease is not subject to any Liens superior to, or of equal priority with, the Mortgage; (c) there are no outstanding options to purchase or rights of first refusal with

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respect to the Real Property except those granted to the Subsidiary Guarantor under the express terms of the Affiliate Ground Lease; (d) the Subsidiary Guarantor’s interest in the Affiliate Ground Lease is assignable to Administrative Agent upon notice to, but without the consent of, the ground lessor thereunder (or if such consent is required, it has been obtained prior to or concurrently herewith); (e) the Affiliate Ground Lease is in full force and effect, no default exists under the Affiliate Ground Lease, and there is no existing condition which, but for the passage of time or the giving of notice (or both), would result in a default under the terms of the Affiliate Ground Lease; (f) the Affiliate Ground Lease requires the ground lessor thereunder to give notice of any default by the Subsidiary Guarantor to any mortgagee, and it provides that any notice of termination given under the Affiliate Ground Lease is not effective against such mortgagee unless a copy of the notice has been delivered to the mortgagee in the manner described in the Affiliate Ground Lease; (g) Administrative Agent is permitted a reasonable opportunity (including, where necessary, sufficient time to gain possession of the Subsidiary Guarantor’s interest under the Affiliate Ground Lease) to cure any default under the Affiliate Ground Lease, which is curable after the receipt of notice of the default before the ground lessor thereunder may terminate the Affiliate Ground Lease; (h) the Affiliate Ground Lease has a term which extends not less than twenty (20) years beyond the Termination Date (including the exercise of all extension options); (i) the Affiliate Ground Lease requires the ground lessor thereunder to enter into a new lease upon termination of the Affiliate Ground Lease for any reason, including rejection of the Affiliate Ground Lease in a bankruptcy proceeding, provided that Administrative Agent cures any defaults that are susceptible to being cured; (j) the Affiliate Ground Lease permits the use of the proceeds of any casualty or condemnation at the Real Property for either (A) the restoration of the Real Property (and in such case permits such restoration proceeds to be held and disbursed by Administrative Agent or its designee), or (B) the repayment of the Advances; (k) the Affiliate Ground Lease permits subleasing of the Real Property by a mortgagee, subject only to the reasonable approval of the ground lessor; (l) the Affiliate Ground Lease provides that no amendments, cancellations, alterations, surrender, or modifications thereof may become effective without the consent of Administrative Agent; and (m) the Advances are also secured by the related fee interest in the Real Property and upon the occurrence of an Event of Default, Administrative Agent, as mortgagee, has the right to foreclose or otherwise exercise its rights with respect to the fee interest within a commercially reasonable time.

ARTICLE V
COVENANTS OF THE LOAN PARTIES

          SECTION 5.01. Affirmative Covenants. So long as any Advance or any other Obligation of any Loan Party under any Loan Document shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, each Loan Party will:

     (a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders (such compliance to include, without limitation, compliance with ERISA and the Racketeer Influenced and Corrupt Organizations Chapter of the Organized Crime Control

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Act of 1970); provided, however, that the failure to comply with the provisions of this Section 5.01(a) shall not constitute a default hereunder so long as such noncompliance is the subject of a Good Faith Contest.

     (b) Payment of Taxes, Etc. Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided, however, that neither the Loan Parties nor any of their Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim that is the subject of a Good Faith Contest, unless and until any Lien resulting therefrom attaches to its property and becomes enforceable against its other creditors.

     (c) Compliance with Environmental Laws. Comply, and cause each of its Subsidiaries and all lessees and other Persons operating or occupying its properties to comply, in all material respects, with all applicable Environmental Laws and Environmental Permits; obtain and renew and cause each of its Subsidiaries to obtain and renew all Environmental Permits necessary for its operations and properties; and conduct, and cause each of its Subsidiaries to conduct, any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its properties in material compliance with the requirements of all Environmental Laws; provided, however, that neither the Loan Parties nor any of their Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is the subject of a Good Faith Contest.

     (d) Maintenance of Insurance. Maintain, and cause each of its Subsidiaries to maintain, insurance (including, with respect to the Borrowing Base Assets, the insurance required by the terms of the Mortgages) with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which such Loan Party or such Subsidiaries operate, but in no event shall such amounts be lower or coverages be less comprehensive than the respective insurance amounts and coverages maintained by the Borrower and its Subsidiaries on the Closing Date approved by the Administrative Agent.

     (e) Preservation of Partnership or Corporate Existence, Etc. Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its existence (corporate or otherwise), legal structure, legal name, rights (charter and statutory), permits, licenses, approvals, privileges and franchises, unless, in the case of Subsidiaries of the Borrower only, in the reasonable business judgment of such Subsidiary, such Subsidiary determines that it is in its best economic interest not to preserve and maintain such rights or franchises and such failure to preserve and maintain such rights or franchises is not reasonably likely to result in a Material Adverse Effect (it being understood that the foregoing shall not prohibit, or be violated as a result of any transaction by or involving any Loan Party or Subsidiary thereof otherwise permitted under Section 5.02(d) or (e) below).

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     (f) Visitation Rights. At any reasonable time and from time to time, after reasonable advance notice to the Borrower, permit any of the Agents or Lender Parties, or any agent or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, any Loan Party and any of its Subsidiaries, and to discuss the affairs, finances and accounts of any Loan Party and any of its Subsidiaries with any of their general partners, managers, managing members, officers or directors and with their independent certified public accountants; provided, that, notwithstanding anything herein to the contrary, the Borrower shall be obligated to reimburse the Administrative Agent and the Lenders for their costs and expenses incurred in connection with the exercise of their rights under this Section 5.01(f) only if such exercise occurs after the occurrence and during the continuance of a Default or an Event of Default.

     (g) Keeping of Books. Keep, and cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of such Loan Party and each such Subsidiary in accordance with GAAP.

     (h) Maintenance of Properties, Etc. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted, and will from time to time make or cause to be made all appropriate repairs, renewals and replacement thereof except where failure to do so could not reasonably be expected to result in a Material Adverse Effect.

     (i) Transactions with Affiliates. Conduct, and cause each of its Subsidiaries to conduct, all transactions otherwise permitted under the Loan Documents with any of their Affiliates (other than transactions exclusively among or between the Borrower and/or one or more of the Guarantors) on terms that are fair and reasonable and no less favorable to such Loan Party or such Subsidiary than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate.

     (j) Covenants to Guarantee Obligations and Give Additional Security. (A) Concurrently with the delivery of Collateral Deliverables pursuant to Section 5.01(k) with respect to a Proposed Borrowing Base Asset owned or leased by a Subsidiary of a Loan Party or (B) within 10 days after the formation or acquisition of any new direct or indirect Subsidiary of a Loan Party that directly owns or leases a Borrowing Base Asset, cause (i) each such Subsidiary (if it has not already done so), to duly execute and deliver to the Administrative Agent a Guaranty Supplement in substantially the form of Exhibit C hereto, or such other guaranty supplement in form and substance reasonably satisfactory to the Administrative Agent, guaranteeing the other Loan Parties’ Obligations under the Loan Documents and (ii) each direct and, if applicable, indirect parent of such Subsidiary (if it has not already done so), to duly execute and deliver to the Administrative Agent (or, in the case of clause (2) below, the Collateral Agent), (1) a security agreement supplement and a pledge agreement supplement in form and substance reasonably satisfactory to the Administrative Agent, and (2) 100% of the certificated Equity Interests in each such Subsidiary and each direct and indirect parent of

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such Subsidiary (other than the Parent Guarantor and the Borrower), but solely to the extent such direct and indirect parents of such Subsidiary do not own any assets other than Equity Interests in Subsidiaries that directly or indirectly own Borrowing Base Assets, and stock powers and membership interest powers with respect thereto executed in blank, all in form and substance reasonably acceptable to the Administrative Agent.

     (k) Borrowing Base Additions. With the Borrower’s written request to the Administrative Agent that any Campus Housing Asset (a “Proposed Borrowing Base Asset”) be added as a Borrowing Base Asset, deliver (or cause to be delivered) to the Administrative Agent, at the Borrower’s expense, a BBA Proposal Package with respect to such Proposed Borrowing Base Asset. Within fifteen (15) Business Days after receipt of a complete BBA Proposal Package, the Administrative Agent shall give notice to the Borrower of whether the Administrative Agent and the Required Lenders have approved such Proposed Borrowing Base Asset as a Borrowing Base Asset subject to the delivery of all applicable Collateral Deliverables and Guarantor Deliverables pursuant to the following sentence (any such notice comprising an approval, a “Conditional Approval Notice”). Within 45 days after receipt by the Borrower of a Conditional Approval Notice (which period may be extended in the discretion of the Administrative Agent, at the Borrower’s request, for an additional 30 days without the approval of the Required Lenders), the Borrower shall, at its expense, deliver (or cause to be delivered) to the Administrative Agent all applicable Collateral Deliverables and Guarantor Deliverables. Notwithstanding the foregoing, the failure of any Proposed Borrowing Base Asset to comply with one or more of the Borrowing Base Conditions shall not preclude the addition of such Proposed Borrowing Base Asset as a Borrowing Base Asset so long as the Administrative Agent and the Required Lenders shall have expressly consented to the addition of such Proposed Borrowing Base Asset as a Borrowing Base Asset notwithstanding the failure to satisfy such conditions.

     (l) Further Assurances. (i) Promptly upon request by Administrative Agent, or any Lender Party through the Administrative Agent, correct, and cause each Loan Party to promptly correct, any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation thereof.

     (ii) Promptly upon request by any Agent, or any Lender Party through the Administrative Agent, do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, conveyances, pledge agreements, account control agreements, mortgages, deeds of trust, trust deeds, assignments of leases and rents, assignments, financing statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments as any Agent, or any Lender Party through the Administrative Agent, may reasonably require from time to time in order (A) to carry out more effectively the purposes of the Loan Documents and the intent of the parties hereto, (B) to the fullest extent permitted by applicable law, to subject any Loan Party’s or any of its Subsidiaries’ properties, assets, rights or interests to the Liens now or hereafter intended to be covered by any of the Collateral Documents, (C) to perfect and maintain the validity, effectiveness and priority of any of the Collateral

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Documents and any of the Liens intended to be created thereunder and (D) to assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted to the Secured Parties under any Loan Document or under any other instrument executed in connection with any Loan Document to which any Loan Party or any of its Subsidiaries is or is to be a party, and cause each of its Subsidiaries to do so.

     (iii) Cooperate in a commercially reasonable manner with the relevant appraiser in connection with any Appraisal of a Borrowing Base Asset (including any proposed additional Borrowing Base Asset), such cooperation to include, without limitation, providing such appraiser with access to such information relating to such Borrowing Base Asset as such appraiser may reasonably request.

     (iv) No tract map, parcel map, condominium plan, condominium declaration, or plat of subdivision will be recorded by any Loan Party with respect to any Borrowing Base Asset without the Administrative Agent’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned.

     (m) Performance of Material Contracts. Perform and observe, and cause each of its Subsidiaries to perform and observe, all the terms and provisions of each Material Contract to be performed or observed by it, maintain each such Material Contract in full force and effect, enforce each such Material Contract in accordance with its terms, take all such action to such end as may be from time to time reasonably requested by the Administrative Agent, and, upon the reasonable request of the Administrative Agent, make to each other party to each such Material Contract such demands and requests for information and reports or for action as any Loan Party or any of its Subsidiaries is entitled to make under such Material Contract, and cause each of its Subsidiaries to do so; provided, that the foregoing shall not prohibit, or be violated as a result of, any transactions or determinations by or involving any Loan Party or Subsidiary thereof otherwise permitted under Section 5.02(l).

     (n) Leases. (i) Make all payments and otherwise perform in all material respects all obligations in respect of all leases of real property to which the Borrower or any of its Subsidiaries is a party, keep such leases in full force and effect and not allow such leases to lapse or be terminated or any rights to renew such leases to be forfeited or cancelled (except, in the case of Subsidiaries of the Borrower only, if in the reasonable business judgment of such Subsidiary it is in its best economic interest not to maintain such lease or prevent such lapse, termination, forfeiture or cancellation and such failure to maintain such lease or prevent such lapse, termination, forfeiture or cancellation is not in respect of a Qualifying Ground Lease of a Borrowing Base Asset and could not otherwise reasonably be expected to result in a Material Adverse Effect), notify the Administrative Agent of any default by any party with respect to such leases and cooperate with the Administrative Agent in all respects to cure any such default, and cause each of its Subsidiaries to do so.

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     (ii) Without the prior written consent of Administrative Agent, such approval not to be unreasonably withheld, conditioned or delayed, none of Borrower, any Subsidiary Guarantor, nor their respective agents shall (A) enter into any non-residential Tenancy Leases where the annual rent under the applicable Tenancy Lease exceeds $30,000 per annum, or (B) modify, amend or terminate any such non-residential Tenancy Lease (except as expressly permitted or contemplated hereunder). Borrower shall provide Administrative Agent with a copy of all non-residential Tenancy Leases where the annual rent under the applicable Tenancy Lease exceeds $30,000 per annum no less than ten (10) days prior to execution of such Tenancy Leases. Borrower shall provide Administrative Agent with a copy of the fully executed original of all non-residential Tenancy Leases promptly following their execution. At Administrative Agent’s request, Borrower or Subsidiary Guarantors shall use best efforts to cause all non-residential tenants where the annual rent under the applicable Tenancy Lease exceeds $30,000 per annum to execute subordination, non-disturbance and attornment agreements reasonably satisfactory to Administrative Agent. Administrative Agent reserves the right to subordinate the Mortgages to any Tenancy Lease.

     (o) Interest Rate Hedging. Enter into prior to the Closing Date, and maintain at all times thereafter, interest rate Hedge Agreements (i) with Persons acceptable to the Administrative Agent (it being understood and agreed that such Persons shall be deemed acceptable to the Administrative Agent if and for so long as they have a long term unsecured debt rating of not less than “A-” from S&P and not less than “A3” from Moody’s, provided that if at any time the long term unsecured debt rating of such Persons falls below such required ratings or if any such required credit ratings is placed on watch for downgrade by S&P or Moody’s, then Administrative Agent shall have the right to reasonably require that such Loan Party, at such Loan Party’s expense, provide replacement Hedge Agreements from different Persons which satisfy the required credit ratings), (ii) providing either an interest-rate swap for a fixed rate of interest acceptable to the Administrative Agent or an interest-rate cap at an interest rate acceptable to the Administrative Agent, (iii) covering a notional amount equal to the amount, if any, by which (A) 66²/₃% of Debt for Borrowed Money of the Parent Guarantor and its Subsidiaries exceeds (B) all Debt for Borrowed Money of the Parent Guarantor and its Subsidiaries then accruing interest at a fixed rate acceptable to the Administrative Agent and (iv) otherwise on terms and conditions reasonably acceptable to the Administrative Agent.

     (p) Management Agreements. At all times cause each Borrowing Base Asset to be managed and operated by an Approved Manager that has (i) entered into a management agreement with respect to such Asset in form and substance satisfactory to the Administrative Agent, and (ii) executed and delivered a management agreement subordination agreement in form and substance satisfactory to the Administrative Agent.

     (q) Maintenance of REIT Status. In the case of the Parent Guarantor, commencing with its taxable year, ending December 31, 2010, be organized in conformity with the requirements for qualification as a REIT under the Internal Revenue

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Code, and at all times thereafter, conduct its affairs and the affairs of its Subsidiaries in a manner so as to continue to qualify as a REIT and elect to be treated as a REIT under all applicable laws, rules and regulations.

     (r) Exchange Listing. In the case of the Parent Guarantor, at all times (i) cause its common shares to be duly listed on the New York Stock Exchange, the American Stock Exchange or NASDAQ and (ii) timely file all reports required to be filed by it in connection therewith.

     (s) Sarbanes-Oxley. Comply at all times with all applicable provisions of Section 402(a) of Sarbanes-Oxley.

          SECTION 5.02. Negative Covenants. So long as any Advance or any other Obligation of any Loan Party under any Loan Document shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, no Loan Party will, at any time:

     (a) Liens, Etc. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on or with respect to any of its assets of any character (including, without limitation, accounts) whether now owned or hereafter acquired, or sign or file or suffer to exist, or permit any of its Subsidiaries to sign or file or suffer to exist, under the Uniform Commercial Code of any jurisdiction, a financing statement that names such Loan Party or any of its Subsidiaries as debtor, or sign or suffer to exist, or permit any of its Subsidiaries to sign or suffer to exist, any security agreement authorizing any secured party thereunder to file such financing statement, or assign, or permit any of its Subsidiaries to assign, any accounts or other right to receive income, except, in the case of the Loan Parties (other than the Parent Guarantor) and their respective Subsidiaries:

     (i) Liens created under the Loan Documents;

     (ii) Permitted Liens;

     (iii) Liens described on Schedule 4.01(p) hereto;

     (iv) purchase money Liens upon or in equipment acquired or held by such Loan Party or any of its Subsidiaries in the ordinary course of business to secure the purchase price of such equipment or to secure Debt incurred solely for the purpose of financing the acquisition of any such equipment to be subject to such Liens, or Liens existing on any such equipment at the time of acquisition (other than any such Liens created in contemplation of such acquisition that do not secure the purchase price), or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount; provided, however, that no such Lien shall extend to or cover any property other than the equipment being acquired, and no such extension, renewal or replacement shall extend to or cover any property not theretofore subject to the Lien being extended, renewed or replaced; provided further that the aggregate principal amount of the Debt secured

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by Liens permitted by this clause (iv) shall not exceed the amount permitted under Section 5.02(b)(iii)(A);

     (v) Liens arising in connection with Capitalized Leases permitted under Section 5.02(b)(iii)(B), provided that no such Lien shall extend to or cover any Collateral or assets other than the assets subject to such Capitalized Leases;

     (vi) Liens on property of a Person existing at the time such Person is acquired by, merged into or consolidated with any Loan Party or any Subsidiary of any Loan Party or becomes a Subsidiary of any Loan Party, provided that such Liens were not created in contemplation of such merger, consolidation or acquisition and do not extend to any assets other than those of the Person so merged into or consolidated with such Loan Party or such Subsidiary or so acquired by such Loan Party or such Subsidiary;

     (vii) Liens securing Non-Recourse Debt permitted under Section 5.02(b)(iii)(E), Recourse Debt permitted under Section 5.02(b)(iv) or Debt permitted under Section 5.02(b)(vii), provided, in each case, that no such Lien shall extend to or cover any Borrowing Base Asset or other Collateral;

     (viii) the replacement, extension or renewal of any Lien permitted by clause (iii) above upon or in the same property theretofore subject thereto in connection with any Refinancing Debt permitted under Section 5.02(b)(iii)(C);

     (ix) Liens arising in connection with any Secured Hedge Agreement; and

     (x) Liens arising in connection with Debt in respect of Hedge Agreements permitted under Section 5.02(b)(iii)(D) (other than Secured Hedge Agreements), provided that no such lien shall extend to or cover any Borrowing Base Asset or other Collateral.

     (b) Debt. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Debt, except:

     (i) Debt under the Loan Documents;

     (ii) in the case of any Loan Party or any Subsidiary of a Loan Party, Debt owed to any Loan Party, provided that, in each case, such Debt (y) shall be on terms acceptable to the Administrative Agent and (z) shall be evidenced by promissory notes in form and substance satisfactory to the Administrative Agent, which promissory notes shall (unless payable to the Borrower) by their terms be subordinated to the Obligations of the Loan Parties under the Loan Documents;

     (iii) in the case of each Loan Party (other than the Parent Guarantor) and its Subsidiaries,

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     (A) Debt secured by Liens permitted by Section 5.02(a)(iv) not to exceed in the aggregate $5,000,000 at any time outstanding,

     (B) (1) Capitalized Leases not to exceed in the aggregate $5,000,000 at any time outstanding, and (2) in the case of any Capitalized Lease to which any Subsidiary of a Loan Party is a party, any Contingent Obligation of such Loan Party guaranteeing the Obligations of such Subsidiary under such Capitalized Lease,

     (C) the Surviving Debt described on Schedule 4.01(o) hereto and any Refinancing Debt extending, refunding or refinancing such Surviving Debt,

     (D) Debt in respect of Hedge Agreements entered into by the Borrower and designed to hedge against fluctuations in interest rates or foreign exchange rates incurred as required by this Agreement or incurred in the ordinary course of business and consistent with prudent business practices,

     (E) Non-Recourse Debt (including, without limitation, the JV Pro Rata Share of Non-Recourse Debt of any Joint Venture) in respect of Assets other than Borrowing Base Assets, the incurrence of which would not result in a Default under Section 5.04 or any other provision of this Agreement, and

     (F) Recourse Debt not secured by any Lien in an amount not to exceed 5% of Total Asset Value at any one time outstanding;

     (iv) Recourse Debt of the Borrower and/or Property-Level Subsidiaries of the Borrower and the JV Pro Rata Share of Recourse Debt of any Joint Venture, in each case as such Recourse Debt may be secured by Liens permitted by Section 5.02(a)(vii), in respect of which the Borrower or the Parent Guarantor has guaranteed the obligations of the Borrower and/or such Property-Level Subsidiary or Joint Venture under such Recourse Debt and the incurrence of which would not result in a Default under Section 5.04 or any other provision of this Agreement;

     (v) in the case of the Parent Guarantor and the Borrower, Debt under Customary Carve-Out Agreements;

     (vi) endorsements of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and

     (vii) any other Debt not to exceed $5,000,000 in the aggregate at any time outstanding in respect of all Loan Parties and which is not secured by any Lien on any Borrowing Base Asset.

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     (c) Change in Nature of Business. Make, or permit any of its Subsidiaries to make, any material change in the nature of its business as carried at the Closing Date (after giving effect to the Formation Transactions, the IPO and the other transactions contemplated by the Loan Documents); or engage in, or permit any of its Subsidiaries to engage in, any business other than ownership, development, licensing and management of Campus Housing Assets in the United States consistent with the business plan described in the Registration Statement and the requirements of the Loan Documents, and other business activities incidental thereto.

     (d) Mergers, Etc. Merge or consolidate with or into, or convey, transfer (except as permitted by Section 5.02(e)), lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, any Person, or permit any of its Subsidiaries to do so; provided, however, that (i) any Subsidiary of a Loan Party may merge or consolidate with or into, or dispose of assets to, any other Subsidiary of such Loan Party (provided that if one or more of such Subsidiaries is also a Loan Party, a Loan Party shall be the surviving entity) or any other Loan Party other than the Parent Guarantor (provided that such Loan Party or, in the case of any Loan Party other than the Borrower, another Loan Party shall be the surviving entity), and (ii) any Loan Party may merge with any Person that is not a Loan Party so long as such Loan Party is the surviving entity or (except in the case of a merger with the Borrower, which shall always be the surviving entity) such other Person is the surviving party and shall promptly become a Loan Party, provided, in each case, that no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom. Notwithstanding any other provision of this Agreement, (y) any Subsidiary of a Loan Party (other than the Borrower and any Subsidiary that is the direct owner of a Borrowing Base Asset) may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and the assets or proceeds from the liquidation or dissolution of such Subsidiary are transferred to the Borrower or a Guarantor, provided that no Default or Event of Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom, and (z) any Loan Party or Subsidiary of a Loan Party shall be permitted to effect any Transfer of Assets through the sale or transfer of direct or indirect Equity Interests in the Person (other than the Borrower or the Parent Guarantor) that owns such Assets so long as Section 5.02(e) would otherwise permit the Transfer of all Assets owned by such Person at the time of such sale or transfer of such Equity Interests. Upon the sale or transfer of Equity Interests in any Person that is a Guarantor permitted under clause (z) above, provided that no Default or Event of Default shall have occurred and be continuing or would result therefrom, the Administrative Agent shall, upon the request of the Borrower, release such Guarantor from the Guaranty and the Collateral Documents.

     (e) Sales, Etc. of Assets. (i) In the case of the Parent Guarantor, sell, lease, transfer or otherwise dispose of, or grant any option or other right to purchase, lease or otherwise acquire any assets and (ii) in the case of the Loan Parties (other than the Parent Guarantor), sell, lease (other than by entering into Tenancy Leases), transfer or otherwise dispose of, or grant any option or other right to purchase, lease (other than any option or other right to enter into Tenancy Leases) or otherwise acquire, or permit any of its

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Subsidiaries to sell, lease, transfer or otherwise dispose of, or grant any option or other right to purchase, lease or otherwise acquire (each action described in clauses (i) and (ii) of this subsection (e), including, without limitation, any Sale and Leaseback Transaction, being a “Transfer”), any Asset or Assets (or any direct or indirect Equity Interests in the owner thereof), or obtain a release of the Liens created under the Loan Documents, in each case other than the following Transfers and releases, which shall be permitted hereunder only so long as no Default or Event of Default shall exist or would result therefrom:

     (A) the Transfer of any Asset or Assets that are not Borrowing Base Assets from any Loan Party to another Loan Party (other than the Parent Guarantor) or from a Subsidiary of a Loan Party to another Subsidiary of such Loan Party or any other Loan Party (other than the Parent Guarantor),

     (B) the Transfer of any Asset or Assets that are not Borrowing Base Assets to any Person that is not a Loan Party, provided that (1) the Loan Parties shall be in compliance with the covenants contained in Section 5.04 both immediately prior to and on a pro forma basis immediately after giving effect to such Transfer, and (2) in the case of any such Transfer which shall result in the aggregate purchase price paid to the Loan Parties (or any of them) to exceed $50,000,000 in any 12-month period and any such Transfer thereafter consummated during such 12-month period, prior to the date of such Transfer, the Borrower shall have delivered to the Administrative Agent (x) a Borrowing Base Certificate demonstrating that the Total Borrowing Base Value (calculated on a pro forma basis after giving effect to such Transfer and to any repayment of Advances made at the time thereof) will be greater than or equal to the Facility Exposure, and (y) a certificate of the Chief Financial Officer (or other Responsible Officer performing similar functions) of the Borrower demonstrating compliance with the foregoing clause (1) and confirming that no Default or Event of Default shall exist on the date of such Transfer or will result therefrom, together with supporting information in detail reasonably satisfactory to the Administrative Agent,

     (C) the Transfer of any Borrowing Base Asset or Borrowing Base Assets to any Person, or obtaining a release of the Liens created under the Loan Documents with respect to a Borrowing Base Asset or Borrowing Base Assets, in each case with the intention that such Borrowing Base Asset or Borrowing Base Assets, upon consummation of such Transfer or release, shall no longer constitute a Borrowing Base Asset or Borrowing Base Assets, provided that:

     (1) immediately after giving effect to such Transfer or release, as the case may be, the remaining Borrowing Base Assets shall continue to satisfy the requirements set forth in clauses (a) through (h) of the definition of Borrowing Base Conditions,

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     (2) immediately after giving effect to such Transfer or release, as the case may be, no Default or Event of Default shall exist or result therefrom,

     (3) the Loan Parties shall be in compliance with the covenants contained in Section 5.04 both immediately prior to and on a pro forma basis immediately after giving effect to such Transfer or release,

     (4) on or prior to the date of such Transfer or release, as the case may be, the Borrower shall have delivered to the Administrative Agent a certificate of the Chief Financial Officer (or other Responsible Officer performing similar functions) of the Borrower demonstrating compliance with the foregoing clauses (1) through (3), together with supporting information in detail reasonably satisfactory to the Administrative Agent, and

     (5) With respect to a release of the Liens created under the Loan Documents only, which release is not executed as a result of a Transfer or refinancing of such Borrowing Base Asset, Borrower shall have received the prior written approval of the release from the Administrative Agent and the Required Lenders, or

     (D) the Transfer of (1) obsolete or worn out personal property in the ordinary course of business or (2) inventory in the ordinary course of business, which personal property or inventory, as the case may be, is used or held in connection with an Asset.

Following (x) a Transfer of all Borrowing Base Assets owned or leased by a Subsidiary Guarantor in accordance with Section 5.02(e)(ii)(C) or (y) the release by a Subsidiary Guarantor of all Borrowing Base Assets owned or leased by it such that such Borrowing Base Assets become non-Borrowing Base Assets pursuant to Section 5.02(e)(ii)(C), the Administrative Agent shall, upon the request of the Borrower and at the Borrower’s expense, promptly release such Subsidiary Guarantor from the Guaranty and the Security Agreement.

     (f) Investments. Make or hold, or permit any of its Subsidiaries to make or hold, any Investment other than:

     (i) Investments by the Loan Parties and their Subsidiaries in their Subsidiaries outstanding on the date hereof and additional Investments in wholly-owned Subsidiaries and, in the case of the Loan Parties (other than the Parent Guarantor) and their Subsidiaries (and Joint Ventures in which such Loan Parties and Subsidiaries hold any direct or indirect interest), Investments in Assets (including by asset or Equity Interest acquisitions or investments in Joint

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Ventures), in each case subject, where applicable, to the limitations set forth in Section 5.02(f)(iv);

     (ii) Investments in Cash Equivalents;

     (iii) Investments consisting of intercompany Debt permitted under Section 5.02(b)(ii);

     (iv) Investments consisting of the following items so long as (y) the aggregate amount outstanding, without duplication, of all Investments described in this subsection does not exceed, (1) 35% of Total Asset Value during the period from the Closing Date through the fiscal quarter of the Parent Guarantor ending on June 30, 2011, (2) 30% of Total Asset Value during the period thereafter ending with the fiscal quarter of the Parent Guarantor ending on June 30, 2012 or (3) 25% of Total Asset Value, at any time thereafter, and (z) the aggregate amount of each of the following items of Investments does not exceed at any time the specified percentage of Total Asset Value set forth below:

     (A) Investments in unimproved land and Development Assets (including such assets that such Person has contracted to purchase for development with or without options to terminate the purchase agreement but, in such instances, limited solely to non-refundable deposits under such contracts and, to the extent a Loan Party is obligated under any such contract, the amount of such obligation), so long as the aggregate amount of such Investments, calculated on the basis of the greater of actual cost or budgeted cost, does not at any time exceed 10% and 20%, respectively, of Total Asset Value at such time,

     (B) Investments in Joint Ventures of any Loan Party so long as the aggregate amount outstanding, without duplication, of all such Investments does not at any time exceed 15% of Total Asset Value at such time, and

     (C) Investments permitted under this Subsection, other than the items of Investments referred to in clauses (A) and (B) above, so long as the aggregate amount of all such Investments does not at any time exceed 10% of Total Asset Value at such time;

     (v) Investments, if any, outstanding on the date hereof in Subsidiaries that are not wholly-owned by any Loan Party;

     (vi) Investments by the Borrower in Hedge Agreements permitted under Section 5.02(b)(iii)(D);

     (vii) To the extent permitted by applicable law, loans or other extensions of credit to officers, directors and employees of any Loan Party or any Subsidiary of any Loan Party in the ordinary course of business, for travel, entertainment, relocation and analogous ordinary business purposes, which

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Investments shall not exceed at any time $1,000,000 in the aggregate for all Loan Parties;

     (viii) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit extended in the ordinary course of business in an aggregate amount for all Loan Parties not to exceed at any time $5,000,000; and

     (ix) Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss.

     (g) Restricted Payments. In the case of the Parent Guarantor, declare or pay any dividends, purchase, redeem, retire, defease or otherwise acquire for value any of its Equity Interests now or hereafter outstanding, return any capital to its stockholders, partners or members (or the equivalent Persons thereof) as such, make any distribution of assets, Equity Interests, obligations or securities to its stockholders, partners or members (or the equivalent Persons thereof) as such (collectively, “Restricted Payments”); provided, however, that (i) the Parent Guarantor may take such actions only so long as (A) no Default or Event of Default shall have occurred and be continuing or would result therefrom and (B) as of the date of such action, the Loan Parties are in compliance with the covenants contained in Section 5.04 (both immediately before and on a pro forma basis immediately after giving effect to such action), (ii) the Parent Guarantor may declare and make dividend payments or other distributions payable solely in the common stock or other common Equity Interests of the Parent Guarantor and (iii) the Parent Guarantor may purchase, redeem, or otherwise acquire shares of its common stock or other common Equity Interests or warrants or options to acquire any such shares with the proceeds received from the substantially concurrent issue of new shares of its common stock or other common Equity Interests, so long as the aggregate amount of such purchases, redemptions and acquisitions of shares of common stock or other common Equity Interests or warrants or options to acquire any such shares does not at any time exceed 90% of the Funds From Operations for the consecutive four fiscal quarters of the Parent Guarantor most recently ended for which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be. Notwithstanding anything herein to the contrary, cash and stock dividends payable by the Parent Guarantor on Equity Interests shall be permitted to the extent necessary to maintain the Parent’s REIT status, provided that the cash component of such dividends shall be the minimum amount required by law or regulation for such purpose.

     (h) Amendments of Constitutive Documents. Amend, or permit any of its Subsidiaries to amend, in each case in any material respect, its limited liability company agreement, partnership agreement, certificate of incorporation or bylaws or other constitutive documents, provided that any amendment to any such constitutive document that would be adverse to any of the Secured Parties shall be deemed “material” for purposes of this Section; and provided further that any amendment to any such constitutive document that would designate such Subsidiary as a “special purpose entity”

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or otherwise confirm such Subsidiary’s status as a “special purpose entity” shall be deemed “not material” for purposes of this Section.

     (i) Accounting Changes. Make or permit, or permit any of its Subsidiaries to make or permit, any change in (i) accounting policies or reporting practices, except as required or permitted by generally accepted accounting principles, or (ii) Fiscal Year.

     (j) Speculative Transactions. Engage, or permit any of its Subsidiaries to engage, in any transaction involving commodity options or futures contracts or any similar speculative transactions or any other derivative transaction not entered into to hedge against interest rate fluctuations in the ordinary course of business.

     (k) Payment Restrictions Affecting Subsidiaries. Directly or indirectly, enter into or suffer to exist, or permit any of its Subsidiaries to enter into or suffer to exist, any agreement or arrangement limiting the ability of any of its Subsidiaries to declare or pay dividends or other distributions in respect of its Equity Interests or repay or prepay any Debt owed to, make loans or advances to, or otherwise transfer assets to or invest in, the Borrower or any Subsidiary of the Borrower (whether through a covenant restricting dividends, loans, asset transfers or investments, a financial covenant or otherwise), except (i) the Loan Documents, (ii) any agreement or instrument evidencing Surviving Debt, (iii) any agreement or instrument evidencing Non-Recourse Debt, provided that the terms of such Debt, and of such agreement or instrument, do not restrict distributions in respect of Equity Interests in Subsidiaries directly or indirectly owning Borrowing Base Assets, (iv) any agreement in effect at the time such Subsidiary becomes a Subsidiary of the Borrower, so long as such agreement was not entered into solely in contemplation of such Person becoming a Subsidiary of the Borrower or (v) with respect to agreements or instruments which limit the ability of Subsidiaries to declare or pay dividends or pay distributions in respect of its Equity Interests only, such agreements which impose any such restriction solely after the occurrence of a default or event of default.

     (l) Amendment, Etc. of Material Contracts. Cancel or terminate any Material Contract or consent to or accept any cancellation or termination thereof, amend or otherwise modify any Material Contract or give any consent, waiver or approval thereunder, waive any default under or breach of any Material Contract, agree in any manner to any other amendment, modification or change of any term or condition of any Material Contract or take any other action in connection with any Material Contract that would impair in any material respect the value of the interest or rights of any Loan Party thereunder or that would impair or otherwise adversely affect in any material respect the interest or rights, if any, of any Agent or any Lender Party, or permit any of its Subsidiaries to do any of the foregoing, in each case in a manner that could reasonably be expected to have a Material Adverse Effect, in each case taking into account the effect of any agreements that supplement or serve to substitute for, in whole or in part, such Material Contract.

     (m) Negative Pledge. Enter into or suffer to exist, or permit any of its Subsidiaries to enter into or suffer to exist, any agreement prohibiting or conditioning the creation or assumption of any Lien upon any of its property or assets (including, without

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limitation, any Borrowing Base Assets), except (i) pursuant to the Loan Documents or (ii) with respect to any property or assets other than the Borrowing Base Assets in connection with

     (A) any Non-Recourse Debt permitted by Section 5.02(b)(iii)(E), provided that the terms of such Debt, and of any agreement entered into and of any instrument issued in connection therewith, (1) do not provide for or prohibit or condition the creation of any Lien on any Borrowing Base Assets and are otherwise permitted by the Loan Documents and (2) solely prohibit Liens on the property of the Person incurring such Non-Recourse Debt and the Equity Interests in such Person,

     (B) any purchase money Debt permitted under Section 5.02(b)(iii)(A) solely to the extent that the agreement or instrument governing such Debt prohibits a Lien on the property acquired with the proceeds of such Debt,

     (C) any Capitalized Lease permitted by Section 5.02(b)(iii)(B) solely to the extent that such Capitalized Lease prohibits a Lien on the property subject thereto, or

     (D) any Debt outstanding on the date any Subsidiary of the Borrower becomes such a Subsidiary (so long as such agreement was not entered into solely in contemplation of such Subsidiary becoming a Subsidiary of the Borrower),

     (E) any Surviving Debt and any Refinancing Debt extending, refunding, or refinancing such Surviving Debt, so long as the prohibitions or conditions contained in such Refinancing Debt are no more restrictive than the corresponding provisions contained in the Debt which is extended, refunded or refinanced thereby,

     (F) any unsecured Recourse Debt permitted by Section 5.02(b)(iii)(F) or other Debt permitted by Section 5.02(b)(vii); and

     (G) any Recourse Debt permitted by Section 5.02(b)(iv).

     (n) Parent Guarantor as Holding Company. In the case of the Parent Guarantor, not enter into or conduct any business, or engage in any activity (including, without limitation, any action or transaction that is required or restricted with respect to the Borrower and its Subsidiaries under Sections 5.01 and 5.02 without regard to any of the enumerated exceptions to such covenants), other than (i) the holding of the direct and indirect Equity Interests of the Borrower; (ii) the performance of the duties of sole general partner of the Borrower through the Parent Guarantor’s indirect ownership of all of the membership interests in such general partner; (iii) the performance of its Obligations (subject to the limitations set forth in the Loan Documents) under each Loan Document to which it is a party; (iv) the making of equity or subordinate debt Investments in the Borrower and its Subsidiaries, provided each such Investment shall be on terms acceptable to the Administrative Agent; and (v) activities incidental to each of the foregoing.

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     (o) Multiemployer Plans. Neither any Loan Party nor any ERISA Affiliate will contribute to or be required to contribute to any Multiemployer Plan.

     (p) Management Agreements. The Borrower shall not and shall not permit any Guarantor to enter into any Management Agreement with a third party manager after the date hereof for any Borrowing Base Asset without the prior written consent of the Administrative Agent (which shall not be unreasonably withheld), and after such approval, no such Management Agreement shall be modified in any material respect or terminated without Administrative Agent’s prior written approval, such approval not to be unreasonably withheld. Administrative Agent may condition any approval of a new manager upon the execution and delivery to Agent of a collateral assignment of such management agreement to Agent and a subordination of the manager’s rights thereunder to the rights of the Administrative Agent and the Lender Parties under the Loan Documents.

          SECTION 5.03. Reporting Requirements. So long as any Advance or any other Obligation of any Loan Party under any Loan Document shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, the Borrower will furnish to the Agents and the Lender Parties in accordance with Section 9.02(b):

     (a) Default Notice. As soon as possible and in any event within two Business Days after the occurrence of each Default or any event, development or occurrence reasonably expected to result in a Material Adverse Effect continuing on the date of such statement, a statement of the Chief Financial Officer (or other Responsible Officer) of the Parent Guarantor setting forth details of such Default or such event, development or occurrence and the action that the Parent Guarantor has taken and proposes to take with respect thereto.

     (b) Annual Financials. As soon as available and in any event within 90 days after the end of each Fiscal Year, a copy of the annual audit report for such year for the Parent Guarantor and its Subsidiaries, including therein Consolidated balance sheets of the Parent Guarantor and its Subsidiaries as of the end of such Fiscal Year and Consolidated statements of income and a Consolidated statement of cash flows of the Parent Guarantor and its Subsidiaries for such Fiscal Year (it being acknowledged that a copy of the annual audit report filed by the Parent Guarantor with the Securities and Exchange Commission shall satisfy the foregoing requirements), in each case accompanied by (x) an opinion acceptable to the Administrative Agent of KPMG LLP or other independent public accountants of recognized standing acceptable to the Required Lenders, and (y) if and as required by the rules and regulations promulgated by the United States Securities and Exchange Commission, a report of such independent public accountants as to the Borrower’s internal controls required under Section 404 of the Sarbanes-Oxley Act of 2002, in each case certified in a manner to which the Administrative Agent has not objected, together with (i) a certificate of such accounting firm to the Lender Parties stating that in the course of the regular audit of the business of the Parent Guarantor and its Subsidiaries, which audit was conducted by such accounting firm in accordance with generally accepted auditing standards, such accounting firm has obtained no knowledge of non-compliance with any of the covenants contained in

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Section 5.04, or if, in the opinion of such accounting firm, any such non-compliance has occurred, a statement as to the nature thereof, (ii) a schedule in form satisfactory to the Administrative Agent of the computations used by such accountants in determining, as of the end of such Fiscal Year, compliance with the covenants contained in Section 5.04, provided that in the event of any change in GAAP used in the preparation of such financial statements, the Parent Guarantor shall also provide, if necessary for the determination of compliance with Section 5.04, a statement of reconciliation conforming such financial statements to GAAP and (iii) a certificate of the Chief Financial Officer (or other Responsible Officer) of the Parent Guarantor stating that no Default has occurred and is continuing or, if a Default has occurred and is continuing, a statement as to the nature thereof and the action that the Parent Guarantor has taken and proposes to take with respect thereto.

     (c) Quarterly Financials. As soon as available and in any event within 45 days after the end of each of the first three quarters of each Fiscal Year, Consolidated balance sheets of the Parent Guarantor and its Subsidiaries as of the end of such quarter and Consolidated statements of income and a Consolidated statement of cash flows of the Parent Guarantor and its Subsidiaries for the period commencing at the end of the previous fiscal quarter and ending with the end of such fiscal quarter and Consolidated statements of income and a Consolidated statement of cash flows of the Parent Guarantor and its Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending with the end of such quarter, setting forth in each case in comparative form the corresponding figures for the corresponding date or period of the preceding Fiscal Year, all in reasonable detail and duly certified (subject to normal year-end audit adjustments) by the Chief Executive Officer, Chief Financial Officer or Treasurer (or other Responsible Officer performing similar functions) of the Parent Guarantor as having been prepared in accordance with GAAP (it being acknowledged that a copy of the quarterly financials filed by the Parent Guarantor with the Securities and Exchange Commission shall satisfy the foregoing requirements), together with (i) a certificate of such officer stating that no Default has occurred and is continuing or, if a Default has occurred and is continuing, a statement as to the nature thereof and the action that the Parent Guarantor has taken and proposes to take with respect thereto and (ii) a schedule in form satisfactory to the Administrative Agent of the computations used by the Parent Guarantor in determining compliance with the covenants contained in Section 5.04, provided that in the event of any change in GAAP used in the preparation of such financial statements, the Parent Guarantor shall also provide, if necessary for the determination of compliance with Section 5.04, a statement of reconciliation conforming such financial statements to GAAP.

     (d) Borrowing Base Certificate. (i) As soon as available and in any event within 45 days after the end of each calendar quarter, (ii) at the time any Proposed Borrowing Base Asset is included in the definition of “Borrowing Base Asset,” (iii) at the time any Borrowing Base Asset is the subject of a Transfer or a release of Liens such that it no longer constitutes a Borrowing Base Asset or (iv) at any time a Borrowing Base Asset fails to satisfy all of the Borrowing Base Conditions, a Borrowing Base Certificate, as at the end of such quarter or as of the applicable date, certified by the Chief Financial

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Officer (or other Responsible Officer performing similar functions) of the Parent Guarantor.

     (e) Annual Budgets. As soon as available and in any event within 45 days after the end of each Fiscal Year, forecasts prepared by management of the Parent Guarantor, in form satisfactory to the Administrative Agent, of balance sheets, income statements and cash flow statements on a quarterly basis for the then current Fiscal Year and on an annual basis for each Fiscal Year thereafter until the Termination Date.

     (f) Reconciliation Statements. If, as a result of any change in accounting principles and policies from those used in the preparation of the audited financial statements referred to in Section 4.01(g), the Consolidated financial statements of the Parent Guarantor and its Subsidiaries delivered pursuant to Section 5.03(b), (c) or (f) (i) will differ in any material respect from the Consolidated financial statements that would have been delivered pursuant to such Section had no such change in accounting principles and policies been made, then (i) together with the first delivery of financial statements pursuant to Section 5.03(b), (c) or (f) (i) following such change, Consolidated financial statements of the Parent Guarantor and its Subsidiaries for the fiscal quarter immediately preceding the fiscal quarter in which such change is made, prepared on a pro forma basis as if such change had been in effect during such fiscal quarter, and (ii) together with each delivery of financial statements pursuant to Section 5.03(b), (c) or (f) (i) following such change, a written statement of the chief accounting officer or chief financial officer of the Parent Guarantor setting forth the differences (including any differences that would affect any calculations relating to the financial covenants set forth in Section 5.04) which would have resulted if such financial statements had been prepared without giving effect to such change.

     (g) Material Litigation. Promptly after the commencement thereof, notice of all actions, suits, investigations, litigation and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting any Loan Party or any of its Subsidiaries of the type described in Section 4.01(f), and promptly after the occurrence thereof, notice of any adverse change in the status or the financial effect on any Loan Party or any of its Subsidiaries of the Material Litigation from that described on Schedule 4.01(f) hereto.

     (h) Securities Reports. Promptly after the sending or filing thereof, copies of all proxy statements, financial statements and reports that any Loan Party or any of its Subsidiaries sends to the holders of its Equity Interests, and copies of all regular, periodic and special reports, and all registration statements, that any Loan Party or any of its Subsidiaries files with the Securities and Exchange Commission or any governmental authority that may be substituted therefor, or with any national securities exchange.

     (i) Real Property. As soon as available and in any event within 15 days after the end of each fiscal quarter of each Fiscal Year, a report supplementing Schedule 4.01(q) hereto, including an identification of all owned and leased real property acquired or disposed of by any Loan Party or any of its Subsidiaries during such fiscal quarter, a list and description (including the street address, county or other relevant

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jurisdiction, state, record owner, book value thereof and, in the case of leases of property, lessor, lessee, expiration date and annual rental cost thereof) of all real property acquired or leased by any Loan Party or any of its Subsidiaries during such fiscal quarter and a description of such other changes in the information included in such Schedules as may be necessary for such Schedules to be accurate and complete.

     (j) Assets Reports. As soon as available and in any event within 45 days after the end of each quarter of each Fiscal Year, a report listing and describing (in detail reasonably satisfactory to the Administrative Agent) all Assets of the Parent Guarantor and its Subsidiaries as of the end of such quarter in form and substance reasonably satisfactory to the Administrative Agent.

     (k) Environmental Conditions. Notice to the Administrative Agent (i) promptly upon obtaining knowledge of any material violation of any Environmental Law affecting any Asset or the operations thereof or the operations of any of its Subsidiaries, (ii) promptly upon obtaining knowledge of any known release, discharge or disposal of any Hazardous Materials at, from, or into any Asset which it reports in writing or is legally required to report in writing to any governmental authority and which is material in amount or nature or which could reasonably be expected to materially adversely affect the value of such Asset, (iii) promptly upon its receipt of any written notice of material violation of any Environmental Laws or of any material release, discharge or disposal of Hazardous Materials in violation of any Environmental Laws or any matter that could reasonably be expected to result in an Environmental Action, including a notice or claim of liability or potential responsibility from any third party (including without limitation any federal, state or local governmental officials) and including notice of any formal inquiry, proceeding, demand, investigation or other action with regard to (A) such Loan Party’s or any other Person’s operation of any Asset in compliance with Environmental Laws, (B) Hazardous Materials contamination on, from or into any Asset, or (C) investigation or remediation of off-site locations at which such Loan Party or any of its predecessors are alleged to have directly or indirectly disposed of Hazardous Materials, or (iv) upon such Loan Party’s obtaining knowledge that any expense or loss has been incurred by such governmental authority in connection with the assessment, containment, removal or remediation of any Hazardous Materials with respect to which such Loan Party or any Joint Venture could reasonably be expected to incur material liability or for which a Lien may be imposed on any Asset, provided that notice is required only for any of the events described in clauses (i) through (iv) above that could reasonably be expected to result in a Material Adverse Effect, could reasonably be expected to result in a material Environmental Action with respect to any Borrowing Base Asset or could reasonably be expected to result in a Lien against any Borrowing Base Asset.

     (l) Borrowing Base Asset Value. Promptly after discovery of any setoff, claim, withholding or defense asserted or effected against any Loan Party, or to which any Borrowing Base Asset is subject, which could reasonably be expected to (i) have a material adverse effect on the value of a Borrowing Base Asset, (ii) have a Material Adverse Effect or (iii) result in the imposition or assertion of a Lien against any

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Borrowing Base Asset which is not a Permitted Lien, notice to the Administrative Agent thereof.

     (m) Compliance with Borrowing Base Asset Conditions. Promptly after obtaining actual knowledge of any condition or event which causes any Borrowing Base Asset to fail to satisfy any of the Borrowing Base Conditions (other than those Borrowing Base Conditions, if any, that have theretofore been waived by the Administrative Agent and the Required Lenders with respect to any particular Borrowing Base Asset, to the extent of such waiver), notice to the Administrative Agent thereof.

     (n) Appraisals. Promptly upon the written request of the Administrative Agent or the Required Lenders and at the expense of the Borrower, Appraisals of the Borrowing Base Assets that are the subject of such request, provided, that so long as no Event of Default then exists, the Borrower shall not be required to deliver an Appraisal of a Borrowing Base Asset more frequently than once during the term of the Facility (other than the Appraisal required in connection with the extension of the Termination Date).

     (o) Other Information. Promptly, such other information respecting the business, condition (financial or otherwise), operations, performance, properties or prospects of any Loan Party or any of its Subsidiaries as the Administrative Agent, or any Lender Party through the Administrative Agent, may from time to time reasonably request.

     (p) Management Agreements and Material Contracts. Promptly following execution thereof by all parties thereto, a copy of any Management Agreement or Material Contract entered into with respect to any Borrowing Base Asset after the date hereof.

          SECTION 5.04. Financial Covenants. So long as any Advance or any other Obligation of any Loan Party under any Loan Document shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have, at any time after the Initial Extension of Credit, any Commitment hereunder, the Parent Guarantor will:

     (a) Parent Guarantor Financial Covenants.

     (i) Maximum Leverage Ratio. Maintain as of each Test Date, a Leverage Ratio of not greater than 0.60:1.00.

     (ii) Maximum Secured Recourse Debt Ratio. Maintain as of each Test Date, a Secured Recourse Debt Ratio of not greater than 20%.

     (iii) Minimum Tangible Net Worth. Maintain at all times tangible net worth of the Parent Guarantor and its Subsidiaries, as determined in accordance with GAAP (but excluding accumulated depreciation on all Real Property), of not less than the sum of $[                                        ] plus an amount equal to 75% times the net cash proceeds of all issuances and primary sales of Equity Interests of the Parent Guarantor or any of its Subsidiaries consummated following the Closing Date.

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     (iv) Minimum Ratio of Fixed Rate Debt for Borrowed Money and Debt for Borrowed Money Subject to Hedge Agreements to Debt for Borrowed Money. Maintain as of each Test Date, a ratio of fixed rate Debt for Borrowed Money and Debt for Borrowed Money subject to Hedge Agreements to all Debt for Borrowed Money of not less than 66.67%.

     (v) Maximum Dividend Payout Ratio. Maintain as of each Test Date, a Dividend Payout Ratio of equal to or less than (A) 90% or (B) such greater amount as may be required by applicable law to maintain status as a REIT for tax purposes.

     (vi) Minimum Fixed Charge Coverage Ratio. Maintain as of each Test Date, a Fixed Charge Coverage Ratio of not less than 1.50:1.00.

          (b) Borrowing Base Covenants.

     (i) Maximum Facility Exposure to Borrowing Base Asset Value. Not permit at any time the Facility Exposure at such time to exceed the Total Borrowing Base Value at such time.

     (ii) Minimum Borrowing Base Debt Service Coverage Ratio. Maintain as of each Test Date, a Borrowing Base Debt Service Coverage Ratio of not less than 1.50:1.00.

     (iii) Minimum Appraised Value. Not permit at any time the Appraised Value of the Borrowing Base Assets in the aggregate to be less than $130,000,000.

     (iv) Minimum Number of Borrowing Base Assets. Not permit at any time the number of Campus Housing Assets comprising the Borrowing Base Assets to be fewer than ten.

     (v) Maximum Size of Individual Borrowing Base Asset. Not permit at any time the Appraised Value of any individual Borrowing Base Asset to exceed 15% of the Appraised Value of the Borrowing Base Assets in the aggregate.

     (vi) Minimum Weighted Average Occupancy of the Borrowing Base Assets. Not permit at any time the average occupancy of the Borrowing Base Assets, weighted based upon the number of beds comprising each Borrowing Base Asset, to equal less than 80%.

     All calculations described above in Sections 5.04(a) and 5.04(b) that pertain to the fiscal quarters of the Parent Guarantor ending on or prior to September 30, 2010 shall be made on a pro forma basis, including to give effect to the IPO and the Formation Transactions. To the extent any calculations described in Sections 5.04(a) or 5.04(b) are required to be made on any date of determination other than the last day of a fiscal quarter of the Parent Guarantor, such calculations shall be made on a pro forma basis to account for any acquisitions or dispositions of Assets, and the incurrence or repayment of any Debt for Borrowed Money relating to such

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Assets, that have occurred since the last day of the fiscal quarter of the Parent Guarantor most recently ended. To the extent any calculations described in Sections 5.04(a) or 5.04(b) are required to be made on a Test Date relating to an Advance, a merger permitted under Section 5.02(d), a Transfer permitted under Section 5.02(e)(ii)(C) or the release of a Borrowing Base Asset, such calculations shall be made both before and on a pro forma basis after giving effect to such Advance, merger, Transfer or such other event, as applicable. All such calculations shall be reasonably acceptable to the Administrative Agent.

          SECTION 5.05. Ground Lease Covenants.

     (a) Each Loan Party shall (i) pay or cause to be paid on or before the due date thereof all Ground Lease Payments, (ii) perform and observe every covenant to be performed or observed by a Loan Party under the applicable Ground Lease; (iii) refrain from doing anything and not do or permit any act, event or omission, as a result of which, there is reasonably likely to occur a default or breach under any Ground Lease; (iv) promptly give Administrative Agent notice of any default under any Ground Lease upon learning of such default and promptly deliver to Administrative Agent a copy of each notice of default and all responses to such notice of default and all other material instruments, notices or demands received or delivered by a Loan Party under or in connection with the applicable Ground Lease; (v) promptly notify Administrative Agent in writing in the event of the initiation of any litigation or arbitration proceeding affecting a Loan Party or the Real Property under or in connection with the applicable Ground Lease; (vi) not voluntarily or involuntarily, directly or indirectly, surrender, terminate or cancel any Ground Lease nor, without the prior written consent of Administrative Agent, fail to exercise in a timely manner any purchase option(s) or renewal option(s) contained in any Ground Lease; and (vii) not modify, alter or amend any Ground Lease, either orally or in writing without the prior written consent of the Administrative Agent. Any assignment, transfer, conveyance, surrender, termination, cancellation, modification, alteration or amendment of any Ground Lease in contravention of the foregoing shall be void and of no force and effect.

     (b) Each Loan Party acknowledges and agrees that no release or forbearance of any of its obligations under any Ground Lease or otherwise shall release such Loan Party from any of its obligations under the Loan Documents, including without limitation the performance of all of the terms, provisions, covenants, conditions and agreements contained in any applicable Ground Lease, to be kept, performed and complied with by such Loan Party therein.

     (c) In the event of a default by any Loan Party under any Ground Lease, Administrative Agent may (but shall not be obligated to), in its sole discretion and without notice to any Loan Party, cause such default or defaults by such Loan Party to be remedied and otherwise take or perform such other actions as Administrative Agent may reasonably deem necessary or desirable as a result thereof or in connection therewith. Borrower shall reimburse Administrative Agent for all advances reasonably made and expenses reasonably incurred by Administrative Agent in curing any such default(s) (including, without limitation, reasonable attorneys’ fees), together with interest thereon from the date incurred until the same is paid in full to Administrative Agent and all such

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sums so advanced shall be secured by the applicable Mortgage. The provisions of this subsection are in addition to any other right or remedy given to or allowed Administrative Agent under such Ground Lease or otherwise.

     (d) If any Ground Lease is cancelled or terminated and Administrative Agent or its nominee shall acquire an interest in any new lease of the Real Property, each Loan Party shall have no right, title or interest in or to the new lease or the leasehold estate created by such new lease.

     (e) Each Loan Party shall from time to time within ten (10) Business Days of Administrative Agent’s request to execute and deliver, use reasonable efforts to obtain from the ground lessor, an estoppel certificate in a form reasonably acceptable to Administrative Agent certifying to such matters as Administrative Agent may reasonably require, including without limitation, the following: (a) the name of the tenant entitled to possession of the leasehold estate under the applicable Ground Lease; (b) that the applicable Ground Lease is in full force and effect and has not been modified or, if it has been modified, the date of each such modification (together with copies of each modification); (c) the date to which the fixed (or base) rent has been paid under the applicable Ground Lease; (d) the dates to which all other fees or charges have been paid under the applicable Ground Lease; (e) whether any notice of default has been sent to any Loan Party under the applicable Ground Lease which has not been cured, and if such notice has been sent, the date it was sent and the nature of the default; (f) to the best of the ground lessor’s knowledge, whether any Loan Party is in default under such Ground Lease, and if so, the nature thereof in reasonable detail.

     (f) Notwithstanding anything contained herein or otherwise to the contrary, Administrative Agent shall not have any liability or obligation under any Ground Lease, by virtue of its acceptance of the applicable Mortgage. Each Loan Party acknowledges and agrees that Administrative Agent shall be liable for the obligations of a Loan Party arising under any Ground Lease, as applicable, for only that period of time, if any, during which Administrative Agent is in possession of the leasehold estate created thereby and has acquired, by foreclosure, power of sale or otherwise, and is holding, all of such Loan Party’s right, title and interest as tenant under the applicable Ground Lease.

     (g) Notwithstanding anything contained herein or otherwise to the contrary, each Loan Party hereby assigns, transfers and sets over to Administrative Agent any and all rights and interests that may arise in favor of such Loan Party in connection with or as a result of the bankruptcy or insolvency of the ground lessor, as applicable, including, without limitation, all of such Loan Party’s right, title and interest in, to and under §365 of the Bankruptcy Code (11 U.S.C. §365), as the same may be amended, supplemented or modified from time to time.

     (h) In the event that it is claimed by any governmental authority that any tax is due, unpaid or payable by a Loan Party upon or in connection with any Ground Lease, such Loan Party shall promptly either (a) pay such tax, charge or imposition when due and deliver to Administrative Agent reasonably satisfactory proof of payment thereof or (b) contest such tax in accordance with the applicable provisions of this Agreement. If

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liability for such tax is asserted against Administrative Agent, Administrative Agent will give to such Loan Party prompt notice of such claim, and such Loan Party, upon complying with the provisions of this Agreement shall have full right and authority to contest such claim.

     (i) It shall be an immediate Event of Default hereunder if: (a) a Loan Party shall fail in the payment of any Ground Lease Payments as and when the same is payable under the applicable Ground Lease (unless waived by the ground lessor under such Ground Lease); (b) there shall occur any default by a Loan Party under the applicable Ground Lease in the observance or performance of any term, covenant or condition on the part of such Loan Party to be observed or performed thereunder (unless waived by the lessor under such Ground Lease); (c) any one or more of the events referred to in the applicable Ground Lease shall occur which would cause the applicable Ground Lease to terminate without notice or action by the ground lessor under such Ground Lease or which would entitle the ground lessor to terminate such Ground Lease by giving notice to a Loan Party (unless waived by the lessor under such Ground Lease); (d) the leasehold estate created by any Ground Lease shall be surrendered or such Ground Lease shall be terminated or canceled for any reason or under any circumstances, or (e) any of the terms, covenants or conditions of any Ground Lease shall in any manner be materially modified, changed, supplemented, altered, or amended without the prior written consent of Administrative Agent.

ARTICLE VI
EVENTS OF DEFAULT

          SECTION 6.01. Events of Default. If any of the following events (“Events of Default”) shall occur and be continuing:

     (a) Failure to Make Payments When Due. (i) The Borrower shall fail to pay any principal of any Advance when the same shall become due and payable or (ii) the Borrower shall fail to pay any interest on any Advance, or any Loan Party shall fail to make any other payment under any Loan Document, in each case under this clause (ii) within three Business Days after the same becomes due and payable; or

     (b) Breach of Representations and Warranties. Any representation or warranty made by any Loan Party (or any of its officers or the officers of its general partner or managing member, as applicable) under or in connection with any Loan Document shall prove to have been incorrect in any material respect when made; or

     (c) Breach of Certain Covenants. The Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 2.03(e), 2.14, 5.01(d), (e), (f), (i), (j), (n), (o), (p), (q), (r) or (s), 5.02, 5.03 or 5.04; or

     (d) Other Defaults under Loan Documents. Any Loan Party shall fail to perform or observe any other term, covenant or agreement contained in any Loan Document on its part to be performed or observed if such failure shall remain unremedied for 30 days after the earlier of the date on which (i) a Responsible Officer becomes aware

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of such failure or (ii) written notice thereof shall have been given to the Borrower by any Agent or any Lender Party; or

     (e) Cross Defaults. (i) Any Loan Party or any Subsidiary thereof shall fail to pay any principal of, premium or interest on or any other amount payable in respect of any Material Debt when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise and after the expiration of any cure period thereunder); or (ii) any other event shall occur or condition shall exist under any agreement or instrument relating to any such Material Debt, if (A) the effect of such event or condition is to permit the acceleration of the maturity of such Material Debt or otherwise permit the holders thereof to cause such Material Debt to mature, and (B) such event or condition shall remain unremedied or otherwise uncured for a period of 30 days; or (iii) the maturity of any such Material Debt shall be accelerated or any such Material Debt shall be declared to be due and payable or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Material Debt shall be required to be made, in each case prior to the stated maturity thereof; or

     (f) Insolvency Events. Any Loan Party or any Subsidiary thereof shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against any Loan Party or any Subsidiary thereof seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it) that is being diligently contested by it in good faith, either such proceeding shall remain undismissed or unstayed for a period of 30 days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or any substantial part of its property) shall occur; or any Loan Party or any Subsidiary thereof shall take any corporate action to authorize any of the actions set forth above in this subsection (f); or

     (g) Monetary Judgments. Any judgments or orders, either individually or in the aggregate, for the payment of money in excess of $5,000,000 shall be rendered against any Loan Party or any Subsidiary thereof and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; provided, however, that any such judgment or order shall not give rise to an Event of Default under this Section 6.01(g) if and so long as (A) the amount of such judgment or order which remains unsatisfied is covered by a valid and binding policy of insurance between the respective Loan Party or Subsidiary and the insurer covering full payment of such unsatisfied amount and (B) such insurer, which shall be rated at least “A” by

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A.M. Best Company, has been notified, and has not disputed the claim made for payment, of the amount of such judgment or order; or

     (h) Non-Monetary Judgments. Any non-monetary judgment or order shall be rendered against any Loan Party or Subsidiary thereof that could reasonably be expected to result in a Material Adverse Effect, and there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

     (i) Unenforceability of Loan Documents. Any provision of any Loan Document after delivery thereof pursuant to Section 3.01 or 5.01(j) shall for any reason (other than pursuant to the terms thereof) cease to be valid and binding on or enforceable against any Loan Party which is party to it, or any such Loan Party shall so state in writing; or

     (j) Security Failure. Any Collateral Document or financing statement after delivery thereof pursuant to Section 3.01 or 5.01(j) shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected first priority lien on and security interest in the Collateral purported to be covered thereby; or

     (k) Change of Control. A Change of Control shall occur; or

     (l) ERISA Events. Any ERISA Event shall have occurred with respect to a Plan and the sum (determined as of the date of occurrence of such ERISA Event) of the Insufficiency of such Plan and the Insufficiency of any and all other Plans with respect to which an ERISA Event shall have occurred and then exist (or the liability of the Loan Parties and the ERISA Affiliates related to such ERISA Event) exceeds $5,000,000;

then, and in any such event, the Administrative Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Commitments of each Lender Party and the obligation of each Lender Party to make Advances (other than Letter of Credit Advances by an Issuing Bank or a Lender pursuant to Section 2.03(c) and Swing Line Advances by a Lender pursuant to Section 2.02(b)) and of each Issuing Bank to issue Letters of Credit to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, (A) by notice to the Borrower, declare the Advances, all interest thereon and all other amounts payable under this Agreement and the other Loan Documents to be forthwith due and payable, whereupon the Advances, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower, and (B) by notice to each party required under the terms of any agreement in support of which a Letter of Credit is issued, request that all Obligations under such agreement be declared to be due and payable; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under any Bankruptcy Law, (y) the Commitments of each Lender Party and the obligation of each Lender Party to make Advances (other than Letter of Credit Advances by an Issuing Bank or a Lender pursuant to Section 2.03(c) and Swing Line Advances by a Lender pursuant to Section 2.02(b)) and of each Issuing Bank to issue Letters of Credit shall automatically be terminated and (z) the Advances,

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all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.

          SECTION 6.02. Actions in Respect of the Letters of Credit upon Default. If any Event of Default shall have occurred and be continuing, the Administrative Agent may, or shall at the request of the Required Lenders, irrespective of whether it is taking any of the actions described in Section 6.01 or otherwise, make demand upon the Borrower to, and forthwith upon such demand the Borrower will, pay to the Administrative Agent on behalf of the Lender Parties in same day funds at the Administrative Agent’s office designated in such demand, for deposit in the L/C Cash Collateral Account, an amount equal to the aggregate Available Amount of all Letters of Credit then outstanding. If at any time the Administrative Agent or the Issuing Bank determines that any funds held in the L/C Cash Collateral Account are subject to any right or claim of any Person other than the Agents and the Lender Parties with respect to the Obligations of the Loan Parties under the Loan Documents, or that the total amount of such funds is less than the aggregate Available Amount of all Letters of Credit, the Borrower will, forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited and held in the L/C Cash Collateral Account, an amount equal to the excess of (a) such aggregate Available Amount over (b) the total amount of funds, if any, then held in the L/C Cash Collateral Account that the Administrative Agent, as the case may be, determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit in the L/C Cash Collateral Account, such funds shall be applied to reimburse the relevant Issuing Bank or Lenders, as applicable, to the extent permitted by applicable law.

ARTICLE VII
GUARANTY

          SECTION 7.01. Guaranty; Limitation of Liability. (a) Each Guarantor hereby absolutely, unconditionally and irrevocably guarantees the punctual payment when due, whether at scheduled maturity or on any date of a required prepayment or by acceleration, demand or otherwise, of all Obligations of each other Loan Party now or hereafter existing under or in respect of the Loan Documents (including, without limitation, any extensions, modifications, substitutions, amendments or renewals of any or all of the foregoing Obligations), whether direct or indirect, absolute or contingent, and whether for principal, interest, premiums, fees, indemnities, contract causes of action, costs, expenses or otherwise (such Obligations being the “Guaranteed Obligations”), and agrees to pay any and all expenses (including, without limitation, fees and expenses of counsel) incurred by the Administrative Agent or any other Secured Party in enforcing any rights under this Agreement or any other Loan Document. Without limiting the generality of the foregoing, each Guarantor’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by any other Loan Party to any Secured Party under or in respect of the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such other Loan Party. This Guaranty is and constitutes a guaranty of payment and not merely of collection.

          (b) Each Guarantor, the Administrative Agent and each other Lender Party and, by its acceptance of the benefits of this Guaranty, each other Secured Party, hereby confirms

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that it is the intention of all such Persons that this Guaranty and the Obligations of each Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law to the extent applicable to this Guaranty and the Obligations of each Guarantor hereunder. To effectuate the foregoing intention, the Guarantors, the Administrative Agent, the other Lender Parties and, by their acceptance of the benefits of this Guaranty, the other Secured Parties hereby irrevocably agree that the Obligations of each Guarantor under this Guaranty at any time shall be limited to the maximum amount as will result in the Obligations of such Guarantor under this Guaranty not constituting a fraudulent transfer or conveyance.

          (c) Each Guarantor hereby unconditionally and irrevocably agrees that in the event any payment shall be required to be made to any Secured Party under this Guaranty or any other guaranty, such Guarantor will contribute, to the maximum extent permitted by law, such amounts to each other Guarantor and each other guarantor so as to maximize the aggregate amount paid to the Secured Parties under or in respect of the Loan Documents.

          SECTION 7.02. Guaranty Absolute. Each Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of this Agreement and the other Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Administrative Agent or any other Secured Party with respect thereto. The Obligations of each Guarantor under or in respect of this Guaranty are independent of the Guaranteed Obligations or any other Obligations of any other Loan Party under or in respect of this Agreement or the other Loan Documents, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce this Guaranty, irrespective of whether any action is brought against the Borrower or any other Loan Party or whether the Borrower or any other Loan Party is joined in any such action or actions. The liability of each Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following:

     (a) any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto;

     (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other Obligations of any other Loan Party under or in respect of the Loan Documents, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to the Borrower, any other Loan Party or any of their Subsidiaries or otherwise;

     (c) any taking, exchange, release or non-perfection of any collateral, or any taking, release or amendment or waiver of, or consent to departure from, any other guaranty, for all or any of the Guaranteed Obligations;

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     (d) any manner of application of collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any collateral for all or any of the Guaranteed Obligations or any other Obligations of any Loan Party under the Loan Documents or any other assets of any Loan Party or any of its Subsidiaries;

     (e) any change, restructuring or termination of the corporate structure or existence of any Loan Party or any of its Subsidiaries;

     (f) any failure of the Administrative Agent or any other Secured Party to disclose to any Loan Party any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Loan Party now or hereafter known to the Administrative Agent or such other Secured Party (each Guarantor waiving any duty on the part of the Administrative Agent and each other Secured Party to disclose such information);

     (g) the failure of any other Person to execute or deliver this Agreement, any other Loan Document, any Guaranty Supplement or any other guaranty or agreement or the release or reduction of liability of any Guarantor or other guarantor or surety with respect to the Guaranteed Obligations; or

     (h) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Administrative Agent or any other Secured Party that might otherwise constitute a defense available to, or a discharge of, any Loan Party or any other guarantor or surety.

This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by any Secured Party or any other Person upon the insolvency, bankruptcy or reorganization of the Borrower or any other Loan Party or otherwise, all as though such payment had not been made.

          SECTION 7.03. Waivers and Acknowledgments. (a) Each Guarantor hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that the Administrative Agent or any other Secured Party protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against any Loan Party or any other Person or any collateral.

          (b) Each Guarantor hereby unconditionally and irrevocably waives any right to revoke this Guaranty and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.

          (c) Each Guarantor hereby unconditionally and irrevocably waives (i) any defense arising by reason of any claim or defense based upon an election of remedies by the Administrative Agent or any other Secured Party that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of such Guarantor or other rights of such Guarantor to proceed against any

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of the other Loan Parties, any other guarantor or any other Person or any collateral and (ii) any defense based on any right of set-off or counterclaim against or in respect of the Obligations of such Guarantor hereunder.

          (d) Each Guarantor acknowledges that the Administrative Agent may, without notice to or demand upon such Guarantor and without affecting the liability of such Guarantor under this Guaranty, foreclose under any mortgage by nonjudicial sale, and each Guarantor hereby waives any defense to the recovery by the Administrative Agent and the other Secured Parties against such Guarantor of any deficiency after such nonjudicial sale and any defense or benefits that may be afforded by applicable law.

          (e) Each Guarantor hereby unconditionally and irrevocably waives any duty on the part of the Administrative Agent or any other Secured Party to disclose to such Guarantor any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower, any other Loan Party or any of their Subsidiaries now or hereafter known by the Administrative Agent or such other Secured Party.

          (f) Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by this Agreement and the other Loan Documents and that the waivers set forth in Section 7.02 and this Section 7.03 are knowingly made in contemplation of such benefits.

          SECTION 7.04. Subrogation. Each Guarantor hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against the Borrower, any other Loan Party or any other insider guarantor that arise from the existence, payment, performance or enforcement of such Guarantor’s Obligations under or in respect of this Guaranty, this Agreement or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Secured Party against the Borrower, any other Loan Party or any other insider guarantor or any collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower, any other Loan Party or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash, all Letters of Credit shall have expired or been terminated, all Secured Hedge Agreements shall have expired or been terminated and the Commitments shall have expired or been terminated. If any amount shall be paid to any Guarantor in violation of the immediately preceding sentence at any time prior to the latest of (a) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty, (b) the termination in whole of the Commitments and (c) the latest date of expiration or termination of all Letters of Credit and all Secured Hedge Agreements, such amount shall be received and held in trust for the benefit of the Secured Parties, shall be segregated from other property and funds of such Guarantor and shall forthwith be paid or delivered to the Administrative Agent in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents. If (i) any Guarantor shall

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make payment to any Secured Party of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash, (iii) the termination in whole of the Commitments shall have occurred and (iv) all Letters of Credit and all Secured Hedge Agreements shall have expired or been terminated, the Administrative Agent and the other Secured Parties will, at such Guarantor’s request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment made by such Guarantor pursuant to this Guaranty.

          SECTION 7.05. Guaranty Supplements. Upon the execution and delivery by any Person of a Guaranty Supplement, (i) such Person shall be referred to as an “Additional Guarantor” and shall become and be a Guarantor hereunder, and each reference in this Agreement to a “Guarantor” or a “Loan Party” shall also mean and be a reference to such Additional Guarantor, and each reference in any other Loan Document to a “Guarantor” shall also mean and be a reference to such Additional Guarantor, and (ii) each reference herein to “this Agreement”, “this Guaranty”, “hereunder”, “hereof” or words of like import referring to this Agreement and this Guaranty, and each reference in any other Loan Document to the “Loan Agreement”, “Guaranty”, “thereunder”, “thereof” or words of like import referring to this Agreement and this Guaranty, shall mean and be a reference to this Agreement and this Guaranty as supplemented by such Guaranty Supplement.

          SECTION 7.06. Indemnification by Guarantors. (a) Without limitation on any other Obligations of any Guarantor or remedies of the Administrative Agent or the Secured Parties under this Agreement, this Guaranty or the other Loan Documents, each Guarantor shall, to the fullest extent permitted by law, indemnify, defend and save and hold harmless the Administrative Agent, each other Secured Party and each of their Affiliates and their respective officers, directors, employees, agents, partners and advisors (each, an “Indemnified Party”) from and against, and shall pay on demand, any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party in connection with or as a result of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of any Loan Party enforceable against such Loan Party in accordance with their terms.

          (b) Each Guarantor hereby also agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract, tort or otherwise) to any of the Guarantors or any of their respective Affiliates or any of their respective officers, directors, employees, agents and advisors, and each Guarantor hereby agrees not to assert any claim against any Indemnified Party on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Facilities, the actual or proposed use of the proceeds of the Advances or the Letters of Credit, the Loan Documents or any of the transactions contemplated by the Loan Documents.

          SECTION 7.07. Subordination. Each Guarantor hereby subordinates any and all debts, liabilities and other Obligations owed to such Guarantor by each other Loan Party (the “Subordinated Obligations”) to the Guaranteed Obligations to the extent and in the manner hereinafter set forth in this Section 7.07.

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          (a) Prohibited Payments, Etc. Except during the continuance of a Default (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to any other Loan Party), each Guarantor may receive regularly scheduled payments or payments made in the ordinary course of business from any other Loan Party on account of the Subordinated Obligations. After the occurrence and during the continuance of any Default (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to any other Loan Party), however, unless the Administrative Agent otherwise agrees, no Guarantor shall demand, accept or take any action to collect any payment on account of the Subordinated Obligations.

          (b) Prior Payment of Guaranteed Obligations. In any proceeding under any Bankruptcy Law relating to any other Loan Party, each Guarantor agrees that the Secured Parties shall be entitled to receive payment in full in cash of all Guaranteed Obligations (including all interest and expenses accruing after the commencement of a proceeding under any Bankruptcy Law, whether or not constituting an allowed claim in such proceeding (“Post Petition Interest”)) before such Guarantor receives payment of any Subordinated Obligations.

          (c) Turn-Over. After the occurrence and during the continuance of any Default (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to any other Loan Party), each Guarantor shall, if the Administrative Agent so requests, collect, enforce and receive payments on account of the Subordinated Obligations as trustee for the Secured Parties and deliver such payments to the Administrative Agent on account of the Guaranteed Obligations (including all Post Petition Interest), together with any necessary endorsements or other instruments of transfer, but without reducing or affecting in any manner the liability of such Guarantor under the other provisions of this Guaranty.

          (d) Administrative Agent Authorization. After the occurrence and during the continuance of any Default (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to any other Loan Party), the Administrative Agent is authorized and empowered (but without any obligation to so do), in its discretion, (i) in the name of each Guarantor, to collect and enforce, and to submit claims in respect of, Subordinated Obligations and to apply any amounts received thereon to the Guaranteed Obligations (including any and all Post Petition Interest), and (ii) to require each Guarantor (A) to collect and enforce, and to submit claims in respect of, Subordinated Obligations and (B) to pay any amounts received on such obligations to the Administrative Agent for application to the Guaranteed Obligations (including any and all Post Petition Interest).

          SECTION 7.08. Continuing Guaranty. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the latest of (i) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty, (ii) the termination in whole of the Commitments and (iii) the latest date of expiration or termination of all Letters of Credit and all Secured Hedge Agreements, (b) be binding upon the Guarantors, their successors and assigns and (c) inure to the benefit of and be enforceable by the Administrative Agent and the other Secured Parties and their successors, transferees and assigns.

ARTICLE VIII
THE AGENTS

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          SECTION 8.01. Authorization and Action; Appointment of Supplemental Collateral Agents. (a) Each Lender Party (in its capacities as a Lender, the Swing Line Bank (if applicable) and as an Issuing Bank (if applicable) and on behalf of itself and its Affiliates as potential Hedge Banks) hereby appoints and authorizes each Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Loan Documents as are delegated to such Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. As to any matters not expressly provided for by the Loan Documents (including, without limitation, enforcement or collection of the Notes), no Agent shall be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lender Parties and all holders of Notes; provided, however, that no Agent shall be required to take any action that exposes such Agent to personal liability or that is contrary to this Agreement or applicable law. Each Agent agrees to give to each Lender Party prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement. Notwithstanding anything to the contrary in any Loan Document, no Person identified as a syndication agent, documentation agent, senior manager, joint lead arranger or joint book running manager, in such Person’s capacity as such, shall have any obligations or duties to any Loan Party, the Administrative Agent or any other Secured Party under any of such Loan Documents. In its capacity as the Lender Parties’ contractual representative, Agents are each a “representative” of the Lender Parties as used within the meaning of “Secured Party” under Section 9-102 of the Uniform Commercial Code.

          (b) Anything contained herein or in the Collateral Documents to the contrary notwithstanding, the Collateral Agent may from time to time, when the Collateral Agent deems it to be necessary, appoint one or more trustees, co-trustees, collateral co-agents or collateral subagents (each, a “Supplemental Collateral Agent”) with respect to all or any part of the Collateral. In the event that the Collateral Agent so appoints any Supplemental Collateral Agent with respect to any Collateral, (i) such Supplemental Collateral Agent shall automatically be vested, in addition to the Collateral Agent, with all rights, powers, privileges, interests and remedies of the Collateral Agent under the Collateral Documents with respect to such Collateral; (ii) such Supplemental Collateral Agent shall be deemed to be an “Agent” for purposes of this Agreement and the other Loan Documents, and the provisions of Section 21 of the Security Agreement, this Article and Section 9.04 hereof that refer to the Agents (or either of them) shall inure to the benefit of such Supplemental Collateral Agent, and all references therein and in the other Loan Documents to the Collateral Agent shall be deemed to be references to the Collateral Agent and/or such Supplemental Collateral Agent, as the context may require; and (iii) the term “Collateral Agent”, when used herein or in any applicable Collateral Document in relation to the Liens on or security interests in such Collateral granted in favor of the Collateral Agent, and any rights, powers, privileges, interests and remedies of the Collateral Agent with respect to such Collateral, shall be deemed to include such Supplemental Collateral Agent; provided, however, that no such Supplemental Collateral Agent shall be authorized to take any action with respect to any such Collateral unless and except to the extent expressly authorized in writing by the Collateral Agent. Should any instrument in writing from the Borrower or any other Loan Party be reasonably required by any Supplemental Collateral Agent so appointed by the Collateral Agent to more fully or certainly vest in and confirming to such Supplemental Collateral Agent such rights, powers, privileges and duties, the Borrower shall, or shall cause such Loan Party to,

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execute, acknowledge and deliver any and all such instruments promptly upon request by the Collateral Agent. If any Supplemental Collateral Agent, or successor thereto, shall die, become incapable of acting, resign or be removed, all the rights, powers, privileges and duties of such Supplemental Collateral Agent, to the extent permitted by law, shall automatically vest in and be exercised by the Collateral Agent until the appointment of a new Supplemental Collateral Agent.

          SECTION 8.02. Agents’ Reliance, Etc. Neither any Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with the Loan Documents, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, each Agent: (a) in the case of the Administrative Agent, may treat the payee of any Note as the holder thereof until the Administrative Agent receives and accepts an Accession Agreement entered into by an Acceding Lender as provided in Section 2.17 or an Assignment and Acceptance entered into by the Lender that is the payee of such Note, as assignor, and an Eligible Assignee, as assignee, or, in the case of any other Agent, such Agent has received notice from the Administrative Agent that it has received and accepted such Accession Agreement or Assignment and Acceptance, as the case may be, in each case as provided in Section 9.07; (b) may consult with legal counsel (including counsel for any Loan Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender Party and shall not be responsible to any Lender Party for any statements, warranties or representations (whether written or oral) made in or in connection with the Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance, observance or satisfaction of any of the terms, covenants or conditions of any Loan Document on the part of any Loan Party or the existence at any time of any Default under the Loan Documents or to inspect the property (including the books and records) of any Loan Party; (e) shall not be responsible to any Lender Party for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant thereto; and (f) shall incur no liability under or in respect of any Loan Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, telecopy or telex or other electronic communication) believed by it to be genuine and signed or sent by the proper party or parties.

          SECTION 8.03. Citibank and Affiliates. With respect to its Commitments, the Advances made by it and the Notes issued to it, Citibank shall have the same rights and powers under the Loan Documents as any other Lender Party and may exercise the same as though it were not an Agent; and the term “Lender Party” or “Lender Parties” shall, unless otherwise expressly indicated, include Citibank in its individual capacity. Citibank and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, any Loan Party, any Subsidiary of any Loan Party and any Person that may do business with or own securities of any Loan Party or any such Subsidiary, all as if Citibank were not the Administrative Agent or the Collateral Agent and without any duty to account therefor to the Lender Parties.

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          SECTION 8.04. Lender Party Credit Decision. Each Lender Party acknowledges that it has, independently and without reliance upon any Agent or any other Lender Party and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender Party also acknowledges that it will, independently and without reliance upon any Agent or any other Lender Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. Nothing in this Agreement or any other Loan Document shall require any Agent or any of its respective directors, officers, agents or employees to carry out any “know your customer” or other checks in relation to any Person on behalf of any Lender Party and each Lender Party confirms to the Agents that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by any Agent or any of its respective directors, officers, agents or employees.

          SECTION 8.05. Indemnification by Lender Parties. (a) Each Lender Party severally agrees to indemnify each Agent (to the extent not promptly reimbursed by the Borrower) from and against such Lender Party’s ratable share (determined as provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against such Agent in any way relating to or arising out of the Loan Documents or any action taken or omitted by such Agent under the Loan Documents (collectively, the “Indemnified Costs”); provided, however, that no Lender Party shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from any Agent’s gross negligence or willful misconduct as found in a final, non-appealable judgment by a court of competent jurisdiction. Without limitation of the foregoing, each Lender Party agrees to reimburse each Agent promptly upon demand for its ratable share of any costs and expenses (including, without limitation, fees and expenses of counsel) payable by the Borrower under Section 9.04, to the extent that such Agent is not promptly reimbursed for such costs and expenses by the Borrower. In the case of any investigation, litigation or proceeding giving rise to any Indemnified Costs, this Section 8.05 applies whether any such investigation, litigation or proceeding is brought by any Lender Party or any other Person.

          (b) Each Lender Party severally agrees to indemnify each Issuing Bank (to the extent not promptly reimbursed by the Borrower) from and against such Lender Party’s ratable share (determined as provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against such Issuing Bank in any way relating to or arising out of the Loan Documents or any action taken or omitted by such Issuing Bank under the Loan Documents; provided, however, that no Lender Party shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Issuing Bank’s gross negligence or willful misconduct as found in a final, non-appealable judgment by a court of competent jurisdiction. Without limitation of the foregoing, each Lender Party agrees to reimburse such Issuing Bank promptly upon demand for its ratable share of any costs and expenses (including, without limitation, fees and expenses of counsel) payable by the Borrower under Section 9.04, to

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the extent that such Issuing Bank is not promptly reimbursed for such costs and expenses by the Borrower.

          (c) For purposes of this Section 8.05, the Lender Parties’ respective ratable shares of any amount shall be determined, at any time, according to their respective Revolving Credit Commitments at such time. The failure of any Lender Party to reimburse any Agent or any Issuing Bank, as the case may be, promptly upon demand for its ratable share of any amount required to be paid by the Lender Parties to such Agent or such Issuing Bank, as the case may be, as provided herein shall not relieve any other Lender Party of its obligation hereunder to reimburse such Agent or such Issuing Bank, as the case may be, for its ratable share of such amount, but no Lender Party shall be responsible for the failure of any other Lender Party to reimburse such Agent or such Issuing Bank, as the case may be, for such other Lender Party’s ratable share of such amount. Without prejudice to the survival of any other agreement of any Lender Party hereunder, the agreement and obligations of each Lender Party contained in this Section 8.05 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the other Loan Documents.

          SECTION 8.06. Successor Agents. Any Agent may resign at any time by giving 30 days’ prior written notice thereof to the Lender Parties and the Borrower and may be removed at any time for cause by the Required Lenders; provided, however, that any removal of the Administrative Agent will not be effective until it has been replaced as Collateral Agent and it (or its Affiliate) has been replaced as an Issuing Bank and released from all obligations in respect thereof. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent (which successor Agent shall be reasonably acceptable to the Borrower). If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent’s giving of notice of resignation or the Required Lenders’ removal of the retiring Agent, then the retiring Agent may, on behalf of the Lender Parties, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States or of any State thereof and having a combined capital and surplus of at least $250,000,000. Upon the acceptance of any appointment as an Agent hereunder by a successor Agent, and, in the case of a successor Collateral Agent, upon the execution and filing or recording of such financing statements, or amendments thereto, and such amendments or supplements to the Mortgages and Assignments of Leases, and such other instruments or notices, as may be necessary or desirable, or as the Required Lenders may request, in order to continue the perfection of the Liens granted or purported to be granted by the Collateral Documents, such successor Agent shall succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under the Loan Documents. If within 45 days after written notice is given of the retiring Agent’s resignation or removal under this Section 8.06 no successor Agent shall have been appointed and shall have accepted such appointment, then on such 45th day (i) the retiring Agent’s resignation or removal shall become effective, (ii) the retiring Agent shall thereupon be discharged from its duties and obligations under the Loan Documents and (iii) the Required Lenders shall thereafter perform all duties of the retiring Agent under the Loan Documents until such time, if any, as the Required Lenders appoint a successor Agent as provided above. After any retiring Agent’s resignation or removal hereunder as an Agent shall have become effective, the provisions of this Article VIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an Agent under this Agreement.

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          SECTION 8.07. Relationship of Agents and Lenders. The relationship between Agents (or either of them) and the Lenders, and the relationship among the Lenders, is not intended by the parties to create, and shall not create, any trust, joint venture or partnership relation between them.

ARTICLE IX
MISCELLANEOUS

          SECTION 9.01. Amendments, Etc. (a) No amendment or waiver of any provision of this Agreement or the Notes or any other Loan Document, nor consent to any departure by any Loan Party therefrom, shall in any event be effective unless the same shall be in writing and signed (or, in the case of the Collateral Documents, consented to) by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all of the Lenders, do any of the following at any time:

     (i) modify the definition of Required Lenders or otherwise change the percentage vote of the Lenders required to take any action under this Agreement or any other Loan Document,

     (ii) release the Borrower with respect to the Obligations or, except to the extent expressly permitted under this Agreement, reduce or limit the obligations of any Guarantor under Article VII or release such Guarantor or otherwise limit such Guarantor’s liability with respect to the Guaranteed Obligations,

     (iii) release all or substantially all of the Collateral (other than pursuant to Section 5.02(e) or 9.11) or permit the Loan Parties to encumber the Collateral, except as expressly permitted in the Loan Documents prior to giving effect to such amendment,

     (iv) amend this Section 9.01,

     (v) increase the Commitments of the Lenders or subject the Lenders to any additional obligations, other than as provided by Section 2.17,

     (vi) forgive or reduce the principal of, or interest on, the Obligations of the Loan Parties under the Loan Documents or any fees or other amounts payable thereunder,

     (vii) postpone or extend any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, or

     (viii) extend the Termination Date, other than as provided by Section 2.16;

provided further that no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Bank or each Issuing Bank, as the case may be, in addition to the Lenders required above to take such action, affect the rights or obligations of the Swing Line Bank or of the Issuing Banks, as the case may be, under this Agreement; and provided further that no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent or the Collateral Agent in addition to the Lenders required

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above to take such action, affect the rights or duties of the Administrative Agent or the Collateral Agent, as the case may be, under this Agreement or the other Loan Documents.

          (b) In the event that (1) any Lender shall refuse to consent to a waiver or amendment to, or a departure from, the provisions of this Agreement which requires the consent of all Lenders and that has been consented to by the Administrative Agent and the Required Lenders or (2) any Lender Party makes a demand for payment pursuant to Section 2.10(a) or (b) or (3) any Loan Party is required to pay additional amounts to a Lender Party pursuant to Section 2.12(a) or (b) or (c) or (4) any Lender fails to make any Advance to be made by it as part of any Borrowing on a date when the other Lenders make their Advances as contemplated under this Agreement (any such Lender, a “Potential Assignor Lender”), then the Borrower shall have the right, upon written demand to such Potential Assignor Lender and the Administrative Agent given within 30 days after the first date on which such consent was solicited in writing from the Lenders by the Administrative Agent or the first date on which the Lender Party made a demand for payment or failed to make the Advance (a “Potential Assignment Event Date”), to cause such Potential Assignor Lender to assign its rights and obligations under this Agreement at par (including, without limitation, its Commitment or Commitments, the Advances owing to it and the Note or Notes, if any, held by it) to an Eligible Assignee designated by the Borrower and approved by the Administrative Agent (such approval not to be unreasonably withheld) (a “Replacement Lender”), provided that (i) as of such Potential Assignment Event Date, no Default or Event of Default shall have occurred and be continuing, and (ii) with respect to clause (1) above only, as of the date of the Borrower’s written demand to replace such Potential Assignor Lender, no Default or Event of Default shall have occurred and be continuing other than a Default or Event of Default that resulted solely from the subject matter of the waiver or amendment for which such consent was being solicited from the Lenders by the Administrative Agent. The Replacement Lender shall purchase such interests of the Potential Assignor Lender and shall assume the rights and obligations of the Potential Assignor Lender under this Agreement upon execution by the Replacement Lender of an Assignment and Acceptance delivered pursuant to Section 9.07. Any Lender that becomes a Potential Assignor Lender agrees that, upon receipt of notice from the Borrower given in accordance with this Section 9.01(b) it shall promptly execute and deliver an Assignment and Acceptance with a Replacement Lender as contemplated by this Section.

          SECTION 9.02. Notices, Etc. (a) All notices and other communications provided for hereunder shall be either (x) in writing (including telecopier communication) and mailed, telecopied or delivered by hand or by overnight courier service, (y) as and to the extent set forth in Section 9.02(b) and in the proviso to this Section 9.02(a), in an electronic medium and delivered as set forth in Section 9.02(b) or (z) as and to the extent expressly permitted in this Agreement, transmitted by e-mail, provided that such e-mail shall in all cases include an attachment (in PDF format or similar format) containing a legible signature of the person providing such notice, if to the Borrower, at its address at 2100 Rexford Road, Suite 414, Charlotte, North Carolina 28211, Attention: Donald L. Bobbitt, Jr., with a copy to Bradley Arant Boult Cummings LLP, 1819 Fifth Avenue North, Birmingham, Alabama 35203, Attention: Dawn Helms Sharff or, if applicable, at donnie.bobbitt@campuscrest.com (with a copy to dsharff@babc.com) (and in the case of transmission by e mail, with a copy by U.S. mail to 2100 Rexford Road, Suite 414, Charlotte, North Carolina 28211, Attention: Donald L. Bobbitt, Jr., with a copy to Bradley Arant Boult Cummings LLP, 1819 Fifth Avenue North, Birmingham,

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Alabama 35203, Attention: Dawn Helms Sharff); if to any Initial Lender, at its Domestic Lending Office or, if applicable, at the telecopy number or e-mail address specified opposite its name on Schedule I hereto (and in the case of a transmission by e-mail, with a copy by U.S. mail to its Domestic Lending Office); if to any other Lender Party, at its Domestic Lending Office or, if applicable, at the telecopy number or e-mail address specified in the Assignment and Acceptance pursuant to which it became a Lender Party (and in the case of a transmission by e-mail, with a copy by U.S. mail to its Domestic Lending Office); if to the Initial Issuing Bank, at its address at 1615 Brett Road, New Castle, Delaware 19720, Attention: Bank Loan Syndications Department, or, if applicable, at GLAgentOfficeOps@citigroup.com (and in the case of a transmission by e-mail, with a copy by U.S. mail to 1615 Brett Road, New Castle, Delaware 19720, Attention: Bank Loan Syndications Department); and if to the Administrative Agent, the Collateral Agent or the Swing Line Bank, at its address at 1615 Brett Road, New Castle, Delaware 19720, Attention: Bank Loan Syndications Department, or, if applicable, at GLAgentOfficeOps @citigroup.com (and in the case of a transmission by e-mail, with a copy by U.S. mail to 1615 Brett Road, New Castle, Delaware 19720, Attention: Bank Loan Syndications Department) or, as to the Borrower or any Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Borrower and the Administrative Agent. All notices, demands, requests, consents and other communications described in this clause (a) shall be effective (i) if delivered by hand, including any overnight courier service, upon personal delivery, (ii) if delivered by mail, three (3) Business Days after the date such notice, demand, request, consent or other communication is deposited in the mails, (iii) if delivered by posting to an Approved Electronic Platform, an Internet website or a similar telecommunication device requiring that a user have prior access to such Approved Electronic Platform, website or other device (to the extent permitted by Section 9.02(b) to be delivered thereunder), when such notice, demand, request, consent and other communication shall have been made generally available on such Approved Electronic Platform, Internet website or similar device to the class of Person being notified (regardless of whether any such Person must accomplish, and whether or not any such Person shall have accomplished, any action prior to obtaining access to such items, including registration, disclosure of contact information, compliance with a standard user agreement or undertaking a duty of confidentiality) and such Person has been notified in respect of such posting that a communication has been posted to the Approved Electronic Platform, provided that if requested by any Lender Party, the Administrative Agent shall deliver a copy of the Communications to such Lender Party by e-mail or telecopier and (iv) if delivered by electronic mail or any other telecommunications device, when receipt is confirmed by electronic mail as provided in this clause (a); provided, however, that notices and communications to any Agent pursuant to Article II, III or VIII or to the Collateral Agent under the Collateral Documents shall not be effective until received by such Agent or the Collateral Agent, as the case may be. Delivery by telecopier of an executed counterpart of a signature page to any amendment or waiver of any provision of this Agreement or the Notes or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of an original executed counterpart thereof. Each Lender Party agrees (i) to notify the Administrative Agent in writing of such Lender Party’s e-mail address to which a notice may be sent by electronic transmission (including by electronic communication) on or before the date such Lender Party becomes a party to this Agreement (and from time to time thereafter to ensure

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that the Administrative Agent has on record an effective e-mail address for such Lender Party) and (ii) that any notice may be sent to such e-mail address.

          (b) Notwithstanding clause (a) (unless the Administrative Agent requests that the provisions of clause (a) be followed) and any other provision in this Agreement or any other Loan Document providing for the delivery of any Approved Electronic Communication by any other means, the Loan Parties shall deliver all Approved Electronic Communications to the Administrative Agent by properly transmitting such Approved Electronic Communications in an electronic/soft medium in a format acceptable to the Administrative Agent to oploanswebadmin@citigroup.com or such other electronic mail address (or similar means of electronic delivery) as the Administrative Agent may notify to the Borrower. Nothing in this clause (b) shall prejudice the right of the Administrative Agent or any Lender Party to deliver any Approved Electronic Communication to any Loan Party in any manner authorized in this Agreement or to request that the Borrower effect delivery in such manner.

          (c) Each of the Lender Parties and each Loan Party agrees that the Administrative Agent may, but shall not be obligated to, make the Approved Electronic Communications available to the Lender Parties by posting such Approved Electronic Communications on IntraLinks™ or a substantially similar electronic platform chosen by the Administrative Agent to be its electronic transmission system (the “Approved Electronic Platform”). Although the Approved Electronic Platform and its primary web portal are secured with generally-applicable security procedures and policies implemented or modified by the Administrative Agent from time to time (including, as of the Closing Date, a dual firewall and a User ID/Password Authorization System) and the Approved Electronic Platform is secured through a single-user-per-deal authorization method whereby each user may access the Approved Electronic Platform only on a deal-by-deal basis, each of the Lender Parties and each Loan Party acknowledges and agrees that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution. In consideration for the convenience and other benefits afforded by such distribution and for the other consideration provided hereunder, the receipt and sufficiency of which is hereby acknowledged, each of the Lender Parties and each Loan Party hereby approves distribution of the Approved Electronic Communications through the Approved Electronic Platform and understands and assumes the risks of such distribution

          (d) THE APPROVED ELECTRONIC PLATFORM AND THE APPROVED ELECTRONIC COMMUNICATIONS ARE PROVIDED “AS IS” AND “AS AVAILABLE”. NONE OF THE ADMINISTRATIVE AGENT NOR ANY OF ITS DIRECTORS, OFFICERS, AGENTS OR EMPLOYEES WARRANT THE ACCURACY, ADEQUACY OR COMPLETENESS OF THE APPROVED ELECTRONIC COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM AND EACH EXPRESSLY DISCLAIMS ANY LIABILITY FOR ERRORS OR OMISSIONS IN THE APPROVED ELECTRONIC COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE ADMINISTRATIVE AGENT OR ANY OF ITS DIRECTORS, OFFICERS, AGENTS OR

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EMPLOYEES IN CONNECTION WITH THE APPROVED ELECTRONIC COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM.

          (e) Each of the Lender Parties and each Loan Party agrees that the Administrative Agent may, but (except as may be required by applicable law) shall not be obligated to, store the Approved Electronic Communications on the Approved Electronic Platform in accordance with the Administrative Agent’s generally-applicable document retention procedures and policies.

          SECTION 9.03. No Waiver; Remedies. No failure on the part of any Lender Party or any Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

          SECTION 9.04. Costs and Expenses. (a) Each Loan Party agrees jointly and severally to pay on demand (i) all reasonable out-of-pocket costs and expenses of each Agent in connection with the preparation, execution, delivery, administration, modification and amendment of the Loan Documents (including, without limitation, (A) all due diligence, collateral review, syndication, transportation, computer, duplication, appraisal, audit, insurance, consultant, search, filing and recording fees and expenses, (B) the reasonable fees and expenses of counsel for such Agent with respect thereto (including, without limitation, with respect to reviewing and advising on any matters required to be completed by the Loan Parties on a post-closing basis), with respect to advising such Agent as to its rights and responsibilities, or the perfection, protection or preservation of rights or interests, under the Loan Documents, with respect to negotiations with any Loan Party or with other creditors of any Loan Party or any of its Subsidiaries arising out of any Default or any events or circumstances that may give rise to a Default and with respect to presenting claims in or otherwise participating in or monitoring any bankruptcy, insolvency or other similar proceeding involving creditors’ rights generally and any proceeding ancillary thereto and (C) the reasonable fees and expenses of counsel for such Agent with respect to the preparation, execution, delivery and review of any documents and instruments at any time delivered pursuant to Sections 3.01, 3.02, 5.01(j) or 5.01(k) and (ii) all reasonable out-of-pocket costs and expenses of each Agent and each Lender Party in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of the Loan Documents, whether in any action, suit or litigation, or any bankruptcy, insolvency or other similar proceeding affecting creditors’ rights generally (including, without limitation, the reasonable fees and expenses of counsel for such Agent and each Lender Party with respect thereto).

          (b) Each Loan Party agrees to indemnify, defend and save and hold harmless each Indemnified Party from and against, and shall pay on demand, any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (i) the Facilities, the actual or proposed use of the proceeds of the Advances or the Letters of Credit, the Loan Documents or any of the transactions contemplated

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thereby or (ii) the actual or alleged presence of Hazardous Materials on any property of any Loan Party or any of its Subsidiaries or any Environmental Action relating in any way to any Loan Party or any of its Subsidiaries, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 9.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by any Loan Party, its directors, shareholders or creditors or an Indemnified Party, whether or not any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated by the Loan Documents are consummated. Each Loan Party also agrees not to assert any claim against any Agent, any Lender Party or any of their Affiliates, or any of their respective officers, directors, employees, agents and advisors, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Facilities, the actual or proposed use of the proceeds of the Advances or the Letters of Credit, the Loan Documents or any of the transactions contemplated by the Loan Documents.

          (c) If any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made by the Borrower to or for the account of a Lender Party other than on the last day of the Interest Period for such Advance, as a result of a payment or Conversion pursuant to Section 2.06, 2.09(b)(i), 2.10(d) or 2.17(e), acceleration of the maturity of the Notes pursuant to Section 6.01 or for any other reason, or if the Borrower fails to make any payment or prepayment of an Advance for which a notice of prepayment has been given or that is otherwise required to be made, whether pursuant to Section 2.04, 2.06 or 6.01 or otherwise, the Borrower shall, upon demand by such Lender Party (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender Party any amounts required to compensate such Lender Party for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion or such failure to pay or prepay, as the case may be, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender Party to fund or maintain such Advance.

          (d) If any Loan Party fails to pay when due any costs, expenses or other amounts payable by it under any Loan Document, including, without limitation, fees and expenses of counsel and indemnities, such amount may be paid on behalf of such Loan Party by any Agent or any Lender Party, in its sole discretion.

          (e) Without prejudice to the survival of any other agreement of any Loan Party hereunder or under any other Loan Document, the agreements and obligations of the Borrower and the other Loan Parties contained in Sections 2.10 and 2.12, Section 7.06 and this Section 9.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under any of the other Loan Documents.

          SECTION 9.05. Right of Set-off. Upon (a) the occurrence and during the continuance of any Event of Default and (b) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Administrative Agent to declare the Notes due and payable pursuant to the provisions of Section 6.01, each Agent and each Lender Party and

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each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and otherwise apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Agent, such Lender Party or such Affiliate to or for the credit or the account of the Borrower or any other Loan Party against any and all of the Obligations of the Borrower or such Loan Party now or hereafter existing under the Loan Documents, irrespective of whether such Agent or such Lender Party shall have made any demand under this Agreement or such Note or Notes and although such obligations may be unmatured.

          SECTION 9.06. Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower, each Guarantor named on the signature pages hereto and the Administrative Agent shall have been notified by each Initial Lender and each Initial Issuing Bank that such Initial Lender or such Initial Issuing Bank, as the case may be, has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Guarantors named on the signature pages hereto and each Agent and each Lender Party and their respective successors and assigns, except that neither the Borrower nor any other Loan Party shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lender Parties.

          SECTION 9.07. Assignments and Participations; Replacement Notes. (a) Each Lender may (and, if demanded by the Borrower in accordance with Section 9.01(b) will) assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment or Commitments, the Advances owing to it and the Note or Notes held by it); provided, however, that (i) each such assignment shall be of a uniform, and not a varying, percentage of all rights and obligations under and in respect of one or more of the Facilities, (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender, an Affiliate of any Lender or a Fund Affiliate of any Lender or an assignment of all of a Lender’s rights and obligations under this Agreement, the aggregate amount of the Commitments being assigned to such Eligible Assignee pursuant to such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $5,000,000 under each Facility or an integral multiple of $1,000,000 in excess thereof (or such lesser amount as shall be approved by the Administrative Agent and, so long as no Default shall have occurred and be continuing at the time of effectiveness of such assignment, the Borrower), (iii) each such assignment shall be to an Eligible Assignee, (iv) each such assignment made as a result of a demand by the Borrower pursuant to Section 9.01(b) shall be an assignment of all rights and obligations of the assigning Lender under this Agreement, (v) no such assignments shall be permitted (A) until the Administrative Agent shall have notified the Lender Parties that syndication of the Commitments hereunder has been completed, without the consent of the Administrative Agent, and (B) at any other time without the consent of the Administrative Agent (which consent shall not be unreasonably withheld) and (vi) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with any Note or Notes subject to such assignment and, except if such assignment is being made by a Lender to an Affiliate or Fund Affiliate of such Lender, a processing and recordation fee of $3,500; provided, however, that for each such assignment made as a result of a demand by the Borrower pursuant to Section 9.01(b), the Borrower shall pay to the Administrative Agent the $3,500 processing and recordation fee.

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          (b) Upon such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance, (i) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender or Issuing Bank, as the case may be, hereunder and (ii) the Lender or Issuing Bank assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (other than its rights under Sections 2.10, 2.12, 7.06, 8.05 and 9.04 to the extent any claim thereunder relates to an event arising prior to such assignment) and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the remaining portion of an assigning Lender’s or Issuing Bank’s rights and obligations under this Agreement, such Lender or Issuing Bank shall cease to be a party hereto).

          (c) By executing and delivering an Assignment and Acceptance, each Lender Party assignor thereunder and each assignee thereunder confirm to and agree with each other and the other parties thereto and hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender Party makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with any Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant thereto; (ii) such assigning Lender Party makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or the performance or observance by any Loan Party of any of its obligations under any Loan Document or any other instrument or document furnished pursuant thereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon any Agent, such assigning Lender Party or any other Lender Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes each Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to such Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender or Issuing Bank, as the case may be.

          (d) The Administrative Agent shall maintain at its address referred to in Section 9.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lender Parties and the Commitment under each Facility of, and principal amount of the Advances owing under each Facility to, each Lender Party from time to time (the “Register”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Agents and the Lender Parties may treat each Person whose name is recorded in the Register as a Lender Party hereunder for all purposes of this Agreement. The Register shall be available for

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inspection by the Borrower or any Agent or any Lender Party at any reasonable time and from time to time upon reasonable prior notice.

          (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender Party and an assignee, together with any Note or Notes subject to such assignment, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit D hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower and each other Agent. In the case of any assignment by a Lender, within five Business Days after receipt of a request therefor, the Borrower, at its own expense, shall, if requested by the applicable Lender, execute and deliver to the Administrative Agent in exchange for the surrendered Note or Notes a substitute Note to the order of such Eligible Assignee in an amount equal to the Commitment assumed by it under each Facility pursuant to such Assignment and Acceptance and, if any assigning Lender has retained a Commitment hereunder under such Facility, a substitute Note to the order of such assigning Lender in an amount equal to the Commitment retained by it hereunder. Such substitute Note or Notes, if any, shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit A hereto.

          (f) Each Issuing Bank may assign to one or more Eligible Assignees all or a portion of its rights and obligations under the undrawn portion of its Letter of Credit Commitment at any time; provided, however, that (i) except in the case of an assignment to a Person that immediately prior to such assignment was an Issuing Bank or an assignment of all of an Issuing Bank’s rights and obligations under this Agreement, the amount of the Letter of Credit Commitment of the assigning Issuing Bank being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $5,000,000 and shall be in an integral multiple of $1,000,000 in excess thereof, (ii) each such assignment shall be to an Eligible Assignee and (iii) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with a processing and recordation fee of $3,500, provided that such fee shall not be payable if the assigning Issuing Bank is making such assignment simultaneously with the assignment in its capacity as a Lender of all or a portion of its Revolving Credit Commitment to the same Eligible Assignee.

          (g) Each Lender Party may sell participations to one or more Persons (other than any Loan Party or any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments, the Advances owing to it and the Note or Notes (if any) held by it); provided, however, that (i) such Lender Party’s obligations under this Agreement (including, without limitation, its Commitments) shall remain unchanged, (ii) such Lender Party shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender Party shall remain the holder of any such Note for all purposes of this Agreement, (iv) the Borrower, the Agents and the other Lender Parties shall continue to deal solely and directly with such Lender Party in connection with such Lender Party’s rights and obligations under this Agreement, (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of any Loan Document, or any consent to any departure by any Loan

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Party therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or release all or substantially all of the Collateral and (vi) if, at the time of such sale, such Lender Party was entitled to payments under Section 2.12(a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to such participant on such date, provided that such participant complies with the requirements of Section 2.12(e) as if it were a Lender hereunder.

          (h) Any Lender Party may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.07, disclose to the assignee or participant or proposed assignee or participant any information relating to the Loan Parties (or any of them) furnished to such Lender Party by or on behalf of any Loan Party; provided, however, that prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any Information received by it from such Lender Party on the same terms as provided in Section 9.10.

          (i) Notwithstanding any other provision set forth in this Agreement, any Lender Party may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System.

          (j) Upon notice to the Borrower from the Administrative Agent or any Lender of the loss, theft, destruction or mutilation of any Lender’s Note, the Borrower will execute and deliver, in lieu of such original Note, a replacement promissory note, identical in form and substance to, and dated as of the same date as, the Note so lost, stolen or mutilated, subject to delivery by such Lender to the Borrower of an affidavit of lost note and indemnity in customary form. Upon the execution and delivery of the replacement Note, all references herein or in any of the other Loan Documents to the lost, stolen or mutilated Note shall be deemed references to the replacement Note.

          (k) If for any reason other than a good faith dispute any Lender shall fail or refuse to abide by its obligations hereunder, and such Lender shall not have cured such failure or refusal within five (5) Business Days of its occurrence (a “Lender Default”), then, in addition to the rights and remedies that may be available to Administrative Agent, Lenders, or any Loan Party at law or in equity, such Lender’s right to vote on matters related to this Agreement other than those matters set forth in Section 9.01(a)(v), (vi), (vii) or (viii), and to participate in the administration of the Advances and this Agreement, shall be suspended during the pendency of such failure or refusal; provided, however, that during the existence of such Lender Default, if such defaulting Lender is the only Lender to refuse to consent to a matter set forth in Section 9.01(a)(v), (vi), (vii) or (viii), then the proviso in the first sentence of Section 9.01(b) shall not apply if such Lender Default is continuing. Administrative Agent shall have the right, but not

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the obligation, in its sole discretion, to acquire at par all of such Lender’s Commitment, including its Pro Rata Share in the Obligations under this Agreement. In the event that Administrative Agent does not exercise its right to so acquire all of such Lender’s interests, then each Lender for whom there does not exist a Lender Default (each, a “Current Party”) shall then, thereupon, have the right, but not the obligation, in its sole discretion to acquire at par (or if more than one Current Party exercises such right, each Current Party shall have the right to acquire, pro rata) such Lender’s Commitment, including its Pro Rata Share in the outstanding Obligations under this Agreement.

          SECTION 9.08. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of an original executed counterpart of this Agreement.

          SECTION 9.09. No Liability of the Issuing Banks. The Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit. Neither any Issuing Bank nor any of its officers or directors shall be liable or responsible for: (a) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank against presentation of documents that do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit, except that the Borrower shall have a claim against such Issuing Bank, and such Issuing Bank shall be liable to the Borrower, to the extent of any direct, but not consequential, damages suffered by the Borrower that the Borrower proves were caused by (i) such Issuing Bank’s willful misconduct or gross negligence as determined in a final, non-appealable judgment by a court of competent jurisdiction in determining whether documents presented under any Letter of Credit comply with the terms of the Letter of Credit or (ii) such Issuing Bank’s willful failure to make lawful payment under a Letter of Credit after the presentation to it of a draft and certificates strictly complying with the terms and conditions of the Letter of Credit. In furtherance and not in limitation of the foregoing, such Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary.

          SECTION 9.10. Confidentiality. (a) Each of the Agents, the Lender Parties and the Issuing Bank agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) to its Affiliates and to its and its Affiliates’ respective managers, administrators, trustees, partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (ii) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (iii) to the extent required by applicable laws or

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regulations or by any subpoena or similar legal process, (iv) to any other party hereto, (v) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (vi) subject to an agreement containing provisions at least as restrictive as those of this Section, (vii) to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (viii) to any actual or prospective party (or its managers, administrators, trustees, partners, directors, officers, employees, agents, advisors and other representatives) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder, (ix) to any rating agency, (x) the CUSIP Service Bureau or any similar organization, (xi) with the consent of the Borrower or (xii) to the extent such Information (A) becomes publicly available other than as a result of a breach of this Section or (B) becomes available to such Agent, such Lender Party, the Issuing Bank or any of their respective Affiliates on a non-confidential basis from a source other than a Loan Party or any of its Subsidiaries without such Agent, such Lender Party, the Issuing Bank or any of their respective Affiliates having knowledge that a duty of confidentiality to the Loan Parties or any of their Subsidiaries has been breached. For purposes of this Section, “Information” means all information received from a Loan Party or any of its Subsidiaries (including the Fee Letter and any information obtained based on a review of the books and records of the Parent Guarantor or any of its Subsidiaries) relating to any Loan Party or any of their Subsidiaries or any of their respective businesses. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

          (b) Certain of the Lender Parties may enter into this Agreement and take or not take action hereunder or under the other Loan Documents on the basis of information that does not contain material non-public information with respect to any of the Loan Parties, any of their Subsidiaries or their respective securities (“Restricting Information”). Other Lender Parties may enter into this Agreement and take or not take action hereunder or under the other Loan Documents on the basis of information that may contain Restricting Information. Each Lender Party acknowledges that United States federal and state securities laws prohibit any person from purchasing or selling securities on the basis of material, non-public information concerning the issuer of such securities or, subject to certain limited exceptions, from communicating such information to any other Person. None of any Agent or any of its respective directors, officers, agents or employees shall, by making any Communications (including Restricting Information) available to a Lender Party, by participating in any conversations or other interactions with a Lender Party or otherwise, make or be deemed to make any statement with regard to or otherwise warrant that any such information or Communication does or does not contain Restricting Information nor shall any Agent or any of its respective directors, officers, agents or employees be responsible or liable in any way for any decision a Lender Party may make to limit or to not limit its access to Restricting Information. In particular, none of any Agent or any of its respective directors, officers, agents or employees (i) shall have, and each Agent, on behalf of itself and each of its directors, officers, agents and employees, hereby disclaims, any duty to ascertain or inquire as to whether or not a Lender Party has or has not limited its access to Restricting Information, such Lender Party’s policies or

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procedures regarding the safeguarding of material, nonpublic information or such Lender Party’s compliance with applicable laws related thereto or (ii) shall have, or incur, any liability to any Loan Party, any Lender Party or any of their respective Affiliates, directors, officers, agents or employees arising out of or relating to any Agent or any of its respective directors, officers, agents or employees providing or not providing Restricting Information to any Lender Party, other than as found by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of any Agent or any of its respective directors, officers, agents or employees.

          (c) Each Loan Party agrees that (i) all Communications it provides to any Agent intended for delivery to the Lender Parties whether by posting to the Approved Electronic Platform or otherwise shall be clearly and conspicuously marked “PUBLIC” if such Communications are determined by the Loan Parties in good faith not to contain Restricting Information which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof, (ii) by marking Communications “PUBLIC,” each Loan Party shall be deemed to have authorized the Agents and the Lender Parties to treat such Communications as either publicly available information or not material information (although such Communications shall remain subject to the confidentiality undertakings of Section 9.10(a)) with respect to such Loan Party or its securities for purposes of United States Federal and state securities laws, (iii) all Communications marked “PUBLIC” may be delivered to all Lender Parties and may be made available through a portion of the Approved Electronic Platform designated “Public Side Information” and (iv) the Agents shall be entitled to treat any Communications that are not marked “PUBLIC” as Restricting Information and may post such Communications to a portion of the Approved Electronic Platform not designated “Public Side Information” (and shall not post such Communications to a portion of the Approved Electronic Platform designated “Public Side Information”). Neither Agent nor any of its respective Affiliates shall be responsible for any statement or other designation by a Loan Party regarding whether a Communication contains or does not contain material non-public information with respect to any of the Loan Parties or their securities nor shall the Agents or any of their respective Affiliates incur any liability to any Loan Party, any Lender Party or any other Person for any action taken by any Agent or any of its respective Affiliates based upon such statement or designation, including any action as a result of which Restricting Information is provided to a Lender Party that may decide not to take access to Restricting Information. Nothing in this Section 9.10(c) shall modify or limit a Person’s obligations under Section 9.10 with regard to Communications and the maintenance of the confidentiality of or other treatment of Information.

          (d) Each Lender Party acknowledges that circumstances may arise that require it to refer to Communications that might contain Restricting Information. Accordingly, each Lender Party agrees that it will nominate at least one designee to receive Communications (including Restricting Information) on its behalf and identify such designee (including such designee’s contact information) in writing to the Administrative Agent. Each Lender Party agrees to notify the Administrative Agent from time to time of such Lender Party’s designee’s e-mail address to which notice of the availability of Restricting Information may be sent by electronic transmission.

          (e) Each Lender Party acknowledges that Communications delivered hereunder and under the other Loan Documents may contain Restricting Information and that

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such Communications are available to all Lender Parties generally. Each Lender Party that elects not to take access to Restricting Information does so voluntarily and, by such election, acknowledges and agrees that the Agents and other Lender Parties may have access to Restricting Information that is not available to such electing Lender Party. Each such electing Lender Party acknowledges the possibility that, due to its election not to take access to Restricting Information, it may not have access to any Communications (including, without being limited to, the items required to be made available to the Administrative Agent in Section 5.03 unless or until such Communications (if any) have been filed or incorporated into documents which have been filed with the Securities and Exchange Commission by the Parent). None of the Loan Parties, Agents or any Lender Party with access to Restricting Information shall have any duty to disclose such Restricting Information to such electing Lender Party or to use such Restricting Information on behalf of such electing Lender Party, and shall not be liable for the failure to so disclose or use, such Restricting Information.

          (f) Sections 9.10(b), (c), (d) and (e) are designed to assist the Agents, the Lender Parties and the Loan Parties, in complying with their respective contractual obligations and applicable law in circumstances where certain Lender Parties express a desire not to receive Restricting Information notwithstanding that certain Communications hereunder or under the other Loan Documents or other information provided to the Lender Parties hereunder or thereunder may contain Restricting Information. None of any Agent or any of its respective directors, officers, agents or employees warrants or makes any other statement with respect to the adequacy of such provisions to achieve such purpose nor does any Agent or any of its respective directors, officers, agents or employees warrant or make any other statement to the effect that a Loan Party’s or Lender Party’s adherence to such provisions will be sufficient to ensure compliance by such Loan Party or Lender Party with its contractual obligations or its duties under applicable law in respect of Restricting Information and each of the Lender Parties and each Loan Party assumes the risks associated therewith.

          SECTION 9.11. Release of Collateral. (a) Upon (i) the sale, lease, transfer or other disposition of any item of Collateral of any Loan Party (including, without limitation, (x) as a result of a sale of the Equity Interests in the Loan Party that owns such Collateral, and (y) any Transfer pursuant to Section 5.02(e)(ii)(B) or (C)) that is permitted by the terms of the Loan Documents or (ii) any designation of any Borrowing Base Asset as a non-Borrowing Base Asset that is permitted by Section 5.02(e)(ii)(C), then, in either such event, the Collateral Agent will, at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Collateral Document in accordance with the terms of the Loan Documents.

          (b) Upon the latest to occur of (i) the payment in full in cash of the Secured Obligations, (ii) the termination in whole of the Commitments and (iii) the termination or expiration of all Letters of Credit and all Secured Hedge Agreements, the Liens granted by the Collateral Documents shall terminate and all rights to the Collateral shall revert to the applicable Loan Party. Upon any such termination, the Collateral Agent will, at the Borrower’s expense, execute and deliver to the applicable Loan Parties such documents as such Loan Parties shall reasonably request to evidence such termination.

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          SECTION 9.12. Patriot Act Notification. Each Lender and each Agent (for itself and not on behalf of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of such Loan Party and other information that will allow such Lender or such Agent, as applicable, to identify such Loan Party in accordance with the Patriot Act. The Parent Guarantor and the Borrower shall, and shall cause each of their Subsidiaries to, provide, to the extent commercially reasonable, such information and take such actions as are reasonably requested by any Agents or any Lenders in order to assist the Administrative Agent and the Lenders in maintaining compliance with the Patriot Act.

          SECTION 9.13. Jurisdiction, Etc. (a) With respect to all matters arising out of or relating to this Agreement, any of the other Loan Documents, or any other letter agreement or other undertaking concerning the financing contemplated therein, each of the parties hereto hereby irrevocably and unconditionally, on behalf of itself, its properties, and to the extent it may lawfully do so, its parent entities, present and future subsidiaries, affiliates, transferees, assigns, acquirers, officers, directors, employees, partners, members, shareholders, and successors in interest, (i) submits to the exclusive jurisdiction of the U.S. District Court for the Southern District of New York State or, if that court does not have subject jurisdiction, in any State court located in the City and County of New York; (ii) agrees that all such matters may be heard and determined in such courts, (iii) waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum, (iv) agrees that a final judgment of such courts shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law, and (v) waives any immunity (sovereign or otherwise) from jurisdiction of any court or from any legal process or setoff to which its or its properties or assets may be entitled.

          (b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents to which it is a party in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

          SECTION 9.14. Governing Law. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York.

          SECTION 9.15. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE OTHER LOAN PARTIES, THE AGENTS AND THE LENDER PARTIES IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE ADVANCES, THE LETTERS OF CREDIT OR THE ACTIONS OF ANY AGENT OR ANY LENDER PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

BORROWER:
CAMPUS CREST COMMUNITIES OPERATING PARTNERSHIP, LP
By:	Campus Crest Communities GP, LLC, Its General Partner
	By:	Campus Crest Communities, Inc.
		Its Sole Member
		By:
			Name: Donald L. Bobbitt, Jr.
			Title: Chief Financial Officer
PARENT GUARANTOR:
CAMPUS CREST COMMUNITIES, INC.
By:
	Name: Donald L. Bobbitt, Jr.
	Title: Chief Financial Officer
SUBSIDIARY GUARANTORS:
CAMPUS CREST AT STEPHENVILLE, LP
By:	Campus Crest GP II, LLC
	Its General Partner
	By:
		Name: Michael S. Hartnett
		Title: Manager

CAMPUS CREST AT LUBBOCK, LP
By:	Campus Crest GP II, LLC
	Its General Partner
	By:
		Name: Michael S. Hartnett
		Title: Manager
CAMPUS CREST AT WACO, LP
By:	Campus Crest GP II, LLC
	Its General Partner
	By:
		Name: Michael S. Hartnett
		Title: Manager
CAMPUS CREST AT WICHITA FALLS, LP
By:	Campus Crest GP II, LLC
	Its General Partner
	By:
		Name: Michael S. Hartnett
		Title: Manager
CAMPUS CREST AT SAN MARCOS, LP
By:	Campus Crest GP II, LLC
	Its General Partner
	By:
		Name: Michael S. Hartnett
		Title: Manager
CAMPUS CREST AT JACKSONVILLE, AL, LLC
By:	Campus Crest Properties, LLC
	Its Manager
	By:
		Name: Michael S. Hartnett
		Title: Manager

CAMPUS CREST AT MOBILE PHASE II, LLC
By:	Campus Crest Properties, LLC
	Its Manager
	By:
		Name: Michael S. Hartnett
		Title: Manager
CAMPUS CREST AT CHENEY, LLC
By:	Campus Crest Properties, LLC
	Its Manager
	By:
		Name: Michael S. Hartnett
		Title: Manager
CAMPUS CREST AT JONESBORO, LLC
By:	Campus Crest Properties, LLC
	Its Manager
	By:
		Name: Michael S. Hartnett
		Title: Manager
CAMPUS CREST AT TROY, LLC
By:	Campus Crest Properties, LLC
	Its Manager
	By:
		Name: Michael S. Hartnett
		Title: Manager
CAMPUS CREST AT MURFREESBORO, LLC
By:	Campus Crest Properties, LLC
	Its Manager
	By:
		Name: Michael S. Hartnett
		Title: Manager

CAMPUS CREST AT WICHITA, LLC
By:	Campus Crest Properties, LLC
	Its Manager
	By:
		Name: Michael S. Hartnett
		Title: Manager
CAMPUS CREST STEPHENVILLE LESSOR, LLC
By:	Campus Crest Properties, LLC
	Its Manager
	By:
		Name: Michael S. Hartnett
		Title: Manager
CAMPUS CREST WACO LESSOR, LLC
By:	Campus Crest Properties, LLC
	Its Manager
	By:
		Name: Michael S. Hartnett
		Title: Manager
CAMPUS CREST WICHITA FALLS LESSOR, LLC
By:	Campus Crest Properties, LLC
	Its Manager
	By:
		Name: Michael S. Hartnett
		Title: Manager

CAMPUS CREST CHENEY LESSOR, LLC
By:	Campus Crest Properties, LLC
	Its Manager
	By:
		Name: Michael S. Hartnett
		Title: Manager
CAMPUS CREST JONESBORO LESSOR, LLC
By:	Campus Crest Properties, LLC
	Its Manager
	By:
		Name: Michael S. Hartnett
		Title: Manager
CAMPUS CREST TROY LESSOR, LLC
By:	Campus Crest Properties, LLC
	Its Manager
	By:
		Name: Michael S. Hartnett
		Title: Manager
CAMPUS CREST MURFREESBORO LESSOR, LLC
By:	Campus Crest Properties, LLC
	Its Manager
	By:
		Name: Michael S. Hartnett
		Title: Manager

CAMPUS CREST WICHITA LESSOR, LLC
By:	Campus Crest Properties, LLC
	Its Manager
	By:
		Name: Michael S. Hartnett
		Title: Manager

SWING LINE BANK: CITIBANK, N.A.
By:
	Name:
	Title:
INITIAL ISSUING BANK: CITIBANK, N.A.
By:
	Name:
	Title:
ADMINISTRATIVE AGENT: CITIBANK, N.A.
By:
	Name:
	Title:
COLLATERAL AGENT: CITIBANK, N.A.
By:
	Name:
	Title:

INITIAL LENDERS: BARCLAYS BANK PLC
By:
	Name:
	Title:

CITIBANK, N.A.
By:
	Name:
	Title:

GOLDMAN SACHS BANK USA
By:
	Name:
	Title:

RAYMOND JAMES BANK, FSB
By:
	Name:
	Title:

ROYAL BANK OF CANADA
By:
	Name:
	Title:

EX-10.59

Exhibit 10.59

THIRD AMENDMENT
TO THE
OPERATING AGREEMENT
OF
HSRE-CAMPUS CREST I, LLC

     This THIRD AMENDMENT (this “Amendment”) to the Operating Agreement of HSRE-CAMPUS CREST I, LLC, a Delaware limited liability company (the “Company”) is entered into as of September 12, 2010 (the “Effective Date”) by and between HSRE-CAMPUS CREST IA, LLC, a Delaware limited liability company (“HSRE”), and CAMPUS CREST VENTURES III, LLC, a Delaware limited liability company (“Campus Crest”).

R E C I T A L S:

     A. The internal affairs of the Company are governed by the Operating Agreement of the Company, dated as of November 7, 2008, as amended by that certain First Amendment to the Operating Agreement of the Company, dated as of November 12, 2009, and that certain Second Amendment to the Operating Agreement of the Company, dated as of March 26, 2010 (as amended, the “Operating Agreement”), by and between HSRE and Campus Crest; and

     B. The Members desire to amend the Operating Agreement in order to reflect an agreement between HSRE and Campus Crest with respect to the grant by HSRE of an option to Campus Crest to purchase all of the membership interest, general partnership interest and limited partnership interest, as the case may be, in each of Campus Crest at Conway, LLC, Campus Crest at Statesboro, LLC and Campus Crest at Huntsville, LP not held by Campus Crest at the time of the Option Closing (as defined herein) on the terms and conditions contained herein.

     NOW THEREFORE, in consideration of the foregoing, of the mutual promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

     1. Terms. Except as otherwise specifically set forth in this Amendment, all capitalized terms used herein shall have the meanings set forth in the Operating Agreement.

     2. Grant by HSRE of Option to Campus Crest. A new Section 13.20 is added to the Operating Agreement as follows:

     “Section 13.20. Grant by HSRE of Option to Campus Crest. (a) HSRE hereby grants an option (the “Option”) to Campus Crest to (1) cause HSRE to direct the Company (jointly with Campus Crest) to distribute all of the membership interest, general partnership interest and limited partnership interest of the Company in each of Campus Crest at Conway, LLC, Campus Crest at Statesboro, LLC and Campus Crest at Huntsville, LP (the “Option Project Interest”) to each of HSRE and Campus Crest in proportion to their respective Participating Percentage and (2) purchase all of the Option Project Interest not

directly or indirectly held by Campus Crest at the time of the Option Closing (as defined herein). The Option shall be exercisable in full but not in part at the sole discretion of Campus Crest; provided, however, that the Option shall expire at 11:59 p.m., Charlotte, North Carolina time, on December 31, 2010. The closing of the Option (the “Option Closing”) shall be held on the fifth (5^th) business day following the delivery to HSRE of written notice by Campus Crest of its intent to exercise the Option. At the Option Closing, Campus Crest shall pay the Option Purchase Price (as defined herein) to HSRE by wire transfer of immediately available funds. The parties shall conduct an escrow style closing through a party selected by Campus Crest and HSRE so that it will not be necessary for any party to physically attend the Option Closing.

(b) Notwithstanding anything to the contrary contained herein, HSRE and Campus Crest shall be under no obligation to complete the transactions contemplated in Section 13.20(a) hereof unless and until the following conditions have been satisfied prior to December 31, 2010 or such later date as mutually agreed upon by HSRE and Campus Crest (collectively, the “Option Conditions Precedent”): (i) the consummation of the proposed initial public offering of capital shares in Campus Crest Communities, Inc., (ii) HSRE and Campus Crest have received the written consent of the third party lenders to Campus Crest at Conway, LLC, Campus Crest at Statesboro, LLC and Campus Crest at Huntsville, LP (the “Option Lenders”), if required under the applicable loan documents, in a form reasonably acceptable to HSRE and HSRE consenting to the transactions contemplated herein (the “Option Lenders Consent”) provided, however, that the failure of the Option Lenders to modify the recourse provisions or release or alter the liability of the then existing guarantors under the loan documents shall not be the basis for Campus Crest to withhold its approval of the Option Lenders Consent, and (iii) the JV I Closing (as defined in the Purchase and Sale Agreement (as defined herein)) has occurred.

(c) In the event that Campus Crest exercises the Option, the purchase price for the Option Project Interest (the “Option Purchase Price”) shall be equal to the excess of (X) $22,000,000 minus (Y) $964,286, which is the sum of the pro-rata portion of the purchase price paid by HSRE to Campus Crest for the 9.9% interest (the “Original Interest”) in the Company sold by Campus Crest to HSRE pursuant to the HSRE-CC JV I Assignment Agreement (the “JV I Assignment Agreement”) entered into on March 26, 2010 plus the pro-rata portion of the premium owed by Campus Crest to HSRE for the repurchase by Campus Crest from HSRE of the Original Interest pursuant to the JV I Assignment Agreement minus (Z) the purchase price paid by Campus Crest to HSRE for the JV I HSRE Interest pursuant to and as defined in that certain Purchase and Sale Agreement (the “Purchase and Sale Agreement”) entered into on March 26, 2010 by and among HSRE, affiliates of Campus Crest and certain other parties thereto. At the Option Closing, each of Campus Crest at Conway, LLC, Campus Crest at Statesboro, LLC and Campus Crest at Huntsville, LP, as the case may be, will

remain subject to all debt encumbering the respective property owned by such entity as of the date of the Option Closing.

(d) In the event that Campus Crest exercises the Option, the Closing deliveries, prorations and process for the Closing shall be in form and substance substantially similar to the deliveries, prorations and process agreed to be used by the parties with respect to the closing of the purchase and sale of the San Marcos Interest pursuant to Section 2 of the Purchase and Sale Agreement. Any cash flow of Campus Crest at Conway, LLC, Campus Crest at Statesboro, LLC and Campus Crest at Huntsville, LP for the period between the Option Closing and the date of closing of the repurchase by Campus Crest from HSRE of the Original Interest pursuant to the JV I Assignment Agreement and the transactions contemplated by the Purchase and Sale Agreement shall be prorated at the Option Closing in accordance with the respective membership interests held by Campus Crest and HSRE as of such date.”

     3. Early Swap Termination Payments. A new Section 13.21 is added to the Operating Agreement as follows:

     “Section 13.21. Early Swap Termination Payments. Campus Crest shall be solely responsible for any termination payment and the fees and expenses of the San Marcos Lender in conjunction with any early termination or partial termination of the swap agreement in connection with the JV I Loan due to the payment by Campus Crest at San Marcos, LP to the San Marcos Lender of any amounts required to reduce the principal balance of the JV I Loan in order to obtain the release of the San Marcos Property from the JV I Loan (any capitalized terms used in this Section 13.21 that are not otherwise defined in the Operating Agreement shall have the meaning ascribed to them in the Purchase and Sale Agreement).”

     4. Confirmation of Operating Agreement. Except as set forth herein, the terms and provisions of the Operating Agreement are hereby confirmed, ratified and approved in their entirety, and shall continue in full force and effect.

     5. Further Acts. The parties hereto agree to do such further acts and execute, deliver, file and record such further documents and instruments as any of them may deem to be reasonably necessary or advisable to effect and evidence the transactions contemplated by this Amendment.

     6. Effective Date. Each provision of this Amendment shall be effective as of the Effective Date.

     7. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

THIRD AMENDMENT
TO THE OPERATING AGREEMENT
OF HSRE-CAMPUS CREST I, LLC

COUNTERPART SIGNATURE PAGE

     IN WITNESS WHEREOF, each of the parties has executed this Amendment, as of the date first set forth above, and agrees to be bound by this Amendment.

MEMBERS:
CAMPUS CREST:
CAMPUS CREST VENTURES III, LLC, a
Delaware limited liability company
	By:	Campus Crest Properties, LLC, a
		North Carolina limited liability
		company, its Manager
		By:	/s/ Michael S. Hartnett
		Name:	Michael S. Hartnett
		Its:	Manager

HSRE:
HSRE-CAMPUS CREST IA, LLC, a
Delaware limited liability company
	By:	HSREP II Holding, LLC, a Delaware
		limited liability company, its sole
		member
		By:	HSRE REIT II, a Maryland real
			estate investment trust, a member
			By:	/s/ Stephen Gordon
			Name:	Stephen Gordon
			Its:	Trustee

EX-10.60

Exhibit 10.60

EXCLUSIVE AIRCRAFT LEASE AGREEMENT

Dated as of the ____ day of ___________, 2010

by and between

BUDGET JET, LLC,
as Lessor,

and

CAMPUS CREST COMMUNITIES OPERATING PARTNERSHIP, LP
as Lessee,

concerning one __________________________ business turbo jet aircraft bearing
U.S. registration number _________________
and
manufacturer’s serial number _________________

INSTRUCTIONS FOR COMPLIANCE WITH
“TRUTH IN LEASING” REQUIREMENTS UNDER FAR § 91.23

Within 24 hours after execution of this Aircraft Lease Agreement:
mail a copy of the executed document, without Schedule A, to the
following address via certified mail, return receipt requested:

Federal Aviation Administration
Aircraft Registration Branch
ATTN: Technical Section

P.O. Box 25724
Oklahoma City, Oklahoma 73125

At least 48 hours prior to the first flight to be conducted under this Agreement:
deliver a completed Schedule B containing the departure airport and proposed
time of departure of said first flight by facsimile to the Flight Standards
District Office located nearest the departure airport.

Carry a copy of this Aircraft Lease Agreement in the aircraft at all times.

* * *

Schedule A contains only economic rental data and is
intentionally omitted for FAA submission purposes.

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     This AIRCRAFT LEASE AGREEMENT (the “Agreement”) is entered into as of this ___ day of ___________, 2010 (the “Effective Date”), by and between BUDGET JET, LLC (“Lessor”), and CAMPUS CREST COMMUNITIES OPERATING PARTNERSHIP, LP (“Lessee”).

W I T N E S S E T H :

     WHEREAS, title to the Aircraft described and referred to herein is held by Lessor;

     WHEREAS, Lessee desires to lease from the Lessor, and Lessor desires to lease to Lessee, the Aircraft, without crew, upon and subject to the terms and conditions of this Agreement; and

     WHEREAS, Lessee intends to operate the Aircraft under Part 91 of the FAR within the scope of and incidental to its own business and other uses as deemed appropriate.

     NOW, THEREFORE, in consideration of the mutual promises herein contained and other good and valid consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. DEFINITIONS

1.1	The following terms shall have the following meanings for all purposes of this Agreement:
	“Aircraft” means the Airframe, the Engines, the Parts, and the Aircraft Documents. The Engines shall be deemed part of the “Aircraft” whether or not from time to time attached to the Airframe or removed from the Airframe.
	“Aircraft Documents” means all flight records, maintenance records, historical records, modification records, overhaul records, manuals, logbooks, authorizations, drawings and data relating to the Airframe, any Engine, or any Part, or that are required by Applicable Law to be created or maintained with respect to the maintenance and/or operation of the Aircraft.
	“Aircraft Delivery Receipt” means an Aircraft Delivery Receipt in the form of Schedule C attached hereto.
	“Airframe” means that certain ________________________________ business turbo jet aircraft bearing U.S. registration number _______________________, and manufacturer’s serial number ______________, together with any and all Parts (including, but not limited to, landing gear and auxiliary power units but excluding Engines or engines) so long as such Parts shall be either incorporated or installed in or attached to the Airframe.
	“Applicable Law” means, without limitation, all applicable laws, treaties, international agreements, decisions and orders of any court, arbitration or governmental agency or authority and rules, regulations, orders, directives, licenses and permits of any governmental body, instrumentality, agency or authority, including, without limitation, the FAR and 49 U.S.C. § 41101, et seq., as amended.
	“Business Day” means any day of the year in which banks are not authorized or required to close in State of Delaware.
	“DOT” means the United States Department of Transportation or any successor agency.
	“Engines” means two (2) ______________________________________ engines bearing manufacturer’s serial numbers Left-___________ and Right-_______________, together with any and all Parts so long as the same shall be either incorporated or installed in or attached to such Engine. Any engine which may be, from time to time, substituted for an Engine shall be deemed to be an Engine and subject to this Agreement for so long as it remains attached to the Airframe.

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“Event of Default” means the occurrence of any of the following events: (a) Lessee shall fail to promptly make any payment due under this Agreement or any agreement between Lessee and any third-party relating to the Aircraft, (b) Lessee shall fail to observe or perform any covenant, agreement, or obligation under this Agreement or any agreement between Lessee and any third-party relating to the Aircraft, (c) Lessee shall sell, transfer, encumber, assign, sublet, charter or attempt to sell, transfer, encumber, assign, sublet or charter the Aircraft or any part thereof, (d) Lessee shall use the Aircraft for, or permit the Aircraft to be used for, any illegal purpose or fail to use or operate the Aircraft in compliance with any Applicable Law, (e) Lessee shall fail to pay, or admit in writing its inability to pay, its debts as they become due, (f) Lessee shall make a general assignment for the benefit of creditors or file a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization in a proceeding under any bankruptcy laws (or any such proceeding shall be instituted against Lessee by any other party), (g) a material inaccuracy in any representation or breach of any warranty made by Lessee hereunder, (h) the occurrence of any of the following events: (A) Lessee enters into any transaction of merger or consolidation, unless Lessee is the surviving entity; (B) Lessee ceases to do business as a going concern, or liquidates, or dissolves; (C) Lessee sells, transfers, or otherwise disposes of all or substantially all of its assets or property; or (i) failure by Lessee to notify Lessor of the occurrence of any of the foregoing within five (5) Business Days of its occurrence.

“FAA” means the Federal Aviation Administration or any successor agency.

“FAR” means collectively the Aeronautics Regulations of the FAA and the DOT, as codified at Title 14, Parts 1 to 399 of the United States Code of Federal Regulations.

“FSDO Notice” means an FSDO Notification Letter in the form of Schedule B attached hereto.

“Lien” means any mortgage, security interest, lease or other charge or encumbrance or claim or right of others, including, without limitation, rights of others under any airframe or engine interchange or pooling agreement, except for mechanics liens to be discharged in the ordinary course of business.

“Operating Base” means Asheville Airport, in the City of Asheville, North Carolina, or such airport within the 48 contiguous United States as Lessee may designate upon written notice to and consent of Lessor, which shall not be unreasonably withheld.

“Operational Control” has the same meaning given the term in Section 1.1 of the FAR.

“Parts” means all appliances, components, parts, instruments, appurtenances, accessories, furnishings or other equipment of whatever nature (other than complete Engines or engines) which may from time to time be incorporated or installed in or attached to the Airframe or any Engine and includes replacement parts.

“Pilot in Command” has the same meaning given the term in Section 1.1 of the FAR.

“Taxes” means all taxes of every kind (excluding any tax measured by or assessed against a taxpayer’s income, including, without limitation, any income tax, gross income tax, net income tax, or capital gains tax) assessed or levied by any federal, state, county, local, airport, district, foreign, or other governmental authority, including, without limitation, sales taxes, use taxes, retailer taxes, federal air transportation excise taxes, federal aviation fuel excise taxes, and other similar duties, fees, and excise taxes.

“Term” means the entire period from the Effective Date to the date this Agreement is terminated pursuant to Section 2.2.

SECTION 2. LEASE AND DELIVERY OF THE AIRCRAFT

2.1 Lease. Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the Aircraft, on the terms and conditions of this Agreement.

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2.2 Term.

2.2.1

Initial Term. This Agreement shall become effective on the Effective Date, and shall continue in effect through and including December 31, 2015, unless terminated sooner pursuant to the express provisions herein contained.

2.2.2

Subsequent Terms. At the end of the initial term or any subsequent twelve (12) month term, this Agreement shall automatically be renewed for an additional twelve (12) month term without further action by either party, unless either party delivers to the other party written notice of termination or of election not to renew within _____ days prior to the end of the initial term or any subsequent twelve (12) month term.

2.3 Delivery. The Aircraft shall be delivered to the Lessee on a mutually agreed date at Asheville Airport (AVL), Asheville, North Carolina, and “AS IS,” “WHERE IS,” AND SUBJECT TO EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTION 4 HEREOF. Upon delivery of the Aircraft, Lessee shall execute and deliver to Lessor an Aircraft Delivery Receipt. Lessor shall not be liable for delay or failure to furnish the Aircraft pursuant to this Agreement when such failure is caused by government regulation or authority, mechanical difficulty, war, civil commotion, strikes or labor disputes, weather conditions, or acts of God.

SECTION 3. LETTER OF CREDIT, RENT, AND TAXES

3.1	Rent. During the Term, beginning after delivery of the Aircraft and the delivery of an Aircraft Delivery Receipt as provided in Section 2.3, Lessee shall pay rent monthly to Lessor in an amount equal to the amount specified in Schedule A attached hereto.
3.2	Taxes. Neither the rent nor any other payments to be made by Lessee under this Agreement includes the amount of any Taxes which may be assessed or levied by any taxing jurisdictions as a result of the lease of the Aircraft to Lessee, or the use of the Aircraft by Lessee, or the provision of a taxable transportation service by Lessee using the Aircraft. Lessee shall be responsible for, shall indemnify and hold harmless Lessor against, and Lessee shall pay all such Taxes when due. Lessee shall have the right to dispute or contest in good faith and at Lessee’s sole expense the amount of any Taxes assessed or imposed directly against Lessee and/or Lessor. During the period that any such Taxes are being disputed or contested in good faith, payment of such Taxes in accordance with the terms of this Agreement may be delayed until a final determination of the amount due has been made.
3.3	Net Lease. This Agreement is a net lease, and Lessee acknowledges and agrees that (a) Lessee’s obligation to pay, and Lessor’s right to receive, all rents, Taxes, and other payments due under this Agreement shall be absolute, irrevocable, independent and unconditional and shall not be subject to (and Lessee hereby waives and agrees not to assert) any abatement, reduction, setoff, defense, counterclaim or recoupment for any reason or under any circumstance whatsoever as to any such rents, Taxes, and other payments, and without limiting the foregoing, Lessee also hereby waives any and all existing and future claims to any abatement, reduction, setoff, defense, counterclaim or recoupment against or as to any such rents, Taxes, and other payments, (b) Lessee will pay all such rents, Taxes, and other payments regardless of any abatement, reduction, setoff, defense, counterclaim or recoupment, and (c) this Agreement, and Lessee’s payment and other obligations hereunder, are non-cancelable and non-terminable by Lessee, except in an event of default by Lessor under this Agreement that Lessor fails to cure within fifteen (15) Business Days after receiving written notice from Lessee specifying such event of default.
3.4	Payment of Rent. Lessee shall pay to Lessor the rent required under Section 3.2 in full within five (5) Business Days of receiving each invoice for which such rent is payable during the Term. Lessee shall pay to Lessor the invoiced amount in full within (5) Business Days of the date of the invoice, unless the Lessee notifies Lessor in writing of a discrepancy, in which case Lessee shall pay the amount owed not in dispute, and Lessee and Lessor shall work together to expeditiously reconcile the disputed amount. All amounts to be paid by Lessee shall be paid to the Lessor in immediately available U.S. funds and in a form and manner

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as the Lessor in its sole discretion may instruct Lessee from time to time. All amounts not timely paid when due shall be subject to interest charges from the due date to the date paid at the lesser of 18% per annum or the maximum rate allowed by Applicable Law. In addition, if any payment due from Lessee is not received by Lessee by its payment due date, as determined in this Section 3.5, then Lessee shall have five (5) Business Days to cure such non-payment from the date that Lessee sends written notice of such failure to Lessee by facsimile and, if Lessee fails to so cure, such failure shall be an Event of Default under Section 9.1. Notwithstanding the foregoing, prior to the termination of the Term of this Agreement, Lessor shall invoice Lessee for all payments due under this Agreement and Lessee shall pay such amounts within five (5) Business Days thereof, and the Letter of Credit shall not be released until such payment is received by Lessor.

SECTION 4. REPRESENTATIONS AND WARRANTIES

4.1 Representations and Warranties of Lessee. Lessee represents and warrants as of the date hereof and during the entire Term hereof as follows:

4.1.1	All pilots who operate the Aircraft for Lessee’s flights shall have at least the minimum total pilot hours required by any policy of insurance covering the Aircraft and will meet or exceed all requirements under any policy of insurance covering the Aircraft, and all Applicable Law.
4.1.2	Lessee is and will remain, during the Term, a validly organized limited partnership under the laws of the State of Delaware and is duly qualified to do business wherever necessary to perform its obligations under this Agreement, and the person executing on behalf of Lessee has full power and authority to execute this Agreement on behalf of Lessee and by such execution shall bind Lessee under this Agreement.
4.1.3	The execution and delivery of this Agreement by Lessee and the performance of its obligations hereunder have been duly authorized by all necessary limited liability company action, and do not conflict with any provision of Lessee’s articles of organization, operating agreement, any governmental regulations, or any other agreements that Lessee may now have with other parties.
4.1.4	Lessee is not subject to any restriction, which with or without the giving of notice, the passage of time, or both, prohibits or would be violated by or be in conflict with this Agreement.
4.1.5	Lessee will not permit the Aircraft to be operated in any unsafe manner or contrary to any manual or instructions for the Aircraft or in violation of the terms or conditions of any insurance policy covering the Aircraft or any applicable statute, regulation, ordinance, or other law.

4.2 Representations and Warranties of Lessor. Lessor represents and warrants as of the date hereof and during the entire Term hereof as follows:

4.2.1	Lessor is and will remain, during the Term, a validly organized limited liability company under the laws of the State of Delaware and is duly qualified to do business wherever necessary to perform its obligations under this Agreement, and the person executing on behalf of Lessor has full power and authority to execute this Agreement on behalf of Lessor and by such execution shall bind Lessor under this Agreement.
4.2.3	The execution and delivery of this Agreement by Lessor and the performance of its obligations hereunder have been duly authorized by all necessary corporate or limited liability company action, and do not conflict with any provision of Lessor’s articles of organization, operating agreement, any governmental regulations, or any other agreements that Lessee may now have with other parties.
4.2.4	Lessor is not subject to any restriction, which with or without the giving of notice, the passage of time, or both, prohibits or would be violated by or be in conflict with this Agreement.

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4.3 DISCLAIMER OF WARRANTIES. THE AIRCRAFT IS BEING LEASED BY THE LESSOR TO THE LESSEE HEREUNDER ON A COMPLETELY “AS IS,” “WHERE IS,” BASIS AS OF THE EFFECTIVE DATE, WHICH IS ACKNOWLEDGED AND AGREED TO BY THE LESSEE. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION 4 ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, AND LESSOR HAS NOT MADE AND SHALL NOT BE CONSIDERED OR DEEMED TO HAVE MADE (WHETHER BY VIRTUE OF HAVING LEASED THE AIRCRAFT UNDER THIS AGREEMENT, OR HAVING ACQUIRED THE AIRCRAFT, OR HAVING DONE OR FAILED TO DO ANY ACT, OR HAVING ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS AGREEMENT OR OTHERWISE) ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR TO ANY PART THEREOF, AND SPECIFICALLY, WITHOUT LIMITATION, IN THIS RESPECT LESSOR DISCLAIMS ALL REPRESENTATIONS AND/OR WARRANTIES AS TO THE TITLE, AIRWORTHINESS, VALUE, CONDITION, DESIGN, MERCHANTABILITY, COMPLIANCE WITH SPECIFICATIONS, CONSTRUCTION AND CONDITION OF THE AIRCRAFT OPERATION, OR FITNESS FOR A PARTICULAR USE OF THE AIRCRAFT AND AS TO THE ABSENCE OF LATENT AND OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OR THE LIKE, HEREUNDER OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT OR ANY PART THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY ARISING FROM A COURSE OF PERFORMANCE OR DEALING OR USAGE OF TRADE), WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF. THE LESSEE HEREBY WAIVES, RELEASES, DISCLAIMS AND RENOUNCES ALL EXPECTATION OF OR RELIANCE UPON ANY SUCH AND OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF LESSOR AND RIGHTS, CLAIMS AND REMEDIES OF THE LESSEE AGAINST LESSOR, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, INCLUDING BUT NOT LIMITED TO (I) ANY IMPLIED WARRANTY OF MERCHANTABILITY OF FITNESS FOR ANY PARTICULAR USE, (II) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, (III) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF LESSOR, ACTUAL OR IMPUTED, AND (IV) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO THE AIRCRAFT, FOR LOSS OF USE, REVENUE OR PROFIT WITH RESPECT TO THE AIRCRAFT, OR FOR ANY OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.

SECTION 5. REGISTRATION, USE, OPERATION, MAINTENANCE AND POSSESSION

5.1

Title and Registration. Lessee acknowledges that Lessor owns all legal, beneficial, and equitable title to the Aircraft, and that said title shall remain vested in Lessor during the Term hereof. Lessee shall undertake, to the extent permitted by Applicable Law, to do all such further acts, deeds, assurances or things as may, in the opinion of the Lessor, be necessary or desirable in order to protect or preserve Lessor’s title to the Aircraft.

5.2

Use and Operation. Lessee shall operate the Aircraft in accordance with the provisions of Part 91 of the FAR and shall not operate the Aircraft in commercial service, as a common carrier, or otherwise for compensation or hire except to the extent permitted under Sections 91.321 and 91.501 of the FAR, if applicable. Lessee shall be solely and exclusively responsible for the use, operation and control of the Aircraft at all times during the Term. Lessee agrees not to operate or locate the Airframe or any Engine, or permit the Airframe or any Engine to be operated or located, in any area excluded from coverage by any insurance policy in effect or required to be maintained hereunder with respect to the Airframe or Engines, or in any war zone. Lessee agrees not to operate the Airframe or any Engine or permit the Airframe or any Engine to be operated during the Term except in operations for which Lessee is duly authorized, or to use or permit the Aircraft to be used for a purpose for which the Aircraft is not designed or reasonably suitable. Lessee will not permit the Airframe or any Engine to be maintained, used or operated during the Term in violation of any Applicable Law, or contrary to any manufacturer’s operating manuals or instructions.

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Lessee shall not knowingly permit the Aircraft to be used for the carriage of any persons or property prohibited by Applicable Law, nor shall Lessee permit the Aircraft to be used during the existence of any known defect except in accordance with the FAR. Lessee may carry on the Aircraft on all flights under this Agreement such passengers, baggage, and cargo as Lessee in its sole but reasonable discretion shall determine; provided, however, that the number of passengers on any flight shall in no event exceed the number of seats legally available in the Aircraft, and the total load carried on any flight, including passengers, crew, baggage, and fuel and oil in such quantities as the Pilot in Command shall determine to be required, shall not exceed the legally permissible maximum load for the Aircraft. Lessee will abide by and conform to, be responsible for causing and cause others to abide by and conform to, all Applicable Laws now existing or hereafter enacted, that control or in any way affect the operation, use, maintenance, or occupancy of the Aircraft, or the use of any airport by the Aircraft.

5.3

Aircraft Leased without Services. The Aircraft is leased by Lessor to Lessee hereunder without any additional services of any kind, and Lessee shall obtain or supply all services and supplies necessary to the operation, maintenance, repair, and storage of the Aircraft of every kind and nature whatsoever, routine and non-routine. Without limiting the generality of the foregoing, Lessee, at no cost or expense to Lessor, shall:

5.3.1	obtain all fuel, oil, lubricants, and other services and supplies required for Lessee’s operations of the Aircraft;
5.3.2	pay the fixed hourly cost of any maintenance service plans that may be in effect with respect to the Aircraft that become due and payable;
5.3.3	maintain the Aircraft, or cause the Aircraft to be maintained, in a good and airworthy operating condition and in compliance with all applicable FAR and the Aircraft Operating Manual;
5.3.4	ensure that all mechanics assigned to the maintenance of the Aircraft are competent with respect to this type of aircraft, and fully familiar with applicable maintenance and preventative repair programs for the Aircraft’s specific type;
5.3.5	store the Aircraft when not in use in an appropriate and adequate indoor facility at the Operating Base;
5.3.6	obtain and pay for the services of pilots for all of Lessee’s operations of the Aircraft;
5.3.7	ensure that all pilots serving on any flight conducted by Lessee possess current and valid Airline Transport Pilot and First Class Medical Certificates issued by the FAA, and are fully competent, trained, experienced, and qualified in accordance with Applicable Law and all insurance policies covering the Aircraft;
5.3.8	maintain and preserve, or cause to be maintained and preserved, in the English language, all Aircraft Documents in a complete, accurate, and up-to-date manner; and
5.3.9	reimburse Lessor for all insurance maintained by Lessor as provided under Section 8 of this Agreement, including prepaid insurance.

5.4

Operational Control. Lessee shall exercise Operational Control of the Aircraft during all flight operations conducted by Lessee. Further, Lessee shall have exclusive possession, command, and control of the Aircraft, and the pilots of any flight by Lessee shall be under the exclusive command of Lessee.

5.5

Authority of Pilot in Command. Notwithstanding that Lessee shall have operational control of the Aircraft during any flight conducted by Lessee, the parties acknowledge that pursuant to Section 91.3 of the FAR, the Pilot in Command of such flight is responsible for, and is obligated and entitled to exercise final authority over, the safe operation of the flight, and the parties agree that the Pilot in Command may, in the exercise of such authority, refuse to commence such flight, terminate such flight, or take any other flight-

7

	related action that, in the judgment of the Pilot in Command, is required to ensure the safety of the Aircraft, the flight crew, the passengers, and any other persons and/or property.
5.6	Right to Inspect. Lessor and/or Lessor’s agents shall have the right to inspect the Aircraft or the Aircraft Documents at any reasonable time, upon giving Lessee reasonable notice, to ascertain the condition of the Aircraft and to satisfy Lessor that the Aircraft is being properly repaired and maintained in accordance with the requirements of this Agreement. All required repairs shall be performed as soon as practicable after such inspection.
5.7	Fines, Penalties, and Forfeitures. Lessee shall be solely responsible for any fines, penalties, or forfeitures relating in any manner to the operation, maintenance, or use of the Aircraft by Lessee under this Agreement.

SECTION 6. RETURN OF AIRCRAFT

6.1	Return. Subject to Section 11, on the last day of the Term or the date of earlier termination hereof, Lessee shall return the Aircraft to Lessor by delivering the same at Lessee’s expenses to Lessor at Asheville Airport, in Asheville, North Carolina, fully equipped with all Engines and Parts installed thereon.
6.2	Condition of Aircraft. Subject to Section 11, the Aircraft at the time of its return to Lessor, shall have, and be in compliance with, a current valid certificate of airworthiness issued by the FAA, and shall be airworthy according to manufacturer’s specifications and FAA regulations, shall have been maintained and repaired in accordance with the provisions of this Agreement, and shall be in the same condition as it was in on the Effective Date of this Agreement, ordinary wear and tear excepted.
6.3	Aircraft Documents. Lessee shall return or cause to be returned to Lessor, at the time the Aircraft is returned to Lessor, all of the Aircraft Documents, updated and maintained by Lessee through the date of return of the Aircraft.

SECTION 7. LIENS

7.1 Lessee Liens. Lessee shall ensure that no Liens are created or placed against the Aircraft by Lessee or third parties as a result of Lessee’s actions. Lessee shall notify Lessor promptly upon learning of any Liens not permitted by these terms. Lessee shall, at its own cost and expense, take all such actions as may be necessary to discharge and satisfy in full any such Lien promptly after the same becomes known to it.

SECTION 8. INSURANCE

8.1	Liability. Lessor shall maintain, or cause to be maintained, entirely at Lessee’s cost and expense, bodily injury and property damage, liability insurance in an amount no less than $10,000,000 United States Dollars (US$10,000,000) Combined Single Limit, a copy of the current insurance certificate being attached hereto on Schedule D.
8.2	Hull. Lessor, shall maintain, or cause to be maintained, entirely at Lessee’s cost and expense, all risks aircraft hull insurance in the amount of Four Million Eight Hundred Thousand Dollars United States Dollars (US$4,800,000), and such insurance shall name Lessor and any first lien mortgage holder as loss payees as their interests may appear, a copy of the current insurance certificate being attached hereto on Schedule D.
8.3	War Risk and Allied Perils. Lessor shall also maintain war risk and allied perils (including confiscation, appropriation, expropriation, terrorism and hijacking insurance) in the amounts required in Subsections 8.1 and 8.2 of this Agreement, as applicable, and entirely at Lessee’s cost and expense, a copy of the current insurance certificate being attached hereto on Schedule D.
8.4	Insurance Certificates. Lessor will provide Lessee with a Certificate of Insurance upon execution of this Agreement and at any time thereafter as Lessee may reasonably request.

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8.5

Conditions of Insurance. Each insurance policy required under this Section 8 shall insure the interests of Lessor regardless of any breach or violation by Lessee of any warranties, declarations or conditions contained in such policies and shall be payable to the Lessor, with the Lessee as an additional insured. Lessor and Lessee will cause the proceeds paid under any such policies on account of damage or destruction to the Aircraft to be applied and used for the repair of the Aircraft or distribution to Lessor and Lessee as provided in Section 11. Each such policy shall insure Lessee’s contractual liability to Lessor contained in this Agreement (with a Breach of Warranty endorsement). The geographic limits, if any, contained in each and every such policy of insurance shall include at the minimum all territories over which Lessee will operate the Aircraft for which the insurance is placed. Each policy shall contain an agreement by the insurer that notwithstanding the lapse of any such policy for any reason or any right of cancellation by the insurer or Lessor, whether voluntary or involuntary, such policy shall continue in force for the benefit of Lessor for at least thirty (30) days (or such lesser time as may be permitted in the case of War Risk Insurance, if such War Risk Insurance so requires) after written notice of such lapse or cancellation shall have been given to Lessor. Each policy shall contain an agreement by the Insurer to provide Lessor with thirty (30) days’ advance written notice of any deletion, cancellation or material change in coverage.

8.6

Insurance Companies. Each insurance policy required under this Section 8 shall be issued by a company or companies who are qualified to do business in the United States and who (i) will submit to the jurisdiction of any competent state or federal court in the United States with regard to any dispute arising out of the policy of insurance or concerning the parties herein; and (ii) will respond to any claim or judgment against Lessor in any competent state or federal court in the United States or its territories.

SECTION 9. DEFAULTS AND REMEDIES

9.1 Upon the occurrence of any Event of Default, and at any time thereafter so long as such Event of Default shall be continuing, the Lessor may, at its option, declare in writing to the Lessee that this Agreement is in default, and may immediately terminate this Agreement, but only after Lessor has first provided Lessee with written notice of such Event of Default and Lessee has failed to cure such Event of Default within fifteen (15) Business Days, if such Event of Default is monetary, or within thirty (30) Business Days if such Event of Default is non-monetary. Upon any such termination hereof by Lessor, Lessee shall immediately return the Aircraft to Lessor in accordance with Section 6 and Section 11 hereof. Upon termination of this Agreement pursuant to this Section 9.1, the full amount of all rent and/or other payments required to paid by Lessee to Lessor hereunder during the Term shall be deemed earned, and to the extent not previously paid, shall be accelerated and become immediately due and payable. Further, in the event Lessor elects pursuant to this Section 9.1 to terminate this Agreement following an Event of Default by Lessee, then the amount of money owed by Lessee on account of such acceleration will be offset against its Lease Termination Fee as shown on Exhibit A and which is to be paid out at lease termination.

SECTION 10. NOTICES

10.1 All communications, declarations, demands, consents, directions, approvals, instructions, requests and notices required or permitted by this Agreement shall be in writing and shall be deemed to have been duly given or made when delivered personally or transmitted electronically by e-mail or facsimile, receipt acknowledged, or in the case of documented overnight delivery service or registered or certified mail, return receipt requested, delivery charge or postage prepaid, on the date shown on the receipt therefor, in each case at the address set forth below:

If to Lessor:	Budget Jet, LLC	Tel: (205) 521-8200
	C/O Dawn Sharff	Fax: (205) 488-6200
	One Federal Place
	1819 Fifth Avenue North
	Birmingham, AL 35203	E-mail:dsharff@babc.com

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If to Lessee:	Campus Crest Communities, LLC	Tel: 704-496-2500
	2100 Rexford Road, 4th Floor	Fax: 336-510-3807
	Charlotte, NC 28211	E-Mail: Donnie.bobbitt@campuscrest.com
	Attn: Donald L. Bobbitt, Jr.

SECTION 11. EVENT OF LOSS AND INDEMNIFICATION

11.1 Notification of Event of Loss. In the event any damage to or destruction of, the Aircraft shall occur, or in the event of any whole or partial loss of the Aircraft, including, without limitation, any loss resulting from the theft, condemnation, confiscation or seizure of, or requisition of title to or use of, the Aircraft by private persons or by any governmental or purported governmental authority, Lessee shall immediately:

11.1.1	report the event of loss to Lessor, the insurance company or companies, and to any and all applicable governmental agencies; and
11.1.2	furnish such information and execute such documents as may be required and necessary to collect the proceeds from any insurance policies.

11.2

Repair or Termination. In the event the Aircraft is partially destroyed or damaged, Lessor and Lessee shall have the option, in their sole discretion, to either (i) fully repair the Aircraft in order that it shall be placed in at least as good condition as it was prior to such partial destruction or damage; or (ii) terminate this Agreement. The parties will indicate so by written mutual consent. In the event the Aircraft is totally destroyed, this Agreement shall terminate and Lessee shall be relieved from the obligations under Section 6 regarding the return of the Aircraft. In the event that Lessor and Lessee elect to terminate this Agreement pursuant to Section 11.2 or the Agreement has terminated pursuant to Section 11.2 because of the total destruction of the Airplane, then the Lessor and Lessee shall split the insurance proceeds equally.

11.3

Indemnification. Lessee hereby releases, and shall defend, indemnify and hold harmless Lessor and Lessor’s affiliates, shareholders, members, directors, officers, managers, employees, successors and assigns, on a net after-tax basis from and against, any and all claims, damages, losses, liabilities, demands, suits, judgments, causes of action, civil and criminal legal proceedings, penalties, fines, and other sanctions, and any attorneys’ fees and other reasonable costs and expenses, directly or indirectly arising from this Agreement, and/or Lessee’s operation, maintenance, storage, or other use of the Aircraft. Lessor shall defend, indemnify and hold harmless Lessee and Lessee’s affiliates, shareholders, members, directors, officers, managers, employees, successors and assigns, on a net after-tax basis from and against, any and all claims, damages, losses, liabilities, demands, suits, judgments, causes of action, civil and criminal legal proceedings, penalties, fines, and other sanctions, and any attorneys’ fees and other reasonable costs and expenses, directly arising from Lessor’s uncured default under this Agreement.

SECTION 12. MISCELLANEOUS

12.1	Entire Agreement. This Agreement, and all terms, conditions, warranties, and representations herein, are for the sole and exclusive benefit of the signatories hereto. This Agreement constitutes the entire agreement of the parties as of its Effective Date and supersedes all prior or independent, oral or written agreements, understandings, statements, representations, commitments, promises, and warranties made with respect to the subject matter of this Agreement.
12.2	Other Transactions. Except as specifically provided in this Agreement, none of the provisions of this Agreement, nor any oral or written statements, representations, commitments, promises, or warranties made with respect to the subject matter of this Agreement shall be construed or relied upon by any party as the basis of, consideration for, or inducement to engage in, any separate agreement, transaction or commitment for any purpose whatsoever.
12.3	Prohibited and Unenforceable Provisions. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such

10

	prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibitions or unenforceability in any jurisdiction. To the extent permitted by Applicable Law, each of Lessor and Lessee hereby waives any provision of Applicable Law that renders any provision hereof prohibited or unenforceable in any respect.
12.4	Enforcement. This Agreement, including all agreements, covenants, representations and warranties, shall be binding upon and inure to the benefit of, and may be enforced by Lessor, Lessee, and each of their successors, assigns, agents, servants and personal representatives.
12.5	Headings. The section and subsection headings in this Agreement are for convenience of reference only and shall not modify, define, expand, or limit any of the terms or provisions hereof.
12.6	Counterparts. This Agreement may be executed by the parties hereto in two (2) separate counterparts, each of which when so executed and delivered shall be an original, and both of which shall together constitute but one and the same instrument. Such counterparts may be exchanged via facsimile transmission provided that immediately following such transmission each party shall forward an executed original of the counterpart signature page to each of the other parties hereto by first class mail or courier.
12.7	Amendments. No term or provision of this Agreement may be amended, changed, waived, discharged, or terminated orally, but only by an instrument in writing signed by Lessor and Lessee.
12.8	No Waiver. No delay or omission in the exercise or enforcement or any right or remedy hereunder by either party shall be construed as a waiver of such right or remedy. All remedies, rights, undertakings, obligations, and agreements contained herein shall be cumulative and not mutually exclusive, and in addition to all other rights and remedies which either party possesses at law or in equity.
12.9	No Assignments. Lessee shall not assign this Agreement or sell, transfer, assign, or encumber the Aircraft or the Aircraft or any part thereof, or sublet, charter, or part with possession of, the Aircraft or the Aircraft or any part thereof, or enter into any Time Sharing or Interchange Agreement (as such terms are defined in Section 91.501(c) of the FARs) involving the Aircraft.
12.10	Time is of the Essence. Time is of the essence for all payments and actions required by this Agreement.
12.11	Governing Law. This Agreement has been negotiated and delivered in the State of Delaware and shall in all respects be governed by, and construed in accordance with, the laws of the State of Delaware, including all matters of construction, validity and performance, without giving effect to its conflict of laws provisions.
12.12	Jurisdiction and Venue. Exclusive jurisdiction and venue over any and all disputes between the parties arising under this Agreement shall be in, and for such purpose each party hereby submits to the jurisdiction of, the state and federal courts serving the State of Delaware.
12.13	Enforcement Costs. Lessee shall be liable for, and pay to Lessor upon demand, all costs, charges and expenses incurred by Lessor in enforcing or protecting its rights under this Agreement, whether by reason of any Lessee Event of Default, or otherwise, including, legal fees, disbursements, insurance, expert witness fees, consultant fees, repossession, taxes, lien removal, recovery, storage, inspection, appraisal, repair, costs of transportation, refurbishing, advertising and brokers’ fees, and other carrying costs and costs of sale, release or other disposition of the Aircraft. Lessor shall be liable for, and pay to Lessee upon demand, all costs, charges and expenses incurred by Lessee in enforcing or protecting its rights under this Agreement by reason of Lessor’s uncured default under this Agreement.

SECTION 13. TRUTH IN LEASING

WITHIN THE TWELVE (12) MONTH PERIOD PRECEDING THE DATE OF THIS AGREEMENT, THE AIRCRAFT HAS BEEN INSPECTED AND MAINTAINED IN ACCORDANCE WITH THE PROVISIONS OF FAR 91.409.

11

THE PARTIES HERETO CERTIFY THAT DURING THE TERM OF THIS AGREEMENT AND FOR OPERATIONS CONDUCTED HEREUNDER, THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED BY LESSEE IN ACCORDANCE WITH THE PROVISIONS OF FAR 91.409.

LESSEE ACKNOWLEDGES THAT WHEN IT OPERATES THE AIRCRAFT UNDER THIS AGREEMENT, IT SHALL BE KNOWN AS, CONSIDERED, AND IN FACT WILL BE THE OPERATOR OF SUCH AIRCRAFT. EACH PARTY HERETO CERTIFIES THAT IT UNDERSTANDS THE EXTENT OF ITS RESPONSIBILITIES, SET FORTH HEREIN, FOR COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS.

AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FEDERAL AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FEDERAL AVIATION ADMINISTRATION FLIGHT STANDARDS DISTRICT OFFICE.

THE PARTIES HERETO CERTIFY THAT A TRUE COPY OF THIS AGREEMENT SHALL BE CARRIED ON THE AIRCRAFT AT ALL TIMES, AND SHALL BE MADE AVAILABLE FOR INSPECTION UPON REQUEST BY AN APPROPRIATELY CONSTITUTED IDENTIFIED REPRESENTATIVE OF THE ADMINISTRATOR OF THE FAA.

*     *     *     Signature Page Follows     *     *     *

12

     IN WITNESS WHEREOF, Lessor and Lessee have each caused this Aircraft Lease Agreement to be duly executed as of the Effective Date.

LESSOR:
BUDGET JET, LLC
By:
Print:
Title:	Manager
LESSEE:
CAMPUS CREST COMMUNITIES
OPERATING PARTNERSHIP, LP
By:
Print:
Title:	Manager

13

EXCLUSIVE AIRCRAFT LEASE AGREEMENT

Schedule A

Lessee shall pay the sum of $                                         per hour as a lease rate together with all amounts due under the engine maintenance service plan.

Termination Fee Payable to Lessee:                                                             

EXCLUSIVE AIRCRAFT LEASE AGREEMENT

Schedule B

FSDO Notification Letter

Date: _________________

Via Facsimile

Fax: __________________

Federal Aviation Administration

__________________________

__________________________

__________________________

RE:	FAR Section 91.23 FSDO Notification
	First Flight Under Lease of ________________ business turbo jet aircraft, _______________,

s/n ___________________

To whom it may concern:

     Pursuant to the requirements of Federal Aviation Regulation Section 91.23(c)(3), please accept this letter as notification that the undersigned will acquire and take delivery from Budget Jet, LLC of an exclusive leasehold interest in the above referenced aircraft on the ___ day of _____________, 2010 and that the first flight of the aircraft under the lease will depart from Asheville Airport (AVL), Asheville, North Carolina on the ___ day of __________, 2010, at approximately _____ (am / pm) local time.

     Should you require any additional information, please contact my pilot, Mr. _________________, at telephone: (___) ____________.

Sincerely,
CAMPUS CREST COMMUNITIES OPERATING PARTNERSHIP, LP
By:
Print:
Title:	Manager

EXCLUSIVE AIRCRAFT LEASE AGREEMENT

Schedule C

Aircraft Delivery Receipt

CAMPUS CREST COMMUNITIES OPERATING PARTNERSHIP, LP (“Lessee”) hereby acknowledges delivery and acceptance of the Aircraft described in that Aircraft Lease Agreement (the “Agreement”) by and between Lessee and BUDGET JET, LLC (“Lessor”) dated as of the _____ day of ________, 2010. Lessee hereby accepts custody of the Aircraft in good working order and airworthy condition for the purposes set forth in the Agreement.

TOTAL TIME AIRFRAME AT DELIVERY:	__________________ hours
TOTAL TIME ENGINES AT DELIVERY:
Left Engine:	__________________ hours
Right Engine:	__________________ hours
TOTAL LANDINGS AT DELIVERY:	______________________

Lessee:
CAMPUS CREST COMMUNITIES OPERATING PARTNERSHIP, LP
By:
Print:
Title:	Manager

EXCLUSIVE AIRCRAFT LEASE AGREEMENT

Schedule D

Insurance Certificates

EX-10.61

Exhibit 10.61

AMENDMENT NO. 1 TO CONTRIBUTION AGREEMENT

     THIS AMENDMENT NO. 1 TO CONTRIBUTION AGREEMENT (this “Agreement”), dated as of September 14, 2010, by and among Campus Crest Communities, Inc., a Maryland corporation (the “Company”), and Campus Crest Communities Operating Partnership, LP, a Delaware limited partnership (the “Operating Partnership” and, together with the Company, the “Company Entities”), and Carl H. Ricker, Jr., an individual resident in the State of North Carolina, hereinafter referred to as “Ricker”.

W I T N E S S E T H:

     WHEREAS, the Company Entities and Ricker have entered into that certain Contribution Agreement, dated as of May 13, 2010 (the “Contribution Agreement”); and

     WHEREAS, the Company Entities and Ricker desire to amend Section 1.3(ii) of the Contribution Agreement.

     NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties to the Contribution Agreement hereby agree that the Contribution Agreement shall be amended as follows:

     1. Amendment to Section 1.3(ii). Section 1.3(ii) of the Contribution Agreement is hereby deleted in its entirety and replaced with the following:

     “(ii) 66,667 limited partnership units in the Operating Partnership and”

     2. Amendment to Section 4.1(g). Section 4.1(g) of the Contribution Agreement is hereby deleted in its entirety and replaced with the following:

     “(g) Allow any of the Ricker Entities to make or pay any distributions or dividends to any person, except in the ordinary course of business consistent with past practice.”

     3. Contribution of Campus Crest Ventures V, LLC Membership Interest. In the event that Ricker contributes his interest in Campus Crest at Carrollton, LLC to Campus Crest Ventures V, LLC, a Delaware limited liability company (“CCV V”), and receives, in exchange therefore, a membership interest in CCV V (the “CCV V Interest”), Ricker shall contribute the CCV V Interest to the Operating Partnership at the Closing. The contribution by Ricker of the CCV V Interest to the Operating Partnership shall be part of the other Formation Transactions for which Ricker shall receive the consideration set forth in the Contribution Agreement, as amended by this Amendment. The Company Entities agree that the transaction set forth in this Section 3 shall not be considered a breach of or default under any provision of the Contribution Agreement, as amended by this Amendment.

     4. Contribution of CC-Encore, LLC Membership Interest. In the event that Ricker or an affiliate owns an interest (the “Encore Interest”) in CC-Encore, LLC, a Delaware limited liability company (“Encore”), at the Closing, Ricker shall contribute, or cause to be contributed,

1

the Encore Interest to the Operating Partnership at the Closing. The contribution by Ricker of the Encore Interest to the Operating Partnership shall be part of the other Formation Transactions for which Ricker shall receive the consideration set forth in the Contribution Agreement, as amended by this Amendment. The Company Entities agree that the transaction set forth in this Section 4 shall not be considered a breach of or default under any provision of the Contribution Agreement, as amended by this Amendment.

     5. Remainder of Contribution Agreement Unchanged. Except as amended by this Amendment, the Contribution Agreement shall otherwise remain in full force and effect.

     6. Governing Law. This Amendment shall be governed by and construed under the laws of the State of North Carolina, without giving effect to choice of law principles thereof.

     7. Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Signature page follows]

2

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written.

COMPANY ENTITIES:
CAMPUS CREST COMMUNITIES, INC.
By:	/s/ Donald L. Bobbitt, Jr.
Name:	Donald L. Bobbitt, Jr.
Title:	Chief Financial Officer
CAMPUS CREST COMMUNITIES
OPERATING PARTNERSHIP, LP
By:	Campus Crest Communities GP, LLC, Its General Partner

By:	Campus Crest Communities, Inc.
	Its Sole Member
	By:	/s/ Donald L. Bobbitt, Jr.
	Name:	Donald L. Bobbitt, Jr.
	Title:	Chief Financial Officer

RICKER:

/s/ Carl H. Ricker, Jr. 

Carl H. Ricker, Jr.

3

EX-21.1

EXHIBIT 21.1

LIST OF THE SUBSIDIARIES OF CAMPUS CREST COMMUNITIES, INC.

Name	State and Form of Organization
1. Campus Crest Communities GP, LLC	Delaware – Limited Liability Company
2. Campus Crest Communities LP, LLC	Delaware – Limited Liability Company
3. Campus Crest Communities Operating Partnership, LP	Delaware – Limited Partnership
4. Campus Crest Group, LLC	North Carolina – Limited Liability Company
5. Campus Crest at Asheville, LLC	Delaware – Limited Liability Company
6. Campus Crest at Carrollton, LLC	Delaware – Limited Liability Company
7. Campus Crest at Las Cruces, LLC	Delaware – Limited Liability Company
8. Campus Crest at Milledgeville, LLC	Delaware – Limited Liability Company
9. Campus Crest at Abilene, LP	Delaware – Limited Partnership
10. Campus Crest at Ellensburg, LLC	Delaware – Limited Liability Company
11. Campus Crest at Greeley, LLC	Delaware – Limited Liability Company
12. Campus Crest at Jacksonville, AL, LLC	Delaware – Limited Liability Company
13. Campus Crest at Mobile, LLC	Alabama – Limited Liability Company
14. Campus Crest at Mobile Phase II, LLC	Delaware – Limited Liability Company
15. Campus Crest at Nacogdoches, LP	Delaware – Limited Partnership
16. Campus Crest at Cheney, LLC	Delaware – Limited Liability Company
17. Campus Crest at Jonesboro, LLC	Delaware – Limited Liability Company
18. Campus Crest at Lubbock, LP	Delaware – Limited Partnership
19. Campus Crest at Stephenville, LP	Delaware – Limited Partnership
20. Campus Crest at Troy, LLC	Delaware – Limited Liability Company
21. Campus Crest at Waco, LP	Delaware – Limited Partnership
22. Campus Crest at Wichita, LLC	Delaware – Limited Liability Company
23. Campus Crest at Wichita Falls, LP	Delaware – Limited Partnership
24. Campus Crest at Murfreesboro, LLC	Delaware – Limited Liability Company
25. Campus Crest at San Marcos, LP	Delaware – Limited Partnership
26. Campus Crest GP, LLC	Delaware – Limited Liability Company
27. The Grove Student Properties, LLC	North Carolina – Limited Liability Company
28. Campus Crest Construction, LLC	North Carolina – Limited Liability Company
29. Campus Crest Development, LLC	North Carolina – Limited Liability Company
30. Campus Crest Lease, LLC	Delaware – Limited Liability Company
31. Campus Crest at San Marcos GP, LLC	Delaware – Limited Liability Company
32. Campus Crest Aviation, LLC	North Carolina – Limited Liability Company
33. Campus Crest Properties, LLC	North Carolina – Limited Liability Company
34. Campus Crest Ventures III, LLC	Delaware – Limited Liability Company
35. HSRE-Campus Crest I, LLC	Delaware – Limited Liability Company
36. Campus Crest Springing Member, LLC	Delaware – Limited Liability Company
37. Campus Crest Milledgeville Manager, LLC	Delaware – Limited Liability Company
38. Campus Crest at Lawrence, LLC	Delaware – Limited Liability Company
39. Campus Crest at Moscow, LLC	Delaware – Limited Liability Company

Name	State and Form of Organization
40. Campus Crest at Statesboro, LLC	Delaware – Limited Liability Company
41. Campus Crest at Conway, LLC	Delaware – Limited Liability Company
42. Campus Crest at Huntsville, LP	Delaware – Limited Partnership
43. Campus Crest at San Angelo, LP	Delaware – Limited Partnership
44. HSRE-CC Huntsville GP, LLC	Delaware – Limited Liability Company
45. HSRE-Campus Crest GP I, LLC	Delaware – Limited Liability Company
46. The Grove Student Properties, Inc.	Delaware – Corporation
47. Campus Crest Construction, Inc.	Delaware – Corporation
48. Campus Crest Development, Inc.	Delaware – Corporation
49. Campus Crest Asheville Manager, LLC	Delaware – Limited Liability Company
50. Campus Crest Carrollton Manager, LLC	Delaware – Limited Liability Company
51. Campus Crest Las Cruces Manager, LLC	Delaware – Limited Liability Company
52. Campus Crest at Orono, LLC	Delaware – Limited Liability Company
53. Campus Crest at Denton, LP	Delaware – Limited Partnership
54. Campus Crest at Clarksville, LLC	Delaware – Limited Liability Company
55. Campus Crest at Fort Collins, LLC	Delaware – Limited Liability Company
56. Campus Crest at Fort Wayne, LLC	Delaware – Limited Liability Company
57. Campus Crest at Valdosta, LLC	Delaware – Limited Liability Company
58. Campus Crest at Ames, LLC	Delaware – Limited Liability Company
59. Campus Crest at Turlock, LP	Delaware – Limited Partnership
60. Campus Crest Springing Member II, LLC	Delaware – Limited Liability Company
61. Campus Crest GP II, LLC	Delaware – Limited Liability Company
62. Campus Crest Springing Partner, LLC	Delaware – Limited Liability Company
63. Campus Crest at Wichita Falls II, LP	Delaware – Limited Partnership
64. Campus Crest at San Marcos II, LP	Delaware – Limited Partnership
65. Campus Crest Troy Lessor, LLC	Delaware – Limited Liability Company
66. Campus Crest Cheney Lessor, LLC	Delaware – Limited Liability Company
67. Campus Crest Murfreesboro Lessor, LLC	Delaware – Limited Liability Company
68. Campus Crest Jonesboro Lessor, LLC	Delaware – Limited Liability Company
69. Campus Crest Wichita Lessor, LLC	Delaware – Limited Liability Company
70. Campus Crest Wichita Falls Lessor, LLC	Delaware – Limited Liability Company
71. Campus Crest Waco Lessor, LLC	Delaware – Limited Liability Company
72. Campus Crest Stephenville Lessor, LLC	Delaware – Limited Liability Company

EX-23.2

Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Campus Crest Communities, Inc.:

We consent to the use of our reports dated May 14, 2010, with respect to the balance sheet of Campus Crest Communities, Inc. as of March 1, 2010; the combined balance sheets of Campus Crest Communities Predecessor as of December 31, 2009 and 2008, and the related combined statements of operations, changes in equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2009, and related financial statement Schedule III; and the statement of revenue and certain expenses of HSRE Properties for the year ended December 31, 2009, included herein and to the reference to our firm under the heading “Experts” in the prospectus. Our report on the combined statement of revenue and certain expenses of HSRE Properties contains a paragraph that states that the combined statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, as described in Note 2 to the combined statement of revenue and certain expenses and it is not intended to be a complete presentation of HSRE Properties’ revenue and expenses.

/s/ KPMG LLP

Atlanta, Georgia
September 20, 2010

EX-23.4

Exhibit 23.4

CONSENT OF MICHAEL GALLIS & ASSOCIATES

We consent to the reference to our firm under the captions “Industry and Market Data,” “Industry Outlook” and “Experts” in the Registration Statement on Form S-11 (File No. 333-166834) and related prospectus of Campus Crest Communities, Inc. for the registration of its common stock.

Dated: September 20, 2010
Charlotte, North Carolina

MICHAEL GALLIS & ASSOCIATES
By:	/s/ Michael Gallis
Name:	Michael Gallis
Its:	Principal

EX-99.6

Exhibit 99.6

CERTIFICATE OF THE SECRETARY
OF
CAMPUS CREST COMMUNITIES, INC.

September 17, 2010

     The undersigned, Ted W. Rollins, certifies that he is now and at all time herein mentioned has been the duly elected, qualified and acting Secretary of Campus Crest Communities, Inc. (the “Company”), a duly organized and existing corporation, incorporated in the State of Maryland, and in charge of the minute books and corporate records of the Company. Attached hereto and marked Exhibit A is a true and correct copy of certain of the resolutions duly adopted by the Board of Directors of the Company on May 13, 2010; said resolutions have not been modified or rescinded and are at the date of this Certificate in full force and effect; said resolutions authorize the President, Secretary, Treasurer, Chief Executive Officer, Chief Operating Officer, Chief Investment Officer and Chief Financial Officer (the “Authorized Officers”) to take the actions set forth in the resolutions attached hereto as Exhibit A.

     IN WITNESS WHEREOF, the undersigned has executed this Certificate and affixed the
corporate seal of the Company on September 17, 2010.

/s/ Ted W. Rollins 

Ted W. Rollins
Secretary

[SEAL]

EXHIBIT A

Corporate Resolutions

     RESOLVED FURTHER, that the Authorized Officers of the Company are each authorized to execute and to cause the Registration Statement to be filed with the Commission, and are each authorized to cause to be prepared, executed and filed with the Commission, in the name and on behalf of the Company, such amendments or supplements (including, without limitation, post-effective amendments) to the Registration Statement, and any and all other exhibits, documents or instruments (including, without limitation, requests for acceleration of the effective date of the Registration Statement under the Securities Act), as such Authorized Officer may determine necessary or advisable in order that the Registration Statement may become and remain effective under the Securities Act and in order to conform or comply with the provisions and requirements of the Underwriting Agreement (as defined below), and with the provisions and requirements of the Commission and the Securities Act and of any other applicable agreement, law, regulation, agency or governmental body, such determination by such Authorized Officer to be conclusively evidenced by the execution or filing of such amendments, supplements, exhibits, documents or instruments;

     RESOLVED FURTHER, that each of the Authorized Officers who may execute the Registration Statement, any amendment thereto or other document in connection therewith (whether on behalf of the Company or as an officer or trustee thereof, by affixing the seal of the Company or otherwise) is hereby authorized to execute a power of attorney appointing such person or persons as he or she may designate his true and lawful attorney or attorneys to execute in his or her name in any such capacity the Registration Statement, any amendment thereto or other document in connection therewith, and to cause the same to be filed with the Commission, each of such attorneys to have full power to act with or without the other and to have full power and authority to do and perform any act necessary or appropriate to carrying out the intent of these resolutions as fully and to all intents and purposes as such officer might or could do in person;

CORRESP

corresp